Management Magazine http://management-africa.co.ke Wed, 13 Dec 2017 12:58:51 +0000 en-US hourly 1 How technology is disrupting manufacturing-led development http://management-africa.co.ke/technology-disrupting-manufacturing-led-development/ http://management-africa.co.ke/technology-disrupting-manufacturing-led-development/#respond Wed, 13 Dec 2017 12:58:51 +0000 http://management-africa.co.ke/?p=4386 Advances in technology and changing trade patterns are affecting opportunities for export-led manufacturing. By JAMES RATEMO Technology and globalization are changing how manufacturing contributes to development, and the sector should be braced for massive disruption, a World Bank Group report indicates. The report, Trouble in the Making? The Future of Manufacturing-Led Development indicates that changing technologies and shifting globalization patterns are destined to reshape manufacturing-led development strategies, and we will need to embrace this change rather than fear it. “Trade is slowing. Global value chains remain concentrated among a relatively...

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Advances in technology and changing trade patterns are affecting opportunities for export-led manufacturing.

By JAMES RATEMO

Technology and globalization are changing how manufacturing contributes to development, and the sector should be braced for massive disruption, a World Bank Group report indicates.

The report, Trouble in the Making? The Future of Manufacturing-Led Development indicates that changing technologies and shifting globalization patterns are destined to reshape manufacturing-led development strategies, and we will need to embrace this change rather than fear it.

“Trade is slowing. Global value chains remain concentrated among a relatively small number of countries. Smart automation, advanced robotics, 3-D printing and other advances being incorporated by global manufacturers of cars, electronics, apparel, consumer and other goods are shifting how countries and firms compete for production,” reads the report in part.

The report released on September 20, 2017, shows that advances in technology and changing trade patterns are affecting opportunities for export-led manufacturing.

However, while these shifts threaten significant disruptions in future employment, particularly for low-skilled workers, they also offer opportunities. Policymakers will therefore need to adjust their approach to spurring job creation in manufacturing and ready workers for the jobs of the future.

“In the past, the manufacturing sector created jobs for unskilled workers and increased productivity. In the future, developing countries will need to update their policies along with their infrastructure, firm capabilities and job creation strategies to meet the demands of a more technologically advanced world,” said Anabel Gonzalez, the World Bank Group’s Senior Director for Trade & Competitiveness.

What it takes to be competitive

It is apparent new technologies and evolving globalization patterns are changing what it takes to be competitive, and therefore the feasibility of manufacturing-led development in the future.

The end of the commodities super-cycle, together with China’s production upgrading, provides new opportunities for export-led manufacturing in countries hitherto less involved in global value chains (GVCs).

At the same time, weak import demand resulting from the trade slowdown following the 2008 global financial crisis, the declining trade, and China’s continued expansion at even the lower end of GVCs present new challenges.

According to the report, the potential for low- and middle-income economies to boost their manufacturing exports in the future, and leverage them for growth, is also affected by how emerging technologies change globalization patterns, and this could vary substantially across countries with different levels of development in the manufacturing sector. Faster diffusion of ICT and related developments in the Internet of Things (IoT) could strengthen the current structure of GVCs.

But greater digitalization in smart factories and advanced robotics might reduce the importance of low labour costs in determining comparative advantage, laying greater emphasis on skills, complementary services, and other aspects of firm ecosystems.

Furthermore, 3-D printing may make it feasible to produce in smaller batches with neither an emphasis on scale nor a larger ecosystem of suppliers—which may be particularly useful for countries that currently have limited manufacturing bases.

“These technologies associated with Industry 4.0 emphasize the increasing servicification of manufacturing driven, in large part, by the growing importance of data in production processes,” says the report.

Ray of hope

Despite emerging technologies and changing globalization patterns, some manufacturing industries will still remain feasible entry points for less industrialized countries, including some industries that are labour-intensive. They include a range of commodity-based processing manufacturers that are less automated, less concentrated in terms of export locations, and less intensive in the use of services than other types of manufacturers.

Despite a rising bar to be globally competitive, the report reveals, countries with low unit labour costs could also remain cost-effective in the production of labour-intensive tradables such as textiles, garments, and footwear, given the limited automation in that subsector thus far.

Further, domestic or regional markets for lower-quality, lower-price manufactures across industries will also likely remain viable.

“…for manufacturing sectors that are more automated and where trade is more concentrated, although technology may be disruptive, the inability to use it may be even more disruptive. If the new technologies deliver significant efficiency gains and goods are traded, it will be difficult to maintain domestic production using processes that do not take advantage of new technologies,” reads the report.

That a country has low ICT use today does not mean its jobs will not be affected; it may mean that even more jobs are not created or even lost. Therefore, firms in less industrialized countries may need to adopt labour-saving technologies that raise efficiency to remain globally competitive.

The report says doomsday scenarios about technological unemployment are overblown because, as in the past, new technologies could also lead to greater job creation.

The Kenyan mobile money revolution- a case in point

New technologies can improve access to financial services in ways that expand opportunities for manufacturing, including in countries with a relatively weak business environment.

Mobile payment systems are an increasingly intricate part of ensuring services can be embedded in goods—and that trade in digital services can be embodied in the making of goods.

Beyond the inclusive and governance benefits of mobile money, it will be an important complement to the manufacturing agenda. The growing number of countries following early examples such as Kenya’s M-Pesa shows the wide applicability of this approach.

New technologies are also being used to develop new business forms, with implications for competition, contracting, and financial services to support new manufacturing arrangements.

In a nut shell, therefore, managerial and organizational practices that strengthen firm capabilities will be needed to facilitate the adoption of new technologies in production processes.

Worries about human labour becoming obsolete, overrated

Concerns about the wide-scale displacement of workers by new technologies—an expression referred to as technological unemployment date back as far as the industrial revolution. Yet, two centuries of automation and technological progress have not made human labour obsolete.

New technologies and changing globalization patterns do not spell the end of manufacturing export-led development, but they do make it a less powerful strategy than before.

That the faster growth and job-creating effect of technological change has proven to be greater than any labour displacement effect. Still, automation of some tasks for some occupations has improved productivity, thereby lowering output prices and boosting product and labour demand.

Therefore, manufacturing will likely continue to deliver on productivity, scale, trade, and innovation, but just not with the same number of jobs. So, its unique desirability in terms of the twin wins of productivity and jobs is eroding.

