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THE ROLE OF RESEARCH AND DEVELOPMENT IN THE INDUSTRIALIZATION PROCESS IN KENYA. Moturi C. and Ogada T. Kenya Industrial Research and Development Institute (KIRDI) Technical workshop on Industrialization 22 nd November 2006, KICC, Nairobi. CONTENTS. Background. Background.

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The role of research and development in the industrialization process in kenya l.jpg

THE ROLE OF RESEARCH AND DEVELOPMENT IN THE INDUSTRIALIZATION PROCESS IN KENYA

Moturi C. and Ogada T.

Kenya Industrial Research and Development Institute (KIRDI)

Technical workshop on Industrialization

22nd November 2006, KICC, Nairobi


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CONTENTS INDUSTRIALIZATION PROCESS IN KENYA

  • Background


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Background INDUSTRIALIZATION PROCESS IN KENYA

  • The Kenyan economy has enjoyed both periods of great advances and disheartening downturns.

  • Incidences of poverty and unemployment, meagre foreign exchange earnings (exports of primary product mainly - agro-produce) have resulted in unfavourable balance of payment and low per capita income

  • It is estimated that > 60% of Kenya’s population live below the poverty line


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contd INDUSTRIALIZATION PROCESS IN KENYA

  • While, the overall population growth rate has experienced a decline over the last 2-decades, unemployment continues to increase

  • As a result, lack of productive employment opportunities has led to a fall of real wages in nearly all the sectors of the economy

  • As well, the population pressure on agricultural land and the associated decline in individual holdings have resulted in low and decreasing productivity


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contd INDUSTRIALIZATION PROCESS IN KENYA

  • It has been acknowledged that in order to cope with these challenges, the economy will have to consistently grow at between 8-10% annually.

  • Thus, through rapid sustained economic growth, national wealth can be created, leading to increased employment and incomes and viable enterprises

  • These in turn will provide the resources to support measures to alleviate poverty, protect vulnerable groups and provide rising standards of living for Kenyans


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contd INDUSTRIALIZATION PROCESS IN KENYA

  • It is well recognized that industrialization is a means through which Kenya can accelerate its economic growth

  • Indeed, all indicators show that Kenya’s goal of rapid and sustained growth cannot be achieved in the absence of industrialization, as has also been demonstrated in all NICs


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Indicators of Industrialization and Industrial Competitiveness

  • Manufacturing Value adding per capita (MVA) measures the level of industrialization of a country

  • Manufactured exports per capita is a measure of the ability of a country to produce goods competitively


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MVA as % GDP Competitiveness


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Industrial Development Policies in Kenya Competitiveness

  • Since independence (1963), it has been recognized that the informal sector has potential in employment and wealth creation in Kenya

  • The GoK has therefore continued to react positively by facilitating MSEs to generate sustainable employment and income by formulating various policies to address constraints affecting the sector

  • The following is thus, a summary of the key government policy papers that have been developed over the years


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contd Competitiveness

  • Sessional Paper No 10, 1965

  • The Sessional paper on “African Socialism and its Application to Planning in Kenya” set the pace in the introduction of small enterprises in the economy.

  • The paper sought to indigenise the economy by encouraging foreign enterprises to equip Kenyan Africans with necessary skills through training, apprenticeship programmes, to enable them operate private business


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contd Competitiveness

  • Sessional Paper No 10, 1973

  • The desire to Kenyanize the economy was further amplified by the Sessional paper on Employment.

  • It attempted to assist small enterprises to access working sites, credit, managerial and technical services, skill upgrading and business training services


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contd Competitiveness

  • Sessional Paper No 5. of 1982

  • The Sessional paper on “Science and Technology for Development” Recognized that Science and Technology provide the knowledge with which to identify opportunities and to increase growth rates (by making capital and labour more productive).

  • The Paper recommends that the GOK should deliberately, but conscientiously expand its research system to cover all sectors of the economy


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contd Competitiveness

  • It also recommends:

    • Increased levels of funding to 1% of GDP for Research and Experimental Development.

    • Acquisition and Transfer of Technology Policy

    • Capacity Building for Technological transformation


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contd Competitiveness

  • Sessional Paper No 2, 1985on Unemployment

  • The paper appreciated the importance of MSE sector in the economy and sought to encourage it to expand.

  • It however fell short of providing concrete solutions to the sector’s accessibility to credit, technical and marketing assistance


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contd Competitiveness

  • Sessional Paper No 1, 1986

  • The paper on Economic Management for renewed Growth together with the Sixth National Development Plan (1989-1993) tried to accelerate MSE growth by seeking to

    • amend the rules and regulations that inhibit MSEs

    • To limit unfair trade practices by large scale firms

    • To change cost-price relations in favour of MSEs

    • To address constraints that limit access of MSEs to finance and credit.


