Making Do: Innovation in Kenya's Informal Economy
An investigation of indigenous innovation in Africa.
with a foreword by CHRISTOPHER BULL author of APPROPRIATE TECHNOLOGY MAKING DO INNOVATION IN KENYA'S INFORMAL ECONOMY STEVE DANIELS MAKING DO INNOVATION IN KENYA'S INFORMAL ECONOMY STEVE DANIELS � 2010 by Steve Daniels. Some rights reserved. This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/us/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. All photos and diagrams are attributed to the author unless otherwise specified. 1 13 33 CHAPTER ONE UNDER THE HOT SUN CHAPTER TWO THE VIEW FROM ABOVE CHAPTER THREE THE JUA KALI WAY OF LIFE CHAPTER FOUR A LIVING ORGANISM 49 67 85 CHAPTER FIVE MOVING FORWARD CHAPTER SIX A CALL FOR COLLABORATION V Making Do List of Acronyms LIST OF ACRONYMS ACESS ATP BDS CIPE CPC EPZ FDI GDP IC ICT IDDS IDE IMF ITTU KCJ KEBS KICK KIPI KIRDI KNBS LED MIT MRTTT MSE NGO NISCO NFJKA PEC RoSCA SMIDO SMS Africa Center for Engineering Social Solutions Appropriate Technology Project Business Development Services Center for International Private Enterprise Community Power Center Export Processing Zone Foreign Direct Investment Gross Domestic Product Integrated Circuit Information and Communication Technology International Development and Design Summit International Development Enterprises International Monetary Fund Intermediate Technology Transfer Unit Kenya Ceramic Jiko Kenya Bureau of Statistics Kisumu Innovation Center � Kenya Kenya Intellectual Property Institute Kenya Industrial Research and Development Institute Kenya National Bureau of Statistics Light Emitting Diode Massachusetts Institute of Technology Ministry of Research, Technical Training, and Technology Micro or Small Enterprise Nongovernmental Organization National Informal Sector Coalition National Federation of Jua Kali Associations Poverty Eradication Commission Rotating Savings and Credit Association Suame Magazine Industrial Development Organization Short Message Service Making Do List of Acronyms VI SIM SSA TCC UNIDO WTO Subscriber Identity Module Sub-Saharan Africa Technology Consultancy Center United National Industrial Development Organization World Trade Organization USD 1 = KES 77.25 KES 1 = USD 0.01 EUR 1 = KES 105.15 KES 1 = EUR 0.01 VII Making Do Foreword FOREWORD Near midday on a Sunday in January, 2010, I walked with Steve and Barnabas on Ngong Road, near the racecourse in Nairobi. It had rained earlier and continued to threaten. We hopped over puddles and slipped in the mud on our way to visit Philip, Samuel, and other jua kali who produced bed frames, giraffe statues, and other crafts. Their small shops lined the road, with various wares out front to entice buyers and ample space in the back for production and storage. Barnabas, who apprenticed with Philip, had agreed to introduce us to other jua kali in the neighborhood. On this day we shared a common goal--to understand how these businesses operated--and a common hope--that these businesses held real potential. However, the three of us traveled very different paths to get there. Barnabas was a tall, lanky Luo from western Kenya dressed in blue coveralls. He had come to Nairobi a year ago to "put some money in his pocket" after a couple of years of driving a boda boda, or bicycle taxi, in Kisumu. Philip took him on as an apprentice because he and Barnabas shared ethnic and geographic roots. The opportunity to get a paid break from hammering disks of sheet metal into bowls that would become part of statues of Maasai appealed to Barnabas. Steve was then a student at Brown University--a wiry, intense New Yorker collecting information for what would be his senior thesis (and this book). From what I know, his travel toward this place started in 2007 when he became involved in Engineers Without Borders. Although not an engineer, he was passionate about the role of design in transforming people's lives. As outlets for his passion he took courses in appropriate technology and industrial design, wrote a manifesto advocating change in the curriculum that would engage students with the larger community, organized the first annual Better World by Design conference, and pursued an independent concentration that freed him to bring together ideas from design, technology, entrepreneurship, and development. As a Brown International Scholar he traveled to Kenya in the summer of 2009, where he got to know some jua kali and began to ponder Making Do VIII Foreword how they might be engaged in furthering technology and aiding the development process. Early in the fall of 2009, these ideas gelled into a thesis proposal, hence the need to return to Kenya for further research. This time I joined him. My path to this place took a little longer. Trained as an engineer, I've taught and conducted research at Brown since 1981. In 1986, I joined Brown professor Barrett Hazeltine in teaching a course in appropriate technology. Hazeltine had been at it since 1979, initially as a vehicle to improve the technical literacy for liberal arts students. Over the years this course evolved to embrace a design and development perspective that attempted to bring teams of students together with partners in need of some technical assistance. In the process we wrote a widely-read textbook and a field guide to appropriate technology, endured the frustration of having what seemed to be a good idea drift rather than take off, and built a network of colleagues at least sympathetic to these ideas. For some time appropriate technology labored under the illusion that many problems have technical solutions. While technology may play a part in solving problems, it rarely can be the sole actor in the process. The dimensions and dynamics of most of the real problems we face go far beyond technology, demanding solutions that incorporate social, cultural, political, environmental, and economic realities. Without deep contextual understanding most development projects are doomed to fail. Hence the need for strong partners who are native to the context--partners who define the projects we undertake, guide the development process, and own the results. So our table must be large, with space for competing ideas and a process for moving through issues to produce solutions that have some likelihood of success. Steve, Barnabas, and I sit under a large umbrella with Samuel. The rain has picked up again, discouraging customers, so Samuel has time to tell us about his business and how the web IX Making Do Foreword of entrepreneurs in this small area collaborate to enhance each other's products and sales. Everyone knows each other. Apprentices become masters and open shops nearby. The products tend to be furniture and sculpture with strong similarities from one shop to the next. Jua kali keep binders filled with photos of the items they have produced. If customers don't find what they want on the lot, they leaf through the binder or work with the craftsmen to create the object. Jua kali know local materials, tastes, and markets. But their time that is available to innovate is limited by the need to produce goods that will sell in the market. Steve wonders whether we can engage them to develop tools and machines that would enable the creation of new products and businesses. When Steve asked me to write a foreword for this book I was delighted for three reasons: Firstly, the idea of incorporating jua kali help in the development process brings another valuable ally to the table. This book presents compelling facts and rationale for engaging and supporting not just the jua kali, but ambitious innovators throughout the global informal economy. They offer a missing contextual perspective, and engaging them has the potential to produce better products. The second is that Steve is part of a growing group of people willing and capable of forging new linkages across what have been large divides; between political and social institutions, between formal and informal economies, and across diverse cultures and geographies. This is a strong perspective, and one that provides much of the grounding for this book. Early success stories, like those outlined in the final chapter, demonstrate the power of making these connections. Lastly, this book is simply a good read. The graphics are bright and informative, the text a balanced mix of theory and practice, and the recommendations strongly supported. Making Do Foreword X The sun comes out and with it the customers, so the shop owners are less interested in talking to us. We leave Barnabas at Philip's shop, once again hammering sheet metal into shallow bowls. We head back to the center of the city, hopeful. Christopher Bull Providence, RI August 2010 CHAPTER ONE UNDER THE HOT SUN "The entrepreneurial spirit of Kenya's micro and small enterprises has translated into a dynamic and powerful economic force that has much to contribute to Kenya's development." �Daniel Macaria The Entrepreneurial Spirit1 A market in Gikomba, Nairobi 3 Making Do Under the Hot Sun INTRODUCTION Leonard makes machines in Kamukunji, Nairobi. He labors each day carefully crafting and assembling each part so he can provide a meager sum of USD 1.80 for his family's welfare. Leonard faces fierce competition from similar small enterprises, as well as large Indian-run businesses in the nearby Industrial Area. His two-man shop is not eligible for credit to expand. Unprotected by legal contracts, he faces uncertainty in agreements. And from time to time he worries that his entire industrial area will be razed, as government urban renewal initiatives have done in other areas. In great resolve, Leonard relies on informal mechanisms of production and trade. He borrows money from friends, uses social relations of trust, and depends on creativity and ingenuity to advance himself and his business. Leonard is one of millions of entrepreneurs who rely on informal mechanisms in Kenya, where the informal sector comprises a full three quarters of the non-agricultural economy.2 Under severe material constraints, they are forced to improvise solutions to everyday problems that, from time to time, result in game-changing innovations that better address local needs. Informal artisans who engage in the production of goods are known as jua kali (Swahili for "hot sun") and have established entire ecosystems of production, from scrap sourcing to repair. The most advanced jua kali like Leonard have designed and built capital goods, such as lathes, that propel indigenous production forward. The jua kali have been largely ignored by formal institutions, regarded as a second-rate economy.3 Yet their drive for innovation, understanding of indigenous networks, and ability to work under extreme constraints make them ideal agents of industrialization. This guide will examine the nature of the jua kali sector and how it, along with similar informal production systems throughout Africa, can be leveraged for sustainable economic growth. Making Do Under the Hot Sun 4 WHEN TRADITIONAL APPROACHES FAIL... Despite the tenacity of entrepreneurs like Leonard, businesses throughout the global informal economy have struggled to scale and contribute to local economies. Failed by predatory governments and formal enterprises, the potential of the informal sector has been restrained to a relatively small portion of GDP, despite comprising 72 percent of employment in Sub-Saharan Africa, 65 percent in Asia, and 51 percent in Latin America.4 Thus, organic growth of the informal sector alone has proved insufficient for meeting the growing product and infrastructure requirements of these emerging markets. Industrialization must also be planned. Discourse on industrialization in Sub-Saharan Africa has undergone three phases: modernization, appropriate technology, and bottom of the pyramid consumerism. The first, modernization, has been the dominant approach adopted by governments and international agencies since the dawn of the post-colonial era.5 This approach is typified by a relentless pursuit of a modern formal sector through the privatization of public agencies and the attraction of foreign direct investment (FDI) to establish capital-intensive factories. Beginning in the 1950s, some African governments initially pursued protectionist measures, which boosted local production by barring imports. This era of strong government intervention was known as structuralism and was effective in fostering indigenous innovation throughout the continent. But in the 1970s, the International Monetary Fund (IMF) began enforcing structural adjustment programs (SAPs) to privatize public agencies and open up borders to free trade. Results throughout Sub-Saharan Africa have been mixed. While competition from abroad allows higher quality products and larger volumes of private capital to 1950s Protectionist measures 1973 Schumacher's Small Is Beautiful 1980s Decline of Kenya's formal sector 2004 Prahalad's Fortune at Bottom of Pyramid 1963 Kenyan independence 1980s Structural adjustment 1990s Expansion of Kenya's informal sector 2008 Kinyanjui's New Industrialization Figure 1.1 Developments in Industrialization Discourse. Discourse on industrialization in Africa has undergone four phases in response to trends in industrialization. 5 Making Do Under the Hot Sun flow into the continent, this era of neoliberalism has also crippled local enterprise. In Ghana, for example, an influx of vehicle parts devastated the auto repair industry.6 In Kenya, a flood of cheap second-hand clothing has killed off much of local garment production (See "The Rise and Fall of the Garment Industry" in Chapter Two). Meanwhile, a new movement brewed in the 1970s in reaction to modernization. In 1973, economist E.F. Schumacher published a book called Small Is Beautiful, and in it he recounts numerous examples of modern factories in a state of disuse for the lack of capital and skill to maintain them.7 He then calls for a more appropriate form of technology: An intermediate technology would be immensely more productive than the indigenous technology (which is often in condition of decay), but it would also be immensely cheaper than the sophisticated, highly capital-intensive technology of modern industry. At such a level of capitalization, very large numbers of workplaces could be created within a very short time, and the creation of such workplaces would be "within reach" for the more enterprising minority within the district, not only in financial terms but also in terms of their education, aptitude, organizing skill, and so forth. With this book, Schumacher launched the appropriate technology movement, which has attempted to foster a more sustainable form of development, one that preserves social and environmental justice while spurring economic growth. Appropriate technology has tended to reject the notion of the modern factory which ignores local context and culture, costs too much to construct and operate, and relies on imported skills and materials. Instead, the movement has sought to generate jobs in rural areas by bringing affordable and maintainable technologies to communities, thus countering the flight to cities where newcomers are generally forced into squatter settlements with poor infrastructure and unsanitary conditions. Making Do Under the Hot Sun 6 The appropriate technology has seen some success, but the rural community-oriented approach has tended not to create "sustainable employment on the ground," in the words of entrepreneur-engineer Dr. Martin Fisher.8 Technologies he witnessed in his research were designed by foreign experts and implanted into rural communities without individual ownership. In response, a new movement emerged that sought to introduce sustainable supply chains to a variety of technologies. The bottom of the pyramid (BOP) approach views inhabitants of the developing world as potential consumers, armed with dollar-a-day incomes to spend as they please. In his 2004 book The Fortune at the Bottom of the Pyramid, economist C.K. Prahalad argues that there is a significant economic opportunity in serving the world's poor and that a competitive market would determine what products are appropriate for those customers.9 Great strides have been made through the BOP strategy in consumer products and finance. In the last decade mobile phone penetration in the developing world has grown from fewer than five phones per 100 people in 1998 to almost 50 per 100 people in 2008, delivered through market-based mechanisms.10 Meanwhile, the microfinance industry has grown in assets at 35 percent per year between 2004 and 2008, totaling USD 60 billion at the end of 2008.11 However, the BOP approach has largely served higherincome, urban residents of the developing world. It will take great effort on the part of appropriate technologists to make this approach work for products of extremely low cost and with efficient rural supply chains. In Out of Poverty: When Traditional Approaches Movement Traditional Industrialization Appropriate Technology Bottom of the Pyramid The New Industrialization Technology Complex Simple Complex Simple Labor Low High Low High Materials Imported Local Imported Local Design External External with testing External Co-creation Poor as Producer/ Consumer Producer/ Consumer Consumer Producer/ Consumer Center Urban Rural Urban Urban Table 1.1 Approaches to Industrialization in Africa. Approaches to industrialization differ on a variety of metrics, and it is important to weigh them against a nation's development objectives. 7 Making Do Under the Hot Sun Fail, Dr. Paul Polak recounts his experiences selling incomegenerating products to the rural poor through his organization, International Development Enterprises (IDE).12 He argues that if a farmer can regain the price of a product within one harvest, he or she will be more willing to make the investment and, along with it, the first steps to escaping poverty. Despite the noble efforts of visionary economists and technologists, manufacturing capacity remains low throughout the developing world.13 Yet informal sectors of small-scale manufacturers, traders, and retailers have continued to develop indigenous and efficient infrastructures for production and dissemination of products.14 When approaches to industrialization begin to recognize the potential of informal sector entrepreneurial producers, appropriate technologies will finally meet local needs and create sustainable jobs on the ground. Making Do Under the Hot Sun 8 A NEW INDUSTRIALIZATION A segment of industrialization scholars are proposing a New Industrialization that empowers indigenous producers and leverages their creativity and drive.15 They argue that despite the Kenyan government's discounting of the informal sector as antidevelopment, backward, or illegal, the sector has continued to expand and, in the face of a sluggish formal sector, contributes over 90 percent of new jobs annually. Dr. Mary Kinyanjui of the University of Nairobi contends that "efforts to formalize have not worked" and the sector "has extended its frontiers and markets." The New Industrialization has the potential to rework globalization in the favor of the informal sector, allowing them to grow As we will see in the next chapter, the informal sector has been on a foundation of indigenous riddled with varying perspectives and conceptions. Jua kali, innovation that both provides for too, is a multifaceted concept. Originally applied in the 1970s the needs of the local economy to artisans who produced wares out in the open sun, the term has since expanded to include all micro and small enterprises and brings in new capital (MSEs) in Kenya. It has connotations of a Kenyan modus through investment and export. THE JUA KALI operandi, as opposed to the Western or Asian way of doing business. Kenyans take pride in the fact that they participate in the jua kali economy. The indigenous matatu bus industry, for example, is rowdy and crude, but it works. Its market-driven incentives have allowed the sector to outcompete any government attempts at a public transit system. Through its close linkages with the auto repair industry, scores of jua kali repairmen have specialized exclusively in producing parts for or working with matatus. Likewise, many microenterprises in metalworks have proudly put their formal Indian counterparts out of business by competing on price. When asked which enterprises were considered formal, one artisan responded, "We are all jua kali in Kenya." Despite the contemporary universal interpretation, this guide adopts the original conception of jua kali as artisanal makers in the informal sector who produce consumer and capital goods under minimal regulation and protection from the government. This guide will also touch on supporting sectors, including trade, repair, and materials supply. Source: King, 1996. Kinyanjui is one of many supporters of the New Industrialization. As she proposes, "Informal production systems could be upgraded into import substitution status [through] relief on import duties on raw materials, tax concessions for jobs created, [and] improved infrastructure and factory premises." Others have called for stronger linkages among micro and small enterprises (MSEs), formal enterprises, and educational institutions.16 On the ground, workers have found viable methods of supporting MSEs, including microfinance, 9 Making Do Under the Hot Sun technology upgrading, and business development. Yet in Kenya many of these services remain out of reach for the informal sector and are still being refined. Unlocking the potential of the informal sector will require the collaboration of actors external to the sector. The success stories of the late industrializers of East Asia and elsewhere have taught us that it is important to harness indigenous innovation by creating linkages among all players, including governments, non-governmental organizations (NGOs), formal enterprises, and academic institutions.17 The government must provide appropriate infrastructure and ensure opportunities for capital and resources. NGOs may offer training and other business development services. Large enterprises--private and public--should subcontract to the smaller ones in order for capital to trickle down. Educational institutions can obtain reliable data on the sector, propose appropriate interventions, and develop new technologies to be channeled through the sector. This guide will help elucidate the strengths of the sector, as well as the gaps to be filled by external actors in conjunction with jua kali. Whether working with artisans to develop a new product or simply subcontracting parts to smaller enterprises, collaboration can be beneficial for all players, as well as the broader economy. The main arguments put forth by this book are as follows: 1. The creativity and drive of the jua kali make them excellent engineer-entrepreneurs, though material constraints make many averse to risk-taking. 