Dr Ndii on Kenya bellycrats pervasive incompetence

[Kim Jong-Un's Pajama Pants]

UAE still relies heavily on oil.  It is diversifying though.  To manufacturing.

[MOON Ki]

Yes.  Malaysia.  I think Vietnam is also on the same track. 

Yes, Vietnam too seems headed that way.   (They have already done boda-boda for ages, but I don't know if they have tried watchmen.)

Indonesia, Thailand, etc. are also set on that path and have started with the "easier" parts of consumer electronics, automotive parts, etc.     Apparently, it has not occurred to them that all they need do is arm toddlers with laptops and then leap  straight to everyone producing "apps", or that they could be among the "many examples of countries that have moved to developed world through focusing solely on services".   

[hk]

Its amazing that some people see all the negative in Kenya but fail to see the good in our country. There are sectors in our country that are world class and can compete with any country. In horticulture not only are we the best in africa but world wide we're beating Israel only behind netherlands. The nascent outsourcing industry we compete with Philippines and other english speaking countries and we are winning some jobs.
Kenya is going to continue confounding people because its not conventional. Its a country of many moving parts. The recent finance survey shows that more than 50% of kenyans are self employed. If only we can continue embracing technology those self employed people can increase productivity and eventually develop big companies. Rv pundit put it right we need to induce technology or knowledge in every sector and we'll be okay.   

[MOON Ki]

Its amazing that some people see all the negative in Kenya but fail to see the good in our country. There are sectors in our country that are world class and can compete with any country.

Questioning bizarre claims and theories does not mean that people see only the negative.

By the way, as a rule,  there is something to be had from looking at negative things: if they can be eliminated, or even just reduced substantially, then there is a good chance of progress and positive development---both of which are rarely founded on just wild fantasy.

There are sectors in our country that are world class and can compete with any country. In horticulture not only are we the best in africa but world wide we're beating Israel only behind netherlands.

True.   Kenya is certainly world-class in flowers.   Tea as well.   

Kenya is going to continue confounding people because its not conventional. Its a country of many moving parts.

Perhaps people are confounded, and perhaps not. I don't know.   But if I may ask:

(a) What is a "conventional" country and how is Kenya "not conventional".   

(b) What is a "country of many moving parts", and what are Kenya's "many moving parts" that, I assume,  lead to the "confounding" and "not unconventional"?

[Kim Jong-Un's Pajama Pants]

There are sectors in our country that are world class and can compete with any country. In horticulture not only are we the best in africa but world wide we're beating Israel only behind netherlands. The nascent outsourcing industry we compete with Philippines and other english speaking countries and we are winning some jobs.

Great stuff.  I like the micro-finance thing too.  Equity.  Flowers, we are good too.  I worry about Ethiopia snatching that market. 

Generally good things.  And biting poverty remains.  I think that is the thrust of David Ndii's article.  Which moving parts, to borrow your phrase, must we inject life into?  Maybe he is clueless.  But it has not been demonstrated.

[RV Pundit]

There are many example of countries that didn't become developed through natural resources or manufacturing. One more example is Australia. Service sector of Australian economy is nearly 70% of the economy. The highest manufacturing ever became important was in 60s - at 25% of GDP. This is a viable model that kenya should explore. The Asian tiger (before that Japan or British or USA) or low cost manufacturing for export route is not a viable model for us and seem to be working for Ethiopia. We have to pursue a different model. And there are many.Kenya is doing well in parts of agriculture - tea & horticulture - it doing very well in financial & intermediation services - and has spawn multinational companies there - it doing relatively well in tourism despite terror attacks here and there - it now doing very well in retail & wholesaling (secondly only to South Africa) - and doing really well also in real estate & construction. Those are kenya's greatest strength now. The economy has been growing at 6% - that is just a few % down 10% that would be required to move the country to developed world in a generation or two. I think we can easily get the 4%  if we focussed on what we are good at - services - and are lucky with some mineral or two - and of course continue to get china to finance huge infrastructure - SGR alone adds 1.5% to GDP during construction. If we had several SGRS type projects -like Ethiopia - those can easily add the 4% we need on yearly basis.

[hk]

There are sectors in our country that are world class and can compete with any country. In horticulture not only are we the best in africa but world wide we're beating Israel only behind netherlands. The nascent outsourcing industry we compete with Philippines and other english speaking countries and we are winning some jobs.

