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February 21, 2019

Why we fail to diversify economy


When travelling around Kenya, one of the most spectacular views seen from the highways is of the tea estates.

Whether in Limuru or in Kericho, these endless fields of deep green seem so much a part of the natural beauty of the country that one would be forgiven for assuming that tea has always been grown in abundance in those gentle rolling hills and plains.

But of course, that is not true. About a 100 years ago, any of our ancestors travelling through what are now the recognised ‘tea belt’ zones, would have seen nothing but empty Savannah grasslands. For tea only came to Kenya well into the colonial era, when white ‘settler’ farmers of mostly British ancestry were encouraged to come and start a new life here.

And though it is not something that Kenyan historians like to emphasise, it is only by being colonised that the indigenous people of this country found a path into the modern agricultural economy that is still our main economic pillar. Most of our valued cash crops are not indigenous to this region. Not a single bush of tea or coffee grew here, until some colonial-era agriculture officer planted a few experimental samples.

Related to this is a recent news item on the retirement of Botswana’s President Ian Khama. Among the points raised in the assessments of his two terms in office, was that he had failed to diversify the Botswanan economy, which remains largely dependent on diamond exports. It is in fact something of a ritual that when Botswanan presidents retire, they are routinely accused of this failing: That they did not manage to move the nation’s economy beyond its current dependence on the export of diamonds.

And if Kenyan Presidents were honest, they would admit — as and when they left office — that they too have not been able to take the Kenyan economy beyond a dependency on agriculture and tourism.

Both these sectors existed at the time we gained independence in 1963. Kenya back then was already a major exporter of basic agricultural produce. And there was also some tourism, though admittedly a different type from what we have today. Back then, Kenya was where American millionaires and British aristocrats came to hunt and shoot wild animals.

The high point of a safari back then was not about taking selfies to send to your friends, showing the wildebeest migration in the background. It was about shooting a large elephant or buffalo and taking back home with you the ‘trophies’ from a successful hunt.

But the bigger point is that all our efforts to diversify the economy have thus far failed.

And yet it is not for lack of opportunity that we have had these failures. Economic opportunities arise all the time. The difficultly lies in spotting them.

Consider horticulture, which is perhaps the only agricultural sub-sector to have been initiated well after Independence. I recall about 10 years ago, it was headlines here that Kenya had overtaken Israel in exports of fresh cut flowers to Europe.

I don’t know whether younger Kenyans hold similar views now, but back then many of us simply did not imagine that Kenyans could ever beat the Israelis (who had famously ‘made the desert bloom’) in anything within the field of agriculture.

And, oddly enough, it turned out that we sceptics were right. It was not so much that we had done better than Israel, but rather that the Israeli economy had successfully diversified into high-tech industries to a point where there was just not enough of the cheap labour needed to grow flowers. A fresh wave of the tragic and unending violence between Israelis and Palestinians had also locked out a potential source of low-wage workers from the Israeli economy.

More interesting yet, Kenya’s booming flower exports had largely relied on the expertise of Israeli specialists who came here as their own country slowed down on flower exports. In this way then did Kenya benefit from Israel diversifying its economy away from horticulture.

Next week I go into the details of some of our opportunities for economic diversification currently being ignored.

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