2. Removing barriers to innovation for the jua kali will allow for a new indigenous type of industrialization. 3. Given the knowledge of local production methods and networks, any new technologies should be delivered through the jua kali sector. Making Do Under the Hot Sun 10 Informal Enterprise Business size Start-up capital Labor Labor protection Skills Selling price Raw materials Infrastructure Quality Resources Market Linkages Flexibility Efficiency Self-sufficiency Culture Small, <5 workers Low, easy to start a business Labor intensive Unprotected by contracts, social welfare, or unions Skills passed on by informal apprenticeships Affordable for local population Scrap from formal and informal sources Unreliable power and insecure premises Low-quality goods Limited capital goods and funding Poor distribution network, fragmented informational environment Adapts well to market conditions Efficiency through coordination among businesses Dependent on formal economy for resources Embedded in Kenyan social relations Formal Enterprise Large, >50 workers High, difficult to start a business Automated production Protected by contracts, social welfare, and unions High skills from formal training institutions Out of reach for local population New from local and imported sources Reliable power and secure premises High-quality goods Extensive capital goods and funding Well-established distribution network Difficult to adapt Efficiency through vertical integration Dependent on government and FDI for resources Adopts Western mode of production Table 1.2 Informal vs. Formal Enterprises. Enterprises in the informal and formal economies differ on a variety of metrics. There are strengths and weaknesses of each, based on the context. It is important to note that the descriptions given here are for extremes, as we will see that formality exists on a spectrum. 11 Making Do Under the Hot Sun ROADMAP In Chapter Two, we will view the jua kali sector from a macro perspective, examining its history, composition, and context. Then, in Chapter Three, we will zoom into the individual workshop to learn how the jua kali entrepreneur designs, builds, and passes on skills. In Chapter Four, we will zoom out to the cluster level, investigating how enterprises interact and coordinate activity. Chapter Five discusses ways to remove barriers to innovation for the sector. And finally, Chapter Six will outline more explicitly how external agents can engage the jua kali sector. Throughout, this guide attempts to respond to questions applicable to a variety of readers: Engineers and Designers The limited resources afforded to jua kali artisans forces many of them to be creative, efficient, and less wasteful. What can we learn from these practices? Development Workers The jua kali offer a unique entry point for interventions that promote industrialization, introduce new technologies, or create jobs. How can we interface with MSEs to advance these goals? Academics Some view the jua kali as the driving force behind indigenous innovation, while others see them as anti-development. What is happening in the informal sector and what is its role in development? KES Governments The jua kali are an active and enterprising sector that deserves the attention of government agencies. How can governments engage with MSEs to promote development objectives? Private Enterprises The jua kali are known to produce efficiently, cheaply, and with a thorough understanding of local terrain. How can formal businesses work with MSEs in subcontracting arrangements or when entering new markets? Artisans The jua kali sector has faced difficulty in collaborating and interfacing with other groups. How can artisans form more effective associations and obtain higher quality services? Making Do 12 Making Do 12 Under the Hot Sun Under the Hot Sun ABOUT THE STUDY This study was conducted between 2009 and 2010, including three months of research in Kenya, funded by the Brown University Office of International Affairs. Qualitative data was collected through interviews and multimedia documentation in Kenya's three largest cities of Nairobi, Mombasa, and Kisumu, as well as rural towns in the districts of Siaya and Bondo, located outside Kisumu city. Interviews were also conducted in Accra, Ghana, at the Maker Faire Africa conference, which included a segment of more innovative artisans from East, Central, and West Africa. Approximately 40 formal interviews were conducted with artisans, with the highest representation in Nairobi, and with more information gathered through informal discussions. Most of the respondents were entrepreneurs, though some were employees. Further information was gathered by surveying experts from government and academic institutions, including UNIDO, KIRDI, PEC, University of Nairobi, Maseno University, Bondo University, and the Appropriate Technology Project. Quantitative data on the jua kali sector is notoriously scarce. By definition, the informal sector is unregulated and, therefore, difficult to track. However, relatively comprehensive surveys were conducted by the Kenya National Bureau of Statistics in 1995 and 1999. Much of the quantitative data in this study has been gathered from the 1999 Microenterprise Survey. I am grateful to a number of individuals who have made this study not only possible, but also a powerful experience for my own personal development. I am most appreciative of the dedication afforded to me by my advisor, Dr. Chris Bull of Brown University, as well as my host in Kenya, Clarice Odhiambo, who also served as my employer while volunteering for her organization, the Africa Center for Engineering Social Solutions (ACESS). I am also thankful for the guidance of Erik Hersman of Maker Faire Africa; Dr. Mary Kinyanjui, Dr. Dorothy McCormick, Lorraine Amollo, and Lilac Osanjo of the University of Nairobi; Dr. Stephen Agong of Bondo University; Agina Isaac of KICK; Niti Bhan of the Emerging Futures Lab; Dr. Barrett Hazeltine, Sharon Langevin, and Cornel Ban of Brown University; Dr. Marijoan Bull of Westfield State College; Andy Cutler of Cutler & Company; the hip-hop sensation Palindrome; and my guides on the ground, Barnabus Ouma, Kennedy Ongawae, and Dominic Wanjihia. Lastly, I would like to thank my parents, Scott and Teri Daniels, for their loving, yet wary, support of my adventures. CHAPTER TWO THE VIEW FROM ABOVE "The New Industrialization should be the rallying call for the next decade in the new millennium." �Mary Kinyanjui University of Nairobi18 Rooftops in Kibera, Nairobi Source: Simon Cunningham 15 Making Do The View from Above INDUSTRIALIZATION IN AFRICA As the world industrializes and deindustrializes, Sub-Saharan Africa has been left behind. Globalization has promised that each nation would find a niche in the international economy, but most in Africa have not moved beyond primary commodity trading.19 This is the result of both structural imbalances in the international market, whereby many countries tax value-added imports, and internal factors, such as corrupt leadership, foreign aid dependence, and poor infrastructure, among others.20 This situation has led to rising inequality between the global North and South, with Sub-Saharan Africa hit the hardest.21 In its 2006 World Development Report, the World Bank reported that global inequality (measured as the distribution of income among all individuals in the world with zero indicating perfect equality and one indicating perfect inequality) has risen consistently from 0.42 in 1820 to 0.83 in 1992, but has begun to taper in recent years due to rapid growth in China and India. Within country inequality, according to the report, has also increased in the last half century. The authors argued that "with imperfect markets [like those in the developing world], inequalities in power and wealth translate into unequal opportunities, leading to wasted productive potential and to an inefficient allocation of resources," as well as "impaired institutional development." To level the economic playing field, then, the Bank advocated for policies that redistribute income or subsidies away from dominant groups over traditional measures that exclusively promote economic growth. As we will see, policies aimed at equity and growth can be complementary. The traditional strategies of attracting aid and foreign direct investment for large-scale, centralized projects have failed, calling for a new approach that views a country's people as sources of innovation, not just labor. Japan, Korea, India, and countless others have harnessed the creativity of their own citizens to grow their economies and realize their potential as major international players.22 We will see that this shift in mindset is also possible for Kenya and other nations in Africa. Making Do The View from Above 16 A BRIEF HISTORY OF KENYA Kenya, much like the rest of Africa, has a long history of skilled craft and bustling trade. In the pre-colonial era, trade routes running through the coastal city of Mombasa fostered linkages with other port cities throughout Africa and the Middle East, introducing new cultural ideas incorporated into wood carving, architecture, and even the Swahili language (See Figure 2.1). These traditions continue to thrive in Mombasa today. The beginning of the British colonial era was marked by the establishment of the British East Africa Company in 1888. While the British dominated formal industry, Africans were viewed as secondclass laborers.23 A significant Indian population was introduced between 1895 and 1905 for the construction of the infamous Kenya-Uganda Railway, known as the "Lunatic Line" because no one knows quite why it was built. Following independence in 1963, a transition period established a new national government. During this period of nationalization, state agencies solidified and indigenous capacity was built up within the informal sector, with particularly strong auto repair, textile, metalwork, and carpentry industries. A strong formal sector emerged in parallel, mostly dominated by Indian entrepreneurs, with some cases of Africans graduating from the informal sector. A series of structural adjustment programs (SAPs) enacted by the World Bank and International Monetary Fund (IMF) in the late 1980s and early 1990s marked the beginning of Kenya's age of globalization. The structural adjustments sought to privatize government agencies and partly controlled parastatals, as well as lower barriers to international trade with the intention of empowering the free market to direct development. The same adjustments have been enacted throughout most of the developing world, Figure 2.1 Wood carving is a well-developed craft in Mombasa as a result of coastal trade. 17 Making Do The View from Above and the results have been mixed. On one hand, a free market allows capital and high quality goods to move freely into the country. However, this has the adverse effect of weakening local industry, which has typically failed to compete with imported goods on price and quality. Countless accounts recall machine makers, auto parts manufacturers, and garment producers floundering as a result of market liberalization (See "The Rise and Fall of the Garment Industry"). The entrepreneurs and employees of these enterprises, as well as hastily privatized government agencies, have been thrust back into the informal economy. 1988 British East Africa Company 1963 Kenyan independence 1980s Structural adjustment 1990s Expansion of informal sector Early 1900s Age of colonial trade 1970s Age of protectionism 1990s Age of globalization 2007 Kenya Vision 2030 Figure 2.2 A Brief History of Kenya. This timeline shows major turning points in Kenya's development, setting the stage for the current gaps between the growing indigenous informal sector, shrinking formal sector, and business abroad. Making Do The View from Above 18 THE RISE AND FALL OF THE GARMENT INDUSTRY Following independence, the Government of Kenya identified textile manufacturing as a core industry that would promote jobs along with an African identity. Today, textiles are still one of the most important sectors for many African countries, but the industry landscape looks very different. Starting in 1963, the government promoted import substitution policies that protected the garment industry, including a 100 percent duty on imported goods. Local cotton production and textile manufacturing flourished, and the number of weaving mills grew from six in 1963 to 52 in 1984. The icons of the Kenyan textile industry were the khanga and kitenge, traditional East African cloths with bright colors and African prints. During this golden age of textiles, the industry employed a full 30 percent of the manufacturing labor force. But in 1991, market liberalization policies opened the doors to a flood of imported clothing, killing off local industry. Much of the imports were second-hand Western clothing, which replaced traditional fabrics, but some African textiles were still brought in from Tanzania and India. Today heaps of used clothing donated by charitable organizations can be found throughout Kenya's markets. Children upcountry wear shirts bearing the names of failed Super Bowl contenders, for whom merchandise was made but never sold. Meanwhile, factory after factory closed its doors in Kenya; by 2001 there were no traditional garment manufacturers were left, though micro garment producers and tailors continue to operate on a small scale in the informal sector. In 2000, the US passed the African Growth and Opportunity Act (AGOA), which eliminated import duties on textiles from Africa. Many of the traditional textile manufacturers, attracting investment from India, shifted gears to produce trousers, shirts, and dresses for the American market and revitalized the industry. Some of this growth has been mitigated by the World Trade Organization's (WTO) decision to include garments in its free trade policies, which removed quotas on exports from China. Meanwhile, the Government of Kenya has pushed for a resurfacing of pride in traditional wear, launching a contest to pick a national dress. Because of Kenya's diverse population and ethnic divisions, critics joked that only one dress was truly shared across cultural identities--mitumba, or secondhand clothes. Source: McCormick, Kinyanjui, and Ongile, 1997. 19 Making Do Under the Hot Sun THE INFORMAL ECONOMY The term informal economy has been wrought with misinterpretations, many of which rest on the assumption that developing countries should simply adopt Western modes of production.24 However, the rise of the global informal economy makes sense in context and even more so in comparison to the alternatives. The formal institutions we take for granted-- law, finance, and education--have failed the self-employed manufacturers and traders of the informal sector, who have in turn used great ingenuity and drive to invent mechanisms of production and trade appropriate for a huge population of workers. Today Kenya's informal sector continues to thrive despite being ignored by public institutions and officials. The relationship between the informal sector and the government has been mixed. As early as 1956, the government wrote of the informal sector as a powerful channel for economic growth. The government's Sessional Paper No. 1 of 1986, for example, included the following statement: Obviously, the modern, urban, industrial sector cannot be depended on to employ much of the growing work force. To employ people on small farms, in very small-scale industry and services, or in self-employment takes only a fraction of the �16,000 per worker required in the formal sector. Clearly the bulk of the work force will have to be productively employed in these activities.25 Additional sessional papers over the last several decades reiterated this sentiment, yet the rhetoric has failed to translate to action.26 Despite a few isolated cases of the government providing sheds and electricity for the jua kali, most artisans report harassment by the police or forced removals from their premises. In one notorious blunder, the World Bank and Government of Kenyan collaborated on a USD 11 million project to distribute training vouchers throughout the sector and improve infrastructure, only to find that the vouchers were allocated based on political relationships, many vouchers were not used due to confusion over the costs, and the portion of funds allocated for infrastructure mysteriously disappeared.27 Making Do The View from Above 20 Instead the government has focused on developing export processing zones (EPZs) in line with the modernization approach outlined in Chapter One, establishing formal enterprises and providing incentives such as 10-year tax withholding, expedited project approval, and business inputs such as machinery.28 The EPZ program was enacted in 1990 and has since produced three zones with high-quality infrastructure. The program has been criticized for dealing exclusively with the importation of raw materials and export of goods, creating a closed loop with no backward or forward linkages with domestic industry outsize the EPZs. Therefore, no capital or technology is transferred to the jua kali economy. The jua kali sector continues to produce over 90 percent of new jobs annually and employs an estimated 80 percent of the labor force.29 Nevertheless, the government has maintained its traditional approach of attracting foreign direct investment (FDI) to create large industrial states, absorbing only the remaining 10 percent of new workers. In 2007, the Government of Kenya announced Kenya Vision 2030, a plan to develop targeted economic zones around the country to generate 10 percent annual growth in GDP.30 The plan targets the following formal industries with no mention of the informal sector: tourism, The term informal economy was initially applied to Ghana by agriculture, manufacturing, Keith Hart in 1971, but the first thorough investigation of the trade, information technology, sector was conducted by the International Labor Organization and financial services. So far, the (ILO) in Kenya in 1972. More than three decades later, in 2002, targets have not been met, in the ILO released a report called "Women and Men of the Informal part due to violence following Economy: A Statistical Picture," in which they attempted to the highly contested 2007 reconcile the term's many definitions and interpretations, as well as provide the first reliable statistical overview of the elections, but also because global informal economy. The ILO defines informal economy as the strategy has viewed the comprising "small unregistered or unincorporated enterprises," nation as a node in the global as well as "informal employment outside informal enterprises," economy without considering including casual and domestic workers. The ILO report also the development of its internal recognized that informality existed along a continuum, rather talent and resources in the than as a binary characteristic. A number of variables contribute informal sector. to a business's level of formality, largely depending on the DEFINING THE INFORMAL ECONOMY level of regulation and protection applied to an enterprise's operations and relations. Source: International Labor Organization, 2002. 