Thursday, December 21, 2006

Number’s don’t lie

People do

Whether it's - Kenya to receive 5.8 billion in military aid, government creates 500,000 jobs, NGO plans to plant 1 million trees, ILO says 352 million children are economically active, SACCO’s contribute 45% to GDP, or 30 per cent of teenagers in some Kenyan coastal areas are involved in casual sex for cash - numbers are thrown at us everyday and we absorb the numbers and take them as gospel truth. We - blogs, the media, and the public - then re-broadcast them to others as fact and they are repeated around the world.

The numbers can come from government departments, ministers, NGO’s, donors, and other leaders who use them to justify arguments, increased funding, or positions taken. One thing I remember from statistics class is that numbers can be made up to say whatever the author wants, if they are slanted in a certain way.

So, I am not saying all the numbers from a study or report are false or some opinions polls are poisoned, but in the spirit of Coldtusker’s financial gaffes we should take time and question the accuracy, motive, reason, purpose, feel good factor, or any other underlying story to the numbers.


coldtusker said...

Banks - I have not updated the list for a while... I just got tired of the constant errors!

Anyway... that way you phrased it makes it seem like I made the gaffes!
Thought I don't think that is what you meant!

Season's Greetings!

toiyoi said...

On Numbers:
Assuming the youth (< 35) get the Ksh 1 billion, how realistic is it (given that a bunch of them may be entering biz for the first time) for them to pay back 7% interest? This might force them to:
(i) overprice whatever it is they are doing
(ii) be run out of biz in no time

My opinion ( but who cares?)
(i)Is 2-3% interest not more in order? The intention is to create biz/employment, not make Gov and Banks rich, right?
(ii)Is 1 year grace period not in order. The gov always gets grace period for all the loans it gets, right?
(iii) If we want them to succeed, should there not be something like biz counselling/training esp for those with no proven biz track?

You economists/biz people out there, enlighten me.

Anonymous said...

i read about this fund and some requirements dont make sense - why the requirement that i go to NYS for training? i could already be in possesion of an MBA, how about the ruirment that i belong to a group or start a micro finance venture?

anyway i dont expect too much from govt bureacracy

Kudrinketh said...

I think the govt has this loan thing backwards.It should first create a conducive environment for small businesses otherwise this money will be squandered aka CDF.

The govt could achieve this by creating some form of affirmative action that requires a certain portion of govt tenders allocated to young businesses.It could also encourage private sector to do the same by awarding tenders to those private firms that reciprocate.

The 7% interest rate is reasonable concidering that market rates are almost threefold.When you allocate the inflation rate of 15%, the 7% is actually a steal!

One sure business opportunity where the under 35 have an edge is the IT industry.With the laying of the fiber optics,these youths could jump into the lucrative business of outsourcing.They could lower overhead costs by starting firms around university campuses which will offer them cheap high skilled labor.

Another advantage of university towns is the relatively cheap cost of leasing/renting office spaces in such areas as Njoro,Laikipia,Maseno,Chepkoilel.

This is feasible guys,a recent study showed that Americans prefer Kenyan accents over Indians and other Africans.Lets cash this blank check before it bounces.

There are lots of Kenyans especially in the States who have lots of experience in call center operations and telecommunications IT(During my college yrs i worked with lots of Kenyans doing tech support at Stream International and Texas Instruments).We could mobilise our skills and money and head back home,not to beg for government jobs, but to start our own firms.Remember Idia's IT boom was started by U.S trained Indians who started migrating back to India.I know i'm getting ready to cash this blank check, are you?

toiyoi said...

Way to go. But you need to move fast b4 the indians descend and monopolize the market you are talking about, by which time entry into that privileged club will be very very difficulty indeed. Even without the fibre opts, you can still use other means (expensive of course). Though,even with the fibre, what assurance do we have that a backbone run by a private company without competition will be cheap to use? Seems to me a backbone run by a consortium of governments would have at least ensured a manageable cost.