The report concludes that the overall impact of change depends critically on what countries can do to enable their firms (including new ones) add value and create jobs in the new and evolving environment.

Email: jratemo@gmail.com

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Track job market trends to know your worth http://management-africa.co.ke/track-job-market-trends-know-worth/ http://management-africa.co.ke/track-job-market-trends-know-worth/#respond Wed, 13 Dec 2017 12:43:38 +0000 http://management-africa.co.ke/?p=4383 The inability to determine how much you are worth makes it difficult to ask for the salary or responsibility that will enable you grow within your profession. By EDNA MARITIM Determining your value – either to a current employer or a potential new one – is an important part of developing a long-lasting and rewarding career. The inability to determine how much you are worth makes it difficult to ask for the salary or responsibility that will enable you grow within your profession. There is an old saying that describes...

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The inability to determine how much you are worth makes it difficult to ask for the salary or responsibility that will enable you grow within your profession.

By EDNA MARITIM

Determining your value – either to a current employer or a potential new one – is an important part of developing a long-lasting and rewarding career. The inability to determine how much you are worth makes it difficult to ask for the salary or responsibility that will enable you grow within your profession. There is an old saying that describes this issue. “You are never paid what you are worth; you are paid what you can negotiate for.”

Human capital is an asset in all organisations, one that is imperative for them to make more money and further their goals. It is thus important to understand how a company determines the value that you provide. Any organisation can accurately measure the various expenses spent on an employee using quantifiable data like salary, recruiting expenditures, training costs or the benefits package. All these are tangible elements factored in when determining how much a company should ideally pay you. There are also other factors based on the internal metrics of an organisation. For you the employee, however, salary information is the most ideal piece of data that will determine your worth to any employer in the market. In Kenya, finding market data that highlights the market rate for an individual based on the location, their experience and position is extremely difficult.

Consider this example: you have worked at a company for about five years and throughout that time, you have grown an exceptional team, delivered results and given your time. But at this point, you feel like you are ready to move, discover a new job, take part in a new training, find a new challenge, push your career trajectory a bit further and so you begin to apply for jobs. Usually, this happens passively. You don’t really understand your market value, so during that upcoming interview when negotiating for your salary, where are you going to begin?

Know market trends

You need data about the current market. Staying up to date on market trends will allow you to successfully negotiate for that training you want to take part in, the salary you want or that pay rise.

Data Fintech and Brighter Monday have developed a salary benchmarks service across several African countries that helps both organisations and job seekers to keep up to date with job market trends. The analysis uses metrics that allow one to keep track of market evolution for multiple positions and industries. These include, but are not limited to, median salary, job creation, salary level and competition pressure. This information serves two purposes. First, you can verify you are being paid what you are worth and secondly, it can inspire you to take steps to become qualified for some of the higher-paying roles in the industry.

  1. Median salary:

This is the salary that is in the ‘middle’ when ordered from the highest paying salary to the lowest paying salary. The median salary evolution allows you to know if employers are creating more or less high paying jobs.

2. Evolution of job creation:

This looks at the average number of jobs created every month in your area and the various levels of expertise. If the number of jobs created on average per month is high in your job category, then it means demand for talent is high and one can negotiate for better packages. Conversely, if the number of jobs created is low, demand for talent is low and negotiating for better packages becomes harder.

3. Salary levels:

These are salary ranges based on your position/experience in the market; that is senior, intermediate, junior and entry. In the legal sector for example, as of June 2017, junior level salaries ranged between KSh32,500 and KSh67,500.

4. Competition pressure:

This refers to the average number of job applications per job opening. For example, if there are 30 lawyers applying for five positions, then competition pressure would be high. Thus, negotiating for a higher salary would be difficult because there is a larger number of people ready to take the job. However, if there were five lawyers and 10 open positions then competition pressure is low. Thus, negotiating for a higher salary would be manageable as there is a shortage of expertise in the market.

In the latest Brighter Monday Job market July 2017 report for example, the legal job category performed best. A total of 29 jobs were created in the market place in June 2017 with most of the jobs created commanding senior salaries. Legal salaries also experienced a jump, with the median salary recording a 36.57 per cent growth to KSh118,362. The increase in median salary can be explained by higher wages and the creation of more qualified jobs in the market place.

For anyone working in the legal sector, this would be good news as there is an increase in both jobs and the median salaries. This would mean that they would have an idea of how much to negotiate for when applying for a job. The fact that there was also an increase in the number of jobs created means that if they had the needed qualifications, getting a job would be fairly easy.

Ultimately, the bottom line is simple; knowing your value by keeping track of job market trends will not only ensure financial satisfaction, but will also allow you to know what steps you need to take to move to the next level of your professional career.

Email: emaritim@data-fintech.com

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Your personal brand strategy in 9 steps http://management-africa.co.ke/personal-brand-strategy-9-steps/ http://management-africa.co.ke/personal-brand-strategy-9-steps/#respond Wed, 13 Dec 2017 12:28:28 +0000 http://management-africa.co.ke/?p=4380 Personal branding takes time, hard work, resilience, character and belief in self. By WANJIRU KANG’ARA “This is a very complicated world; it’s a very noisy world. And we’re not going to get a chance to get people to remember much about us. No company is. And so we have to be really clear on what we want them to know about us.” These are succinct words spoken by Steve Jobs to the Apple team. He was talking about the company’s brand marketing “Think Different” campaign, but in essence, he defined...

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Personal branding takes time, hard work, resilience, character and belief in self.

By WANJIRU KANG’ARA

“This is a very complicated world; it’s a very noisy world. And we’re not going to get a chance to get people to remember much about us. No company is. And so we have to be really clear on what we want them to know about us.” These are succinct words spoken by Steve Jobs to the Apple team. He was talking about the company’s brand marketing “Think Different” campaign, but in essence, he defined branding. Steve Jobs is a super brand, who like other global personal brands, lived ahead of his time. Coincidentally, he honoured these greats in the “Think Different” campaign.

Personal branding is essential in today’s work place. The job market is crowded with qualified, skilled and experienced professionals. So, how does a professional stand out from the crowd?