21 Making Do The View from Above Meanwhile, the informal sector's greatest strength--creating extremely low-cost jobs--is becoming its greatest weakness. Many jua kali industries are rapidly approaching saturation, with competition so fierce that it is difficult for any single enterprise to amass enough capital to formalize its operations on its own.31 No doubt life in the informal sector is hard. Resources from financial capital to information are severely restricted for this segment of the labor force. The title of microenterprise applies not just to the number of employees a business has (usually between one and five), but to a range of assets, from money to technology.32 Competition among microenterprises is so fierce that if a carpenter designs a new chair, he or she will find dozens of replicas along the side of the road by the next morning. Since every investment in time and money must provide an immediate return, the rampant theft of ideas in the sector can inhibit invention. However, material constraints also force the entrepreneurs to be creative with their resources and extract as much return as possible. No scrap material, power, or transportation is wasted. The jua kali entrepreneur is both resourceful and driven, but often lacks the means to realize his or her own potential. This is the tragedy of the jua kali. Making Do The View from Above 22 THE CLUSTERS OF KENYA Informal enterprises tend to be lean and specialized. A metalworker will start out specializing in one product--typically one he was trained to produce through an apprenticeship. He will source scrap materials from local vendors and sell them to traders often with expansive networks throughout the country. If he saves enough capital over time, he may take on apprentices of his own and purchase a welding machine, so he can scale up and expand his product line. Perhaps in time he will be fortunate enough to find a loan with suitable terms so that he can purchase a lathe and perform services for all the enterprises in the immediate region. The dynamic among such specialized enterprises is known as clustering.33 Within a geographic region, producers and traders will emerge--either organically based on replication through apprenticeships or forcefully through government relocations of enterprises. With the rise of these enterprises come supporting services like materials suppliers, hardware shops, and financial services. Enterprises form linkages with reliable suppliers and clients, building their social capital and reducing transaction costs through relationships and trust. You should now be getting the idea that it is not just each enterprise that operates efficiently, but the whole network! This is the idea behind collective efficiency, the competitive advantage gained from cluster activity and joint action.34 As opposed to the modern approach of integrating vertically so that all operations are consolidated within one organization, the jua kali tend to operate in smaller units, each one performing its own task resourcefully. It follows that the geographic cluster, comprised of an intricate web of relationships and transactions, operates with its own collective efficiency, so long as there are minimal losses in the connectors--usually guaranteed by close proximity and established social relations. Clusters of microenterprises can be found all over the developing world. Dr. Dorothy McCormick of the University of Nairobi has identified four main types: the diversified industrial cluster; the subcontractor cluster; the market town or distribution center; and the specialized petty commodity cluster. In Kenya, diversified industrial and subcontractor clusters are predominantly located 23 Making Do The View from Above within major cities. In Nairobi, a well-developed cluster might specialize in auto repair or metalwork, with businesses engaged in a variety of activities related to that sector. Peripheral clusters on the outskirts of the city or in smaller cities like Mombasa and Kisumu might be less specialized and rely on larger clusters for raw materials and parts. Rural cluster, for the most part, engage in trade of goods imported from other areas, as well as the localized exchange of so-called "petty commodities," a term coined by Frederick Engels to describe simple products produced by craftsmen. Making Do The View from Above 24 Source: Google THE INDUSTRIAL AREAS OF AFRICA All over Africa exist clusters of informal enterprises, some of which have become widely recognized for their scale, scope, and quality. Though data is scarce, Nairobi's Gikomba cluster is regarded as the largest concentration of artisans in Kenya. Walking through a labyrinth of improvised sheds, one feels as if he or she has entered a microcosm of industry where a ruthless free market reigns supreme. However, it soon becomes clear that the economy is embedded in a complex web of social relations that make Gikomba a thriving organism of production and trade. The range of products, from kitchenware to furniture, is impressive. One study (See Osanjo, 2010) found that the wooden frames of nearly all sofas distributed throughout Kenya's markets--even at large formal retailers--were born in Gikomba and that the design of each sofa was more or less set at this early stage. Elsewhere in Africa, clusters of informal enterprises have emerged from similar socioeconomic forces, but each with a unique flavor. Suame Magazine in Kumasi, Ghana, is widely known for its metalwork and auto repair industries, which attract customers from beyond national borders to have their vehicles fitted. It is estimated that about 100,000 artisans in over 9,000 firms are located in Suame Magazine, including some of the most mature MSEs in SubSaharan Africa. Suame's artisans build high quality auto parts and even metalworking machines. Few of the workers have a tertiary education, but they have been able to associate successfully through the Suame Magazine Industrial Development Organization (SMIDO) and innovatiton hubs like the Intermediate Technology Transfer Unit (ITTU) (See "Transferring Tools in Ghana" in Chapter Five). In Lagos, Nigeria, the Otigba Computer Village specializes in repair, sales, and even production of electronics and has demonstrated the potential for high-tech clusters in Africa to expand through incremental innovation from sales to assembly. In addition to unskilled traders, between 55 and 60 percent of workers here are university graduates with training in electrical engineering. With about 40,000 employees in 5,000 enterprises, this cluster has become so popular that the Nigerian government has begun to apply regulations to the businesses in intellectual property and consumer protection. However, the entrepreneurs have been effective in associating and formed the Computer and Allied Products Association of Nigeria (CAPDAN), which has lobbied successfully for reductions in duties on computer components and accessories. Source: Zeng, 2009. INDUSTRY DISTRIBUTION NO. MSES 9m MSE GENDER DISTRIBUTION EMPLOYMENT 12m FEMALE MALE 21 79 Manufacturing 6m 8m 51 Trade 49 3m 4m 33 Services 67 0 Manufacturing Trade Services 0 100% 42 Total 58 0% 50% MANUFACTURING SECTOR DISTRIBUTION NO. MSES 75k MSE MONTHLY INCOME EMPLOYMENT 90k FEMALE MALE 3k 6k Manufacturing 50k 60k 3k 6k Trade 25k 30k 13k Services 18k 0 Food Textiles Wood Paper Ceramics Const. Hardware Other 0 KES 18k 4k Total 8k KES 0 KES 9k SIZE OF MSES 6-50 people 3-5 people Source: Kenya National Bureau of Statistics, 1999. 1 person 2 people 70% 17% 9% 3% TOP CONSTRAINTS OF MSES 66% Rural 34% Urban 66% Rural 34% RURAL URBAN 13 Competition Urban 20 8 10 Credit NUMBER OF MSES EMPLOYMENT IN MSES 5 2 Transport 3 3 Raw materials 1 5 Authorities 1 2 Security 72% 25% of Kenya's non-agricultural employment of Kenya's non-agricultural GDP 20% 10% MSEs contribute MSEs contribute 0.5 2 Sites 0.3 0.3 Skills 0 0.6 Power 0.2 0.2 Water 0% MSE ACTIVITY AS A PERCENTAGE OF NON-AGRICULTURAL TOTAL 100% 75% 50% 25% 0% Percent GDP Percent employment Kenya Mali Senegal South Africa India SSA Total Kawangware Racecourse Kibera NAIROBI Kariobangi Gikomba Kamukunji Source: Google MOMBASA Changamwe Majengo Akamba Source: Google KISUMU Kondele Kibuye Market Kamas Source: Google CHAPTER THREE THE JUA KALI WAY OF LIFE "Craftsmanship names an enduring, basic human impulse, the desire to do a job well for its own sake." �Richard Sennett The Craftsman35 Metalworkers in Gikomba, Nairobi 35 Making Do The Jua Kali Way of Life THE CONDITION OF INFORMALITY In Planet of Slums, Mike Davis writes poetically about the tragedy of cities in the global South.36 "Instead of being a focus for growth and prosperity," he argues, "the cities have become a dumping ground for a surplus population working in unskilled, unprotected and lowwage informal service industries and trade." Cities in the periphery "grow prodigiously despite ruined import-substitution industries, shrunken public sectors and downwardly mobile middle classes," leading to urbanization without growth. Yet another view of this situation, championed by economist Hernando de Soto, tells us that the informal economy is a paragon of free trade comprised of driven entrepreneurs striving to form an indigenous economy from the ground up.37 If only governments can lower barriers to entry for business, says de Soto, the informal sector would flourish. Both of these perspectives illuminate different facets of the informal economy. Informality is truly a many-headed beast. Yet these simplified views miss an important element--that informality exists along a spectrum.38 If the informal economy encompasses both the woman sitting along the roadside selling grain by the kilogram and the metalworker churning out hundreds of sofas per month, it is worthwhile to differentiate between such cases. On the informal extreme, businesses tend to be untaxed, without fixed premises, uninsured, unprotected by contracts or intellectual property, and unregulated in production or trade. On the formal end, the opposite is true. But for a business to move from one end to another, it takes a gradual and arduous process of building skills, saving capital, obtaining a business license, purchasing land, building on that land, and promoting one's business. It is difficult to graduate from the informal sector. But in Kenya, even those who appear to have transitioned fully still take pride in identifying as jua kali. Making Do The Jua Kali Way of Life 36 THE PROPAGATION OF SKILLS The nature of skills in an industry determines its standards of performance and its capacity to innovate.39 It is important, therefore, to assess the level of skills in the jua kali sector, as well as map out the sources and flows of skills throughout the sector. Skills in the sector originated largely in the formal sector, where African engineers were trained in Indian-run enterprises.40 These engineers were taught to use a variety of machines, such as lathes and drills. When they left--voluntarily or by force--to start up on their own, they brought those skills with them to the informal sector. These entrepreneurs took on apprentices and trained them in their respective crafts, but typically these skills have been watered down from generation to generation due to a lack of appropriate machinery or a narrow production specialization. Because of a dearth of tools, it is said that the typical ratio in an African workshop is one man working to five men cleaning. Indeed, we will see that the issue of skills is intrinsically linked to the availability of capital goods, and it is difficult to decouple the two. Trainees are usually obtained through familial or tribal affiliations. Entrepreneurs tend to take on relatives seeking employment, many of whom move from upcountry to the city with no other prospects. Because so many workers flood into the cities, the areas surrounding major transportation hubs, such as Kamukunji, tend to grow prodigiously due to the huge influx of unskilled labor (See "Kamukunji Cluster" in Chapter Four).41 Employers also tend to favor members of their own tribe; one might notice that a business is exclusively comprised of Luos or Kikuyus. Nepotism in Kenya--even in the formal sector--is not always a nasty word. It's acceptable to help out your brother or sister. Those who share a tribal affiliation may also speak the same mother tongue and share a geographic or cultural origin. However, this practice does reinforce social divisions and builds up political conflict, as evidenced by the violent reaction following the contested 2007 elections. It is important to note that relations between master and apprentice are not always amiable, and some have criticized the low wages and extended hours as a form of exploitation.42 One 37 Making Do The Jua Kali Way of Life employee I spoke to reported abuse by his former employer, who was also a close relative. Nonetheless, as with all informal operations, the nature of the apprenticeship will depend on the values of the entrepreneur and his or her relationships with trainees. Interviews suggested that the investment is generally mutually beneficial for the employer and employee. One of the unique features of jua kali enterprises is that they are selfreplicating.43 For example, entrepreneur Sam runs a furniture shop at the Racecourse cluster in Nairobi. He was one of the first entrepreneurs to settle in the area because of its proximity to Figure 3.1 Students machining parts in ATP's metal shop. the Nairobi Racecourse, which enjoys a higher-end clientele, but also pays higher rent for premises. He gradually took on apprentices and trained them in tasks necessary to the business, starting with finishing of materials and moving on to cutting metals for furniture and finally using machines, such as drills, grinders, and welding machines. He employs 10 trainees per year, half of whom are usually new. Once his first apprentices graduated from their training, some of them set up shop next door. Since they had only been trained to work with certain materials and styles of furniture, they tend to compete directly with their master. These entrepreneur clones have an intricate dynamic that depends on a number of social factors. They do compete with each other, but most apprentices are grateful to their former masters and play nice by sharing materials, labor, and knowledge. This replication also allows enterprise clusters to form organically, drawing customers, labor, and producer services to the area. In addition to the formal sector and informal apprenticeships, one other type of training exists--formal training institutions. Making Do The Jua Kali Way of Life 38 These include universities, polytechnics, and NGOs. Most jua kali have not come into contact with any of these institutions, but those who have develop a deeper set of skills (See "A Tale of Three Repairmen").44 The government sponsors many so-called village polytechnics around the country, which have produced a number of technical graduates, though many have fallen into a state of disrepair with decrepit workshops and teaching facilities.45 Some jua kali even have university degrees. Indeed, a tertiary education in Kenya does not guarantee one formal employment after graduation, and many educated youth are forced into selfemployment with no capital. In Kisumu, the Appropriate Technology Project (ATP) was established by the Lutheran Evangelical Association of Finland (LEAF) in 1990 (See Figure 3.1). They have since become a self-sufficient training institute specializing in three tracks: mechanical engineering, auto repair, and hospitality. Their facilities are the most advanced in Kisumu city--stocked with lathes, a hydraulic press, and a large sheet metal roller--though a number of the machines have failed and ATP's technicians lack the skills and tools to fix them. Even so, ATP has churned out highly skilled graduates and takes on incomegenerating commissions to provide real-world experience for their students. Despite focusing on industry linkages to offer employment opportunities for their graduates, the formal sector is simply too small to absorb many graduates. 39 Making Do The Jua Kali Way of Life A TALE OF THREE REPAIRMEN During the study, I met three electronics repairmen in Nairobi, each with varying levels of training. The first, John, was trained informally and now works in Kawangware repairing TVs, radios, and amplifiers. The second, William, runs a small kiosk, also in Kawangware, where he repairs phones. He too is untrained, but has expensive machinery. The third, Daniel (pictured), owns an electronics shop near Racecourse and was trained formally at a polytechnic. John, who was trained informally, says the same few issues tend to reoccur and has mastered them through practice. He receives many amplifiers for repair, and the problem usually exists on a small integrated circuit (IC) chip, which he can simply pluck out and replace. Customers also sometimes ask him to make their amplifiers louder, which he can also do by replacing an IC. When faced with an unfamiliar problem, he goes to his friends for help. His friends also share new circuit designs with him, allowing him to build his own amplifiers from scratch. William runs a 20 square-foot kiosk where he sells mobile phone accessories. Since his parents bought him a Lukey 883 as a gift--a machine that removes embedded ICs from circuit boards--he can now replace ICs in phones, which are tricky to get to without such a tool. The Lukey 883 retails for KES 8,000 (USD 105) but has since come down in price and he hopes to purchase another. William keeps a handy supply of mobile scraps on hand for replacement parts, but will go to the local hardware store for ICs he doesn't keep in stock. Unlike John and William, Daniel was trained formally at a polytechnic. He says that those who are untrained typically don't know where to start when fixing electronics and will hack at different parts until the appliance is fixed. He saves time and money by testing once and knowing immediately what is wrong. For him, formal training was a worthwhile investment. Daniel's shop has only been open for one year, but because of a KES 50,000 (USD 670) loan from a friend he was able to start a cyber cafe in the shop. He has already paid off half the loan and has three computers available, purchased second-hand at KES 15,000 (USD 200) each and paid for in weekly installments of KES 500 (USD 7). When he grows to ten computers, he says, he will expand by starting a training center for youth so he can pass on his skills to the next generation. Source: Personal interviews. Making Do The Jua Kali Way of Life 40 TOOLS The pioneers of the jua kali sector brought with them not only skills from formal enterprises, but also tools.46 Some were able to replicate the advanced machinery they had seen and used in their prior workplaces from memory and trial and error. Some of these machine makers specialized in selling capital goods, rather than consumer goods, to other artisans in the area. Dr. Kenneth King of the University of Edinburgh has documented jua kali machinemaking skills over thirty years and found that the machine makers of the 1970s were more proficient due to skills acquired in the formal sector. Mutang'ang'I, a metalworker in rural Githiga (just north of Nairobi), was trained by an Italian foreman for six years before he set out on his own. Mutang'ang'I went on to make bicycle carriers, fence-post nails, and a number of hand-operated machines. He received a loan to obtain power tools, which he used to make powered machine tools and a new type of fodder cutter called a zero-grazer (See Figure 3.2). King identifies Mutang'ang'I as the source of skills that spread through Githiga to Nairobi, as well as a number of products still produced today. Now the skills in the sector are lower, and it is usually more cost effective to purchase an imported Indian or Chinese machine, though most were still out of reach for the jua kali interviewed in this study. In Racecourse, where carpentry workshops see fewer, but wealthier clients, just one workshop had a bandsaw. Gabriel, whose workshop is the one of the oldest in Racecourse and originally run by his father, was able to save enough money to purchase an Indian-made bandsaw at a hardware store. He now tends to specialize in services for the Racecource cluster, making cuts for other furniture makers. He continues to make his own furniture, which is of a high quality due to his machines and skills. In Kawangware, a Nairobi slum with a burgeoning market center, businesses see many more, but poorer customers. Several workshops there had bandsaws, perhaps Figure 3.2 A zero-grazer in Gikomba. 41 Making Do The Jua Kali Way of Life a signal of the maturity of the cluster. Businesses in Kawangware also tended to be larger, with more employees and space. It is common for most workshops to have some powered hand tools, such as drills and grinders. In metalwork, one machine is ubiquitous: the welding machine. In fact, it is said that to open up shop, a jua kali must first purchase one. This means metalwork typically has a higher barrier to entry than carpentry, where a premise and simple tools will often suffice. Moses, a metalworker at Racecourse, purchased his first welding machine in 2004 without any training. Through drive and entrepreneurial spirit, he trained himself to use the welding machine and has since fabricated at least ten more from scratch (See "Scrap Sculptor"). Figure 3.3 Inside one of Moses's home-made welding machines found at his workshop at Racecourse. The rest of the jua kali must make do with simple tools--many of them handmade. In Gikomba, Nairobi, exist some of the most creative fabrication techniques. Any object in Gikomba can be used as a tool, and most serve multiple functions. I-beams are used as flat surfaces, as well as edges for bending. Homebrewed hammers employ a hollowed out handle for riveting, whereby a rivet is placed beneath two sheets of steel, punched through with the hollowed out handle, and smashed down with the hammer (See Figure 3.4). Since screws and nails are difficult to come by, joining is a challenge throughout the jua kali sector. Rivets, solder, adhesives, bent rods, and welding are all common workarounds. Creative mechanisms have also been devised for temporary joining, for example in a common grill design in which the grate can be raised and lowered using a crank. In this design, a simple piece of sheet Making Do The Jua Kali Way of Life 42 metal or wire can be employed to lock in the position of the crank. One of the unsolved challenges for machine makers has been devising a tool that can churn out nails at an economically competitive cost. The jua kali spirit of fabrication is embodied in the jua kali workbench, a homemade tool employed by just about every shop at Racecourse (See Figure 3.5). Artisans start with a simple frame of square steel tubing, which can be used as flat surfaces and right angle edges. The jua kali then attach relevant parts to the frame as needed. For example, a large hollow cylinder can be welded to the frame, with which one can hammer sheet metal into a bowl shape. Welding on two short rods to the frame allows artisans to bend iron or steel wire between them, creating patterns that resemble wrought iron furniture designs seen locally in catalogs. 1 HOW TO FASTEN WITHOUT NAILS OR SCREWS 2 3 4 5 Figure 3.4 Riveting. The jua kali riveting process includes homebrewed tools and improvisational methods. 43 Making Do The Jua Kali Way of Life A hollow cylinder can be used to shape bowls and curved sheet metal. A helix mold can be used to make springs or other helical shapes. Two thick rods spaced closely can be used to curve thinner rods. Figure 3.5 The Jua Kali Workbench. The workbench exemplifies the jua kali improvisational tradition. It is a flexible and modular tool that can be adapted to each new task. Making Do The Jua Kali Way of Life 44 SCRAP SCULPTOR Jua kali metalworkers complete their apprenticeships when they learn sufficient skills to operate on their own and save enough money to buy a welding machine and obtain premises. This is the story of Moses, who established his workshop six years ago at Racecourse. He started by fabricating typical furniture pieces, but switched to sculpture three years ago when he came across an interested European buyer. Now he makes high-end sculptures out of scrap metal and is one of the most successful entrepreneurs in the area. He started with just a welding machine and a small premise, but has since reverse engineered the welding machine and fabricated over 10 from scratch. He has also expanded his premises significantly and takes on as many as 13 apprentices at a time. His designs are creative and beautiful, and it is easy to see why they are so popular abroad. At the time of interview, he and his workers were filling a large order of giraffes, warthogs, and windmills to be shipped to the United Kingdom. Typically, purchasers abroad order enough sculptures to fill one or more shipping containers to justify the price of shipping. Indeed, this trade can be very lucrative with the right publicity channels. Others at Racecourse have already copied his designs identically and are reaping the benefits of scrap art for export. Despite the contentious issues of competition and intellectual property, the area is showing signs of an emerging sectoral cluster specializing in scrap art that may over time develop a reputation and attract many buyers. It would be wise for the businesses to begin to coordinate their operations and specialize in different types of sculpture. Cooperation of this sort would keep the businesses from competing, and an administrative institution could make it easier to interface with buyers. Though Moses uses the cheapest materials he can find, the cost of scrap metal is on the rise in Nairobi. Small markets in Gikomba supply the city's informal sector with scrap metal, but traders have found it increasingly profitable to ship scrap overseas to China in large containers, so the local supply has diminished and the price increased. According to Moses, 1 kilogram of scrap metal costs KES 70 (USD 0.95). Therefore, a 15 kilogram giraffe sculpture would cost KES 1,050 (USD 15) to produce, plus wage for three days' labor, for a total of approximately KES 2,100 (USD 30). At a hefty mark-up of KES 10,000 (USD 135), Moses still sees a nice profit. Source: Personal interviews. 