Great stuff.  I like the micro-finance thing too.  Equity.  Flowers, we are good too.  I worry about Ethiopia snatching that market. 

Generally good things.  And biting poverty remains.  I think that is the thrust of David Ndii's article.  Which moving parts, to borrow your phrase, must we inject life into?  Maybe he is clueless.  But it has not been demonstrated.

If you look at the recent Finance survey file:///C:/Users/HP/Downloads/FinAccess%202016%20survey%20report%20(1).pdf you'll see that 18% adults are self employed and 32% derive income from agriculture. In my humble opinion is that biting poverty remains because of low productivity especially in agriculture where bulk of adults get their income from. The 18% that's self employed varies from crazy tender entrepreneurs to honest jua kali people producing real stuff. The problem is this self employed businesses are fragment and not growing fast enough to consolidate.

[Kim Jong-Un's Pajama Pants]

There are sectors in our country that are world class and can compete with any country. In horticulture not only are we the best in africa but world wide we're beating Israel only behind netherlands. The nascent outsourcing industry we compete with Philippines and other english speaking countries and we are winning some jobs.

Great stuff.  I like the micro-finance thing too.  Equity.  Flowers, we are good too.  I worry about Ethiopia snatching that market. 

Generally good things.  And biting poverty remains.  I think that is the thrust of David Ndii's article.  Which moving parts, to borrow your phrase, must we inject life into?  Maybe he is clueless.  But it has not been demonstrated.

If you look at the recent Finance survey file:///C:/Users/HP/Downloads/FinAccess%202016%20survey%20report%20(1).pdf you'll see that 18% adults are self employed and 32% derive income from agriculture. In my humble opinion is that biting poverty remains because of low productivity especially in agriculture where bulk of adults get their income from. The 18% that's self employed varies from crazy tender entrepreneurs to honest jua kali people producing real stuff. The problem is this self employed businesses are fragment and not growing fast enough to consolidate.

Your link doesn't work because it is pointing to a file on your windows drive.  The productivity issue is not too far off from what David Ndii is addressing.  If I understand him well, he is saying we need to find ways of optimizing productivity and levels of involvement in the economy.  IN other words, do we need more or less tractors, fertilizer, education etc?  As efficiency improves, some of these farmhands may find themselves jobless even as the productivity and GDP goes up.  Where do they go for employment?  That's just my rudimentary understanding of what he is talking about.

[MOON Ki]

There are many example of countries that didn't become developed through natural resources or manufacturing. One more example is Australia. Service sector of Australian economy is nearly 70% of the economy.  The highest manufacturing ever became important was in 60s - at 25% of GDP.

There you go again, with the "many examples".   Another bad example here, I'm afraid.   Before pointing out why, let us remind ourselves of the statement you made and should be proving:

There are many examples of countries that have moved to developed world through focusing solely on services.

I asked you to gives a list of 10 of the "many".    And the list is where?

So, here's what is wrong with your "proof":

First, simply noting  that a developed country has a huge services sector does not tell us that it got developed through services; a huge services sector is an aspect of developed countries.

Second, even if Australia got there without relying primarily on manufacturing, it would not tell us that it got there by "focusing solely on services".   As a matter of fact, that was not the case.

Third, you do not seem to be aware of the role that huge agricultural and natural-resources (gold, iron-ore, etc.) industries played in Australia's economic history.   

Fourth, on the manufacturing level: You seem to think of that 25% as a small number.  Really?   What are comparable numbers for the Asian Tigers?  Let us take South Korea for example: in what year did manufacturing  exceed that level?

The Asian tiger (before that Japan or British or USA) or low cost manufacturing for export route is not a viable model for us and seem to be working for Ethiopia.

It is, of course, possible to develop without a great focus in manufacturing: a country can, for example, start with selling stuff out of the ground (e.g. oil) and then buy its way into other things.   So, why are agriculture and manufacturing being proposed for places like Kenya?   Three reasons:

(a) Export-driven manufacturing has been shown to be very good at rapidly boosting employment and lifting masses of poverty.

(b) Without stuff to dig out of the ground, agriculture is a good basis for financing required for (a) and other things.

(c) After moving from agriculture to export-driven manufacturing, the exports also provide the finance to grow other sectors.

SGR alone adds 1.5% to GDP during construction. If we had several SGRS type projects -like Ethiopia - those can easily add the 4% we need on yearly basis.