Here are nine tips to help you build your personal brand

1. Know yourself

This will help you build a brand that you will resonate with. Identify your personality type and the values you stand by. Reflect on your actions and decisions in the recent past. What do you value most in life? What is important to you in the short and long term? Pinpoint your strengths and weaknesses. Capitalise on the former and address the latter. If in doubt, take a personality test. Read “Quiet: The Power of Introverts in a World That Can’t Stop Talking”, a profound book authored by Susan Cain. It contains invaluable insights on personality types. A strength-profiling test would also add value. As Stephen Covey says, “Seek first to understand, and then to be understood,” then define and start building your brand.

2. Be authentic

Fake products are produced with the intention of taking advantage of superior original products. Fakes are cheap and don’t last. Build a genuine brand that will resonate with the market place. Authentic brands last and they fetch premium value.

3. Be unique

Distinctness means you are different from the crowd. Uniqueness is scarce and is easily noticed. Being different will give you value because uniqueness is not found everywhere.

4. Be valuable

In doing so, project that which is positive and add value to the world. In a 2017 research carried out by Meaningful Brands, 75 per cent of the more than 300,000 people interviewed expect brands to make more contribution to their wellbeing and quality of life. Yet, only 40 per cent believe brands are doing so. People wouldn’t care if 74 per cent of the brands they use just disappeared. Be a meaningful brand, and the world will remember you. Like product brands, personal brands must be valuable. In 2009, after news broke that Jobs health was failing, the company’s stock fell. Be as valuable as Steve Jobs.

Notably, prior to his exit from Apple in 1985, Steve Jobs was described by some of the company’s executives as “uncontrollable” and a “zealot” – damaging words which could destroy a personal brand in a second. In his absence, the company made losses and Windows 95 was on everybody’s mouth. Smelling doom, Apple’s board decided the “zealot” was just what it needed. Jobs was an invaluable asset and he rejoined the company in 1997 to ignite a global revolution. That is Steve Job’s turbulent journey as he built his personal brand, which is best described by the slogan “Think different”. Personal branding takes time, hard work, resilience, character and belief in self.

5. Be visible

Share your brand with the world. Let the world know who you are through various avenues. Online platforms like LinkedIn will enhance your personal brand. Blogging on subject matters that relate to your profession will give you an edge. Own a website and use social media to boost your brand. Remember that intelligent content will be your selling point.

6. Be consistent, constant and clear

Front the same values, image and character through and through. In the long run your brand will be believable. When Nike entered the shoe market, they used the Swoosh alongside the slogan “Just do it”. They have since dropped the slogan. Their customers spot the Swoosh and know that is Nike. The Swoosh is a lifestyle, not a slogan.

7. Create brand awareness

This is achievable through networking. Join professional bodies to connect with the industry. Publish articles in the industry magazine and share them on social media. Give opinions in leading newspapers and publish papers in recognized journals.

8. Develop a selling proposition

In as far as nation brands are concerned, Japan is known for technology while the strength of Brand Germany is in its manufacturing prowess. The German industry is known for its efficiency and reliability. In personal branding, the goal is to differentiate yourself from others. What skills and qualities set you apart from others? What perceptions do people have about you? What tag line describes you?

9. Deliver your brand promise

With no shadow of a doubt, Apple can proudly say that they “think different”. Customers experience the Apple brand promise through their unique distinct products. They include Apple Watch, Apple Pay, Apple Pencil, iPad and Siri. Ensure you deliver your personal brand promise to the world.

Remember, the first man gets the oyster, the second man gets the shell. In the words of Confucius “the will to win, the desire to succeed, the urge to reach your full potential… these are keys that will unlock the door to personal excellence.” As ZigZiglar said “you were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win.

Wanjiru Kang’ara is a communications specialist, trainer and writer, highly skilled in brand management, public relations and customer management

Email: wanjirukangara@hotmail.com

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It’s time to decentralise our energy strategy http://management-africa.co.ke/time-decentralise-energy-strategy/ http://management-africa.co.ke/time-decentralise-energy-strategy/#respond Mon, 11 Dec 2017 15:14:18 +0000 http://management-africa.co.ke/?p=4377 Despite ranking high in the provision of green energy, energy security and environmental dimensions, it performs poorly in energy equity. By REHEMA KHIMULU Kenya leads Africa in green energy. Approximately 60 per cent of the grid is powered by renewables. There still lies a great potential that has not been harnessed yet. For instance, potential for large hydropower is estimated at 6,000MW with only half of this online. Small hydro power projects have a potential for 3,000MW of which only 30MW has been developed. In 2014, it was stated that...

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Despite ranking high in the provision of green energy, energy security and environmental dimensions, it performs poorly in energy equity.

By REHEMA KHIMULU

Kenya leads Africa in green energy. Approximately 60 per cent of the grid is powered by renewables. There still lies a great potential that has not been harnessed yet. For instance, potential for large hydropower is estimated at 6,000MW with only half of this online. Small hydro power projects have a potential for 3,000MW of which only 30MW has been developed.

In 2014, it was stated that Kenya would generate more than half of its electricity from solar power through the construction of solar power plants. Pay As You Go (PAYG) systems have greatly transformed families and small holder farmers and improved business operations in Kenya. Kenya’s energy policy maintains that as long as the rural economy remains subsistence, there will be continued use of wood fuel. This may change if the economy is transformed into a highly productive one.

Kenya’s green energy is majorly characterised by geothermal, hydro, solar, wind, biomass, biofuels, biogas and municipal waste. Ocean energy, biomass gasification, bio-refinery technologies and concentrating solar power have not been commercialised yet. A rapid scaling up of this huge potential will aid in accelerating the country’s industrial transformation.

The Energy Trilemma

Despite ranking high in the provision of green energy, Kenya ranks 107 out of 125 in the World Energy Trilemma Index. This, according to the world energy council, details a score of BDB, which translates to good performance in energy security and environmental dimensions but a balanced score of D in energy equity. Denmark ranks highest of the best with a AAA score while Tunisia, Algeria, Gabon, Morocco, South Africa Botswana, Namibia and Ghana are the only African countries in the top 100.

Kenya’s goal to be a middle income country by 2030 has spurred growth in the economy, including a growing set of highly skilled and talented population. The devolved government is aiding to decentralise the pressures of the Capital, spurring growth in other urban and peri-urban towns. Kenya’s urban development may be characterised as growth oriented, necessitating a more sustainable approach in urban energy strategy that combines energy, environment, economy and society. Advancement in technology and green energy continue to leap frog and disrupt traditional methods.