Kudrinketh said...

I know Indians would move fast to grab the emerging outsourcing market in Kenya by virtue of being the industry leaders.We can pass legislation that protects our IT industry from these Indians.(they do it,so should we)

I think with the entry of more countries into EASSY, the Kenyan govt boycott may be waning.But it would not hurt to have both EASSY and TEAMs fiber optics,the ensuing competition would ensure lower costs.

Anonymous said...

on the outsourcing issue, i dont think we can or should compete against india. i think we should try to complement india - the big indian outsourcing firms are now huge multinationals and its in their interest to diversify the locations of their services - just makes business sense in case of catastrophic falires(wars natural disater) or economic barriers - i think kenya should market itself to this firms as backup and complimentary location(competing with philipines,slovakia,dalian and south africa in this regard). besides some kenyan indians are big shareholders in some indian
outsourcing firms.

also instead of thinking only north america and europe - lets think local kenya can be the outscouring center for countries operating i africa as outsourcing is not just about finding cheap services but is becoming an established business practice. in this regard we should look at uruguay which is becoming an outsourcing hub for businesses in south america.

its all about competitive advantage.
i think inn kenya we fall in the trap of always trying to copy other peoples ideas. there is only one india, or one dubai or one hong kong
copying doesnt makes sens complementing or improving is the solution. - EPZ was a copycays solution has not worked out - now we are talking about settingup dubais in coast. except well be competing with 100 other dubai wannabes and same thing with tech outscouring well be competing with 100 other india wanna bes

Kudrinketh said...

@ annon
We can and should compete with India because first, we speak better english than they do.You just dont know how much Americans detest Indian call center reps.So here's an opportunity for us to exploit.Secondly, with the increasing Indian GDP, the labor costs are beginning to creep upwards.

On the issue of copying, I dont care if my idea is unoriginal, so long as it generates profit.So according to your argument, once someone comes up with an idea, no one should do it.What happenned to re-engineering and making things better.According to you,we should still have AT&T as the only telecommunications company in the States(and the world actually), or that Intel should be the only computer chips company.Or closer home, we should not have another cellphone company since we would be copying Safaricom.All civilisations have advanced by copying from others and improving on existing technology through re-engineering.

I do agree with you that we could target Kenyan industries for outsourcing especially the service industry like telecom and banking.I'm sure we could become a technology hub in east and Central Africa.

Africaincorp said...

numbers truly don't lie. Men do, so if you want numbers that equate the reality of Africa we better start doing the math ourselves.
Nothing less

Anonymous said...

about the english language:
speaking better english is all relative to an american if the accent is not american it aint english and besides kenya is not
the only english spekaing country - i dont think in theis case well be competing with india - we will be competing with south africa,zimbabwe
nigeria,caribean islands. - i dont think u really undertsand the dynamics of outsourcing the people making outsourcing decision in major american companies are indians themselves - i know i have seen it with my own eyes and the relationships between this coproartions is already tight - a company doesnt wake up one morning and change the company they outsource to overnight.
labor costs:
the cost of labor in kenya is already higher than in india unless kenya stagnates i dont see how this is going to be a competitive point for kenya.
on copying:
its not about building the same mousetrap its about building a better or different mousetrap.
In the outsourcing industry india
has certain competitive advantages
that would take kenya ages to even come close. you have to come to silicon valley to realize that the people making this decision are from india or china. the indian outsorcing business is vertically integerated companies like TATA started by shipping workers to america and then moved to shipping the work to india.

Kudrinketh said...

As a matter of fact, i do know a lot about outsourcing having participated in several outsourcing project management.And the companies doing the high volume outsourcing are not the silicon valley firms but companies in such mundane industries like insurance, banking, telecom, processing medical forms etc.And the decision makers at these firms are not Indians and Chinese.