Kenya borrowed about $4 billion for the SGR, which is about 8% of GDP; it's good to see that spending it is contributing to the GDP.   

And, yes, if we had several "SGRS type projects" .... But the construction will come to an end and the money must eventually be paid back, so it might be a good idea to think of what the returns might be, rather than just how many we could have, all adding x% ...

[RV Pundit]

Get your facts straight.

1) For a country to go the Asian tiger model; the manufacturing contribution to GDP has to go anything 40-50%. Australia and so many developed countries never had to go through these. I give you examples - all I hear is excuses - they are small countries or have resources? I guess Singapore that get praised for that export-driven manufacturing was not small or other excuses about resources financing services sectors. Kenya is in middle - neither big neither small - we certainly have natural resources and are starting to explore those. So might not need to go Ethiopia way..and in any case I doubt it possible.

2) Secondly SGR has to been amortized for entire duration of the loan..this 20-30yr loan..split that 4-5B usd plus interest into 30yrs...and then compare with 1.5-2% it contributing to our GDP during construction and possibly for the entire duration of running. You'll realize that the cost per year is waaaaaaaaaaay less than 1.5-2% (about 1B usd every year). You just need to compare what treasury will pay every year..and what SGR gdp contribution per annum.

Kenya can and will develop without manufacturing being a key pillar. All we need to do is to focus on our comperative advantages (regionally we are best in services) and then leverage agricluture & construction - that also have huge multiplier effects.

Gov should not be afraid to borrow and fund huge infrastructural projects...I say that is probably the only way we can grow by 10% per annum (the target we need to move to developed world)...get two SGR type mega projects running every year.

But I guess all these is greek for guys who have to google around.

[MOON Ki]

Get your facts straight.

1) For a country to go the Asian tiger model; the manufacturing contribution to GDP has to go anything 40-50%.

Really?   This is one we ought to be able to settle quickly.   South Korea example: in what years have manufacturing as % of GDP ever been in that range?    Weka answer hapa hapa.  We can then start on the path to getting our "facts straight".   

so many developed countries never had to go through these. I give you examples - all I hear is excuses - they are small countries or have resources?

Your claim was that:

There are many examples of countries that have moved to developed world through focusing solely on services.

So far, the only "examples" you have given as "models" that Kenya ought to follow are Namibia, Seychelles, Estonia, Dubai, and Australia, two of which don't even come to mind when one thinks of "developed".   In all cases, I have pointed out the "problems" with your "models"; but I have not yet seen any counter-argument to what I have pointed out.   Can you give us  others of your "many examples"?

I guess Singapore that get praised for that export-driven manufacturing.

Actually, all  the Asian Tigers get praised for export-driven manufacturing; it is one of their most distinctive economic characteristics.  By the way, how has Singapore done with respect to your recommended 40-50%?

2) Secondly SGR has to been amortized for entire duration of the loan..this 20-30yr loan..split that 4-5B usd plus interest into 30yrs...and then compare with 1.5-2% it contributing to our GDP during construction and possibly for the entire duration of running.

Where do you get the figures as to its contribution after construction?    Or is that an "elementary question"?   

[MOON Ki]

The economy has been growing at 6% - that is just a few % down 10% that would be required to move the country to developed world in a generation or two. I think we can easily get the 4%  if we focussed on what we are good at - services - and are lucky with some mineral or two - and of course continue to get china to finance huge infrastructure - SGR alone adds 1.5% to GDP during construction. If we had several SGRS type projects -like Ethiopia - those can easily add the 4% we need on yearly basis.

This seems like a really simple and neat way to go.  Easily, as you put it.  Kenyans and everyone ought to go for it.

I was curious as to how it might "easily" go, and there seems to some confusion in some places as to just what this 1.5% is all about---for example, there is a whale of a difference between, say, spending x% of GDP and increasing GDP by x%, just as there is between x% of GDP and x% of GDP growth. (The relevance will be apparent in what follows.) 

At any rate,  I took a quick look at some of it, starting with your starry-eyed notion that a few "SGR type" projects will get the Kenyan economy up there.  Here is some of what I learned:

(1) Around the time the construction of the SGR started, there were plenty of 1.5% predictions.   Once it started, there have been claims that the 1.5% is happening right now.  Leo, hapa hapa.  What seems near-impossible to find is any actual verification of this 1.5%, right here and now, while the SGR is being constructed.    (Perhaps RV Pundit has some helpful sources.)

