Why playing by the rules makes a country competitive. Published in the Business Daily on 12 November 2013 at http://www.businessdailyafrica.com/Opinion-and-Analysis/Bureaucracy--corruption-fuel-clich--US-is-the-land/-/539548/2069262/-/47j2bvz/-/index.html
I’m typically not one for clichés,
especially those that have been told over and over ad infinitum, and which are
supposedly on the cusp of becoming irrelevant. The past two weeks, though, have
given me the chance to interact with the classic cliché – that of the Land of
Opportunity – and to help the thought process of what Kenya needs to ensure
that it positions itself as the go-to location for young people with ideas.
I have been on a tour of the United States,
shooting what will eventually be a television news special about technology
corridors and the interaction between academia, government and private
corporations. (The television programmes will be coming to an NTV screen near
you – I promise to let you know when well in advance). The tour has been an
enlightening (and exhausting) one, taking my cameraman Steve Mwei and I from
Northern Virginia, through the Research Triangle Park in North Carolina, and
now winding up in Boston in Massachusetts, where Harvard University and the
Massachusetts Institute of Technology helm an ecosystem of high-tech companies,
researchers, financiers and government enablers.
And here in Boston is where I met the
walking cliché. Maja Drolec is a slender, charmingly-accented immigrant from
Slovenia, who has begun – with her partners – a company named Celtra Inc.
Celtra is one of those companies whose main business is difficult to explain to
your mother – in very basic terms, it makes mobile phone graphics that are
useful for the advertising of movies and other entertainment. If you are at home
and intend to go to a movie theatre and are busy looking up the best film to
watch, you can call up some of Celtra’s services on your smartphone, and be
able to see trailers, interactive content and other content that may convince
you to watch one film and not another. It sounds lightweight, until Maja tells
you that the company is on course for $20 million dollars in annual revenues,
and that the business commands almost 100% margins.
The company, which is hosted in a Nailab/
iHub-type office named the Cambridge Innovation Center, started as an idea
between Maja and two of her compatriots, and they are now looking keenly at how
to expand the business and whether to explore new ideas in an environment that
is keenly nurturing to such companies and individuals.
But it’s when I asked her why she opted to
set up in the United States and not in her native Slovenia that my ears pricked
up. Beyond the 315-million-odd size of the market, Maja told me: ‘We in Eastern
Europe like to say that the law runs the state. But that’s not really the
truth. With the ethics and just the way business is done means that you cannot
really trust people – that they’ll pay you on time; that they will stick to
their contracts, and that can take up a lot of [your] energy and time if you
need to be dealing with those kind of issues. Here [in the United States], you
do pay a lot for professional services such as consultancy, legal fees and
recruitment fees. But when you go by the book, things come back to you in a
very nice way. All the Slovenians here had a culture shock – [in Eastern
Europe] a lot of the stuff can be done [off] the books, but it comes back to
really hurt you. It feels good knowing that if you play by the book, you will
be rewarded for it. You can compete with anyone and pretty much be at par’.
Does the Eastern European scenario sound
painfully familiar? Kenya has, for a long time, been a two-tier society and
economy. There is the shiny, rule-based system, which we are happy to show
foreigners and investors (and especially foreign investors). We are busy
reforming processes such as company registration, legal procedures and investor
protections. But ask any businessperson (heck, any Kenyan) and they will regale
you with tales of off-book procedures and officials. Everyone knows how to
acquire the relevant licences and permissions without necessarily following
procedure, and it is the shortsighted businessperson who does not have the
numbers of the OCPD and county/ city council official saved on their phone.
The off-book processes do move things along
when certain processes get stuck, but the sheer energy of having to familiarise
oneself with the underground regulatory environment saps the necessary vitality
required to actually grow businesses (anything from a food kiosk to a
cutting-edge tech business). If Eastern Europeans, who have the run of the
world when it comes to choices of doing business, are still opting for an
old-world country like America to be the host of their dreams and ideas, it is
not hard to imagine young Kenyans also thinking the same.
And thus will a tired old – but very true –
cliché of the land of opportunity be perpetuated.
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