45 Making Do The Jua Kali Way of Life DESIGN The nature of the jua kali design process has been a point of contention among scholars.47 When one applies Western standards of design to the sector, it might appear as if many of the artisans are not employing a design process at all. Most copy designs from other artisans, who in turn copy designs from catalogs or imported goods--a process known as import substitution. But even if designs are copied, they are chosen for a reason and adapted to the local context according to a number of constraints. And that is a design process. The first component of the design process is product choice. A decision must take into consideration one's skills, experiences, startup capital, competition, tools and machinery, available materials, and customer preferences. Most broadly, products take three forms: consumer goods, capital goods, and subcontracted parts. Each of these types has a different customer base and requires varying forms of investment and relationships. To produce a kerosene lamp, a consumer good, requires only a small amount of capital, a connection to a scrap dealer, and market linkages. But to produce parts on contract with larger enterprises, one must have a proven track record of consistent quality, as well as relationships with formal enterprises. Most jua kali enterprises specialize in consumer goods, which can be broken down further by skill set and fit into a number of subcategories: metalwork, carpentry, textiles, and ceramics. Enterprise clusters typically specialize in one or two of these areas. Depending on the nature of the work and the market, an entrepreneur may decide to specialize in one good only or produce an array of products. In Gikomba, one can find stretches of sheds filled with burly men hammering hundreds of metal plates into bowls. Yet in rural areas like Siaya, most jua kali do not specialize at all. Instead they take only custom orders. At first, it might seem unreasonable not to keep a stock of goods for sale on the spot. After all, why would a customer make a purchase if they haven't seen the goods? Showing display items can offer an opportunity to make sales on the spot. However, due to limited capital and unsecured premises, it may be unwise or impossible to keep any surplus. Furthermore, One in three jua kali has improved the design of his or her products over time, and one in three has expanded his or her product line beyond the initial product. Figure 3.6 Product Lines. According to a study of 200 jua kali entrepreneurs, 33% had improved the design of their products and 34% had expanded their product lines. Source: Kabecha, 1999. Making Do The Jua Kali Way of Life 46 products in rural areas tend to have less differentiation among similar MSEs, which think of fabrication more as a service. These entrepreneurs rely on consistent relationships with customers to prove the value of their services. However, customers sometimes complain that fabricators take advantage of this practice to make it seem like an order will take more time or labor and charge a higher price. One of the reasons the jua kali work so well for the local economy is that the quality and quantity of products are matched well to consumer needs. In Kawangware, carpenter Leonard sells a range of furniture, some pieces visibly Figure 3.7 Leonard's furniture varies in quality based on what better than others (See Figure 3.7). He his customers in Kawangware can afford. says one of his greatest strengths is his ability to work with customers. He knows many of them have tight budgets, so he judges the quality based on what people can afford. While the Kenya Bureau of Standards might frown upon such a practice, it is this type of quality and price matching that make the jua kali sector so appropriate. The range of products offered in clusters like Gikomba is truly astonishing. Among the clanging of hammers and buzzing of welding rods one can find farming tools, kitchenware, a variety of cookstoves, and complex machines like zero-grazers mentioned earlier in the chapter. Most of these products are made from scrap materials, and while they lack a certain polish, they are affordable and fairly durable--exactly what customers value. However, over time it has become apparent that progress is slow in jua kali world. Most artisans don't invest in innovation, and those who do can rarely find adequate financial support or protect their ideas as intellectual property. Anecdotal evidence suggests that the 47 Making Do The Jua Kali Way of Life Kenya Industrial Property Institute (KIPI) has not been receptive to inventions from the informal sector. One inventor who completed detailed drawings for a viable new type of engine hit a dead end when KIPI demanded a prototype, which he lacked sufficient funds to fabricate. Even in the United States a patent does not require a working prototype for approval. Despite their sprawling presence on the Nairobi landscape, microenterprises are lean and efficient. They rely mostly on scrap materials from local factories and produce no waste. But you won't find any "green" marketing on their products. Customers don't like their wares to appear low-quality, so artisans finish scrap materials with bright paint and stenciled designs. In fact, some customers reported a stigma against Kenyan products as generally inferior to imported goods. Only those artisans lucky enough to produce goods for export know that we in the North like that "authentic scrap aesthetic." Making Do The Jua Kali Way of Life 48 Source: Tom Reilly THE BOY WHO HARNESSED THE WIND Despite the creativity employed in the jua kali sector each day, rarely does one find an innovation so staggering that the world takes note. In rural Malawi, a young boy would become perhaps the first informal African inventor to achieve international acclaim. Though he lacked the infrastructure of urban jua kali, he employed the same bricolage in his design process. William Kamkwamba, born and raised in the village of Masitala, Malawi, found himself at age 14 unable to pay his school fees of USD 80 per year. Instead he educated himself at a local library, where he stumbled upon a book with photos of windmills. The idea of building one of those machines sparked his curiosity and ingenuity. He saved up money from working piecemeal jobs to buy materials from a scrap yard: a tractor fan, some PVC, and spare bike parts. He worked tirelessly to recreate the windmills, with every component was true to the jua kali design approach: a bicycle wheel for bearings, a car battery for energy storage, nails and a stereo's magnets for a circuit breaker, and a bicycle dynamo for a generator. Initially William's tinkering was perceived locally as witchcraft; his neighbors told him he was mad. But after he was discovered by the local media, his opportunities snowballed. He has since spoken at conferences, been interviewed on The Daily Show, and released a book entitled The Boy Who Harnessed the Wind. Donors have supported his secondary education in South Africa, and he plans to study engineering in the United States. William's village is now grateful for his achievements. Following his first windmill, he has improved the design and built two others, along with a solar-powered water pump. He uses his windmills to power lamps in his house and charge batteries for his neighbors. He has also trained a cousin to build windmills. Following graduation, William hopes to launch an enterprise that helps individuals throughout Africa construct machines like his. "A windmill means more than power," he says. "It means freedom." If necessity is the mother of invention, zeal is its father. William was able to innovate at a higher level than most due a passion for invention and a drive to succeed. His achievements were remarkable for his age, but his youth also freed him from the pressures of providing for a household of dependents. Motivating others to tinker from a young age can promote further indigenous innovation. Source: Personal interviews and Kamkwamba and Mealer, 2009. CHAPTER FOUR A LIVING ORGANISM "Africa holds pockets of vital economic activity-- many in the form of enterprise clusters scattered across the continent's countries and industries." �Douglas Zeng The World Bank48 Jua kali at a shop in Kisumu 51 Making Do A Living Organism THE CLUSTER EFFECT Traditionally, microenterprises have been viewed as inefficient because they lack significant resources--capital, labor, technology, etc.--compared to larger firms. However, this view misses an important point: microenterprise efficiency comes not from the individual firm, but from the dynamics among similar enterprises in collective geospatial clusters.49 In fact, through clustering the jua kali economy displays a critical property of ecosystems that Western economies lack: it produces virtually no waste.50 Clustering can bring about many positive effects: attracting customers, labor, and producer services; exchanging information and skills; and forming linkages among enterprises. Linkages among firms occur in two different ways: horizontally through collaboration among producers and vertically through relationships along the supply chain. Well-developed clusters experience the most advanced benefits, especially those that require conscious effort by the entrepreneurs, such as subcontracting, firm specialization, and the formation of associations. However, clustering can also bring about negative effects. The jua kali apprenticeship system tends to breed workers who are skilled in only one product or trade. Once they conclude their apprenticeships, workers are likely to set up enterprises that compete directly with their masters. Since copying is rampant, the jua kali feel that it is not worth investing time and money in developing new designs. Historically, innovation has occurred more freely in jua kali technology and machinery than products, though these advances lead only to an incremental increase in quality or productivity, whereas the ripple effect of a new product design can be more far-reaching. It is easy to get caught up in the problems that entrepreneurs face on a day-to-day basis, yet we also know that at a macro scale things tend to work for the informal sector. This is because the linkages among microenterprises form dense networks of activity. Take a stroll through Gikomba, and one can't help but think of the informal sector as a living organism with intricate systems that form a concordant whole. Making Do A Living Organism 52 Trader or Customer Technical Support Business Support Jua Kali Jua Kali Jua Kali KES Microfinance Jua Kali Materials Trader Figure 4.1 Cluster Relations. Enterprise clusters include a variety of horizontal relations among businesses and vertical relations along the supply chain. 53 Making Do A Living Organism KAMUKUNJI CLUSTER Nairobi's Kamukunji cluster has received a significant amount of attention not only because it is one of the largest and most densely populated clusters in Kenya, but also because it was reportedly the first discovered by the Government of Kenya. In the decades following independence, jua kali in Kamukunji were met with harassment, with municipal authorities using health acts to control the cluster's expansion by demolishing buildings erected by entrepreneurs--just the type of misunderstanding that tends to occur when formal and informal forces make first contact. But in 1985, President Daniel Moi visited the site and made a landmark promise to provide sheds to the jua kali if they formed associations, thus launching the first ever jua kali associations--and forecasting their downfall due to the political nature of the allocation of goods and services. The cluster currently comprises about 5,000 artisans in more than 2,000 enterprises over 10 hectares (for a population density of about 130,000 per square mile). The artisans work in a variety of trades, focusing mostly on metalwork and producing products as varied as wheelbarrows and energysaving stoves. A small sub-sector of businesses make capital goods to sell to other businesses, such as presses and folding machines. Business support services coexist with producers, including scrap metal dealers, metal cutters and folders, gas and electrical welders, welding rod suppliers, polish and paint traders. Because of its location near the Machakos Bus Station, the cluster has experienced rapid growth as new laborers flow into Nairobi. These workers enter apprenticeships, where they learn not only technical skills but lessons that help them adapt to the jua kali culture: self-development, self-initiative, hard work, and co-existing with competitors. The embedding of manufacturing and trade in these social values allows the complex web of relationships and transactions that comprise the informal economy to flourish. Coordination in the cluster has been weak and, as the cluster continues to expand, will become even more difficult. But it will be necessary to mitigate the effects of population density and market saturation. Source: Kinyanjui in Zeng, 2009. Making Do A Living Organism 54 HORIZONTAL LINKAGES When similar types of producers cluster geographically, they tend to form relationships. These can be competitive or friendly, depending on a number of social factors. Have the artisans worked together before? Was one a former trainee of the other? Do they share a tribal affiliation? What is their attitude towards business? In 1944, sociologist Karl Polanyi claimed that markets function best when they are embedded in social relations like these, rather than disconnected from society.51 Polanyi's social relations included redistribution, whereby a central authority would redistribute assets to members of a society; reciprocity, based on mutual exchanges among social entities; and householding, where production is centered around the household. In formalized markets, institutional mechanisms--laws, contracts, intellectual property, and welfare-- reembed the market by practicing redistribution. But the informal sector lacks these institutions, so entrepreneurs must rely on their own social capital to do business. Of Polanyi's three mechanisms, the jua kali most clearly practice reciprocity, manifested as horizontal linkages. Despite intense competition, relationships among producers are not overtly competitive. Microenterprises tend to specialize, in part due to lack of resources, so maintaining productive relationships is important. Entrepreneurs work together to share labor, technology, and materials. When an entrepreneur gets a large order, he might ask a friend to take on some of the load. Or when supplies are tight, he might ask the friend for a loan of materials. Pooling of resources ensures that they are used efficiently by those who need them. The jua kali attitude towards business values harambee, the Kenyan national motto and Swahili for "pulling together," and it is not uncommon for microenterprises to work together when necessary. Trust is one of the most valuable assets. Grouping similar businesses also gives rise to producer support services. In some clusters access to such services can provide a huge competitive advantage. Microfinance institutions, training centers, business incubators, and marketing services all help producers operate more securely and expand their businesses. 55 Making Do A Living Organism Equity Bank, a microfinance institution which boasts 52 percent of the nation's bank accounts, has branches in several informal clusters, including Gikomba, Kawangware, and Kariobangi. Safaricom, Kenya's leading mobile services provider, has launched the M-PESA mobile money transfer service, affording financial services and more secure transactions to anyone with a mobile phone. Recently, Safaricom and Equity have partnered to offer a new M-KESHO mobile banking service, which offers traditional banking services in addition to basic money transfer, over the mobile platform. It is too soon to judge how M-KESHO will be adopted and whether microfinance can operate successfully over a digital medium, but the track record of Equity Bank and M-PESA suggest this will prove a powerful combination. More advanced services like training and consulting are hard to come by, and microfinance is still out of reach for many MSEs, but those who have access to these services often depend on them for survival and growth.52 Making Do A Living Organism 56 REVIVING OLD MATERIALS The informal sector runs on scrap, which introduces several interesting dynamics into the sector (See Figure 4.2). Firstly, it links microenterprises to the largest firms, some of which supply a steady stream of factory waste while others scoop up materials for recycling. Secondly, it minimizes the ecological footprint of an otherwise sprawling phenomenon by encouraging reuse and repair. Note that this is not intentional as most jua kali would prefer to use higher quality materials. Some, though, find that using cheap materials actually works well with export markets, particularly in art (See "Scrap Sculptor" in Chapter Three). Furthermore, continuously relying on scrap parts isn't necessarily a sustainable practice, as evidenced by the clouds of black smoke trailing behind vehicles running on jua kali maintenance and spare parts. Though parts wear down, the jua kali will scrape every ounce of life out of them. Welcome to the world of the scrap dealer. Samuel manages a scrapyard, which supplies the Racecourse cluster and surrounding areas with materials. He buys materials directly from businesses in the area or on site from individuals and middlemen. His two employees are then charged with the task of sorting plastic from metal. He sells what he can directly to local businesses. He buys plastic at KES 7 (USD 0.09) per kilogram and sells at KES 10 (USD 0.13) per kilogram. He buys metal for KES 12 (USD 0.16) per kilogram and sells at KES 15 (USD 0.20) per kilogram. Anything he can't move, he sells to formal businesses for recycling. Nairobi's steel producers like Rolmil, Devki, and Steel Yard have integrated vertically to include metal recycling. They scoop up metal from small dealers like Samuel, melt down the materials, and cast them into usable parts for the construction industry. Samuel's biggest problem is thievery, but not from his yard. It is difficult to assess whether the materials he purchases are the supplier's own or stolen from someone else. Occasionally, visitors make claims that materials in his yard have been stolen from them. Like the rest of the sector, Samuel keeps things rough and simple because he has found a model that works. But he could also extract more value out of his materials by using other metrics besides weight to determine price, managing his sources better, and demonstrating on site the design possibilities of his materials. Source: Personal interviews. 57 Making Do A Living Organism VERTICAL LINKAGES Producers also form linkages with suppliers, traders, and consumers to build their social capital. It can be advantageous to form relationships with hardware stores and materials suppliers in order to earn privileges like buying on credit. Connections to traders can establish consistent and reliable access to customers. Selling producer inputs can be a tricky business. What may appear to be a consistent opportunity can quickly become an oversaturated sector. Hardware shops like Joy-Lenana Hardware were once bustling--growing at the rate of new businesses creation in the cluster (See Figure 4.3). In 2004 entrepreneur Mary opened a hair salon in Racecourse, a business with a low barrier to entry and a steady client base. In 2006 she expanded her premises and opened a hardware store, where she sells paints, metal, bolts, nails, and other supplies to local producers. She is responsive to consumer demand and buys more of each item when customers ask for it. Her stock is not delivered to her, so she must travel to the Nairobi's Industrial Area to purchase from wholesalers. In a sense, that is the value that she is adding to the product. Mary says she has also been able to attract customers from the surrounding areas looking for residential supplies, like plumbing materials. Unlike producers in the area, she is likely to take out loans because it is the only way she can expand her stock. Though she sometimes defaults, she generally knows she will see a return on her investments because she knows her customers well. Despite her initial success, she says new competition has entered the area and demand is inconsistent. She tries to compete by simply lowering prices, but if she does not develop some new strategies, the hardware sector in Racecourse could hit a dead end and some of the businesses will be forced to close their doors. In addition to hardware, raw materials must also be brought into each cluster. The heart of the scrap industry is in Gikomba, where FORMAL Figure 4.2 Material Flows. Material use forms a closed cycle in the informal economy and links it to the formal economy for sourcing and recycling. Steel is melted in a furnace... ...and rolled into sheets. The sheets are made into oil drums. Making Do A Living Organism 58 traders collect materials from a variety of sources. The bulk of it comes from factories in the formal sector, which ship their scrap off to Gikomba. For example, bottling companies print sheets of metal caps, but sometimes printing errors occur and the sheets are offset. These bottle cap sheets are a common material for jua kali chests and other wares. Upon entering Gikomba, visitors are greeted by massive piles of oil drums to be split open and driven over repeatedly with trucks to flatten them into usable sheets of steel. Scrap yards collect these materials, as well as any others from local businesses and scrap pickers, for sale to manufacturers who travel to Gikomba from all over Nairobi. Goods traders are critical connectors in cluster ecosystem. Producers in lighter clusters like Kawangware might sell directly to customers and retailers in the area, but dense clusters like Gikomba produce at high volumes, affording them access to traders, brokers, and wholesalers. These brokers use their distribution networks to deliver goods throughout not only Nairobi, but the entire country. It is not uncommon to see the same goods produced in Gikomba sitting in the rural markets of Siaya. In fact, almost all sofas produced domestically contain a Gikomba-made frame. The sofa makers of Gikomba churn out hundreds of frames per week.53 Some traders are geared more towards export. For these traders, the social capital contained in transnational relationships with buyers in Europe or the United States can be enormous. However, there is also pressure on these traders to provide consistent quality and quantity of product. The Kisumu Innovation Centre � Kenya (KICK) has developed some ingenious mechanisms to incentivize quality and quantity among artisans (See "The Innovation Center"). Because of its network, KICK has leverage over the artisans it works with to improve the quality and consistency of production. INFORMAL Jua kali flatten them into sheets... ...for use in various products. Any unsold sheets are recycled. 