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September 20, 2018

Ability To Harness Innovation Is Critical To Progress In 2016

With the New Year kicking off today many reflect on the achievements of the past year, both at personal and community level and set new targets or resolutions.

Moreover, with the world becoming a global village, the level of achievement is continuously gauged against a global standard. The internet has not only brought the world closer than the legendary doorsteps but to the palm of the hand with mobile technology. News is now readily available online on a real-time basis, bringing with it an opportunity to benchmark against the best. 

As a country, Kenya can quote many achievements, notable among them the achievement of the middle class economic status. The new found status comes with heightened expectations, both within and outside the country. Internally people expect better living standards and opportunities, both for employment and business. Outside, there are expectations for growing investment opportunities, as well as less reliance on foreign aid. Kenya is like a teenager that joins the adult world with pride of the newfound status, just to realise that the privileges come laded with responsibilities. 

What is clear is that to achieve tangible progress, business as usual no longer works. Progress demands continuously raising the bar and aiming for tangible achievements, and not being content with potential. 

The recently released Forbes Best Country for Business brings the point home that Africa remains behind the rest of the world with six of the 10 worst countries for business located in Africa. This is in spite of Africa being home to two-thirds of the world’s diamonds and one-third of the total mineral reserves. Furthermore, this is despite registering the strongest growth rates averaging five per cent in the last 15 years as the rest of the world struggled with the global financial crisis. Indeed, potential on its own has no merit and development will take more than having great potential to realising real progress.

The Forbes report ranked 144 countries based on 11 criteria with Kenya taking the following rankings in the order of best to worst; innovation was best at position 41, tax burden (80), property rights (82), market performance (84), personal freedom (92), technology (94), investor protection (99), monetary freedom (103), red tape (120), trade freedom (128), and finally the worst performance was in corruption at position 128. The Forbes ranking takes into account other rankings done in the year including the World Bank’s "Ease of Doing Business” and the World Economic Forum’s “Global Competitiveness Report”, thus making it more meaningful. 

Europe dominates the top 25 positions with two-thirds (16) of the positions, with Denmark taking the lead, followed by New Zealand and Norway. Asia-Pacific occupies seven positions among the top 25 with Singapore and Hong Kong leading. Completing the list of the top 25 is Canada at position seven and the US which dropped four positions to rank at 22.

Overall, Kenya comes in at position 108 out of a total of 144 countries that are included in the ranking. While it is position 15 within Africa, it is in the bottom quarter of the ranking worldwide. This puts Kenya among the best in Africa, but among the worst worldwide.  Among the top five in Africa is Mauritius the highest African ranked country at position 37 followed by South Africa at position 47, Morocco (62), Botswana (68), and Rwanda at position 72.

Notable among the country statistics for Kenya is the trade balance to GDP ratio that is a negative 10.1 per cent while Mauritius, the best ranked in Africa has a negative 5.5 per cent and South Africa a negative 5.4 per cent. This depicts the excessive importing compared to exporting, and is perhaps the greatest threat to economic growth in Kenya, second only to corruption. Also notable is the disparity in ranking for Kenya with innovation taking an impressive position 41, closer to first quartile while three of the rankings, red tape, trade freedom and corruption are in fourth quartile. Comparatively, South Africa takes a low ranking in red tape (96), monetary freedom (87), trade freedom (82), and innovation (82) which is in the third quartile. It is however highly ranked in tax burden (19), investor protection (14), property rights (29), and market performance (29) which is in the first quartile. 

Regardless, there is great opportunity for Kenya to harness its inovativeness, which is ranked much higher than the other factors, and the highest in Africa, to improve on its performance.  In other words, it remains a puzzle why the high ranking in innovation has not lead to improvement in the other areas.

The future for Kenya lies in its ability to harness innovation to solve the myriad of challenges that stand in its way to progress. While the prospects are bright, it is clear from the Forbes report that the middle income status is just the beginning, and the path to prosperity cannot be business as usual. I would like to take this opportunity to wish all the readers of this column an innovative and prosperous 2016.

 

Kenya’s Ranking compared with Mauritius, South Africa and Denmark

 

Kenya

Mauritius

South Africa

Denmark

Innovation

41

77

82

10

Tax burden

80

13

19

12

property rights

82

34

29

11

market performance

84

56

29

10

personal freedom

92

35

41

1

technology

94

65

50

9

Investor protection

99

29

14

20

monetary freedom

103

63

87

1

red tape

120

34

96

28

trade freedom

128

7

82

9

Corruption

 

129

42

60

1

 

 

 

 

Poll of the day