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contd Competitiveness

  • Sessional Paper No 2 of 1992

  • The Policy paper on “Small Enterprise and Jua Kali Development in Kenya” was released to address similar problems affecting MSEs

  • However, it emphasized on the creation of an enabling legal and regulatory environments that support the sector’s graduation into formal sector


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contd Competitiveness

  • Sessional Paper No 2 of 1996

  • The Policy paper on “Industrial Transformation to the Year 2020” is indeed the basis of this presentation.

  • The paper proposes measures to remove bottlenecks that hinder the potential MSEs in serving as seed bed for industrialization

  • It also proposes;

    • to review government procurement regulations and procedures to allow MSEs to provide goods and services to Government

    • The rationalization of licensing regime to make it simpler and cheaper


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contd Competitiveness

  • Perhaps more importantly, the paper recognizes that in order for Kenya to achieve and maintain competitiveness in the global market, technology, among others, will play a major role

  • It also encourages;

    • Private sector to invest in technology development (independently or in collaboration with public R&D institutions)


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contd Competitiveness

  • Economic Recovery Strategy for Wealth and Employment Creation (2003-2007)

  • The release of the blueprint became necessary to address the twin challenge of;

    • Creating Employment

    • Creating Wealth

    • Reducing Poverty

  • It emphasized on the desire to facilitate MSEs to graduate in employment size.

  • This was further strengthened by the release of Sessional Paper No.2, 2005, on Development of Micro and Small Enterprises for Wealth and Employment Creation for Poverty Reduction,which sought to enhance the capacity of MSEs to generate wealth as well as durable and decent jobs


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contd Competitiveness

  • The blueprint also recommends “Enhanced support for R&D for industries by reviewing the tax incentives for doing research and zero rating research-related equipment”, among others


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Vision 2030 Competitiveness

  • The Vision envisages a globally competitive and prosperous nation with high quality of life by 2030

  • Per capita income ranking among the five highest in Africa

  • Eliminating absolute poverty and building an equitable and just society

  • Becoming Africa’s most competitive economy

  • 10 % growth in GDP for the next 25 years


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The Missing Gap Competitiveness

  • It can be clearly noted, from the above review, that the proposed interventions have not necessarily yielded the expected results

  • This is evident in the manner in which new policies continue to be formulated to address more or less the same problems that previous policies were meant to tackle.

  • It is also evident that the gap between MSEs and Medium enterprises on one hand and that between Medium and Large enterprises suggest that few of the MSEs graduate to the Medium level


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Large (21%) Competitiveness

Medium

(14%)

A

A

MSEs (65%)

Schematic Diagram illustrating the Missing Gap in the MSE Growth

  • (Ref: Based on Data from GoK Statistical Abstracts)


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contd Competitiveness

  • While MSEs generate employment and wealth, the majority are unable to grow vertically, thus resulting in the gap between MSEs and the Large enterprises, i.e. the missing middle/gap

  • It is now well acknowledged that without vertical growth it would be difficult for MSEs to generate sustainable employment and serve as seedbed for industrialization.


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contd Competitiveness

  • 3 Major constraints continue to hinder the vertical growth of the MSE sector, i.e.;

    • Lack of Credit

    • Low level of Education

    • Negative “Jua Kali” Attitude

    • Lack of Market Information

    • Lack of Technology Advancement

  • As well, limited work sites and lack of clear vision also contribute to the slow growth of the sector


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Technology Acquisition Competitiveness

There are 4-broad means of acquiring technology, i.e.;

Indigenous R&D

Direct foreign investment

Purchasing or leasing “off-the-shelf”, and

Overseas training and study tours

Accessing patent documents in the public domain


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Universities Competitiveness

R&D

Institutions

R&D

Teaching

Extension

  • Capacity Building

  • New knowledge

  • Knowledge Transfer

Technological

development

Mandate of Universities and R&D Institutions


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e.g. KIRDI Mandate Competitiveness

  • The mandate of KIRDI at inception – in 1942, was

  • to initiate and develop local industriesto relieve the industrial goods shortages occasioned by the second world war

  • Derived from the S&T Act, 1979, Cap 250;

  • To carry out Research and Development in Industrial and Allied Technologies, including:

    • Civil engineering, Mechanical engineering, Textile technology, Electrical engineering, Mining, Power resources, Chemical engineering, Industrial chemistry, Food technology, Ceramics and technology, Environment, Information technology


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OPERATIONAL ENVIRONMENT Competitiveness

  • The GOK adopted an Industrialization strategy for achieving:

    • sustainable economic growth, rapid employment generation and poverty eradication,

    • thro’ competitive production and consumption

  • It is however, well recognized that for the last 10 years or so, the Industrial sub-sector in Kenya has been on the decline, and that,


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contd Competitiveness

  • the country is faced with;

    • Low capacity utilization

    • Declining productivity, and

    • Limited technological advancement

  • All of which are indicators of inadequate application of R&D Products


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Research Products and IPRs-1 Competitiveness

The direct product of research is knowledge.