59 Making Do A Living Organism One advanced form of vertical linkages is subcontracting.54 The informal sector is a source of cheap, unregulated labor, so formal businesses often contract out parts to microenterprises. For a microenterprise to be able to take on a job, it must have appropriate labor, tools, and skills to produce at a high and consistent quality. Subcontracting is an important way of promoting linkages between the informal sector and the formal and public sectors since it allows capital to trickle down and forces microenterprises to build their skills. The late industrializers of East Asia recognized this, and their government policies encouraged and enforced the practice. Figure 4.3 Mary's hardware shop at Racecourse. The principles of collective efficiency can also be applied in the global North, where technological integration is the dominant modus operandi and corporations have lost a sense of place and community.55 The jua kali sector has demonstrated that efficiency is possible among clusters of small, cooperative enterprises. Horizontal linkages can be enacted in the developed world, particularly in the creative economy, where businesses tend to be smaller and embed themselves in the community. Providence, Rhode Island, for example, has recently made strides in building profitable "cottage industries" like print shops, electronics labs, and wood studios which provide co-working space, offer services to the public, and coordinate operations through referrals and subcontracting in a way that achieves collective efficiency. For example, Providence's Steel Yard--a metalworking collaborative--offers space and subcontracts jobs to its network of artists. Clustering in the North has been further enhanced by the rapid expansion of ICT and social media, which further reduces transaction costs. This way of working signals an important postindustrial shift, whereby new modes of production mimic pre-industrial clusters of Africa. Making Do A Living Organism 60 THE INNOVATION CENTER Life in Kisumu runs at a slower pace than in Nairobi. At a lower elevation and directly on the equator, Kisumu has been likened to an oven. On the shores of Lake Victoria, the fishing trade is bustling, but manufacturing is stagnant. The jua kali in Kisumu are stuck in an industry where all businesses compete directly with little product differentiation. Here, everything is made to order-- usually the standard grouping of furniture, doors, and window frames. Enter KICK, the Kisumu Innovation Centre - Kenya. KICK is a story of unlikely success that has promoted design and innovation in Kisumu's Kibuye Market, one of the largest open air markets in East Africa. KICK is a for-profit enterprise that works with artisans to design new products for export and bring them to market. KICK was originally founded in 1994 as an NGO specializing in training and spun off a for-profit arm called ZIWA in 1997. However, both KICK and ZIWA went under in 2003 due to mismanagement and corruption. Three very brave Kenyans revived KICK in 2005 as a for-profit social enterprise and took a full three years to pay off the former debt to the artisans and landlord. Today KICK is thriving, with connections to global fair-trade organizations like Ten Thousand Villages and Oxfam. One of KICK's strongest assets has been a product designer on staff who developed new designs for products and trained artisans to fabricate them. Though they have since lost this employee, their connections to global networks brings in new consumer-oriented designs for production. KICK has very effective incentives in place to promote advancement among supplier artisans. Any artisan who conceives a design receives five percent of sales from any order based on that design, regardless of who fabricates it--a novel attempt at intellectual property. Furthermore, when KICK receives an order, say for 2,000 figurines, it will put out a call for samples. Any artisan can submit a sample, and if 20 meet the quality standards, each will be given an order of 100 pieces. The first to complete that order receives an additional 100 pieces and so on until the 2,000 pieces are completed. KICK's most dedicated artisans will train under-qualified artisans in exchange for higher orders from KICK. KICK's metalwork artisans work with wrought iron rod, high-gauge copper wire, scrap steel sheets, and recycled bottle tops (all used in the product pictured). The steel sheets come from bottletop plants, 61 Making Do A Living Organism which often incur printing mistakes. In the aftermath of the 2007 postelection violence, it has been more difficult and expensive to get these materials from Nairobi to Kisumu. KICK's weavers, on the other hand, predominantly use locally available materials, such as papyrus and water hyacinth (a nuisance to fishermen on Lake Victoria). These materials are made into carpets, furniture, paper for greeting cards. Despite KICK's financial growth and success among local artisans, challenges remain. Technological capacity remains very low on the premises and among the artisans, many of whom are not only unskilled, but completely untrained (particularly those who choose to work on the premises with no machines). Their biggest issue is financial literacy, as artisans do not understand certain fundamental business concepts: investing in capital to grow your business; lowering wholesale prices due to economies of scale; and providing a grace period for payment, rather than cash on delivery. Source: Personal interviews. Making Do A Living Organism 62 ASSOCIATIONS BUSINESS ACTIVITIES The most advanced form of cluster linkages is associations among artisans. The first incidence of associations in Kenya occurred in 1985 when President Daniel Moi first recognized the jua kali sector during his visit to Kamukunji.56 He declared that the government would provide sheds to all the microenterprises, but for efficient allocation they would have to form associations. From that day, jua kali associations were doomed to fail due to the political nature of their formation. Jua kali associations have a poor record of success for a number of reasons.57 Firstly, members tend to be dissatisfied with the services provided. Secondly, leaders are sometimes corrupt, or at least appear to be since they tend not to be elected democratically. And thirdly, association leaders are not trained in how to provide value to their members. Associations typically comprise geographical groupings of artisans of various, sometimes unrelated, trades. Members are required to pay regular dues and attend meetings. In return, the associations promise to provide a range of services, including loans, political representation, or bulk purchasing of producer inputs. Dr. Dorothy McCormick and Dr. Mary Kinyanjui of the University of Nairobi distinguish between services that are collective and ones that are individual-focused. Because many of the services tend to be collective--most advocacy activities fall under this category--the results may not be immediate or visible to members. Furthermore, since members are from a range of trades, there is rarely a consensus on their needs. As a result of this mismatch--whether apparent or real--between needs and services, members are often left dissatisfied. Attempts to provide particular services have had mixed results and vary from one association to another. One of the most effective advocacy efforts has been in business licensing; associations have been able to interface with municipal governments to obtain group business licenses that allow its members to operate legally. Loans, a business activity, have also seen some success. Groupbased financial instruments, such as rotating savings and credit 42% Finance 16% Training 5% New products 5% Marketing 16% Other ADVOCACY ACTIVITIES 26% Obtaining sites 21% Raising complaints 21% Protection from harassment 11% Obtaining services 5% Group licensing 11% Other Figure 4.4 Association Activities. The charts show the percentages of associations that engage in various business development and advocacy activities. Source: McCormick et. al., 2003. 63 Making Do A Living Organism 81% Registration fees 56% Monthly fees 17% Weekly fees 4% Premium associations (RoSCAs), are used to pool savings among members and provide loans at regular intervals. However, these tend to be employed more by women's groups and farming cooperatives than by jua kali business associations. Bulk purchasing of producer inputs, another business activity, makes sense in theory since artisans of a given trade have similar needs and would be able to purchase materials more cheaply. However, as mentioned, members are rarely of the same trade. Furthermore, this practice puts local hardware traders in the cluster at risk of losing business, so they pressure wholesalers into not working with associations. Some issues with association leadership can be attributed to the way associations have been formed--often as political bodies to interface with the government for allocation of resources. In most cases where free or subsidized resources are concerned, political conflict tends to surface and the artisans' needs are not met. Indeed, those associations that have formed more organically, rather than through a government mandate, have had a better track record. The most political association of all, the umbrella body known as the National Federation of Jua Kali Associations (NFJKA) has been wrought with political conflict, mismanagement, and poor communication with its constituent associations. It is unfair to claim that association leaders do not want to meet their members' needs; some experts argue that they simply need to be trained in providing value to their members.58 This is the approach taken by the Center for International Private Enterprise (CIPE), which ran a successful workshop in Nairobi for jua kali associations from around Kenya (See "Association Reform"). Through collaborative brainstorming, the association leaders were able to devise novel ways to provide value to their members. They also decided to form a new umbrella association to replace the NFJKA called the National Informal Sector Coalition (NISCO), the results of which remain to be seen. Providing value is one piece of the puzzle, but associations may also have role to play in correcting some informal market failures. As in all markets, a balance must be achieved between organic growth ASSOCIATION FUNDS 53% Credit 47% Administration 32% Welfare 26% Investment 16% Income generation 11% Sites and property 16% Other Figure 4.5 Association Funds. The charts show the percentages of associations that obtain and use funds in a variety of ways. Source: McCormick et. al., 2003. Making Do A Living Organism 64 One in two jua kali believes association leadership can do a better job. Here's how: and top-down coordination. Transferring some power away from the individual enterprise could allow an association to act as a trader and institute some of the allocation and incentive mechanisms that KICK has instated. This way an association could facilitate coordination with large buyers or contractors. One of the biggest issues reported by artisans was that competitors would copy their designs and technologies almost immediately after invention. Legal protection through intellectual property and contracts does not exist in the informal sector. An association could fill this gap by acting as a local enforcement agency; a local tribunal could hear contractual disputes and intellectual property claims. But in order for these rules to be enforced, the association needs leverage, and that leverage comes from providing real value to its members that can be taken away if necessary. One of the largest opportunities for providing value is in skills and machinery. Despite a functional apprenticeship system, artisans are faced with narrow skill sets and limited capital goods to make use of those skills. A centralized workshop, funded by both membership fees and rental fees, could provide machinery and training to all members in good standing. 11% Income generating projects 17% Buy property 19% Obtain finances HOW TO IMPROVE LEADERSHIP 11% 31% Other More active leaders 11% Diversify group activities This model gives associations a significant amount of power, resembling European guilds in certain ways. Despite the dangers associated with concentration of power, guilds were able to build skills of artisans to a very high level, setting the stage for industrialization and the dismantling of feudalism in Europe. Jua kali associations can learn from how guilds operated, but deflect some of the dangers of political power and corruption through democratic elections and umbrella regulatory agencies. While many experts agree that associations will play an important role in improving coordination within the jua kali sector, more research must be conducted in the fields of governance, leadership, and community organizing to uncover suitable association structures. The ideas outlined here, among others, should be executed in a series of experimental trials. Figure 4.6 Improving Leadership. The chart shows suggestions from the 47.2% of association members who believed leadership could do a better job. Source: McCormick et. al., 2003. 65 Making Do A Living Organism In the words of Dr. Bani Orwa of CIPE, "Business is about risk taking; collective action is about risk alleviation." A more powerful and accountable jua kali association is an important step on the road to a more innovative informal sector. Government Buyer Supplier Leadership Services Purchases Loans Fees Elections Disputes Member Member Member Member Figure 4.7 Association Structure. The proposed revisions to the association structure would transfer power away from individual enterprises so associations could more effectively coordinate businesses, bargain externally, and allocate resources. Making Do A Living Organism 66 ASSOCIATION REFORM Jua kali associations have the potential to address prominent challenges faced by microenterprises by protecting members from government harassment, improving access to property and infrastructure, and providing business services. However, many associations are faced with mismanagement, infrequent meetings, and a poor understanding among leadership of how to provide value for membership fees. In 2004 the Center for International Private Enterprise (CIPE) saw an opportunity to improve the situation by holding a weeklong workshop in Nairobi for 40 association leaders from around the country. Of the associations in attendance, all had provided loans to their members, three quarters had provided information and training services, three quarters had provided business licensing, and half had provided healthcare services. Other services offered included marketing and pooling of resources for purchasing and sales. During the workshop, participants acquired skills for leadership, finance, and budgeting; learned strategic planning, membership development, and marketing techniques; identified sources of non-dues income; and discussed the role of associations in democratic society. As a result of the training, several associations were rejuvenated and are currently offering new services to their members, including information centers and hospital insurance funds. Realizing they faced common problems and needed a united voice, participating associations joined together to form a new grassroots coalition, the National Informal Sector Coalition (NISCO). NISCO was meant to replace the existing government-backed federation for the sector, the National Federation of Jua Kali Associations (NFJKA), which was ineffective and did not advocate on behalf of its members. By early 2006, NISCO was presenting a truly representative list of jua kali policy expectations to the highest level of the Kenyan Government. NISCO achievements to date include obtaining a large hawkers market in Nairobi; advocating that the government allocate titled land to members, new shed structures, and basic infrastructure like electricity; and a KES 2 billion (USD 27 million) revolving loan fund. Source: Orwa, 2007. CHAPTER FIVE MOVING FORWARD "It is a long drop from the Ivory Tower to the Grass Roots. Academic engineers can face this free fall only if equipped with the parachute of confidence in their ability to communicate and apply their knowledge in purely practical terms." �John Powell Suame ITTU59 The metal shop at ATP in Kisumu 69 Making Do Moving Forward SURVIVAL OF THE FITTEST Neoliberal supporters of international free trade tend to support modern factories of the sort found in the export processing zones.60 Yet in reality, the informal economy is the closest thing in the world to a truly free market. Here, competition, rather than the state, drives industry, and social Darwinism gives way to organic growth. Nonetheless, this system has not produced large-scale innovation as proponents of capitalistic "creative destruction" would predict.61 Despite the drive and creativity of the jua kali, they are severely restricted by structural factors. Jua kali are incessant problem solvers, but they have largely been unable to innovate in the marketplace. The training system breeds direct competition and clusters with narrow skill sets. A lack of intellectual property protection deincentivizes novel designs. And poor access to loans prevents entrepreneurs from investing their money and growing their businesses. All the while tens of thousands of laborers pour into the cities each year, intensifying competition and spreading resources thinner. The risk aversion of the jua kali comes from the mindset that every decision and action in the informal sector must lead to an immediate and direct return (See "Rural Hydropower"). One expert has gone as far as to claim that "any new technologies therefore must come from outside the training process of the informal sector actors."62 Indeed, it will take the diligent efforts of actors external to the informal sector to unleash the potential of the jua kali. In particular, access to three categories of resources require immediate attention of external actors: capital goods, skills development, and information. Making Do Moving Forward 70 RURAL HYDROPOWER Statistics don't paint a pretty picture for Kenya's Siaya district. Two-thirds of the population live below the poverty line, one in four is infected with HIV, one in three children is orphaned, and the doctor-to-patient ratio is 1:96,000. Yet sparks of brilliance and resilience like that of Lawrence give us hope. Lawrence is not a jua kali, but might be if he could afford the risk associated with executing his ideas. Instead, Lawrence remains a smallholder farmer along the Yala River, but spends free time designing furniture and tools. He uses a KickStart MoneyMaker treadle pump to irrigate his plot, but after many tireless days of pumping (KickStart pumps demand eight hours of work per day), he began to brainstorm new mechanisms for getting water from the river to his maize. One day, an idea struck him: he could use the current from the river to run both a pump and a generator! Using only knowledge from secondary school physics, he designed a water wheel and gear reduction mechanism to run his pump (pictured). However, when he hired a welder to build a prototype, the fabricator left town with his money and materials. He isn't eligible for a loan, and he travels for days by bicycle to reach a market where he can gather materials. All the while, he must sustain his failing crops so his family can survive. That is the risk the jua kali must weigh when entering new terrain, especially those who lack the infrastructure afforded by urban clusters. After a rough calculation, Lawrence showed me that a prototype would cost a mere USD 125 (about the price of a MoneyMaker pump produced in China). He knew how to build it--it was just too risky for him to lay out the time and money. The risk problem is one that plagues innovation on the continent; investments often occur at the expense of day-to-day survival for entrepreneurs and their families. Most, unlike Lawrence, simply accept the status quo that guarantees some income, however small. In reality, Lawrence's design wasn't perfect, but iterations of prototyping or access to experts would help him stumble upon the optimal pump design, just as William Kamkwamba (See "The Boy Who Harnessed the Wind" in Chapter Three) refined his windmill in successive implementations. How might external actors provide a platform for launching indigenous African ideas? Is it possible to alleviate the risk inventors face so they can spend more time developing technologies and businesses like Lawrence's that stand to revolutionize the local landscape? Source: Personal interviews. 