One of 10 disruptive energy technologies as spelled out by a McKinsey report is digital power conversion. It challenges to shift us from the expensive and cumbersome transformers of the 19th Century to the high-speed, very reliable digital switches made of silicon carbide and gallium nitride, which use 90 per cent less energy and take up about one per cent of the space.

A green economy

The World Bank ranks Kenya at position 92 in the Cost of Doing Business index compared to Rwanda at 56 in 2016. According to the Ministry of Energy and Petroleum, the cost of energy is playing a huge role in this competing dynamics.

How Kenya goes about greening its economy and building climate resilience relies largely on the commitment of the actors pursuing implementation of the action plans already in place. We can borrow lessons from Ethiopia’s unique Climate Resilient Green Economy Strategy (CRGE).

Currently, measures to decentralise energy planning and management at the county level are being rolled out, with hoped for benefits for local communities.

Learning from South Korea

Following the implementation of the Green Growth Strategy of 2008 in South Korea, the experience informs that making quick gains from the top-down approach in deploying urban green growth strategies has certain drawbacks. This was due to a lack of reinforcement via bottom up approaches through local authorities and community involvement.

A study by the Kenya Institute of Public Policy Research and Analysis (KIPPRA) revealed projections under different scenarios that vary from optimistic, business as usual and pessimistic up till 2030. Green energy has the potential to actualise the desired range within the county governments’ master plans.

Therein lies numerous opportunities in tapping into various global climate financing platforms. An upcoming research estimates that out of the USD391 billion set aside, only USD 2.67 billion has been approved for 458 projects and programmes throughout sub-Saharan African countries, translating to 0.68 per cent of the total. The East African Community regional status report of 2016 by REN21 denotes that in 2014, the total bilateral climate-related overseas development assistance amounted to USD135.8 million. This is a huge financing opportunity that Kenya can use. A faster route would be actively engaging SMEs and upcoming startups in consolidating their efforts and ideas towards harnessing this opportunity. County governments can also embark on this opportunity as independent entities.

Rehema Khimulu is a specialist in Energy Policy and holds a Masters in Energy Policy as a pioneer at the newly established African Union’s Pan African University Institute of Water and Energy Sciences (PAUWES).

Email: rehemakimulu22@gmail.com

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Kenya’s energy landscape in need of disruption http://management-africa.co.ke/kenyas-energy-landscape-need-disruption/ http://management-africa.co.ke/kenyas-energy-landscape-need-disruption/#respond Mon, 11 Dec 2017 15:01:04 +0000 http://management-africa.co.ke/?p=4374 Having two massive, top-heavy State corporations controlling access to electricity in the country just invites corruption and inefficiency. By PETER WANYONYI Kenya, we have been told frequently, is an energy-starved country. We do not produce anywhere near the amount of energy we need to keep the lights on. A trip through any of Kenya’s upcountry towns and villages can be instructive in assessing our energy scarcity: in most places, the setting of the sun marks the end of the day. A few keronese lamps are lit to illuminate the evening...

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Having two massive, top-heavy State corporations controlling access to electricity in the country just invites corruption and inefficiency.

By PETER WANYONYI

Kenya, we have been told frequently, is an energy-starved country. We do not produce anywhere near the amount of energy we need to keep the lights on. A trip through any of Kenya’s upcountry towns and villages can be instructive in assessing our energy scarcity: in most places, the setting of the sun marks the end of the day. A few keronese lamps are lit to illuminate the evening meal, but these are soon extinguished and Kenya resigns itself to the deep, dark night. This is not unique to us in Africa, though, as a look at night-time photos of Africa will show – it’s not for nothing that the moniker “the dark continent” has stuck. Such photos show a few glimmers of light in South Africa and Egypt, and a handful of blobs of light where the respective capital cities of the continent’s countries are, but the rest is a deep, inky darkness. Lighting up Africa has continued to elude the continent.

Kenya, like other African countries, lagged far behind the West – and Asia – in setting up modern energy generating infrastructure and facilities. Through a mix of historical corruption and similar governance issues, Kenya ended up with entrenched, government-owned monopolies in the energy-generation and distribution sectors, and these were frequently driven not by a profit motive, but by political objectives. The result was a system that we are still saddled with, and which is not only grossly inefficient and ruinously expensive, but one that is inherently unsustainable and incapable of meeting the expanding energy needs of our huge and growing population, currently estimated at over 45 million people.

Existing on monopolies

Up to 77 per cent of the total energy consumed in Kenya is from biomass, mainly wood. This has had a serious effect on the environment. It is also an indictment of Kenyan energy policy that, in a country with 13 hours of sunshine almost every day of the year, we still continue to cut down trees for energy use at home and to supply urban areas with charcoal for cooking.

This situation is owed largely to the monolithic focus of Kenya’s State-owned energy monopolies on “big” energy projects.

While KenGen and its related State-owned corporations have tried to go into a diversified energy mix in Kenya, they have still failed to reach the majority of Kenyans. Just five per cent of rural Kenya has access to electricity, for example, and despite all sorts of fudged numbers we now know that barely 25 per cent of Kenyans across the country have access to electricity. Even these 25 per cent have to contend with daily blackouts, sometimes lasting over a day or two, as the Kenya Power distribution monopoly struggles to keep its creaking electricity network up and running.

This is obviously unsustainable and is holding Kenya back. However, as was the case with the telecommunications sector, the focus on KenGen and Kenya Power is in fact the wrong approach. Having two massive, top-heavy State corporations controlling access to electricity in the country just invites corruption and inefficiency.

Much-needed investment

Instead, Kenyan policymakers should look to disruptive approaches that break the energy grid into small, easily swallowed chunks. They could begin by breaking up the transmission network and selling it off, in a manner not unlike the sale of telecommunications transmission frequencies.

There’s no good reason why the electricity transmission network in Nairobi should be owned by the same company as that in, say, Webuye. Breaking up the network and privatising it invites much-needed investment into transmission facilities, a factor that holds Kenya Power back from fixing its network: the top-heavy nature of the company means that corruption and inefficiency eat up most funds meant for network expansion and repairs. Smaller, private companies would solve this first hurdle.