It can be in the form of

  • New Technology

  • New Product

  • New Process

  • Improvement in existing product, process or technology


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Research Products and IPR-2 Competitiveness

  • Publication a traditional R&D output

  • The dissemination of knowledge through publications is not enough.

  • R&D is only useful if its products can lead to

    • Economic development

    • Industrialization

    • Job creation

    • Poverty Reduction

      It is only through transfer of knowledge that a R&D Institution can become relevant to the society


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Research Products and IPR-3 Competitiveness

  • Knowledge generated may be made available free of charge

  • Effective transfer of knowledge can only be realized through

    • Legal protection and

    • Commercialization

  • Knowledge can only be commercialized if it becomes a property

    • It must have a Legal Owner

    • It must have a value

    • There must be a market for it


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Research Products and IPR-4 Competitiveness

There are two types of Assets

  • Tangible Assets – Raw material, land, building,

    machinery

  • Intangible Assets – knowledge

    Old EconomyNew Economy

    Tangible property Intangible Property

  • Research Products belong to a class of intangible property called intellectual property assets



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    1. Methods of Commercialization Competitiveness

    There are Four Methods through which an Intellectual Property Assets can be commercialized

    • Licensing

    • Sale

    • Own exploitation – start up companies

    • Joint ventures


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    2. Evaluation of the Impact of R&D Competitiveness

    The contribution of R&D Institutions towards a country’s development can be measured through quantity of

    • IP Assets generated

    • IP Assets Licensed

    • Income from Technology Licensing

    • Companies created directly based on the product

      of R&D

    • Jobs created

    • Consultancy offered



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    1. InstitutionsNumbers of Patents Filed by Universities

    1995-2003

    Japan 5,506

    China 13,353

    Korea 5,272

    Singapore 993

    India 467

    Thailand 139 (granted)


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    2. Kenyan Patent Application Situation (1993-2003) Institutions

    • SMEs (Jua Kali) 116

    • Industry 45

    • R&D Institutions 14

    • Individual from university 2

    • Secondary School 1

    • University (MU) 1

  • The culture of innovation has not been developed

  • Researchers in Universities and R & D Institutions innovate daily most of the innovation go unnoticed.


  • Slide41 l.jpg

    • 3. USA Situation. Association of University Technology Managers

    • Over 3000 Technology Transfer Offices

    • University and research center licensing (2000)

      • 3765 license agreements

      • US $ 1.3 billion income

    • Since 1980

    • 3500 companies formed based on R&D Products

      • 400,000 jobs created

      • US $ 50 billion generated annually on sales

      • US $ 10 billions received as tax revenue


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    6. India. Council for Scientific and Industrial Research (CSIR)

    • 42 Laboratories

    • Each laboratory has Technology Transfer Offices

    • 1995-1999, filed 170 patents

    • A patent on a polymer used in coating compact disks (30 % of compact disks produced world-wide)


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    7. Korea (CSIR)

    • Technology Transfer from 19 Private Universities

      Year No of Technologies Income from TT (KWon)

      • 2001 58 473 million

      • 2002 102 983 million

      • 2003 133 1913 million

        293

    • By 2004 Seoul National University had been granted 260 patents


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    8. Singapore (CSIR)

    National University of Singapore and Nanyan Technological University

    • 56,000 students

    • Has technology transfer offices for

      • Research Collaboration

      • Contract Research

      • IP Management

      • Technology Transfer

      • Entrepreneurship

    • Key Statistics (1998-2002)

      • 500 Patents filed

      • 107 technologies licensed

      • 136 research agreements signed worth US $ 42 million


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    9. China (CSIR)

    • Over 2000 university-run S&T Enterprises

    • 238,000 staff out of which 78,000 Researchers

    • 45.2 million TRW in sales

    • 5600 technologies transferred

    • 40 % of R&D funding come from private companies

    • Beijing and Tsinghua Universities

      • spinned-off over 120 high tech companies,

      • some spin off companies listed in the Chinese Stock Market


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    10. Lessons Learnt (CSIR)

    • Research can lead to technological and economic development

    • For this to be realized in African R&D Institutions, there is need to

      • Increase Investment in R&D by our governments

      • have in place innovation and inventive support structures and

      • enabling policy incentives



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    KEY ISSUES IDENTIFIED (CSIR)

    • Low Funding of STI

    • Low utilization of IPR

    • Low level of commercialization of STI findings

    • Low level of utilization of Reverse Engineering

    • Inadequate Technology Transfer policy

    • Lack of entrepreneurial culture

    • Weak linkages between STI organizations and SMEs

    • Weak marketing practices in STI and SMEs

    • Inadequate utilization of local knowledge

    • Weak linkages and networks amongst STI institutions

    • Inadequate utilization of cleaner production techniques


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    Key Issue1. (CSIR)Low Funding of STI

