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

THE ROLE OF RESEARCH AND
DEVELOPMENT IN THE
INDUSTRIALIZATION PROCESS IN
KENYA
Moturi C. and Ogada T.
Kenya Industrial Research and Development Institute
(KIRDI)
Technical workshop on Industrialization
22nd November 2006, KICC, Nairobi
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CONTENTS
Background
2
Background
The Kenyan economy has enjoyed both periods of great
advances and disheartening downturns.
Incidences of poverty and unemployment, meagre foreign
exchange earnings (exports of primary product mainly agro-produce) have resulted in unfavourable balance of
payment and low per capita income
It is estimated that > 60% of Kenya’s population live
below the poverty line
3
contd
While, the overall population growth rate has
experienced a decline over the last 2-decades,
unemployment continues to increase
As a result, lack of productive employment opportunities
has led to a fall of real wages in nearly all the sectors of
the economy
As well, the population pressure on agricultural land and
the associated decline in individual holdings have
resulted in low and decreasing productivity
4
contd
It has been acknowledged that in order to cope with
these challenges, the economy will have to consistently
grow at between 8-10% annually.
Thus, through rapid sustained economic growth,
national wealth can be created, leading to increased
employment and incomes and viable enterprises
These in turn will provide the resources to support
measures to alleviate poverty, protect vulnerable groups
and provide rising standards of living for Kenyans
5
contd
It is well recognized that industrialization is a means
through which Kenya can accelerate its economic
growth
Indeed, all indicators show that Kenya’s goal of rapid
and sustained growth cannot be achieved in the absence
of industrialization, as has also been demonstrated in all
NICs
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Indicators of Industrialization and
Industrial Competitiveness
Manufacturing Value adding per capita (MVA)
measures the level of industrialization of a country
Manufactured exports per capita is a measure of the
ability of a country to produce goods competitively
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MVA as % GDP
Country
1980
1990
2000
KENYA
9.6
10.1
10.3
KOREA
22.8
28.8
35.1
MALAYSIA
19.4
26.5
36.9
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Industrial Development Policies in Kenya
Since independence (1963), it has been recognized that
the informal sector has potential in employment and
wealth creation in Kenya
The GoK has therefore continued to react positively by
facilitating MSEs to generate sustainable employment
and income by formulating various policies to address
constraints affecting the sector
The following is thus, a summary of the key
government policy papers that have been developed
over the years
9
contd
Sessional Paper No 10, 1965
The Sessional paper on “African Socialism and its
Application to Planning in Kenya” set the pace in the
introduction of small enterprises in the economy.
The paper sought to indigenise the economy by
encouraging foreign enterprises to equip Kenyan
Africans with necessary skills through training,
apprenticeship programmes, to enable them operate
private business
10
contd
Sessional Paper No 10, 1973
The desire to Kenyanize the economy was further
amplified by the Sessional paper on Employment.
It attempted to assist small enterprises to access
working sites, credit, managerial and technical
services, skill upgrading and business training services
11
contd
Sessional Paper No 5. of 1982
The Sessional paper on “Science and Technology for
Development” Recognized that Science and Technology
provide the knowledge with which to identify
opportunities and to increase growth rates (by making
capital and labour more productive).
The Paper recommends that the GOK should deliberately,
but conscientiously expand its research system to cover
all sectors of the economy
12
contd
It also recommends:
Increased levels of funding to 1% of GDP
for Research and Experimental
Development.
Acquisition and Transfer of Technology
Policy
Capacity Building for Technological
transformation
13
contd
Sessional Paper No 2, 1985 on Unemployment
The paper appreciated the importance of MSE sector
in the economy and sought to encourage it to expand.
It however fell short of providing concrete solutions to
the sector’s accessibility to credit, technical and
marketing assistance
14
contd
Sessional Paper No 1, 1986
The paper on Economic Management for renewed
Growth together with the Sixth National Development
Plan (1989-1993) tried to accelerate MSE growth by
seeking to
amend the rules and regulations that inhibit MSEs
To limit unfair trade practices by large scale firms
To change cost-price relations in favour of MSEs
To address constraints that limit access of MSEs to
finance and credit.