Labor costs in Kenya are certainly higher in places like nairobi, that's why you take advantage of college towns in the upcountry where you get highly skilled labor for less.And with the upcomming fiber optics, the costs will certainly fall even further.basic economics knowledge will show you that as Indian wages and real estate get higher, the labor costs will increase tremendously thus the need for cheaper destinations,and Africa is the last frontier.

And please stop getting all caught up in silicon valley. Outsourcing is not all that high-tech, all one needs is a cheap tellephone line and a software that does inbound call routing.We are not trying to create a silicon valley in nairobi, we're just trying to help that senior citizen with her health insurance claims processing, the mundane stuff that ordinary people do everyday.

coldtusker said...

The choice of an outsourcing location is based on multiple factors:
- Cost
- Reliability
- Trust (Intellectual)

Kenya needs to ensure the "safety" of peronal information. If you break "privacy laws" retribution should be swift & painful.

coldtusker said...

Anon is correct in stating the need to build LOCAL, then REGIONAL, call-center capacity asap before the S.Africans.

We need multiple providers of fibreoptic connections between all major towns. The good news is that KDN, Telkom, Safaricom among others are adding capacity.
It is easier to build a Ksm-Eld-Nbi-Msa fibrelink (KDN is doing that) than Msa-Dubai.

Kenya needs to make a concerted effort between the Public & Private sectors to produce German & Italian speakers. Thereafter French & Spanish speakers.

India can support the US & UK markets but Kenya can dominate the German market.

The French market is a N.African affair while Spanish will be a C.American affair. They have inherent advantages.

coldtusker said...

India - For all the "frustrations" with Indian call centers, they are the best value for the moment.

Accents - Accents are less pronounced in urban centers exposed to "Western" media. India has schools that teach "neutral" accents. Nevertheless, India seems to have exhausted the "urban" pool of employees.

Kenyans who grew up in Nairobi (& to a lesser extent Kisumu, Eldoret & Mombasa) might not have heavy accents. Those who had an upper-middle class education have little problem BUT this is a SMALL pool of candidates.

We know the "R" & "L" problems of the rural Kikuyus.
What about the "S" & "Sh" of your rural Luo?
Or the "K" of the Kalenjins?

The point is NOT to target any specific tribe or community BUT that it is a matter of EDUCATION & EXPOSURE.

All in all... the mass training in languages & accents needs to start NOW to support the call-centre industry in 2 years (after the fibre-optic cables whether TEAMS or EASSY are ready to go)!

toiyoi said...

@kudrinketh and @coldtusker and @toiyoi

All good points, but do you know what you guys are missing? The action. The ideas are there and there is no doubt outsourcing will work big time(of course we all know kencall is successful- an odeyo answered my Bank of america enquiry the other day, from NBO). Instead of waiting for someone to do it or saying this and that should be done, JUST DO IT.

If there is anything one learns from america is the "IT CAN BE DONE" and "I CAN DO IT" mindset.

@accent issue: Americans are very impatient with "unclear communication" and so kenya does indeed have a big advantage in this respect. They are certainly happy with Jeff's accent (and i am sure it is no problem to produce more Jeffs from a kikuyu/luo/kalenjin)

Kudrinketh said...

LOL, eti "just do it" aint that like getting a lil' old.Unlike some people here who think its impossible, i have done a feasibility study,set up a test call center with cheap software and internet phone lines(there is one company that allows you to get a 1-800 number and so long as you have a router and a computer you can be located in Kansas or Njoro and the costs remain the same).

I even have potential clients who are responsive to the idea.The only thing i'm still working on is to get some venture capitalists lined up willing to invest in Africa.But i have two yrs to pitch my idea to these investors.

Unlike Mr.Silicon Valley here,I have done it all, from taking the calls,network troubleshooting, manning the phone command center,training the Indians who eventually took over these operations.During the transition period, i sat in the outsourcing committee.The two firms i worked for were Stream International that did tech support for Dell Computers and Aegis Communications that run tellephone operations for Qwest communications,Sony,AT&T.