Power generation has the same problem. At the moment, our energy mix is whatever KenGen decides it will be. This is a massive responsibility for one company, and one which the company has spectacularly failed to fulfil with any measure of success. In fact, it is now clear that it would be far better for the generation to also be sliced and diced in the same manner as the distribution. A basic hydroelectric dam on a small permanent river might make no sense when KenGen considers it from a national perspective, but it might be exactly what the small town of Rongo needs to meet all of its energy needs.

Decentralised energy mix

A decentralised approach of this sort also necessarily creates a varied and therefore more stable national energy mix: while hydroelectric generation would suite water-rich Western Kenya, for example, small coal-fired plants would suit those towns in Eastern Kenya sitting on small to medium-sized coal deposits that are too little to power a national-scale energy plant, but which would suffice to supply a town the size of Machakos with power for the next two or three decades.

The same decentralised approach can be used to equip houses in most of Kenya with solar panels, as well as to tap some of the smaller geothermal spots around the country. Big, monolithic energy approaches have failed us for over 100 years: to succeed, we must copy the model we used to succeed in telecommunications: go small, target the small consumer, look for affordable mixes. There’s no point attempting to boil the ocean. Small is good and sustainable – and efficient.

Peter Wanyonyi works for the New Zealand government as a senior solutions architect.

Email: pwanyonyi@gmail.com

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A model for energy sustainability http://management-africa.co.ke/model-energy-sustainability/ http://management-africa.co.ke/model-energy-sustainability/#respond Mon, 11 Dec 2017 14:52:42 +0000 http://management-africa.co.ke/?p=4370 Energy performance contracting helps companies implement sustainable energy technologies in their processes without having to go through the investment risks. By FENWICKS SHOMBE The high cost of doing business in the 21st Century has mediated new thinking in terms of use of sustainable energy. The survival of many businesses partly relies on their sustainable use of energy and how agile they are in adoption of emergent renewable energy technologies. Some of the sustainable energy initiatives include the use of biomass boilers for generation of steam, deployment of energy efficiency initiatives...

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Energy performance contracting helps companies implement sustainable energy technologies in their processes without having to go through the investment risks.

By FENWICKS SHOMBE

The high cost of doing business in the 21st Century has mediated new thinking in terms of use of sustainable energy. The survival of many businesses partly relies on their sustainable use of energy and how agile they are in adoption of emergent renewable energy technologies. Some of the sustainable energy initiatives include the use of biomass boilers for generation of steam, deployment of energy efficiency initiatives like use of energy-saving bulbs for lighting, use of solar water heating technologies and carrying out energy use audits.

Even as businesses implement the sustainable energy initiatives, they still have to meet the investors’ bottom-line, operate within provisioned budgets and give priority to their most pressing capital and operating expense needs. In this context therefore, most business cite financial constraints as the primary reason that hinders them from adopting the initiatives.

Energy performance contracting is an emerging business model that can help companies implement sustainable energy technologies in their processes without having to go through the investment risks.

Assessing energy

In energy performance contracting, service providers, known as energy service companies (ESCOs), assume the responsibility of carrying out energy use assessment, energy project planning, financing and implementing the sustainable energy projects. As well as implementation, the ESCOs maintain the installed sustainable energy technologies on behalf of the businesses.

These service companies became prevalent in Europe and North America in 2000s. This was in response to the rise of energy costs in industries.

The energy performance contracting model was adopted by ESCOs as a way of allaying doubts about the profitability of sustainable energy measures.

Use of technology

Sustainable energy technologies can be capital intensive. Risk-averse businesses might not opt to pursue such technologies on their own. ESCOs come in handy. They help businesses by identifying and carrying out an assessment of opportunities for sustainable energy. For example, an ESCO can evaluate lighting needs in a shopping mall, then come up with a solution to install light emitting diodes (LEDs) on behalf of the client. This solution will include managing the project from design, installation, training of staff and monitoring the savings.

How do ESCOs earn their pay then? Sustainable energy technologies are, in the fullness of time, profitable. The sustainability is in terms of finance and costs. ESCOs guarantee that the projects they implement will have financial savings within a specified period. The avoided energy costs are used to pay them back. In some arrangements, the business can share the capital costs with the service company.    

After a specific period, when the service company has regained its capital with interest, the technology can either be left for the business to operate, or the ESCO can continue with the maintenance. An ESCO therefore operates like a credit facility but absolves the borrower from the project risk.

Weighing the benefits and challenges

Businesses can significantly benefit from partnering with ESCOs to adopt more sustainable energy technologies and conserve energy. The businesses transfer the aspect of project risk management to the service company and help bridge the technology gap in implementing such projects. Given that the project is based on performance contracting, the ESCOs are under pressure to deliver savings, proceeds of which are used to recoup their investment.

There are inherent challenges of energy performance contracting and players have to find ways of dealing with them. The business and the ESCO have to prove and agree on the savings realised after the project has been implemented. This requires prudent measurements and verification methods.

Measurement and verification is a systematic method of analysing the benefits accruing from an energy conservation project. Many tools are employed in this method and there may be differences in the way the ESCO and the business approach it. This can however be mitigated by setting the performance metrics during contract negotiation. Given that ESCOs get their returns from the savings realised after project implementation, they may tend to avoid high risk projects. ESCOs have a propensity to go for projects whose returns they are sure of, that is, projects that are predicted to have a high rate of success.

There are no outright ESCOs in Kenya although some companies offer energy solutions based on energy performance contracting. Some of the services offered include installation and maintenance of biomass boilers for hotels and factories, installation of solar photovoltaic power plants, installation of power factor correction banks and stabilisers, and retrofit of lighting systems, where energy saving bulbs are used to replace fluorescent tubes.

There is therefore need for financial institutions and other interested companies to explore the situation and provide the needed help to conserve energy in industries. Banks can come up with business divisions that can fully focus on energy performance contracting as a way of expanding their credit market.

Fenwicks Shombe is a mechanical engineer, a certified energy manager and a PhD Candidate in Energy Technology at JKUAT. 