71 Making Do Moving Forward EXPANDING CAPITAL GOODS The appropriate technology movement has made great strides in providing communities access to technologies that improve life and generate income.63 Many rural communities have graciously received wells, brick presses, and honey extractors, among other tools. Some have even turned these technologies into sustainable livelihoods, though many have not. Nevertheless, the real drivers of a country's development are its own innovators. Technologists should shift gears towards empowering the jua kali sector to produce and sell new technologies appropriate for the local landscape. In order to do this, the jua kali are going to need some tools. The United Nations Industrial Development Organization (UNIDO) has defined industrialization not as a process, but as a state: the capacity to manufacture machine tools.64 In order to become industrialized then, the jua kali must be able to not only use machine tools to create goods, but also make those machine tools. Machine tools are machines that remove material: saws cut slices, drills make holes, lathes turn down cylinders, and mills remove layers (See Figure 5.1). These are some of the essential functions involved in precision fabrication, and each of these tools comes in various forms: hand-powered; powered, but hand-operated; fully powered; and computer automated. For example, a hand-powered drill press requires a long lever to push the drill bit down while turning; a powered hand drill requires less human force; a drill press automates the process further and operates with higher precision; and computercontrolled device would require only information fed from a computer. Appropriate technologists must work to make options available along this entire spectrum so businesses can grow from the ground up, and Figure 5.1 Elements of Fabrication. Fabrication includes a variety of subtractive, additive, and finishing processes, which can be aided by tools and machines. Saws cut parts along a plane. Hand saws for metal and wood, as well as vertical and horizontal bandsaws are available. Drills cut holes into parts. Hand drills, power drills, and drill presses are available. Lathes turn the part itself so it can be cut by a tool on the side or a drill at the end. Hand and powered lathes are available. Mills and routers remove metal and wood, respectively, along edges. They are available powered or computercontrolled. Making Do Moving Forward 72 they must investigate which devices can be manufactured locally and which will have to be imported from abroad. Appropriate technologist Pat Delany has devised an ingenious tool called the multimachine, which combines several machine tool functions into one machine (See Figure 5.3). His was not the first ever multimachine, but it was the first designed with a realistic expectation of constructing it in virtually any workshop in the world. With an engine block and scrap materials, a team of jua kali could potentially create one of Pat's multimachines affordably. Because they remove materials, machine tools can be considered subtractive. Additive processes include nailing, bolting, gluing, soldering, welding, and casting. Nails and bolts are too expensive to be used by many jua kali, so a manufacturing process that uses machine tools to produce nails and bolts affordably remain a holy grail. Adhesives, soldering, and welding are rather common among jua kali metalworkers, and many have been able to homebrew jua kali welding machines. Casting is the process by which a liquid metal is poured into a mold and allowed to solidify. Casting is performed in a foundry, a type of factory that includes a furnace, molds, and other components. Furnaces operate at very high temperatures and can be prohibitively expensive. In Ghana's Suame Magazine, the Intermediate Technology Transfer Unit has made great strides in making foundries available to informal sector artisans (See "Transferring Tools in Ghana").65 One other important process is forging--the shaping of metal through heating and compression. It is a common element of blacksmithing, which has a rich tradition among both urban and rural craftsmen. A Bolts, nails, and rivets fasten parts together using screwdrivers, hammers, and riveters, respectively. Soldering and welding bind parts together by melting solder or the material itself, respectively. Forging and casting shape parts by heating them and applying force or fitting them to a mold, respectively. Finishing includes sanding, buffing, and applying a polish or paint for an appealing aesthetic. 73 Making Do Moving Forward common jua kali machine in Gikomba for accomplishing this task is a bike-powered blower that fuels a fire pit (See Figure 5.2). It is an ingenious device that has achieved scale due to its simplicity and reliability. Finishing processes include sanding, grinding, and painting. These are the final processes that give a product polish, and most of these are relatively accessible to the jua kali in some form. One piece of the capital goods problem is designing affordable and appropriate tools for a given level of production, as discussed above. The other piece is making those devices available. Some capital goods, like welding machines and wood lathes, can be designed for Figure 5.2 This blower is an ingenious jua kali blacksmithing production by the jua kali themselves. device that fuels fires for forging. Others will remain too complex and rely on imported parts. For these, innovation hubs should be established as community workshops where artisans can rent or share equipment. These innovation hubs can be financed in a number of ways: through government or international aid; membership and rental fees that allow the workshop to grow more gradually; or localized investments that give artisans collective ownership over the machines. Artisan associations, educational institutions, government parastatals, and NGOs are all candidates for implementing these types of hubs. Some entrepreneurs, especially as their enterprises begin to expand, will find it more effective to own machines in their own workshops. For these cases, microfinancing must be made more accessible for the sector. Many entrepreneurs lack collateral and secured premises to back the loans, but microfinance institutions can work with associations or groups of artisans to guarantee regular repayments in small increments. Making Do Moving Forward 74 An overarm can be attached, which holds the lathe's tail stock. The the device can alternate between two motors, one of which is attached to the transmission for gear reduction. The spindle can hold and spin a drill bit, milling cutter, or the part itself for turning. The cross slide moves the part for precise milling. The device is built on an engine block and can weigh over one thousand pounds, so it should be constructed on a mobile base. Figure 5.3 The Multimachine. The multimachine combines many machining processes, such as drilling, milling, and turning, into one device. Multimachines can be built affordably by semi-skilled workers with scrap materials. 75 Making Do 75 Making Do Moving Forward Under the Hot Sun TRANSFERRING TOOLS IN GHANA Suame Magazine in Kumasi, Ghana, is regarded as one of the most mature informal clusters in Africa, but its development required the efforts of a number of institutions, most notably the Intermediate Technology Transfer Unit (ITTU). The magazine--as engineering clusters are dubbed in Northern Ghana--first emerged in the late 1970s and early 1980s when imports were scarce and Suame's shops were, through questionable means, able to get a hold of most of the country's supply of imported auto parts. In 1981, Ghana opened its borders to West African trade, and Suame grew to a regional manufacturing hub. At this time, most engineers in the sector were working with crude hand tools, much like the artisans of today's Gikomba. To expand the capacity of the sector, the University of Science and Technology in Kumasi established the Technology Consultancy Center (TCC) in 1972, which experimented with pilot production units like the Steel Bolt Production Unit, which by 1980, produced over 200,000 sets of bolts and nuts and established three independent spin-off enterprises employing a total of 11 lathes. In 1980, the TCC established the Intermediate Technology Transfer Unit (ITTU), which set up workshops in Suame Magazine that provided on-the-job technical and business training, as well as access to machines for metalworking, welding, blacksmithing, casting, woodworking, and pattern making. Through connections in the UK, the ITTU was able to import affordable machines for local engineers. As an innovation hub, the ITTU was also well-positioned demonstrate new manufacturing techniques and products to local engineers. The ITTU has been so successful as a generator of growth in Suame Magazine that the Ghanaian government sponsored new ITTUs in each of the nation's 10 districts. Perhaps its success is partly due to the wisdom of Director John Powell, who summarizes his philosophy as follows: "It is a long drop from the Ivory Tower to the Grass Roots. Academic engineers can face this free fall only if equipped with the parachute of confidence in their ability to communicate and apply their knowledge in purely practical terms. Informal industrialists tend not so much to listen to what is being said as to observe actions. When they see something that is practically useful they will copy it, especially if it is also affordable and cost-effective." Source: Powell, 1995. Making Do Moving Forward 76 BUILDING CAPACITY In order for MSEs to stay competitive, they must develop internal capabilities to effectively choose, use, and develop technologies on an ongoing basis.66 Therefore, in addition to the hard dimensions of technology--the machines and hardware--it is also important to develop the soft dimensions--the skills and processes--to promote innovation. This type of thinking diverges from the traditional technological choice conception that microenterprises need only capital inputs towards a capability focus on technological learning. This complicates the technology transfer process somewhat since hardware can be transferred more easily than the capability to employ it. These efforts take place on the shop floor, rather than in formal labs. Soft technology includes several areas, such as machine use, design process, and business operations.67 The jua kali must improve their quality of output through improved machining; differentiate their products through user-centric design; and build out their organizations around the products and services developed. There are a number of ways to reach microenterprises through training. A program may choose to target groups or associations of enterprises; commodity-specific sub-sectors; or nodal actors who interact with many producers, such as traders and producer support services.68 An ideal entry point would be an innovation hub like the ITTU, where jua kali could be trained to use various machines within an effective incentive structure established by an association. In order to improve the design process, it is important to establish the current sources of designs. Jua kali metalwork industries have been particularly successful because they have been able to engage in import substitution practices by copying and adapting imported products.69 The jua kali versions are available at a cheaper price and diffuse widely through informal networks. Other products have been introduced by appropriate technologists. The Kenya Ceramic Jiko (KCJ), a more fuel efficient cook stove, was designed by Dr. Maxwell Kinyanjui in 1982 (See Figure 5.6).70 The idea was to change Nine out of ten MSEs have never received credit or other assistance. Of those who have, here are their sources: 1% Government 41% Microfinance Banks 7% SOURCES OF CREDIT 3% Trade credit 42% 22% Informal 6% 22% Coops 4% Other Management training Technical training SOURCES OF ASSISTANCE 10% Multiple types 24% Materials and services 18% Marketing Figure 5.4 Sources of Credit and Non-Financial Assistance. In 1999, only 10.4 percent of microenterprises had received credit from any source and 7.2 percent had received non-financial assistance. With the expansion of microcredit over the last decade, the credit gap has begun to diminish. Source: Kenya National Bureau of Statistics, 1999. 77 Making Do Moving Forward LOAN REQUIREMENTS More than KES 100,000 8% KES 50,000-100,000 9% KES 20,000-50,000 25% the shape slightly and add a clay insert to the scrap steel housing to insulate the jiko and use less firewood. The KCJ costs KES 350 (USD 5) and are 30 to 50 percent more efficient than the traditional stoves. The technology has circulated widely for several reasons: it was an easy switch from the traditional stove; Kinyanjui educated artisans on manufacture of the housing and community groups on production of the ceramic insert; and he also marketed to consumers the cost savings that would accrue over time from reduced energy consumption. In 1982, USAID funded Kinyanjui to produce 5,000 units, but by producing and disseminating the product through microenterprises, 250,000 were sold within four years.71 Today, artisans in virtually every village and trading center in Kenya produce some variation of Kinyanjui's design, making it one of the most successful cases of appropriate technology dissemination in the world. Despite the widespread adoption of the products Kenya Ceramic Jiko, the technology development process in such cases does not exhibit continuous technological learning by the artisans. Based on that realization, the NGO Terra Nuova decided to focus its training on the design process itself (See "Design and Production Units").72 According to Terra Nuova, the design process includes two components: the ability to design technologies that solve problems and the ability to identify those problems. The former requires an understanding of mechanical technology and ergonomics, while the latter entails knowledge of the market and user. An emphasis on market research and user testing is critical to design training because it allows artisans to draw their inspiration from consumer needs, rather than external assistance. The final component of training is business operations, often the biggest weakness in the jua kali sector.73 Micro entrepreneurs know how to manage their money and make decisions that are profitable for the enterprise, but fail in other respects. None of the entrepreneurs interviewed kept any financial records and KICK reported that many jua kali in Kisumu did not recognize the idea KES 10,000-20,000 25% 9% KES 5,000-10,000 KES 1,000-5,000 17% 8% Less than KES 1,000 Figure 5.5 Loan Requirements. The level of required loans demonstrates the gap between supply and demand of credit. Credit must be made available along the spectrum of loan requirements to allow firms to grow, but the sweet spot for targeting MSEs appears to be KES 10,000 - 50,000. Source: Kenya National Bureau of Statistics, 1999. Making Do Moving Forward 78 of making investments to grow one's business. It's one thing to hedge risk, but it's quite another to make no investments at all. The Nairobi-based FIT Resources has made important strides in providing business development services (BDS) to micro and small enterprises. FIT is a nonprofit enterprise development agency that works with MSEs to facilitate market access, input supply, technical assistance, product development assistance, and financing mechanisms. These areas ensure that entrepreneurs are responding to market needs, creating products that address those needs, disseminating them effectively, and building an Figure 5.6 Traditional jikos (rear) and Kenya Ceramic Jikos effective organization to manage growth. (front) at a storefront in Gikomba. Financing mechanisms remain a critical barrier to growth, and the KNBS's 1999 Microenterprise Survey attempted to quantify the gap (See Figures 5.4 and 5.5). Since then, financing has become more prevalent through microfinance institutions and BDS organizations like FIT. Formal academic institutions also have an important role to play in skills development. Some polytechnics and universities have outreach programs that make their facilities available to the community and offer technical workshops. With the Technology Consultancy Center, the University of Science and Technology in Kumasi, Ghana has set the bar for such outreach programs (See "Transferring Tools in Ghana"). 79 Making Do Moving Forward DESIGN AND PRODUCTION UNITS The Undugu Society of Kenya is an NGO that empowers youth through education and training. Realizing that the best way to get kids off the streets is to give them meaningful work, Undugu began interfacing with the jua kali sector in 1984. In 1998, Italian NGO Terra Nuova partnered with Undugu to launch new design and production units so Undugu could more effectively train jua kali. The first was the Industrial Design Unit, established as a workshop for training and new product development. The goal was to diversify and improve the quality of informal sector products with close attention to function, form, and affordability. Undugu would then work with artisans to incorporate these new offerings into their product lines. Undugu went on to add two forprofit Production Units in carpentry and metalwork that trained apprentices while employing them to produce new products in collaboration with the Industrial Design Unit. The units provide feedback to the Design Unit so that products can employ simple fabrication techniques and local materials. Through experimentation, the production units have been able to incorporate new materials like bent plywood and pipe to produce attractive furniture. Through their training programs, Undugu and Terra Nuova paired master craftsmen with apprentices so the trainees could learn skills through observation. For example, metalworker Evans made fruit bowls for the Undugu Society, developed through a process of rapid prototyping, while learning technical and business management skills. On-the-job training has allowed Evans to shift from production by imitation to thinking critically about the design process. He has learned to analyze products, find and treat materials, organize production, maintain quality standards, and calculate costs. He has also been able to extend the design language used in the fruit bowls--concentric wire rings--to an entire line of related products. The training program embodies the spirit of the jua kali, which stresses the master-apprentice relationship and learning through observation and practical, for-profit work. As a result of the design and production units, Undugu now interfaces successfully with fair trade organizations like Ten Thousand Villages to export products. Despite its success, Undugu's exportoriented approach may not be replicable for the entire sector, which must also add value to functional products for local consumption. Source: Terra Nuova. Making Do Moving Forward 80 UNLEASHING INFORMATION SOURCES OF INFORMATION An environment conducive for innovation must be rich in information.74 Entrepreneurs need to create products that meet users' needs, train employees in a range of skills, reach appropriate markets, and identify relevant producer services to help expand the business. Yet few jua kali know that microfinance programs are available to them or that markets exist for their products beyond their immediate premises. One study found that information was so fragmented in the sector that between two-thirds and all MSEs, depending on industry, felt they did not have a reliable source of market information. The issue was even more acute in rural areas. The study also identified a variety of formal and informal sources of information required for operating a business: expert advice, industry standards, market research, competitor reactions, customer reactions, employees, friends and relatives, and personal judgment (See Figure 5.7). The most commonly used in the sector were personal judgment, customer reactions, and competitor reactions. Among the least common were market research, industry standards, and expert advice. The study also found that market information and access to credit were the two biggest information gaps (See Figure 5.9). It is important to provide business development services like those offered by FIT in a physical premise. In an analog culture like the jua kali, word of mouth and face-to-face communication are trusted. In Liberia, entrepreneur Alfred Sirleaf has been dubbed the "analog blogger" because he delivers information in an open way to his entire village through a chalk board he calls the Daily Talk and earns income through advertisements (See Figure 5.8). Despite such innovations in physical information delivery, digital information and communication technologies (ICT) will also be necessary to fill the information gap and introduce bidirectional flows. An innovation hub could allow access to telephones, the internet, and printers. Over the last decade, mobile phones have narrowed the information gap significantly (See Figure 5.10).75 As of 2008, mobile phone penetration in Sub-Saharan Africa reached 32 percent of the population, up from eight percent in 2004. During that period, Use rarely Use on occasion Use frequently 16% 43% 41% Expert advice 16% 28% 41% Industry standards 88% Customer reactions 19% 72% Competitor reactions 24% Employees 71% 88% Personal judgement 45% Research 31% 24% 28% 24% 48% Friends and relatives Figure 5.7 Sources of Information. Jua kali entrepreneurs obtain information from a variety of sources, relying more on informal sources than formal ones. Source: Moyi, 2003. 