CT raised an important factor of safety of personal information.The US firms are very strict on this and would not allow the Indian firms to outsource their operations to a third party. So forget about Indian multinationals diversifying their locations.

Anonymous said...

i just used silicon valley as an example so u dont have to stick that moniker to me. but iwill stil maintain thatthe outsourcing decisions are largely influenced by thebationalities of the people in those corporations.
its not by accident that the philipines and pakistan dominate the medical transcription field. even kencall look at the resumes of the guys in charge it doenst take rocket science to figure that this gusy were leveraging their inside connection to ge a head start - and that is ok.

my argument was that its not about
competing with india its about either finding profitable niches or complementing india. when a comapny outsources to wipro they outsource to wipro not to india - looks at WIPRO's locations

countries like thailand are trying to focus on medical outsourcing. i think kenya should focus on research alot of research is being done in kenya for and by multinationals - so we should build on it and market it and build more infrastructure around it. i.e educational and facilities

Anonymous said...

in other news the war between somalia and ethiopia just started - kenya has its head buried in the sand. we have a mutual defence pact with ethiopia and eastleigh is the financial capital of somalia -- hmm

Kudrinketh said...

No disrespect to you, but the economics of outsourcing mean that India will soon be over-priced and that the next frontier will be Africa.

Remember when all the manufacturing was being done by the Asian tigers,well, the costs of living skyrocketted in these countries forcing the manufacturer's to pursue cheaper locations, hence the emergence of China as a manufacturing superpower.

It can be argued that costs in Africa are currently higher than India.But at least us in Africa have opportunities to reduce costs eg. cheaper fiber optics over the more expensive satelite telephony.Or decentralization to the countryside once fiber optics goes national.

I agree with you that we should find our own niche.Well,back office operations(medical transcription) can be outsourced to non-English speaking countries(Thailand etc),but call centers cannot.So here is where we concentrate our efforts.I'm sure Kenya can get a piece of the pie too.

Anonymous said...

i think we are misundertsanding each other. let me clarify. The BPO industry is dominated by india and indian multinationals - thast i not going to change anytime soon. as a matter of fact its the indian frims that are establishing BPO centers in places like china,philipines and sri lanka to take advantage of this. as a matter of prudence companies dont like to have all their work done in one place - workers go on strike,bomb threats - business has to go on. i think we should try to luresome of this BPO majors to kenya
as a secondary location.

same wy dubai is trying to become a financial hib at th end of the day they try to lure the goldma and sachs the morgan stanley to have locations there - they cant dispace new york they try to compliment it.

agina i think niches is the key - i think research(KEMRI,KARI,ICIPE etc) for one is an advantage we have. 2 media producing programmes and advertising for other african countries (i think this is being done). some american companies outsource advertising to SA coz its much cheaper.

outsourcing takes many forms we just have to find a niche for which we can dominate. but BPO as an industry itself is an will be dominated by india and indian firms.

coldtusker said...

kudri - Watcha smokin???

Medical Transcription to non-English speaking countries???

LOL...LMAO... I bet US & UK patients will love that idea!!! Oops... Don't miss the rhetoric there!

India would do just fine... heavy accents but they have the nurses, docs, medical trained staff whose SPOKEN English may leave a lot to be desired... but they got the manpower.

I would love to help you out in my own small way... but without a visionary government, there is little we can do. India lucked out with Rajiv Gandhi, Sam Pitroda & Manmohan Singh.

All we have are old, older & oldest... who make critical decisions. The idiots we are, we will elect them again!

P.S. I wish we had a Lee Kuan Yew... old but SMART...

toiyoi said...

Just do it ain't old Mr, but tried and true; 2 years is a long time to wait. You strike while the iron is hot (another lil' old adage, yeah, but true), and by the time you convince some USA based VC, 'em Indans or Kimunya-cronies with no fin restraints will have made...

Anyway, seek angels as opposed to mainstream VC with fixed ideas.