Email: fenshombe@gmail.com

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Power to all by 2020 http://management-africa.co.ke/power-to-all-by-2020/ http://management-africa.co.ke/power-to-all-by-2020/#respond Mon, 11 Dec 2017 14:28:34 +0000 http://management-africa.co.ke/?p=4367 Access to electricity is a central building block for socio-economic development. It empowers communities to increase income and productivity, gain access to healthcare and education and enhance water and food security.  By FAITH KOSGEI To end all forms of poverty, and fight inequalities, the United Nations adopted 17 Sustainable Development Goals (SDGs) in 2016. One of the goals is universal access to electricity by 2030. Kenya has brought this forward to year 2020. If Kenya achieves this goal, it will have electrified faster than the US, which took more than...

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Access to electricity is a central building block for socio-economic development. It empowers communities to increase income and productivity, gain access to healthcare and education and enhance water and food security. 

By FAITH KOSGEI

To end all forms of poverty, and fight inequalities, the United Nations adopted 17 Sustainable Development Goals (SDGs) in 2016. One of the goals is universal access to electricity by 2030. Kenya has brought this forward to year 2020. If Kenya achieves this goal, it will have electrified faster than the US, which took more than two decades before achieving 95 per cent connectivity in rural America. Kenya aims to achieve the same in seven years. This is ambitious.

“In three years, we have more than doubled households connected to the national grid from 2.2million in 2013 to 5.05million,” Mr Charles Keter, the Cabinet Secretary for Energy told a conference in Nairobi recently. “We have essentially achieved in three years what we had not achieved in 90 years,” the minister added.

Some commentators question the government’s rational in prioritising access to electricity. These critics say poor Kenyans have more pressing priorities. Usually, such criticism comes from those who already have access to electricity.

Electricity is a lifestyle changer and it is more affordable than other sources of energy especially for lighting and other light domestic uses such as charging cell phones, radio and TV sets.

As an example, a shopkeeper in rural Kenya charges KSh 10 to charge a cellphone for a customer. A customer will charge a phone at least twice a week. That works to KSh 20 a week or KSh80 in a month. A litre of kerosene goes for about KSh65 according to the latest price index by the Energy Regulatory Commission (ERC). The same customer will buy kerosene worth at least KSh 200 per month to light a tin lamp. That works to an energy bill of KSh280. If the same customer has to buy batteries for his radio, his monthly energy bill will be about KSh400 per month. This is more than what an average low income household spends on electricity in a month.

Apart from saving on money, electricity lighting provides a better and healthier source of light compared to kerosene powered lamps or firewood which emit smoke and light at the same time.

Access to electricity is a central building block for socio-economic development. It empowers communities to increase income and productivity, gain access to healthcare and education, enhance water and food security and improve general well-being. Electricity enables economic activities such as chicken farming which requires lighting 24 hours in a day and dairy farming where farms can use machines to milk cows. It also improves green house farming because farmers can use sensors to monitor temperature, humidity and other variables in a green house.

An expensive affair

To achieve universal access, Kenya has to overcome the challenge of extending its national electricity grid to the entire country. This is a very expensive undertaking. To go around this, the government has initiated the Kenya Off-Grid Solar Access Project (KOSAP). The KSh15 billion project will be implemented in 14 arid counties which make up 72 per cent of the country’s land mass but where only 20 per cent of Kenyans live.

KOSAP has a mini-grid component for communities. The mini-grids will be developed through public-private-partnerships where private investors and public funds will finance the mini-grids. The grids will be powered by a combination of solar panels, battery storage and thermal units running on diesel. Another component is stand alone solar system for households. The component will provide incentives for solar off grid companies currently operating in more densely populated areas to expand to undeserved counties and provide services to the off-grid households in these countries.

A third component of KOSAP will support a transition from low-efficiency cooking stoves to cleaner, higher efficiency improved stoves. Other components include stand alone solar systems to energise community facilities such as boreholes, schools, health, and shopping centres. KOSAP is funded by the World Bank and will be implemented by Kenya Power, and the Rural Electrification Authority (REA) which are government agencies under the Ministry of Energy.

Another initiative to achieve universal access is the Last Mile project being implemented by Kenya Power. The project has so far been funded to the tune of KSh 62.5 billion by the African Development Bank (AfDB), the World Bank, the Agence France de development (AFD) & the European Union (EU), and the European Investment Bank (EIB).

In the first phase of the project, people living within 600 metres of existing transformers and are not connected to the grid will be connected in one operation – i.e. when the works on a specific transformer starts, all the people within that reach will be connected. This is called the transformer maximization phase. In other phases of the project, low voltage lines and new transformers will be installed.

Faith Kosgei is a Communication Officer at the State Department of Energy and Petroleum.

Email: fkosgei961@gmail.com

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Oil exploration, the need for skilled labour http://management-africa.co.ke/oil-exploration-need-skilled-labour/ http://management-africa.co.ke/oil-exploration-need-skilled-labour/#respond Mon, 11 Dec 2017 14:18:49 +0000 http://management-africa.co.ke/?p=4364 There is need for government and private sector players to put in place a common skills development policy and where possible upgrade skills from basic through support to core. By PATRICK OBATH Kenya is becoming an increasingly important attraction for companies interested in frontier exploration activities in extractives and more so in the oil and gas sector. Discoveries in the Tullow-operated blocks in northern Kenya led to more companies taking up exploration in all the available blocks. This development opens up opportunities to improve the numbers and quality of skilled...

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There is need for government and private sector players to put in place a common skills development policy and where possible upgrade skills from basic through support to core.

By PATRICK OBATH

Kenya is becoming an increasingly important attraction for companies interested in frontier exploration activities in extractives and more so in the oil and gas sector. Discoveries in the Tullow-operated blocks in northern Kenya led to more companies taking up exploration in all the available blocks. This development opens up opportunities to improve the numbers and quality of skilled labour that will service the sector.

Currently the oil industry has a sufficiently skilled labour pool in the downstream sector. This has been the mainstay of the oil industry since Independence, and the skills have kept up with the development of products and technology over the years.

The mid-stream sector has been present during the time Kenya Petroleum Refineries Limited (KPRL) was operating. Other supporting industries with similar though simpler operations are the lubricant blending plants, various sugar companies and vegetable oil conversion plants. Sadly, with the shutdown of KPRL the likelihood of maintaining skills in this sector will disappear and best place to grow a labour pool to supply operating upstream facilities will diminish.

