Tuesday, March 30, 2010

Developing Infrastructure in Kenya

The Economist reports of the possibility of a IT boom in Kenya following the arrival of fiber-optic cables that will lower the cost of communication with foreign countries. But it also highlights problems:
Would-be investors say Kenya’s tax code is unfriendly and, given the complete lack of public services, poor value. Crime is rife and electricity is patchy. The extra cost of paying for private security and backup generators can upend a business model. Some expect widespread violence in the run-up to elections next year. High costs and jammed roads make Nairobi an expensive place to build a giant call centre. Setting up further away from the capital would be cheaper, but a proposed high-tech city has stalled.

Of course there are problems with the state of infrastructure. Most of India doesn't have good roads, or decent public services, or electricity, but there are pockets where these are provided because companies have been able to pressure elected officials into doing their job (and not just sitting idly waiting to collect bribes). But there is a downside to this sort of behavior-- it can be the case that these companies capture the public services process. That they become the primary dictators of where funds flow, how they are spent, and so on. This will lead to pockets of development, which is certainly good, but also inequality, which isn't always so good.

A better way lies in the hands of the electorate. It can decide whether it will hold its public servants accountable to their responsibilities. When there is a lack of service, citizens need to complain so that their elected officials understand that they cannot get away with providing shoddy services. This is a slow and expensive process because it requires many individuals to invest significant amounts of resources to communicate with public officials. The cost is compounded because elected officials may threaten proactive citizens with violence to keep quiet about these problems. But this will also ensure that in the long run public services develop to cater to the people, and these services are bound to help entrepreneurs and big businesses in many fields, not just the BPO industry.

But either way is good. When there is enough money on the table, firms will make sure that public officials work to ensure electricity and good roads and whatnot. These will in turn help local patches of growth that will spread outwards. If it hadn't be demonstrated so well that politicians have the ability and inclination to ruin anything that will empower the electorate, we would be more optimistic about Kenya's BPO industry.