(2) Kenya's GDP growth: 

2014: 5.3%
2015: 5.6%
2016: 5.9% (est.)

Let's take the 2015 figure.   If that is 1.5% SGR and 4.1% Other---most unlikely---then it indicates serious problems with the other parts of the economy, considering the situation before the SGR business.

Another "scenario" is that not much has changed in the other sectors, but SGR alone is driving the growth.   Also unlikely, but, in any case it is in the 0.2 to 0.3% range; not quite 1.5%.   

Also, GDP growth was was 4.6% in 2012 and 5.7% in 2013; and the latest projection for 2017 is 6.1%.   So, overall, it's hard to see a nice, steady and easy march to 10%. Which is a pity, because, as you note, 6% is "just a few % down 10%".

(3) On the basis of the above, I got curious as to the source and basis of this "1.5% SGR" figure, which has been bandied about all over the place:  Where did it come from?   Where is it going?    What exactly is the SGr construction contributing to to the GDP and GDP-growth?   

The figure has been repeated endlessly by GoK types, and, on that basis, repeated endlessly by numerous others.   (Right up there with the one about how the SGR will reduce costs by 2.5 times.)  But good luck into trying to find any basis for how GoK has arrived at it!

The other source that seems to be quoted by those giving "real proof" is the IMF.    I had slightly less trouble with that one: I asked a friend who works at the IMF.     He wasn't entirely sure---and perhaps RV Pundit has even better sources---but he pointed me to a couple of documents he thought had the answer:

- The 1.5% per year can be found in one of the documents.  That document states that the IMF envisages GoK scaling up investment in public infrastructure to around 1.5% or GDP per year, and for several years,  and that the SGR is only part of that.     That's a long way from saying that 1.5% of annual growth will come from the SGR (or even all infrastructure).   

- IMF made a prediction (of 7%) for Kenya's growth in 2015 and threw the SGR into that.   It appears that some people interpreted that to mean that the SGR would be the sole contributor to that growth.     But we need not dwell on that, as reality has since settled the matter (at 5.6%).   

[RV Pundit]

Let me summarize this again.
1) For countries that have pursued export-driven manufacturing (starting from Britain to China recently) - industry(or manufacturing) at it apex contributed on average 40-50% (you'd have to find GDP component for any of those countries including the Asian tigers and do an average). That seem like an easy enough assignment. In any case that is the whole point...manufacturing has to contribute a really large portion of the economy..otherwise you're talking my model
2) 1.5% SGR contribution to GDP is also easy enough concept to grasp. SGR started in 2014 or about - and is set to end next year --call that 3yrs - split the 4B into 3yrs -and you have 1.1B being spend annually  in steel & concrete- if you want to verify this - all you need to get is cement/steel production & consumption data. Certainly Chinese are pouring lots of cement and steel into this - and that is GDP.

I reckon without SGR - our economy would be stuck at 4% (or worse after the troubles in tea & tourism sector the last few yrs) - not 6%.

Can our economy grow at the desired 10% - yeah - this year the economy certainly will grow 7% (tea and tourism have recovered for starters & marco-economic indicators are stable) -Q1 (Jan-march) GDP data were really goodhttp://af.reuters.com/article/investingNews/idAFKCN0ZG0Z6-so all we need is to get SGR, LAPSET and huge infrastructure (roads, ports, power, broadband,cities) going on. We cannot finance this from any savings (say from export driven manufacturing) and so we have to borrow this on the cheap & hope the investment pay the debts and leave us something every year.


Mix the two - improve on our current advantages and get huge infrastructure going on -grow by 10% and we can fight poverty! SGR alone is employing 30,000 folks during construction.

This seems like a really simple and neat way to go.  Easily, as you put it.  Kenyans and everyone ought to go for it.

I was curious as to how it might "easily" go, and there seems to some confusion in some places as to just what this 1.5% is all about---for example, there is a whale of a difference between, say, spending x% of GDP and increasing GDP by x%, just as there is between x% of GDP and x% of GDP growth. (The relevance will be apparent in what follows.) 