15
contd
Sessional Paper No 2 of 1992
The Policy paper on “Small Enterprise and Jua Kali
Development in Kenya” was released to address
similar problems affecting MSEs
However, it emphasized on the creation of an enabling
legal and regulatory environments that support the
sector’s graduation into formal sector
16
contd
Sessional Paper No 2 of 1996
The Policy paper on “Industrial Transformation to the
Year 2020” is indeed the basis of this presentation.
The paper proposes measures to remove bottlenecks
that hinder the potential MSEs in serving as seed bed
for industrialization
It also proposes;
to review government procurement regulations and
procedures to allow MSEs to provide goods and
services to Government
The rationalization of licensing regime to make it
simpler and cheaper
17
contd
Perhaps more importantly, the paper recognizes that
in order for Kenya to achieve and maintain
competitiveness in the global market, technology,
among others, will play a major role
It also encourages;
Private sector to invest in technology
development (independently or in collaboration
with public R&D institutions)
18
contd
Economic Recovery Strategy for Wealth and
Employment Creation (2003-2007)
The release of the blueprint became necessary to
address the twin challenge of;
Creating Employment
Creating Wealth
Reducing Poverty
It emphasized on the desire to facilitate MSEs to
graduate in employment size.
This was further strengthened by the release of
Sessional Paper No.2, 2005, on Development of Micro
and Small Enterprises for Wealth and Employment
Creation for Poverty Reduction, which sought to
enhance the capacity of MSEs to generate wealth as
well as durable and decent jobs
19
contd
The blueprint also recommends “Enhanced support for
R&D for industries by reviewing the tax incentives for
doing research and zero rating research-related
equipment”, among others
20
Vision 2030
The Vision envisages a globally competitive and
prosperous nation with high quality of life by 2030
Per capita income ranking among the five highest in
Africa
Eliminating absolute poverty and building an equitable
and just society
Becoming Africa’s most competitive economy
10 % growth in GDP for the next 25 years
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The Missing Gap
It can be clearly noted, from the above review, that the
proposed interventions have not necessarily yielded the
expected results
This is evident in the manner in which new policies
continue to be formulated to address more or less the same
problems that previous policies were meant to tackle.
It is also evident that the gap between MSEs and Medium
enterprises on one hand and that between Medium and
Large enterprises suggest that few of the MSEs graduate
to the Medium level
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Schematic Diagram illustrating the Missing Gap
in the MSE Growth
(Ref: Based on Data from GoK Statistical Abstracts)
Large (21%)
A
Medium
(14%)
A
MSEs (65%)
23
contd
While MSEs generate employment and wealth, the
majority are unable to grow vertically, thus resulting in
the gap between MSEs and the Large enterprises, i.e.
the missing middle/gap
It is now well acknowledged that without vertical
growth it would be difficult for MSEs to generate
sustainable employment and serve as seedbed for
industrialization.
24
contd
3 Major constraints continue to hinder the vertical
growth of the MSE sector, i.e.;
Lack of Credit
Low level of Education
Negative “Jua Kali” Attitude
Lack of Market Information
Lack of Technology Advancement
As well, limited work sites and lack of clear vision
also contribute to the slow growth of the sector
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Technology Acquisition
There are 4-broad means of acquiring technology, i.e.;
Indigenous R&D
Direct foreign investment
Purchasing or leasing “off-the-shelf”, and
Overseas training and study tours
Accessing patent documents in the public domain
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Mandate of Universities and R&D
Institutions
Universities
R&D
Institutions
R&D
Teaching
Extension
Capacity Building
New knowledge
Knowledge Transfer
Technological
development
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e.g. KIRDI Mandate
The mandate of KIRDI at inception – in 1942, was
to initiate and develop local industries to relieve the
industrial goods shortages occasioned by the second
world war
Derived from the S&T Act, 1979, Cap 250;
To carry out Research and Development in Industrial
and Allied Technologies, including:
Civil engineering, Mechanical engineering, Textile
technology, Electrical engineering, Mining, Power
resources, Chemical engineering, Industrial chemistry,
Food technology, Ceramics and technology,
Environment, Information technology
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OPERATIONAL ENVIRONMENT
The GOK adopted an Industrialization strategy for
achieving:
sustainable economic growth, rapid employment
generation and poverty eradication,
thro’ competitive production and consumption
It is however, well recognized that for the last 10 years
or so, the Industrial sub-sector in Kenya has been on
the decline, and that,
29
contd
the country is faced with;
Low capacity utilization
Declining productivity, and
Limited technological advancement
All of which are indicators of inadequate application of
R&D Products
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Research Products and IPRs-1
The direct product of research is knowledge.