    Objectives and Strategies

    • 1. To increase funding of R&D from 0.3 % to at least 2-3 % of the GDP

      • Lobby government through sensitization

        2. To formulate national industrial research programs

      • Undertake industrial research needs assessment in the identified key strategic areas

      • Develop mechanism for funding

        3. To Establish a National Industrial Research Fund

      • Lobby government and development partners through sensitization

        • NOTE: The GoK must fund strategic research


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    Key Issue 2. (CSIR)Low Utilization of IPR

    Objective

    1. Promote the generation, protection and utilization of intellectual property assets in STI organizations and SMEs

    Strategies

    • Create an IP literate STI personnel

    • Create focal IP points in STI Institutions and SMEs

    • Develop IP policies in STI organizations and SMEs

    • Provide policy incentives for the generation, protection and commercialization of IP Assets


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    Key Issue 3. (CSIR)Low Commercialization of R&D and innovations

    Objective

    4. Promote commercialization of innovations and R&D outputs

    Strategies

    • Create technology transfer offices in STI organization

    • Develop technology incubators

    • Develop technology parks

    • Create venture capital

    • Create industrial innovation fund

    • Establish Units for prototype development in STI organization

    • Promote use of business development services


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    Key Issue 4. (CSIR)Low Utilization of Reverse Engineering

    Objective

    5. Promote technology development through reverse engineering

    Strategies

    • Strengthen industrial and technology information center

    • Promote use of patent documentation for R&D and innovation

    • Promote patent mining

    • Promote industrial exchange


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    Key Issue 5. (CSIR)Inadequate technology transfer policy

    Objectives

    6. Review and develop technology transfer policy

    7. Formulate appropriate laws and regulations to back the policy

    Strategies

    • Review existing policies on technology transfer

    • Develop appropriate Sessional paper

    • Review and update laws and regulationsrelating to technology transfer


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    Key Issue 6. (CSIR)Lack of entrepreneurial and technology culture

    Objective

    8. Promote entrepreneurial culture in STI activities

    9. Promote technology culture among Kenyans

    Strategies

    • Strengthen formal entrepreneurial education

    • Nurture entrepreneurship among the youth

    • Demystify STI

    • Create awareness on the importance of STI to development

    • Reward creativity and innovation


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    Key Issue 7. (CSIR)Weak linkages between STI Organizations and Industries

    Objective

    10. Strengthen linkages between STI organizations and industries

    Strategies

    • Embracing entrepreneurial culture in STI organizations

      • Generate technology oriented SMEs from R&D outputs

      • Promote business linkages with industries (consultancies and contract research)

      • Promote the uptake of R&D outputs by industries

      • Provide policy incentives for industries to finance R&D

      • Finance joint R&D activities between industries and STI institutions


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    Key Issue 8. (CSIR)Inadequate utilization of Traditional knowledge and local resources

    Objective

    11. Promote the use of TK and local resources

    Strategies

    • Develop policies that promote increase local contents in technology

      • Utilize TK in technology development and utilization

      • Develop technologies for value addition to local resources

      • Promote a culture that encourages consumption of locally manufactured products


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    Key Issue 9. (CSIR)Weak linkages amongst STI Organizations

    Objective

    12. Promote networking and collaboration amongst STI organizations

    Strategies

    • Undertake capacity audits in industrial research amongst STI organizations

    • Promote joint and multidisciplinary research

    • Promote sharing of research equipment


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    Key Issue 10. (CSIR)Weak marketing practices in STI Organizations and Industries

    Objective

    13. Strengthen marketing practices in STI organizations and industries

    Strategies

    • Embracing marketing culture in STI organizations

    • Embrace strategic marketing practices in industries (SMEs)


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    Conclusions (CSIR)

    • Rationalize and priotize R&D activities in line with high potential sectors/clusters of the MSEs that will serve as seedbed for industrialization

    • Establish Technology Service Centers to serve as hub for:

      Technology identification, sourcing, Negotiation and Technology acquisition

    • Establish Technology and Business Incubation Centers

    • There must be a deliberate effort to embrace STI as a tool for industrial and economic development


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    Conclusions contd (CSIR)

    • Lead Technology missions and study tours

    • Establish functional partnerships with relevant Government Ministries and other Departments, NESC, etc

    • Establish functional partnerships with local, regional and international Organizations & RTIs

    • Lobby GoK to support initiatives to develop the NIRP and establish a NIRF along the lines of ARF

    • Kenya must attract, train and retain high calibre scientists and engineers to drive the process of industrialization

    • Kenyan must embrace entrepreneurial and technology culture in order to industrialize


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