At any rate,  I took a quick look at some of it, starting with your starry-eyed notion that a few "SGR type" projects will get the Kenyan economy up there.  Here is some of what I learned:

(1) Around the time the construction of the SGR started, there were plenty of 1.5% predictions.   Once it started, there have been claims that the 1.5% is happening right now.  Leo, hapa hapa.  What seems near-impossible to find is any actual verification of this 1.5%, right here and now, while the SGR is being constructed.    (Perhaps RV Pundit has some helpful sources.)

(2) Kenya's GDP growth: 

2014: 5.3%
2015: 5.6%
2016: 5.9% (est.)

Let's take the 2015 figure.   If that is 1.5% SGR and 4.1% Other---most unlikely---then it indicates serious problems with the other parts of the economy, considering the situation before the SGR business.

Another "scenario" is that not much has changed in the other sectors, but SGR alone is driving the growth.   Also unlikely, but, in any case it is in the 0.2 to 0.3% range; not quite 1.5%.   

Also, GDP growth was was 4.6% in 2012 and 5.7% in 2013; and the latest projection for 2017 is 6.1%.   So, overall, it's hard to see a nice, steady and easy march to 10%. Which is a pity, because, as you note, 6% is "just a few % down 10%".

(3) On the basis of the above, I got curious as to the source and basis of this "1.5% SGR" figure, which has been bandied about all over the place:  Where did it come from?   Where is it going?    What exactly is the SGr construction contributing to to the GDP and GDP-growth?   

The figure has been repeated endlessly by GoK types, and, on that basis, repeated endlessly by numerous others.   (Right up there with the one about how the SGR will reduce costs by 2.5 times.)  But good luck into trying to find any basis for how GoK has arrived at it!

The other source that seems to be quoted by those giving "real proof" is the IMF.    I had slightly less trouble with that one: I asked a friend who works at the IMF.     He wasn't entirely sure---and perhaps RV Pundit has even better sources---but he pointed me to a couple of documents he thought had the answer:

- The 1.5% per year can be found in one of the documents.  That document states that the IMF envisages GoK scaling up investment in public infrastructure to around 1.5% or GDP per year, and for several years,  and that the SGR is only part of that.     That's a long way from saying that 1.5% of annual growth will come from the SGR (or even all infrastructure).   

- IMF made a prediction (of 7%) for Kenya's growth in 2015 and threw the SGR into that.   It appears that some people interpreted that to mean that the SGR would be the sole contributor to that growth.     But we need not dwell on that, as reality has since settled the matter (at 5.6%).   

[MOON Ki]

Let me summarize this again.
1) For countries that have pursued export-driven manufacturing (starting from Britain to China recently) - industry(or manufacturing) at it apex contributed on average 40-50% (you'd have to find GDP component for any of those countries including the Asian tigers and do an average). That seem like an easy enough assignment. In any case that is the whole point...manufacturing has to contribute a really large portion of the economy..otherwise you're talking my model

And let me summarize this again:  You wrote that

There are many examples of countries that have moved to developed world through focusing solely on services.

We are still waiting for the "many examples".   Proper ones, I mean.   

Then, while advising me to get my facts straight, you stated that:

For a country to go the Asian tiger model; the manufacturing contribution to GDP has to go anything 40-50%.

The questions that I asked you in relation to the Asian Tigers are still up there.  I don't know how Britain and China come into that picture.   

You have also now expanded on your case for the Great Beneficial SGR, thus:

2) 1.5% SGR contribution to GDP is also easy enough concept to grasp. SGR started in 2014 or about - and is set to end next year --call that 3yrs - split the 4B into 3yrs -and you have 1.1B being spend annually  in steel & concrete- if you want to verify this - all you need to get is cement/steel production & consumption data. Certainly Chinese are pouring lots of cement and steel into this - and that is GDP.

I reckon without SGR - our economy would be stuck at 4% (or worse after the troubles in tea & tourism sector the last few yrs) - not 6%.

I don't know how much steel and cement Kung Fu is putting out there, and looking at national cement/steel production & consumption data would not necessarily help, given all the non-SGR activity (real estate etc.) that consume those.   Nor would I just  "split the 4B into 3yrs": I imagine that Kung Fu is out to make money here and is not just just putting it all right back into steel and concrete for the locals.   Still,  we need not dwell too much on such things.   Some figures are readily available, e.g. GDP growth:

2013: 5.7%
2014: 5.3%
2015: 5.6%

So, after all the busy work on the SGR, we get back (2015) to just below where we were before  the SGR activity started (2013); and, presumably, other sectors of the economy have been doing their bit .. or so claims KNBS.  One could claim that in between things were so bad that only SGR saved the day and restored lost glory; but the 2014 figure would not support that.  All in all, it doesn't look like we have  a very convincing story for how we'd be in the doldrums if it weren't for this Great Beneficial SGR.

so we have to borrow this on the cheap & hope the investment pay the debts and leave us something every year.

