Also published in the Business Daily on January 7, 2014, at http://www.businessdailyafrica.com/Opinion-and-Analysis/Transport-crisis-and-Juba-chaos-will-define-the-year-/-/539548/2136380/-/item/1/-/gcnt5jz/-/index.html
So, 2014 is upon us. Or 2013 is behind us
(depends on your outlook on life). I’m not one to make New Year’s resolutions
(seeing as most fail within the first two weeks), but it is worth, for just a moment,
to take note of several not-so-obvious issues and trends in the coming year
that will either be important in and of themselves, or be a harbinger of
business and economic life to come. And, as with anything published in the
first few weeks of the New Year, I unilaterally absolve myself of any liability
if any or all of them prove to be absolutely useless.
The
Conflict in South Sudan, and the East African Community
As of this writing, East African heads of
state were scrambling like mad to forestall the rapidly unfolding military and
humanitarian crisis brought about by the conflict in South Sudan. But, away
from the blood-soaked headlines, there is an important issue that the conflict
brought to the fore, and none too soon.
Does the East African Community have
unbreakable criteria before it accepts membership? A few weeks before Juba
exploded, the Summit of the Heads of State of the EAC had proffered a path to
membership to South Sudan and Somalia. One state is brand new, with little
track record of administrative or economic management (the economy almost
collapsed when a dispute with Sudan put paid to oil revenues for a few months).
The other state is one that hasn’t existed in recognisable shape for more than
twenty years. Yes, African Union (in the shape of Ugandan and Kenyan) troops
had pacified the country, but Somalia is a country that exists less as an
actual entity than an example of (for now) wishful thinking. There are still
bombs aplenty – disrupting government meetings, attempting to scuttle
rebuilding, and trying to assassinate top leadership. There is still the
unresolved issue of whether Somaliland shall be recognised as an independent
entity or not.
Thus the argument can be made that the
membership offer to Somalia and South Sudan was not just precipitate, but that
the whole concept of EAC membership needs to be rethought to include good
behaviour. EAC Secretary General Richard Sezibera said as much after the
outbreak of the Juba crisis: ‘The
current internal crisis in South Sudan does not augur well with its bid for
membership in the Community.’ In a story by Muthoki Mumo in the Sunday Nation a
few weeks ago, Dr. Sezibera spoke of membership criteria that includes ‘universally
accepted principles of good governance, democracy, the rule of law, observance
of human rights and social justice.’ So the question in the coming year is
whether these criteria will still apply when the EAC considers the membership
of the two countries, or of Ethiopia down the road. Also, and more
intriguingly, do these criteria apply to current members? Can membership be
suspended or withdrawn for contravening these yardsticks?
Nakumatt Blue Label products
This is one that needs to be watched very
closely, because it is not just about a supermarket offering own-label
products, but also how much a brand can be stretched. Nakumatt, the supermarket
chain, has gone ahead and instituted a practice common to chains in the West
such as Tesco, Sainsbury and Wal-Mart. If well done, it can change the entire
relationship between shop, shopper and supplier. Shoppers will soon realise
that a significant part of the cost of consumer goods covers branding and
marketing efforts. Suppliers will be caught in a bind: they need to sustain a
good relationship with the largest outlet in the region, while at the same time
facing up to the fact that this outlet is now a competitor. For the supermarket
chain, the same question faces them, but in reverse.
What you can expect in 2014 is a raft of
copycats. The smaller supermarket chains will try and develop their own store
brands (some efforts will be commendable, most will be badly done). There will
be a shakeout in some categories, as the lowest-quality (or cheapest) brands
fall by the wayside, decimated by the store brands.
A Denouement
in the Transport Crisis
There is far too much to be sorted out in
the messy transport sector in Kenya, from pricing, to safety, to ownership, to
infrastructure. Without getting into this in too much detail, what you can
expect in 2014 is one of the following: a lengthy, and nasty public transport
strike, as the government tries (yet again) to bring order to the chaotic
sector. It will be triggered by a safety campaign, or by a fare and discipline
dispute, but the crisis will happen this year. Another likely occurrence is an
attempt to clear the encroachment onto railway land by low-income housing. The
government will make a valiant attempt (partly for safety reasons, and partly
as it prepares for the new railway), but will be stymied by sustained political
(over)reaction.
So, happy 2014, everyone. Fill your
shopping baskets, plan a trip to Juba and Mogadishu, and book a train trip.
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