How about someone bright who reads this (Banks, you, Anon, Cold, etc) convincing some "wazees' in Kenya (Kirubi, Uhuru, Mbaru, etc) to see the light and risk some money by being VC/Angels for Kenyans such as you (not to mentioned igniting a fire that might change the whole africa) and not just sit on those dollars?

Me? I have no connection with such pple so i "will just talk" and not do!

kenyanentrepreneur said...

This is a very interesting discussion. I have often talked about my displeasure with dealing with indian outsourcing workers (they are often rude and robotic) The filipino's are much, much better.

I think Kundriketh is on to something. He's main problem will be attracting clients and convincing them to go with his firm. A brilliant or even good idea is not enough. You need to get those clients. I'd like to hear how you plan on doing that. What's your marketing strategy going to be?

Anonymous said...

There are several outsourcing firms in Kenya. While we have a big resource pool of unemployed graduates, the government has not done much to foster a concussive business environment. Infrastructure is the biggest bottleneck.

Going forward, you will see less of the CSR outsourcing. Companies have found out the hard way that you can only outsource jobs that do not create value. Certainly customer service is the bread and butter of many firms, thus they are cutting back on sending these jobs overseas.

Check out

BTW, the owners are Kenyans. I vaguely remember their dad (Nesbitt Snr) who was some big shot in the private sector. Can anyone remember which companies he was associated with?

bankelele said...

Coldtusker: I didn’t mean to imply you made the gaffes, but that you pointed them out.
- Outsourcing has great potential after EASSY. To me accents are not a major problem –esp. our ladies can mimic anyone

Toiyoi: I haven’t paid much attention to the youth fund, but it’s one of those things whose numbers need to be delved into. But I think money should be a loan, not a grant, and the government should avail the funds through banks, like a line of credit. Banks are better able to administer these funds than a government ministry
- On outsourcing: Indian and Chinese firms are looking to setup up here already

Kudrinketh: affirmative action a good thing, but in Kenya that will be tough. Until the company acts are reviewed and updated, you will have 18 years olds fronting companies that will lock down huge government contracts (of course they will be shell companies)

Great opportunities in outsourcing for sure and its something that the government recognizes (
- Good luck with your venture –we are rooting for EASSY first

Africaincorp: we do a lot of the (bad) number crunching ourselves

Kenyanentrepreneur: great topic I see and I need to open a new thread. Interesting point you raise about different Asian workers. From what I have seen the industry is not a bed of roses but the economic rewards have been great for those countries

Ssembonge: the numbers of outsourcing companies are bound to increase as communication costs come down.

Anonymous said...

You missed my point.

Outsourcing will continue to grow, however, not the outsourcing of customer services.

The Harvard Business Review had an article on outsourcing and it concluded that you only outsource functions that are least likely to affect your revenues. Cutting down expenses of valuable functions results in a decline of revenue.

So you will see the outsourcing of paper pushers rather than CS Reps.

Kenya need to focus on other areas of outsourcing other than CSR.

toiyoi said...

One: Loans vs Grants: i did not route for free money, but said the loan rate should be at a rate that can encourage success and growth, not hinder it. Even though most (KU or COLD) say 7% is good (based on the prevailing (and outrageous and artificailly high )15%, it is still high. These are the kinds of things that make NBO artificially expensive, when it ought not to be, given the sarrounding region.

Two: Gentle request:Are there (i guess there must be) satellite based cable services? Do any offer internet services?

Banks, see how much interest you generate? I hope you "endelea vivyo hivyo"

nwabu said...

I think Kenya has what it takes to be a big player in outsourcing. You guys (I'm Nigerian) have the experience of tourism and what better customer service training is there than the tourist industry?

I think having indian or chinese companies come into kenya to do outsourcing is an asset as long as it benefits the Kenyan population fairly through providing jobs, training and allowing Kenyan entrepreneurs the opportunity to network and partner with these firms.

Kenyan entrepreneurs interesting in BPO should start forming networking groups so that its a win-win for all in terms of knowing what kind of technology you need, how to get clients overseas etc.

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