Borrow on the cheap from where?    Kenya's new "lower-middle" status means it will soon lose access to concessional loans from places like the World Bank.     If the idea is that Kung Fu will step in, take a look at the current SGR deal.

[RV Pundit]

Look like you're into obfuscation. Which is not surprising considering this is probably way beyond your paygrade. You're googling stuff and trying to string up an argument as always.Probably the reason why you can't summarize. Contribution of SGR to our GDP is not in doubt. Construction sector grew by 24% in 2014/2015 thanks to SGR . All you need to do is go to KNBS or Central Bank or any other credible source and find analysis of GDP the last few years. Lets try not argue over everything -like we are experts in econometrics!! Take whatever credible institution like WB or IMF or Central bank says at it highest and we can engage better.

Let try again to summarize.
1) Asian tigers (before then Britain &Japan) and now China -among many others--followed export-driven manufacturing/industrial production - which at it apex contributed the most to their economy (call that 50% of GDP & employment). This is the much touted model for nearly every country to become developed. Manufacture things and sell them abroad -with huge made in xyz sign. And that seem your argument here.
2) That is not the ONLY economic model to move from poverty to prosperity. There are countries that haven't done much manufacturing but have developed. Some have been lucky with minerals - starting from Portugal & Spain -who basically shipped gold and diamond from South America & became rich - to recent examples of Middle East who grew from nomadic camel herding deserts to some of the most developed countries now after oil discovery in 1950s.
3) There are other countries without minerals nor manufacturing who've done it. Close home you've Seychelles who have focussed on becoming a tourist haven or Mauritus just off Indian ocean who are doing really good in service sectors.
4) Kenya service sectors is advanced for it's level of development (or underdevelopment) and it one of the things it has going for it. It the reason despite not having any minerals - it fourth biggest economy in sub-saharan Africa - and probably the largest non-mineral economy in sub-sahara Africa - South Africa,Angola,Sudan,Nigeria and even TZ across the board - all have diamond,oil, gold and name it.

Conclusion: Kenya should focus on what has made it the biggest non-mineral economy in sub-sahara Africa, throw in infrastructure from cheap chinese debt (note -export-driven manufacturing  used their own export savings to build infra -see  Britain, Japan, Asia tigers and now China -during their industrial revolution) and it can grow itself out of poverty.

She is already doing 6% -and is brand new low middle income country [check when China became that]- and just need to add 4% to her gdp growth- and in 20-30yrs - we would be a developed country.She can easily add 4% if she improves on efficiency and productivity of existing sectors(2%) - and get 2% from SGR like mega projects. She can do it.

[Nefertiti]

This manufacturing vs services debate reminds me of Ndii human resources vs Ndemo infrastructure argument. They are not zerosum or mutually exclusive. If you build SGR or educate folks, they will work in all sectors - agriculture, manufacturing, services and all shades in between. The reason why developed economies have a 2% agric, 20% industry, 75% services mix is because they have humongous service sectors, not a stop in agric or manufacturing. The US exports MANY softwares & ICTs - are they not manufactured? They just draw a distinction for statistical purposes, nothing is cast in stone and there is no preference. It is like AirBnB: a "service" that enables people to book/lease apartments worldwide. This new market generates billions of dollars which can be service, tourism, real estate or construction.

We have a composite model and we are not going to pick among the straightjackets. We innovate, divest, divesify, etc as we go along.

[MOON Ki]

this is probably way beyond your paygrade.

Wow.    I never saw that one coming.   

Contribution of SGR to our GDP is not in doubt. Construction sector grew by 24% in 2014/2015 thanks to SGR .

No doubt it is contributing to GDP, and it is even possible that it contributed much of the growth rate of the construction sector.  But none of that was the issue, which was the supposed 1.5% and how the economy would have been stuck at 4% without SGR etc.