The upstream sector – exploration and production of crude oil –presents the next opportunity in our economy but will need successful producing facilities with the full value chain to sustain any investment in training skilled labour to service the sector.

An opportunity to explore and produce

Labour uptake in the upstream sector can be divided into three service sections – core, support and basic.

The basic or indirect services include accommodation, camp management, security, transport, IT facilities, construction etc. These are freely available in the country and can be converted to service the oil and gas sector with very little additional investment. This has seen the quickest uptake.

The support or direct services get closer to the technical activities around exploration and production and include field construction, mud supply and management, engineering services, specialist trades, inspection, site management and so forth. These require specialist technical skills and these would not normally be available in an economy like Kenya where the main activities have been agricultural and value addition. The only area where such skills could have been developed from is the midstream or refining sector. The further challenge is that these services would only be required on an intermittent basis during the exploration and appraisal stages of the life of an oil prospect. It is thus more cost effective at this stage for the exploration companies to have all-inclusive contracts where the supplier of the service takes the risk. The supplier would traditionally be a company that has operations in many areas and can bring in the specialised skills for the short period and then deploy them in other areas instead of spending money training up local skills that they would then not use in the immediate future.

The core or specialist services are the ones that are directly used in the exploration, appraisal and production of oil and these include seismic services, Well services, Rig hire and operations and eventually well head services or Floating Production, Storage and Offloading Units (FPSO).

International availability of work

The seismic, well and rig hire services would be very intermittent requirements in Kenya during the early stages of the resource development especially at a time like now when the oil prices are globally depressed. They would be required both on and off shore thus differentiating the skills even more. Because of the way these facilities operate they would require international availability of work and thus precludes them initially being used as an opportunity for local skills development. As far as well head services and FPSOs are concerned, these present an opportunity for long tern skill developments as they would be in place for most of the life of the exploitation of the resource – once there are economically viable proven reserves.

In order to tap into this opportunity, the government and the sector players need to work to put in place a common skills development policy that works through the three service sectors and where possible or prudent, upgrade the skills from basic through support to core. This will mainly be in areas of construction and maintenance as well as general engineering. For these skills, the upgrading training can be given locally and the testing and certification done in conjunction with international industry approved agencies. Over time as the proven resource base expands, the certification agencies can be domiciled in the region to service the wider resource geography across Eastern Africa.

Specialist trades

In as far as the more specialised skills areas, these require longer periods to mature and the industry can partner with the selected local institutions across the East African region to support and design courses that will over time produce the graduate geologists, petroleum engineers and similar specialists as well as specialist trades like tool pushers, rig operators etc who will have the whole region to operate in.

For such a plan to be successful, the Eastern African countries where the resource exploration is currently very active – Kenya, Uganda, Tanzania, Mozambique Ethiopia and Somalia – need to come together to identify where they can work together to produce a common pool of expertise and where they can compete with each other. It is only with such co-operation that a well-structured and optimally funded skill development programme can succeed.

Patrick Obath has been in management positions in Shell and Shell advised companies in Kenya, UK, The Netherlands and Malaysia.

Email: pobath@gmail.com

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In the middle of the class http://management-africa.co.ke/in-the-middle-of-the-class/ http://management-africa.co.ke/in-the-middle-of-the-class/#respond Mon, 11 Dec 2017 14:08:53 +0000 http://management-africa.co.ke/?p=4360 Ipsos study shows there are over 100 million middle class Africans who spend more than USD400 million a day. By KAGENI MUSE Who is the Kenyan middle class? Where do they live? Where do they shop or take their children to school? What do they drive? Do they even exist or are they just an overhyped trend by marketers eyeing a slice of the growing African market? When we talk about the middle class in Kenya most people picture someone who is financially secure, owns a home in a secure...

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Ipsos study shows there are over 100 million middle class Africans who spend more than USD400 million a day.

By KAGENI MUSE

Who is the Kenyan middle class? Where do they live? Where do they shop or take their children to school? What do they drive? Do they even exist or are they just an overhyped trend by marketers eyeing a slice of the growing African market?

When we talk about the middle class in Kenya most people picture someone who is financially secure, owns a home in a secure gated estate, has two or three cars parked in the garage, takes holidays once in a while and whose children go to “group of schools.” We imagine them shopping with overloaded trolleys in malls and sipping exotic lattes at posh uptown joints as they catch up with business, friends and the latest trends in consumerism while peering over the latest iPhone or Samsung device.

Aggrey Oriwo, Ipsos East Africa Managing director notes that common notions about the African middle class is that they are financially secure and have good incomes, are educated, have access to services, own their homes and cars, live in small households and in comfort. He however notes that this is a wrong perception.

“We’ve been looking for middle class slightly above the middle class. One of the phone companies recently came up with a phone that’s truly middle class; it costs KSh 8,000. Any time you are looking for a phone that costs above KSh 20,000 you are affluent,” says Aggrey. “Most of our middle class are hustlers. They don’t depend on just one income. They don’t own houses,” he adds.

He blames this wrong definition of the middle class for the woes facing some multinationals that have scaled back their African operations or closed shop after overestimating demand growth by the middle class while going by the global definition.

Marks of a middle class

There are many definitions of the middle class. The Kenya National Bureau of Statistics puts middle class as a household that spends between KSh24,000 and KSh120,000 per month. The Institute of Economic Affairs (IEA) put the Kenyan middle class as those earning between KSh76,392 and KSh102, 429 in 2015. IEA found that there are about 272,569 middle class wage employees in Kenya, with another 74,337 wage employees taking home more than the middle class.

Homi Kharas, an economist with the World Bank, in 2011 defined the middle class as comprising households with per capita incomes between USD11 and USD110 per person per day. Martin Ravallion at the World Bank used a range of USD2 to USD13 purchasing power parity (PPP) prices. It is generally accepted that if you earn more than two dollars a day in a developing country, you have crossed the poverty line.

Others identify the middle class as the number of people whose income is between 25 per cent above and 25 per cent below the median income of the country, giving a statistical middle class of about 13 to 15 per cent of the global population, living on between USD4 and USD6.50 per day.

Nancy Birdsall of the Centre for Global Development argues that a sense of economic security is what makes someone middle class: “You’ve crossed the line when you no longer have to worry about falling back into poverty.”