81 Making Do Moving Forward Kenya's mobile penetration increased from five percent to 42 percent. Mobile signal coverage in Africa more than doubled between 2000 and 2008. Rapid expansion of mobile technologies in Africa has radically changed the information landscape. Even rural farmers can now access market information. But for all their successes, mobile phones primarily allow individuals to tap into their existing physical social network more quickly and efficiently. It will take efforts by formal service providers to build applications on top of the mobile platform to further bridge the digital Source: Erik Hersman divide and expand their networks. In the Kenya's rural Bondo district, local Figure 5.8 Alfred Sirleaf, the analog blogger of Liberia, government agencies are using SMS to distributes information to his community in an open way. get the word out about meetings and job opportunities, as well as reimburse youth for transportation by sending them airtime. An application called FrontlineSMS, developed by the non6% 49% 0% profit kiwanja.net, allows NGOs to broadcast text messages from any Technical Access to Access to personal computer and has seen high adoption rates throughout the assistance credit inputs developing world. Safaricom's M-PESA and M-KESHO services have afforded financial services to anyone with a mobile phone on its network. M-PESA has been adopted by about seven million users and is reportedly used by 40 percent of the adult population.76 These early successes illuminate the potential of the mobile platform to foster a more complete informational environment. INFORMATION NEEDS 3% Government policy 43% Market information Google, along with the Grameen Foundation and MTN, has recently piloted its Google SMS suite of applications in Uganda with initial success (See "Uganda's AppLab").77 The applications include Google Trader, which allows producers, traders, and consumers to communicate their needs and offerings--a Craigslist for Africa; Farmer's Friend, which allows farmers to access market information; Figure 5.9 Informational Needs. Micro enterprises reported overwhelmingly that access to credit and market information were the greatest informational needs. Source: Moyi, 2003. Making Do Moving Forward 82 and Google Search, which allows anyone with a mobile phone to search Google via text message. 1.7 million messages were sent using the Google SMS service in the first four months of use. Limitations to the SMS platform, including message length and literacy issues, have promted others to look to voice. IBM's India Research Lab has been piloting the Spoken Web, an analog to the internet whereby users create their own hyperlinked "voice sites."78 The result has been the crowdsourcing of huge amounts of content available in the vernacular through a familiar user interface--speech. Multinational corporations and non-profits are entering the race to provide appropriate information and communication technologies for the developing world. In effect, SMS and voice technologies will see a wider range of uses than anyone could ever have imagined. That is, until the next great leap: when a new generation of handsets--with cameras, multimedia messaging, and eventually internet access--are made affordable enough for the bottom of the economic pyramid. MOBILE PHONES PER 100 INHABITANTS 100 75 50 25 0 2003 2008 Kenya Tanzania Uganda Ethiopia Nigeria Ghana South Africa Figure 5.10 Expansion of Mobile Technology. Over the last decade mobile technology has rapidly expanded in SubSaharan Africa. Source: International Telecommunication Union, 2009. 83 Making Do Moving Forward Source: AppLab UGANDA'S APPLAB Since 2004, Grameen Phone-- famous for making mobiles available to Bangladesh's rural poor--has been working in Uganda, empowering women in rural areas to become Village Phone Operators and provide market-based telecommunications services to their entire communities. In 2009, Grameen, in partnership with Google and mobile service provider MTN, launched an initiative called the AppLab. The AppLab was meant to serve as a laboratory for locals to develop new mobile applications for underserved communities through research, rapid prototyping, and dissemination. The applications developed in the AppLab are piloted through Grameen's network of Village Phone Operators and delivered over MTN's infrastructure. The results of initial development include a suite of applications called Google SMS, released in June 2009. The suite comprises Trader, through which users can buy and sell goods and services; SMS Search, through which users can perform keyword-based Google searches; and SMS Tips, through which users can find relevant information on a range of issues, such as health practices, clinic locations, and agricultural techniques. Within five months, the applications had received 1.7 million hits, with a daily average of 12,800 hits. Despite its initial acclaim, some challenges remain. Though the service was initially offered for free, some believe that the regular price of UGX 212 (USD 0.10) per SMS is too steep, considering the typical fee at an internet caf� is UGX 1000 (USD 0.50) per hour. Furthermore, critics fear that the AppLab has focused too much on the technology without giving as much consideration to content. Indeed, a Google search may not be particularly helpful for someone seeking a local business without a web presence, and a restricted database of farming and health tips could hamper adoption rates of SMS Tips. Those who are not literate in the available languages will be excluded completely. Despite these obstacles, the AppLab demonstrates the power of developing applications for the bottom of the pyramid and the potential of the mobile platform. And more importantly, it has devised a model for continuous technological learning and innovation in ICT, and the lab continues to reach out to rural communities in novel ways. You can try Google SMS online at www.google.co.ug/mobile/sms. Source: Grameen Foundation, 2009. Making Do Moving Forward 84 CHAPTER SIX A CALL FOR COLLABORATION "In pre-industrialized Sub-Saharan Africa [a Make philosophy] stands the chance of becoming a pivotal ingredient needed to ignite mechano-electricalchemical creativity." �Emeka Okafor Timbuktu Chronicles79 The Maker Faire Africa in Accra, Ghana Source: Erik Hersman 87 Making Do A Call for Collaboration TOWARDS A NEW INDUSTRIALIZATION We have seen the dual nature of the jua kali sector: its potential and its limitations, its innovation and its risk aversion, its elegance and its crudeness. Empowering the informal sector by filling the gaps can pave the path towards a New Industrialization embedded in African values and social networks. But the current structural environment will not allow microenterprises to grow on their own or overnight. It will take the collaborative efforts of a number of players, including jua kali associations, the government, educational institutions, and transnational agents. The jua kali have an important role to play in associating more effectively. Associations must learn to provide value to their members by providing critical business services, social services, capital goods, and training. This will give associations more leverage to enforce resolutions and contracts, effectively acting as regional and sectoral legal institutions. In the same way European guilds were able to enforce standards of practice, associations too can help build the capacity of African craftsmen. The government must promote the development of microenterprises by improving physical infrastructure, supporting innovation hubs, and aiding product development. Most jua kali do not know which government agency is responsible for microenterprises--and it's certainly not their fault. The department has moved from the Ministry of Research, Technical Training, and Technology (MRTTT) to the Ministry of Trade and now falls within the Ministry of Labor and Human Resources.80 Other agencies that interface with the informal sector--the Kenya Industrial Research and Development Institute (KIRDI), the United Nations Industrial Development Organization (UNIDO), and the Kenya Bureau of Standards (KEBS)-- must be strengthened and act in concordance towards the goal of empowering MSEs. Educational institutions must work with government agencies to perform two critical functions: research and product development. Academic institutions are well-positioned to collaborate with the Kenya National Bureau of Statistics (KNBS) to devise surveys and analyze results. The University of Nairobi Faculty of Development Making Do A Call for Collaboration 88 Studies has worked with KNBS in this capacity, but a rigorous survey of MSEs has not been conducted in over a decade. The engineering and design departments of universities must work with government agencies like KIRDI, as well as jua kali associations and end users, to develop new appropriate technologies and products that can be disseminated throughout the sector. International players can leverage their networks to bring skills and information to the sector, as well as provide export linkages for value-added products. Organizations like Terra Nuova and Ten Thousand Villages have allowed communities of artisans to better understand customers abroad and incorporate that knowledge into an improved design process. One of the most important recent developments in the informal sector has been its organization into a social movement. Jua kali have always held a proud identity, but have never been able to successfully collaborate on a large scale to interface with national and international players. The Maker Faire Africa, an event sponsored by Make Magazine in the United States, has helped solidify this movement among small-scale African makers by bringing them together across national borders to show off their inventions, exchange information, and make connections (See "A Make Philosophy for Africa"). Since these players hold a common interest, but operate across large distances, the relationship is more collaborative than competitive, and ideas can flow freely. Once fully organized, a powerful alliance of informal sector engineers could realize the New Industrial Revolution. 89 Making Do A Call for Collaboration A "MAKE" PHILOSOPHY FOR AFRICA All around the United States, garage inventors called makers congregate for annual Maker Faires--sprawling, family-friendly festivals sponsored by Make Magazine that promote do-it-yourself culture in a fun and educational environment. But a group of African bloggers saw an opportunity to give the Maker Faire an entirely new meaning. In 2006, Nigerian blogger Emeka Okafor wrote on the Timbuktu Chronicles, "In pre-industrialized Sub-Saharan Africa [a Make philosophy] stands the chance of becoming a pivotal ingredient needed to ignite mechanoelectrical-chemical creativity." The philosophy behind the maker movement has several core tenets that can be applied anywhere: accessibility of technology, individual control over the finished product, and open sharing of ideas. Applying this philosophy to Africa could redefine what it means to be a jua kali and form a transnational social movement around the informal sector. Other bloggers, including Erik Hersman of Afrigadget and Nii Simmonds of Nubian Cheetah, joined the movement. Three years later, in August 2009, Africa held its first Maker Faire, in Accra, Ghana, drawing craftsmen from around Ghana and flying in others from as far as Liberia, Zambia, Malawi, and Kenya. Each shared stores of innovations that changed their lives--like William and his windmill (See "The Boy Who Harnessed the Wind" in Chapter Three) or Sham, a talented engineer who works for a local fabrication company designing and building his own tools, from welding sets to shea butter roasters. Entering an apprenticeship with his master at age 15, Sham went on to be a relative success with apprentices of his own. Now one of the most affluent artisans in the area, he has tried to spearhead initiatives to form local associations, which have failed due to managerial conflicts. The Maker Faire has allowed him to share his experience with others and return home with feedback and connections. Also present were Western students and professionals who could lend technical and business advice, as well as find services for local production. Bringing the maker movement to Ghana has allowed craftsmen to embrace the notion of solving their own problems through technology. By connecting them with artisans from other countries in Africa, as well as engineers from abroad, their networks have broadened, opening the door for more meaningful opportunities to exchange ideas. Source: Personal interviews and Okafor, 2006. Making Do A Call for Collaboration 90 PRODUCER SERVICES The most direct way to bolster microenterprises is by improving producer services provided by nodal actors who interact with many manufacturers. These services can take many forms, but generally provide access to some form of capital: machines, loans, market linkages, business inputs, or skills development. Non-profits are well-positioned to address these issues holistically, while forprofits and educational institutions may choose to focus more narrowly. Non-profits like FIT Resources provide consulting services on a range of issues from product development to management. These are important services for the sector, and FIT has been successful in achieving its mission, but non-profit models rely on external donations and are prone to corruption through misuse of funding. A for-profit support model, on the other hand, would force the service provider to provide value to the client and operate efficiently. For-profits also tend to focus on one area, rather than spreading themselves broadly, so they can become profitable and benefit from economies of scale. For example, a microfinance institution might focus on providing loans, an ICT center might provide internet access, or a machine shop might provide rental of capital goods. Each of them could offer complementary services, such as training or consulting. Innovation hubs like the Intermediate Technology Transfer Unit are well-positioned to consolidate these services. They can be especially effective in rural areas by providing a centralized infrastructure point with power and internet access. In Kenya and elsewhere, shops called Fab Labs are becoming important innovation hubs, providing access to computerized fabrication equipment, training, incubator services, and a global network of problem solvers (See "Fab Lab").81 Information and communication technologies (ICT) provide new avenues for service delivery. Applications like Google SMS and FrontlineSMS allow individuals to access new information and networks, but there is still room for improvement. Imagine a virtual incubator that connects investors and experts in the global 91 Making Do A Call for Collaboration North with jua kali. Armed with SMS or multimedia messaging, an inventor can post a technology he or she is working on, receive feedback from a range of experts and seed funding to help make that idea a reality. This can also be done through a web platform, with partner NGOs interfacing with localized groups of artisans via mobile technologies. In coming years, access to information will make producer services more accessible and reliable. It is important for service providers to leverage these networks through both delivery of virtual services and marketing of physical ones. Though many appropriate producer services exist, they are still inaccessible to the masses due to a fragmented informational environment. Making Do A Call for Collaboration 92 FAB LAB In 2002, Dr. Neil Gershenfeld and his students at MIT's Center for Bits and Atoms stumbled upon a striking idea: providing communities around the world access to a set of computerized machining equipment could empower them to solve their own problems. From this concept came the Fab Lab, a facility with sufficient computerized equipment to be able to make "almost anything" in small quantities. Over 40 Fab Labs have been transplanted in such diverse localities as the city of Amsterdam and rural India. Each Fab Lab is established with the same set of equipment, but adapts as necessary to the local context. Available machines include laser cutters, which carve and engrave two-dimensional shapes into many types of materials; milling machines, which can produce printed circuit boards on the spot; routers, which carve large blocks of wood into any shape (pictured); and 3D printers, which deposit resin at specific points in three-dimensional space. In all, the equipment runs about USD 96,000, though cheaper options exist with fewer machines. Through every lab has the more or less the same equipment, each serves its community in unique ways--whether by producing solar technologies in Accra, Ghana, or artistic creations in Providence, Rhode Island. Kenya has two Fab Labs--one in Nairobi (pictured) and one in Bondo, a rural town on the outskirts of Kisumu city. Both are now getting their feet on the ground, facing early successes and challenges. The University of Nairobi's Fab Lab has already undertaken a number of exciting projects: they are developing analog-to-digital television kits to prepare the country for the digital transition, prototyping wind turbine blades, and competing successfully in the nation's annual robotics competition. They hope to commercialize the technologies developed here, turning as many as possible into enterprises run by students or community members through business development services. The Fab Lab is open to everyone. Dr. Kamau Gachigi, who runs the lab in Nairobi, brought in a community member recently discovered to have designed a computerized tea maker (pictured, right). He can send the machine--based on an old fryer--an SMS message to start brewing a cup, so it's ready by the time he gets home. Dr. Gachigi wants to help the inventor turn the technology into a business centered around smart appliances. Former jua kali repairman Dominic 93 Making Do A Call for Collaboration Wanjihia has made the Nairobi Fab Lab his home, unloading two hard drives full of unrealized inventions that he has been unable to produce until now. For example, he has just fabricated a flat parabolic mirror, which acts like a parabolic solar oven but employs an array of many thin, reflective strips placed at different angles to concentrate solar energy on one point. Dominic now helps train students and community members in using the equipment while fabricating his own inventions, which he hopes to employ in a new start-up. In Bondo, the Fab Lab faces more challenges due to its isolation. While they are also making innovative use of the equipment at hand, materials like acrylic and electrical components are expensive to import. They also lack the University of Nairobi's business network, but there are signs of change as a new Bondo University is set to launch this fall right near the lab. In all, the Fab Lab experiment in Kenya has received a huge amount of attention. There are even rumors within the government of building at least a dozen more in other areas around Kenya! No Fab Lab really exists in isolation because all are interlinked through a video conferencing network that allows them to collaborate and transfer knowledge. Each week, Fab Labs around the world tune in for Dr. Gershenfeld's Fab Academy course. Once again, a radical technology has forced us to rethink what makes a technology appropriate. Just as the mobile phone revolution leapfrogged landlines, computerized equipment could allow Africa to leapfrog traditional machining equipment for prototyping. Yet for all their strengths, Fab Labs are testing grounds for prototypes and cannot be used for large-scale manufacturing. Appropriate capital goods will still be necessary to fill this gap. Source: Personal interviews and Gershenfeld, 2007. Making Do A Call for Collaboration 94 FORMAL SECTOR LINKAGES Debates in the field of development grow especially fierce on the topic of "top-down" versus "bottom-up." The former argument is that developing countries need an influx of capital from outside through investment and exports, so capital-intensive projects should encourage advanced manufacturing techniques and business process outsourcing. As we saw in Chapter Two, this approach tends to exclude a large portion of the population, leading to social inequalities. Conversely, the latter argues that the informal sector should be empowered to grow its capacity gradually so that microenterprises can meet the needs of the indigenous population. Yet, as we saw in Chapter Five, these businesses still need investment and technology from the outside to grow. But development isn't an either-or proposition: it is important to promote the formal and informal sectors concurrently, so long as a focus is also placed on the middleware, or linkages between the two. Of the late industrializers--the countries that have developed within the last half a century--those who have seen the most success were able to bridge the gap between the formal and informal sectors. For example, the government of South Korea enacted policies in 1982 to promote linkages between large and small enterprises.81 The Small- and Medium-Industry Systemization Law reserved certain sectors for small subcontractors, prohibited contractors from dominating subcontractors through stock ownership, provided financial incentives to subcontractors to upgrade their factories, and set guidelines for fair practices in subcontracting agreements. This legislation was successful, but subcontracting policies may not work everywhere or anytime.83 It has to make financial sense for companies to form backwards linkages. At Kenya's stage in development, it may be too cheap for formal enterprises to import machines and raw materials and too expensive to subcontract domestically. But this situation can be corrected through protectionist policies and upgrading the technological capacity of the informal sector. In contrast, the Government of Kenya's approach in the export processing zones (EPZs) has been to lower the cost 95 Making Do A Call for Collaboration of imported business inputs for large enterprises and ignore small ones. Though the sector is still underdeveloped, there are already incentives for formal institutions to partner with the informal sector. Both for-profit enterprises and government parastatals can use the jua kali sector as an entry point for introducing new technologies for the domestic consumer market. The informal sector is a source of cheap, reliable labor with a wealth of knowledge concerning the industrial landscape, from available materials to consumer needs. But the decision to engage the informal sector can be a difficult one Figure 6.1 KickStart's MoneyMaker pump, now for formal enterprises. Dealing with manufactured in China. microenterprises can be risky, and it is important to ensure high-quality, timely, and efficient production. For many companies, it makes sense; microenterprises can be trusted to specialize in making a high volume of parts, especially if they are uncomplicated, so long as they have a good track record. However, as we have seen, social capital is important to build, so relationships should be cultivated carefully; micro entrepreneurs might not be aware of standard practices, such as a payment grace period or wholesale pricing, and may not be willing to commit to such demands until trust is established. Yet despite their distrust of Kenya's formal sector--typically dominated by Indian entrepreneurs--the jua kali speak favorably of working with formal enterprises since they tend to be timely in payment and agreements are often protected by contracts.84 On the other hand, there are instances where microenterprises are less appropriate partners in production. The social enterprise ApproTEC was established in Kenya to work with jua kali to Making Do A Call for Collaboration 96 produce income-generating tools for the local market (Figure 6.1).85 Through employment and subcontracting, ApproTEC scaled up several devices, including a block press, oil press, and a particularly successful line of treadle irrigation pumps. However, after manufacturing in Kenya for over a decade, ApproTEC realized the price of its pumps were still out of the range of most small-holder farmers in Kenya. Today, the organization is known as KickStart and has shifted its mission towards making its pumps accessible to the poorest rural consumers by outsourcing its manufacturing to China. Indeed, there are a range of dimensions every organization must weigh before deciding to engage the informal sector. The risk and overhead associated with dealing with many small workshops can be alleviated by shifting power away from individual enterprises. An association or trade organization--much like KICK in Kisumu (See "The Innovation Center" in Chapter Four)--might be able to coordinate the activities of a cluster by taking orders and redistributing them appropriately. Thus, a formal enterprise would only have to deal with a well organized middleman who could guarantee quality, quantity, and timeliness through its relationships with participating microenterprises. 