By the way, I wouldn't attribute it all to SGR---think of housing etc.---and I'm not sure about the 24%.   I took you advice and looked up the KNBS report.   Here is what I found:

The building and construction industry registered a growth of 13.6% in 2015 compared with an expansion of of 13.1% recorded in 2014.     This growth was partly attributed to the ongoing
- SGR construction works
- Roadworks by national and county governments

(Similar statement but smaller figure for 2014).

Let try again to summarize.
1) Asian tigers (before then Britain &Japan) and now China -among many others--followed export-driven manufacturing/industrial production - which at it apex contributed the most to their economy (call that 50% of GDP & employment). This is the much touted model for nearly every country to become deve

And let my try again and summarize the latest claims I find problematic:

There are many examples of countries that have moved to developed world through focusing solely on services.

For a country to go the Asian tiger model; the manufacturing contribution to GDP has to go anything 40-50%.

2) That is not the ONLY economic model to move from poverty to prosperity. There are countries that haven't done much manufacturing but have developed. Some have been lucky with minerals - starting from Portugal & Spain -who basically shipped gold and diamond from South America & became rich - to recent examples of Middle East who grew from nomadic camel herding deserts to some of the most developed countries now after oil discovery in 1950s.

Gold, diamonds, oil, eh?  If you look  up there, you will find that I wrote this: 

It is, of course, possible to develop without a great focus in manufacturing: a country can, for example, start with selling stuff out of the ground (e.g. oil) and then buy its way into other things.

I'm glad to see that you've managed to find examples of that.    Now, go back and also read why the manufacturing approach is being recommended for Kenya.  M

3) There are other countries without minerals nor manufacturing who've done it. Close home you've Seychelles who have focussed on becoming a tourist haven .   Mauritus just off Indian ocean who are doing really good in service sectors.

You have already given us Seychelles, and I pointed out a little problem with the one: it has a population of around 97,000, equivalent to a small suburb of Nairobi.   That hardly seems like the basis of a model like Kenya.    Mauritius's per-capita GPD of $9K is certainly better than that of Kenya, but as a "model" for Kenya, it's Estonia-like population makes it unsuitable: around 1.3 million, the population of Mombasa (not even Nairobi).

4) Kenya service sectors is advanced for it's level of development (or underdevelopment) and it one of the things it has going for it. It the reason despite not having any minerals - it fourth biggest economy in sub-saharan Africa - and probably the largest non-mineral economy in sub-sahara Africa - South Africa,Angola,Sudan,Nigeria and even TZ across the board - all have diamond,oil, gold and name it.

I have no reason to disagree with any of that.

She can easily add 4% if she improves on efficiency and productivity of existing sectors(2%) - and get 2% from SGR like mega projects. She can do it.

We seem to have quite a few problems with the existing 1.5%, and you are already up to 2%?   

[RV Pundit]

The usual nitpicking. We are long at things from big picture. Estimate for SGR was anything btw 1.5-2%. So maybe it help the economy grow by 1.783983893% who damn cares about the decimals. It certainly grew the economy.

When it come to Singapore - we can quote it day and night - Lee sijui whoa - but we can't quote Mauritus which is now a upper middle income economy (16K per capita) -coz it too small??????????

So China model only applies for India? Singapore to Mauritus? And us to where? Britain or Germany.

this is probably way beyond your paygrade.

Wow.    I never saw that one coming.   

Contribution of SGR to our GDP is not in doubt. Construction sector grew by 24% in 2014/2015 thanks to SGR .

No doubt it is contributing to GDP, and it is possible that it contributed that much of the growth rate of the construction sector.  But none of that was the issue, which was the supposed 1.5% and how the economy would have been stuck at 4% without SGR etc

Let try again to summarize.
1) Asian tigers (before then Britain &Japan) and now China -among many others--followed export-driven manufacturing/industrial production - which at it apex contributed the most to their economy (call that 50% of GDP & employment). This is the much touted model for nearly every country to become deve

And let my try again and summarize the latest claims I find problematic:

There are many examples of countries that have moved to developed world through focusing solely on services.

For a country to go the Asian tiger model; the manufacturing contribution to GDP has to go anything 40-50%.

2) That is not the ONLY economic model to move from poverty to prosperity. There are countries that haven't done much manufacturing but have developed. Some have been lucky with minerals - starting from Portugal & Spain -who basically shipped gold and diamond from South America & became rich - to recent examples of Middle East who grew from nomadic camel herding deserts to some of the most developed countries now after oil discovery in 1950s.

