KENYA URGED TO MOVE FROM EPZS TO ICT PARKS FOR ECONOMIC GROWTH

Computing

There has been keen interest and debate about the Government's initiatives at attracting investment in the technology industry in Kenya. The emphasis of the Government appears to be on the low end of the technology industry, specifically the outsourcing of key business processes, which includes routine functions such as call-centre operations and data entry.

However, it is crucial for the Government strategy to aim at developing a long-term technology industry that embraces both the low-end and high-end outsourcing sector.

Major IT powerhouses such as Hewlett Packard, IBM, Microsoft, Cisco and Intel have achieved significant cost savings by outsourcing their high-end technology functions such as software engineering, encryption network security and research and development (R&D) overseas.

Countries such as Ireland, India, Taiwan, China, South Africa, Thailand and Morocco have all benefited hugely from high-end technological investments. India has succeeded by embracing a technological investment policy that not only attracts routine tasks like call- centre services, but also R&D in the pharmaceutical, information technology and telecoms industries.

The London-based research firm Frost and Sullivan, estimates that the R&D outsourcing market to India will hit $9 billion dollars by 2010. Global technology giants such as Microsoft, General Electric and Motorola have all set up research bases in India. Just a few days ago, it emerged that Britain's top fixed line telecoms firm the BT Group is considering setting up an R&D centre in India. Reports from Reuters indicated that BT is attracted by India's skill base.

BT spends about $250 million dollars on R&D every year. Telecoms vending equipment firm Nortel Networks is also gearing up for increased R&D investment in India.

Attracting high-end technological investment to Kenya will lead to increased innovation and competitiveness, resulting in a stronger economy. Several countries can attest to significant growth as a result of a technological investment strategy. Ireland, for instance, experienced severe economic conditions in the early 1980s, intensified by the world oil crisis. This resulted in a decline in income per capita, a halt in economic growth and massive brain drain. It was in the early 1990s that the Irish Government prioritised investments in science and technology, a strategy that helped Ireland achieve unprecedented economic growth. Foreign Direct Investment grew from a paltry $140 million in the mid-1980s to $2.7 billion per year in the second half of the 1980s.

Thailand on the other hand has successfully shifted from a primarily agrarian economy to a high technology export economy that is counted among the top five exporters of computer related products worldwide.

The digital revolution has heralded a dramatic shift in the way technology companies around the globe operate. All manner of corporate functions have succumbed to the global economy, thus increasing opportunities for developing countries to diversify their options in attracting Foreign Direct Investment.

A number of these technology firms are spreading their high-end core corporate functions across various continents. Leading anti-virus company Trend Micro has spread its top executives, engineers and support staff around the world in order to respond to virus threats more effectively. Its financial headquarters is in Japan, its sales headquarters is in Silicon Valley, California and its product development is in Taiwan. This set up allows Trend Micro to maximise its output by benefiting from each of these three country's key competencies. It also has seven virus response labs scattered around the globe, which means it can instantly respond to virus threats as soon as they pop up in any time zone, and quickly develop a cure before they spread around the world.

Africa has realised that technological investment has literally turned the fortunes of many Asian countries. These high-end technology investments are of great benefit to the host countries resulting not only in job creation, but also in technical skills transfer, innovation and increased entrepreneurial activity that further bolters a nation's competitiveness in the global economy.

Several African countries, including Rwanda, Ghana, South Africa and Morocco, are positioning themselves towards being future bases for high technology functions by developing the necessary infrastructure that can make them function accurately and effectively in this arena.

In Ghana, the United Nations will assist in developing a Science and Technology Park at Kwame Nkrumah University of Science & Technology.

Rwanda has recently drafted a policy on science, technology and innovation and aims to set up National Technology Parks at the district level, with the aim of increasing R&D by small businesses.

It is time for Kenya to develop a modern technology infrastructure, in order to tap future inward investment in high technology. There has been heavy investment in the creation of Export Processing Zones (EPZ) in Kenya, but the Government and the private sector should now consider developing Technology Parks, which will serve as centres for innovation and growth of the technology industry in Kenya.

Future Technology Parks in Kenya must establish collaboration with other technological centres around the world, the same way that Taiwan did with Silicon Valley, resulting in the huge growth of technology industry in Taiwan. Currently, Taiwanese patents now rank among the highest in the US market.

The challenges facing Kenya's development as a technological hub today are no different from those that countries like India and Thailand faced 20 years ago. These countries recognised the role of innovation as a key driver of competitiveness in business, investment and new venture creation in their economies.

There has to be a resolve by the Kenya Government to create systems that will nurture and encourage technological innovation and investment and push the country towards a knowledge-based economy. The Ministry of Science and Technology must place more emphasis on the management and shaping of innovation and R&D in Kenya.

The impressive achievements of the high-tech sector in Asian countries are primarily as a result of national policies that have encouraged inward investment in technology and innovation.

There must be increased linkages between the Government, business sector, the research community and academic institutions in pursuit of innovative ways of increasing Kenya's competitive advantage to make the country a dynamic and exciting world-class hub for technology investment.

The East African Standard