97 Making Do A Call for Collaboration PUBLIC INTERVENTIONS In Kenya, certain government agencies are paying close attention to the jua kali sector. The Kenya Industrial Research and Development Institute (KIRDI)--the government parastatal charged with the development of industrial technology--and the United Nations Industrial Development Organization (UNIDO) are increasingly collaborating with the sector on a series of projects. One project, the 4K Welding Machine, has sought to include a number of jua kali shops in the Kisumu area in the production of high-quality welding machines. By subcontracting parts to each shop, the project could reach sufficient scale to become a profitable enterprise. However, KIRDI has faced difficulties in promoting quality standards among the shops. Another ongoing project, Lighting up Kenya, was spearheaded by UNIDO in partnership with KIRDI to establish rural Community Power Centers (CPCs) that run off of kilowatt-level off-the-grid generators and encourage activities that make productive use of that energy. One productive activity is the charging of new LED lamps meant to replace traditional kerosene lamps, which are expensive to maintain and harmful to the environment. The LED lamps are currently imported from India, but UNIDO plans to gradually move the assembly and production of the lamps to Kenya. If successfully adopted, the many jua kali kerosene lamp makers will be forced to adapt to a new trade. Several pilot CPCs have been constructed outside of Kisumu, including a center that employs both sunflower oil and solar energy to run a cyber caf�, battery recharging station, and a metal workshop (pictured). However, UNIDO quickly realized that simply providing equipment would not be enough, as the rural metalworkers continued to build only traditional products such as doors and window frames as orders come in, so the equipment often lay idle. Another center nearby uses a methane digester to extract energy from the waste of a neighboring slaughterhouse. Some of the gas is burned in a stove for cooking, while the rest is used for electricity to charge batteries and LED lamps. Despite the successful implementation of these smallscale technologies, KIRDI and UNIDO have realized that providing technology alone won't be enough. To promote productive use of technology, the government will have to engage the jua kali sector, especially in rural areas, in innovative training programs. Source: Personal interviews. Making Do A Call for Collaboration 98 CO-CREATION Appropriate technologists have long recognized that engineers and designers can alleviate poverty in the developing world by introducing new technologies that meet critical needs and generate income for their users. As talented as appropriate technologists have been at developing functional tools and machines, they tend to struggle when it comes to the thorny dimensions of technology dissemination.86 The jua kali, on the other hand, have well-established processes and networks for accessing materials, fabricating with limited tools, and distributing products to market. Therefore, any new products and technologies should be developed and disseminated in partnership with the jua kali. This process is called co-creation. Before partnering with indigenous engineers, it is important to weigh what faculties each party brings to the table. An expert from abroad may understand how to design products, make effective use of machines, repair equipment, manage finances, and perform market research. He or she may also bring connections from abroad, including a knowledge of consumer tastes and export channels. The jua kali, on the other hand, may know how to access materials, use appropriate fabrication techniques, keep costs down, manage workers, deal with customers, and promote proper maintenance after the expert leaves. He or she may also understand local needs and distribution channels. A co-creation project should be organized around the strengths and weaknesses of both parties. It is also important to define other important players and their roles, including end users, influential community members, and government agents. Input from end users, whether rural farmers or high-end buyers abroad, should be included at each step of the design process. Influential community members should be consulted to ensure the cultural adoption of a technology. And government agents can provide an entry point to communities, as well as resources for scaling solutions, so long as politics play a minimal role in the allocation of services and resources. It can be tricky to balance the desires and values of all players, but a solution can be achieved by facilitating discourse among the parties. 99 Making Do A Call for Collaboration Source: Butterfly Works Figure 6.2 Butterfly Works collaborated with Moroccan artisans to turn scrap tires into valuable rubber products. A number of projects have recognized the power of co-creation in developing products that meet local needs and disseminating them effectively. Butterfly Works is an Amsterdam-based NGO that uses design to empower individuals throughout the developing world (See Figure 6.2).87 The group has embarked on a number of projects with artisans focused on product design, quality conditions, and export marketing. For example, Butterfly Works designers have collaborated with craftsmen in Morocco to develop a range of products from ceramics to baskets made from recycled tires. The organization has introduced these products to upscale European markets through a various channels, including a proprietary website called Unseen Products. The International Development Design Summit (IDDS) is an annual program established by MIT professor Amy Smith. Typically IDDS brings talented designers and engineers to MIT for several weeks to develop products that meet the needs of communities in the developing world, but in 2009 IDDS headed to Ghana to design products with artisans in Kumasi's Suame Magazine that met the needs of local communities, including solutions for processing and storage of agricultural outputs (See "Co-Creation in Ghana"). Other organizations have focused exclusively on fair trade channels to bring products to export. International NGOs like Ten Thousand Villages and Oxfam partner with local organizations like KICK to produce products that match consumer tastes abroad and bring them to market. Making Do 100 A Call for Collaboration Source: Erik Hersman CO-CREATION IN GHANA Each year, dozens of talented technologists and entrepreneurs are selected from around the world to congregate at MIT for several weeks of product development to address the needs of rural communities around the world. This event, known as the International Development Design Summit (IDDS), was launched by MIT professor and MacArthur Genius Amy Smith. In 2009, Amy made a bold move and moved the event to Ghana, where 90 students and professionals from a range of disciplines and geographies engaged in a five-week co-creation project. In the words of IDDS organizer Niall Walsh: "The difference between participants sitting in lecture halls in MIT, learning about international development and the importance of speaking to at least fifty villagers before designing a technology, and actually living with and talking to hundreds of villagers all over the country, is immeasurable." IDDS participants worked with 10 villages in Northern Ghana, including several overnight stays, to ensure that the users of the products developed had input at every phase in the design process. The participants quickly realized the importance of including fabricators in the collaboration and partnered with engineers in Kumasi's famous Suame Magazine. Suame's fabricators knew how products could be built in a way that was sustainable given the local manufacturing infrastructure. The participants and engineers worked closely in the development of new products for the surrounding communities and exchanged ideas and techniques. Some of the 12 innovations produced include a shea oil press, a playground carousel that generates electricity, a process for pressing plastic water sachets into footwear, a low-cost battery, and a rice thresher. These prototypes were presented at the Maker Faire Africa in Accra, held immediately after the conclusion of the summit, where they received feedback from an international community of makers (See "A Make Philosophy for Africa"). The communities will be able to decide which prototypes they want to adopt and then work with fabricators at Suame Magazine to scale them up. IDDS has placed a full-time staff member in Ghana to oversee the adoption process. The 2010 event, located at Colorado State University, will focus on refining and disseminating the prototypes from previous years. Source: Personal interviews and Hersman, 2009. 101 Making Do A Call for Collaboration CONCLUSION The jua kali provide important lessons for Western economics that compel us to revise our notion of efficiency. Economic and environmental efficiency can be gained from resource constraints, rather than boundless choice, and from linkages among small, independent enterprises, rather than from vertical integration. Indeed, instating these notions of efficiency will be necessary to foster a more sustainable and equitable form of development around the globe. The promise of the New Industrial Revolution is that by empowering the jua kali to develop new technologies that meet the needs of the various markets--local consumers, formal contractors, and fair trade buyers abroad--Kenya will pave a new, indigenous path of development that the world has never seen. The same can be said of Ghana and Malawi and other nations struggling to reconcile microenterprise with international trade. That is a powerful proposition, and countless examples of ingenuity in the informal sector suggest that it is one worth pursuing. The genius of the jua kali is their ability to turn trash into treasure: from bike parts to a windmill, oil drums to high art, water weeds to furniture. Material constraints are the reality of life for most in Sub-Saharan Africa, and the jua kali navigate this environment dextrously. With access to capital and protection of ideas, the jua kali will be freer to realize their potential. Imagine the progress that Kenya would make if the entire society were empowered to solve its own problems through indigenous creativity. But that journey starts with the individual. We have seen the power of one innovator like William Kamkwamba to change a community and one technology like the Kenya Ceramic Jiko to spread to marketplaces all over the country. Each person in the complex web of the informal economy wields a power greater than the self. It is up to us to build upon and bridge those networks to help grassroots innovators everywhere launch the New Industrial Revolution. Making Do 102 A Call for Collaboration 103 Making Do Endnotes ENDNOTES 1. Macaria, 2003. 2. The 2009 Kenya Economic Survey conducted by the Kenya National Bureau of Statistics reports that in 2008, 79.8 percent of all jobs were in the informal sector, with 92.7% of all new jobs created in the informal sector. This number indicates an expansion of the informal sector, most likely as a result of a combination of local economic shocks, including the 2008 post-election violence, as well as external shocks, including the global recession. 3. Kinyanjui, 2008. 4. International Labor Organization, 2002. 5. The historical account of industrialization in Africa has been adapted from King and McGrath, 1999. 6. See Powell's account of the fitters of Suame Magazine in Kumasi, Ghana. 7. Schumacher, 1973. 8. See Fisher, 2006. Martin Fisher is the founder of KickStart, formerly ApproTech, which produced income-generating technologies with jua kali artisans. For a brief account of the organization's evolution see Chapter Six. 9. Prahalad, 2004. 10. International Telecommunication Union, 2009. 11. Chen, Rasmussen, and Reille, 2010. The report on the microfinance industry was conducted by GCAP, based on the information reported from members of the Microfinance Information Exchange. 12. Polak, 2009. IDE has been successful in selling its irrigation tools to risk-averse farmers under the premise that the investment should be recoupable within one harvest. 13. UNIDO, 2009. UNIDO's 2009 Industrial Development Report focuses on "the bottom billion" and how the least developed countries can enter global markets. 14. Kinyanjui, 2009. 15. Kinyanjui, 2008. 16. King and McGrath, 1999. 17. Kinyanjui, 2008. 18. Romjin, 1998. Though Romjin advocates for between the formal and informal sectors, he cautions that sub-contracting measures Making Do 104 Endnotes are not appropriate in all instances. This is elaborated on in Chapter Six. 19. UNIDO, 2009. 20. Wade, 2009. Wade recounts trade imbalances among countries, as well as the detrimental implications of the 1986 TRIPS agreements, which enforce intellectual property across national borders. 21. The World Bank, 2006. The 2006 World Development Report on Equity and Development signals a turning point in the World Bank's approach to economic growth by acknowledging the importance of promoting equity within and among nations. 22. Amsden, 1989. For further recounting of sub-contracting policies in Korea, see Chapter Six. 23. King and McGrath, 1999. 24. Kinyanjui, 2009. 25. King, 1996. 26. Amollo, 2008. 27. Riley and Steel. 28. Madani, 1999. 29. Kenya National Bureau of Statistics, 2009. 30. Despite its ambitions of transitioning Kenya to a leading economic force, Kenya Vision 2030 has been criticized on a number of accounts, including dominant authorship by foreign experts who do not understand the indigenous economy. 31. Kinyanjui, 2009. 32. Macaria, 2007. Macaria defines a microenterprise as having between one and five employees, while a small enterprise has between 11 and 50. 33. McCormick, 1998. 34. Sennett, 2008. 35. Schmitz, 1995. 36. Davis, 2004. 37. De Soto, 1989. 38. International Labor Organization, 2002. 39. Romjin, 1998. 40. King, 1996. 41. Kinyanjui in Zeng, 2009. 42. Powell, 1995. 105 Making Do Endnotes 43. McCormick, 1998. 44. King, 1996. 45. The Standard, 2006. As part of Kenya's Vision 2030 plan, a number of polytechnics are being converted to full universities with less focus on technical skills, though this transition has met roadblocks and opposition. 46. King, 1996. 47. Kinyanjui in Zeng, 2009. 48. Osanjo, 2010. 49. McCormick, 1998. 50. Capra, 1997. In a true ecosystem, Capra argues, waste from one component becomes an input for another. This appears to be true for economies with the presence of a resource-strapped informal sector. Note that in the case of the jua kali, the formal sector of material production and recycling forms an important component of this ecosystem. 51. Polanyi, 1944. 52. Jeans, 1999. 53. Osanjo, 2010. 54. Romjin, 1998. 55. Daniels, 2010. Providence-based entrepreneurs noted that new models like co-working and subcontracting were popular during Rhode Island's industrial era and are now resurfacing with the rise of the creative economy. One advantage clusters in Providence have is the prevalence of ICT, which reduces the need for geographic proximity. ICT clusters in Kenya and Ghana, unlike the manufacturing clusters, have been able to leverage these technologies as well. 56. King, 1996 57. McCormick, Mitulla, and Kinyanjui, 2003. 58. Powell, 1995. 59. Orwa, 2007. 60. King and McGrath, 1999. 61. Schumpeter, 1962. 62. Ng'ethe and Ndua, 1992. 63. Hazeltine and Bull, 2003. 64. Powell, 1995. 65. Ibid. Making Do 106 Endnotes 66. Romjin, 1998. Romjin describes the traditional approach of technology transfer as "supply-push" with a one-time allocation of hardware. He advocates for a transition from static technology choice to dynamic technological learning. His "eightfold-c" approach includes four objectives--customer-focus, capabilityfocus, context, and complementarity--and four modes of implementation--collectiveness, concentration, coordination, and "carrot-and-stick" incentives. 67. Jeans, 1999. 68. Romjin, 1998. 69. Ibid. 70. Musaki Enterprises, 2010. 71. Stewart, 1987. 72. Terra Nuova. 73. Macaria, 2007. 74. Moyi, 2003. 75. International Telecommunication Union, 2009. 76. Camner, et. al., 2009. 77. Grameen Foundation, 2009. 78. SPOKEN WEB 79. Okafor, 2006. 80. King, 1996. 81. For further elaboration on Fab Labs, see Gershenfeld, 2007. 82. Amsden, 1989. 83. Romjin, 1998. 84. King, 1996. 85. Fisher, 2006. 86. Hazeltine and Bull, 2003. 87. Butterfly Works, 2008. Butterfly Works has worked on a number of projects that focus on improving design skills through collaboration. In Nairobi, Kenya, the organization launched the web design training school Nairobits, which has successfully trained students to design and develop websites for clients. This model has been replicated in Ethiopia and Tanzania. 107 Making Do Bibliography BIBLIOGRAPHY Amollo, Lorraine. "An Industrial Solution for Kenya and Africa: Using Home-grown Ideas to Create Sustainable Livelihoods." Torino: Changing the Change, 2008. Amsden, Alice. Asia's Next Giant: South Korea and Late Industrialization. New York: Oxford University Press, 1989. Atambo, Helen. "Work and Hazards in Jua Kali Industries in Kenya." African Newsletter 1995: 32-34. Butterfly Works. The Butterfly Paper N�1: Designing for Learning. Amsterdam, 2008. Camner, Gunnar, Emil Sj�blom and Caroline Pulver. "What Makes a Successful Mobile Money Implementation? Learnings from M-PESA in Kenya and Tanzania" London: GSM Association, 2009. Capra, Fritjof. The Web of Life: A New Scientific Understanding of Living Systems. 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Making Do 114 Further Reading FURTHER READING Appropriate Technology Barrett Hazeltine and Chris Bull The Boy Who Harnessed the Wind William Kamkwamba and Brian Mealer Enterprise in Africa Kenneth King and Simon McGrath Inventors of Zambia Victor Crutchley Jua Kali Kenya Kenneth King Knowledge, Technology, and Cluster-Based Growth in Africa Douglas Zeng Mastering the Machine Ian Smilie Out of Poverty Paul Polak Small Is Beautiful E. F. Schumacher Survival of the Fitter John Powell 115 Making Do Online Resources ONLINE RESOURCES Afrigadget www.afrigadget.com Analogue Digital www.analoguedigital.com Appropedia www.appropedia.org Innovation Africa www.innovationafrica.org Kiva www.kiva.org Make Magazine www.makezine.com Maker Faire Africa www.makerfaireafrica.com Microfinance Information Exchange www.themix.org Next Billion www.nextbillion.net Ten Thousand Villages www.tenthousandvillages.org Timbuktu Chronicles timbuktuchronicles.blogspot.com White African www.whiteafrican.com MAKING DO Wandering through winding alleys dotted with makeshift worksheds, one can't help but feel clouded by the clanging of hammers on metal, grinding of bandsaws on wood, and the shouts of workers making sales. But soon it becomes clear that this cacophony is really a symphony of socioeconomic interactions that form what is known as the informal economy. In Kenya, engineers in the informal economy are known as jua kali, Swahili for "hot sun," because they toil each day under intense heat and with limited resources. But despite these conditions, or in fact because of them, the jua kali continuously demonstrate ingenuity and resourcefulness in solving problems. In Making Do: Innovation in Kenya's Informal Economy, Steve Daniels illuminates the dynamics of the sector to enhance our understanding of African systems of innovation. The result of years of research and months of fieldwork, this study examines how the jua kali design, build, and manage through theoretical discussions, visualizations of data, and stories of successful and struggling entrepreneurs. What can we learn from the creativity and bricolage of these engineers? And how can we as external actors engage with the sector in a way that removes barriers to innovation for the jua kali and leverages their knowledge and networks to improve the lives of those who interact with them? ABOUT THE AUTHOR Steve Daniels is a graduate of Brown University, where he concentrated in Technology for Emerging Markets and conducted the study Making Do for his honors thesis. During his travels to Kenya, Tanzania, and Ghana, he interviewed dozens of artisans, surveyed experts, and volunteered for a social enterprise that engages with the jua kali sector. He is the founder of the Better World by Design conference, organized annually by students at Brown University and RISD, and co-founder of Revolution x Design, which promotes socially responsible design through education and research. Currently, Steve works for IBM Research, where he studies mobile social computing in emerging markets. ANALOGUE DIGITAL www.analoguedigital.com