Gold, diamonds, oil, eh?  If you look  up there, you will find that I wrote this: 

It is, of course, possible to develop without a great focus in manufacturing: a country can, for example, start with selling stuff out of the ground (e.g. oil) and then buy its way into other things.

I'm glad to see that you've managed to find examples of that.    Now, go back and also read why the manufacturing approach is being recommended for Kenya.  M

3) There are other countries without minerals nor manufacturing who've done it. Close home you've Seychelles who have focussed on becoming a tourist haven .   Mauritus just off Indian ocean who are doing really good in service sectors.

You have already given us Seychelles, and I pointed out a little problem with the one: it has a population of around 97,000, equivalent to a small suburb of Nairobi.   That hardly seems like the basis of a model like Kenya.    Mauritius's per-capita GPD of $9K is certainly better than that of Kenya, but as a "model" for Kenya, it's Estonia-like population makes it unsuitable: around 1.3 million, the population of Mombasa (not even Nairobi).

4) Kenya service sectors is advanced for it's level of development (or underdevelopment) and it one of the things it has going for it. It the reason despite not having any minerals - it fourth biggest economy in sub-saharan Africa - and probably the largest non-mineral economy in sub-sahara Africa - South Africa,Angola,Sudan,Nigeria and even TZ across the board - all have diamond,oil, gold and name it.

I have no reason to disagree with any of that.

She can easily add 4% if she improves on efficiency and productivity of existing sectors(2%) - and get 2% from SGR like mega projects. She can do it.

We seem to have quite a few problems with the existing 1.5%, and you are already up to 2%?   

[Kim Jong-Un's Pajama Pants]

This manufacturing vs services debate reminds me of Ndii human resources vs Ndemo infrastructure argument. They are not zerosum or mutually exclusive. If you build SGR or educate folks, they will work in all sectors - agriculture, manufacturing, services and all shades in between. The reason why developed economies have a 2% agric, 20% industry, 75% services mix is because they have humongous service sectors, not a stop in agric or manufacturing. The US exports MANY softwares & ICTs - are they not manufactured? They just draw a distinction for statistical purposes, nothing is cast in stone and there is no preference. It is like AirBnB: a "service" that enables people to book/lease apartments worldwide. This new market generates billions of dollars which can be service, tourism, real estate or construction.

We have a composite model and we are not going to pick among the straightjackets. We innovate, divest, divesify, etc as we go along.

Indeed it's not a simple case of one or the other.  In a society like Kenya, encouraging manufacturing does not undermine any other sector as far as I can tell.  veritas best captures some of the reasons knowledge and services are huge.  There is more value in finding new avenues to sell actual things.

I don't consider a country of 40 million plus a candidate for a specialist economy along the lines of places like Bahamas, Monaco among others.

[RV Pundit]

Hypothetically that is true. We all want to have diversified economy. But you've to look at kenya and recommend what is actually achievable and doable. What are kenya's comparative advantages? What is kenya good in? What areas can it actually get some traction. That is for me is the big question. You can't just say go big on manufacturing or ICT service without doing a quick SWOT analysis. I don't for instance see us doing any serious manufacturing until we sort out power and wages...we are doing 3-4 times what Ethiopia is offering.

This manufacturing vs services debate reminds me of Ndii human resources vs Ndemo infrastructure argument. They are not zerosum or mutually exclusive. If you build SGR or educate folks, they will work in all sectors - agriculture, manufacturing, services and all shades in between. The reason why developed economies have a 2% agric, 20% industry, 75% services mix is because they have humongous service sectors, not a stop in agric or manufacturing. The US exports MANY softwares & ICTs - are they not manufactured? They just draw a distinction for statistical purposes, nothing is cast in stone and there is no preference. It is like AirBnB: a "service" that enables people to book/lease apartments worldwide. This new market generates billions of dollars which can be service, tourism, real estate or construction.

We have a composite model and we are not going to pick among the straightjackets. We innovate, divest, divesify, etc as we go along.

Indeed it's not a simple case of one or the other.  In a society like Kenya, encouraging manufacturing does not undermine any other sector as far as I can tell.  veritas best captures some of the reasons knowledge and services are huge.  There is more value in finding new avenues to sell actual things.

I don't consider a country of 40 million plus a candidate for a specialist economy along the lines of places like Bahamas, Monaco among others.