Ipsos study on the African middle class says there are over 100 million middle class Africans who spend over USD400 million a day. “A dollar alone does not make a middle class,” says Aggrey. “A dollar is not the same everywhere,” he says pointing out the cost of a litre of petrol or beer varies widely across Africa affecting the cost of living.

According to the Ipsos study, the African middle class are employed, run a business or are in school and spend less than 75 per cent of their income on expenses such as rent, food and utilities. They have also made it past secondary school.

Aggrey points out various factors in favour of a growing African middle class, among them a growing population that offers a big market for local consumption, diaspora remittances that are a big boon to the continent, positive growth forecasts for a majority of countries like Cameroon, Ethiopia, Kenya and Ivory Coast and a high urbanization rate of 37 per cent that fosters a better quality of life.

Other factors are improved education and infrastructure. “The continent’s road network has grown by 7,500km a year over the decade. The new roads have a trickledown effect. There is still a key gap in infrastructure, making a huge opportunity for investment. However, there’s still a deficit in road density, water access, sanitation and electricity.”

Brenda Muse is the Sub-editor, Management Magazine

Email: bmuse@kim.ac.ke

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Is coal energy viable for Kenya? http://management-africa.co.ke/coal-energy-viable-kenya/ http://management-africa.co.ke/coal-energy-viable-kenya/#respond Mon, 11 Dec 2017 09:33:20 +0000 http://management-africa.co.ke/?p=4357 The economic and business case for mega-plants is shaky, even for the ‘planet-friendly’ wind farms such as in Turkana. By DAVID OBURA What do the classic indicators of income or economic activity, such as Gross Domestic Product (GDP), or Gross National Income (GNI), really measure? One perspective is that they show how much a country, or group of people, has harnessed energy and material goods in the service of its people or members. A traditional hut, a first-owner home in Nairobi’s South C and the mansions in Runda show this...

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The economic and business case for mega-plants is shaky, even for the ‘planet-friendly’ wind farms such as in Turkana.

By DAVID OBURA

What do the classic indicators of income or economic activity, such as Gross Domestic Product (GDP), or Gross National Income (GNI), really measure? One perspective is that they show how much a country, or group of people, has harnessed energy and material goods in the service of its people or members. A traditional hut, a first-owner home in Nairobi’s South C and the mansions in Runda show this eloquently.

But is energy the answer to development? Is energy at any cost the answer?

We know that Kenyans are energy-hungry – families need light so children can study, farmers and factories for production, cities for their vibrant life and the country for development. Our mobile phones, databanks, lifts, factories and grand malls are useless without a secure power source.

The grand plans for Kenya’s Vision 2030 that predicted growth in energy demand have not been realised in the last five years. So the economic and business case for mega-plants is shaky, even for the ‘planet-friendly’ wind farms such as in Turkana.

In pure energy terms there are many innovative solutions for decentralised energy production from renewable sources – and Kenya is endowed with natural assets not only valuable for their beauty for tourism, but their services such as energy that we can use (for example, abundant sun, wind, geothermal and tidal sources). And we can join many countries in the transition from fossil fuels in steps, ‘moving up’ the fossil fuel ladder from ‘dirty’ sources (e.g. coal, diesel) to cleaner ones (e.g. natural gas).

Cutting carbon emission

Efficiency is another way in which energy needs can be met without changing total energy production, but reducing waste. All businesses know it is good to reduce waste, as waste is a cost. Of course, it often takes money to make money – upfront investment in low-waste technologies may be high, but the circular economy principles of turning one person’s waste into another’s resource can provide many times the jobs and employment needed to transform Kenya’s economy into an inclusive one.

So, should Kenya do coal? The proponents say yes, as they stand to make a lot of money. However there are many reasons against, and it is worth scouring the arguments deeply – as the path we take will set a precedent and course we may be unable to shift away from, and at great cost not just financially, but in health, lives and the environment.

Kenya has made grand national commitments to reduce its carbon dioxide emissions in the United Nations climate change framework’s ‘Paris Agreement’ of 2015. So building a coal plant that will double the national energy sector’s carbon output destroys this.

But apart from greenhouse gas emissions and energy efficiency there is a dark side to coal that Kenya is naïve about – chemical, toxic pollution. With very low levels of industrialisation Kenya has not experienced the toxic pollution other countries have. We don’t hear much about the dark side of manufacturing – where companies have externalised the environmental cost of their activities by releasing untreated waste into rivers and streams. Elsewhere I have described how the Amu coal plant may become Kenya’s single largest pollution source, given the amount of chemicals in coal released into the air, water and soils, and the mountain of toxic waste that will be left behind – 4 km long by 1 km wide, and 25 m high. The Environmental Social Impact Assessment (ESIA) on the coal plant is largely silent on the true scale and implications of this amount of waste, and particularly the fact that it will be placed by the beach on Kenya’s most vulnerable coastline to sea level rise (itself caused by climate change from fossil fuel burning). The Strategic Environmental Assessment of the LAPPSET project does not even consider the coal plant at all! The health and social impacts of the coal plant are detailed in expert witness statements, with no effective or credible rebuttal with science or technical information from the coal plant proponents.

So back to the question for Kenya. Why coal? Now? We have wowed the world with M-Pesa, and Kenya is emerging as an innovation hub for Africa. Why go back to Victorian England?

Why coal?

From a business perspective, coal may look attractive if its costs are not brought into the business’s books. If ignored in the ESIA and licensing conditions, as is currently the case, these costs are shifted to the taxpayer and individual families – in hospital fees, waste cleanup, or declining land/property values. Brush the costs under somebody elses’ carpet and coal does look attractive. But we know that Kenya is becoming increasingly crowded, our elections are a potent sign of that. And the clamour for land and opportunity needs options that are not poisonous to the lives and families of employees, other workers and society at large.

We must certainly grow our GDP, and alongside that, the value and wealth in businesses and family incomes. But this can be based on efficient use of clean energies, not only at lower direct costs than coal in coming decades, but also without the social, health and environmental costs that coal will produce.

Coal is most definitely the wrong answer to Kenya’s energy needs for development – now and in the future.

David Obura is a Director of CORDIO East Africa, a non-profit that conducts research to support coastal and ocean sustainability and the impacts of climate change in East Africa.

Email: dobura@cordioea.net

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