It can be in the form of
New Technology
New Product
New Process
Improvement in existing product, process or
technology
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Research Products and IPR-2
Publication a traditional R&D output
The dissemination of knowledge through
publications is not enough.
R&D is only useful if its products can lead to
Economic development
Industrialization
Job creation
Poverty Reduction
It is only through transfer of knowledge that a R&D
Institution can become relevant to the society
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Research Products and IPR-3
Knowledge generated may be made available free of
charge
Effective transfer of knowledge can only be realized
through
Legal protection and
Commercialization
Knowledge can only be commercialized if it becomes a
property
It must have a Legal Owner
It must have a value
There must be a market for it
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Research Products and IPR-4
There are two types of Assets
Tangible Assets – Raw material, land, building,
machinery
Intangible Assets – knowledge
Old Economy
Tangible property
New Economy
Intangible Property
Research Products belong to a class of intangible property
called intellectual property assets
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Commercialization of Research Products
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1. Methods of Commercialization
There are Four Methods through which an
Intellectual Property Assets can be
commercialized
Licensing
Sale
Own exploitation – start up companies
Joint ventures
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2. Evaluation of the Impact of R&D
The contribution of R&D Institutions towards a country’s
development can be measured through quantity of
IP Assets generated
IP Assets Licensed
Income from Technology Licensing
Companies created directly based on the product
of R&D
Jobs created
Consultancy offered
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Examples of Technology Transfer Activities
from R&D Institutions
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1. Numbers of Patents Filed by Universities
1995-2003
Japan
China
Korea
Singapore
India
Thailand
5,506
13,353
5,272
993
467
139 (granted)
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2. Kenyan Patent Application Situation (1993-2003)
SMEs (Jua Kali)
Industry
116
45
R&D Institutions
14
Individual from university
Secondary School
2
1
University (MU)
1
The culture of innovation has not been developed
Researchers in Universities and R & D Institutions innovate
daily most of the innovation go unnoticed.
40
3. USA Situation. Association of University
Technology Managers
Over 3000 Technology Transfer Offices
University and research center licensing (2000)
3765 license agreements
US $ 1.3 billion income
Since 1980
3500 companies formed based on R&D Products
400,000 jobs created
US $ 50 billion generated annually on sales
US $ 10 billions received as tax revenue
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4. Massachusetts Institute of Technology
1500 patents granted since 1986
600 active licenses
80 new licenses per year,
20 new spin out companies per year
US $ 25 million gross annual income
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5. Sweden. Chalmers University of Technology
has created 240 companies from its products of
R&D during 30 years from Its Technology Park
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6. India. Council for Scientific and
Industrial Research (CSIR)
42 Laboratories
Each laboratory has Technology Transfer Offices
1995-1999, filed 170 patents
A patent on a polymer used in coating compact
disks (30 % of compact disks produced worldwide)
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7. Korea
Technology Transfer from 19 Private Universities
Year
No of Technologies Income from TT (KWon)
2001
58
473 million
2002
102
983 million
2003
133
1913 million
293
By 2004 Seoul National University had been granted 260
patents
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8. Singapore
National University of Singapore and Nanyan
Technological University
56,000 students
Has technology transfer offices for
Research Collaboration
Contract Research
IP Management
Technology Transfer
Entrepreneurship
Key Statistics (1998-2002)
500 Patents filed
107 technologies licensed
136 research agreements signed worth US $ 42 million
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9. China
Over 2000 university-run S&T Enterprises
238,000 staff out of which 78,000 Researchers
45.2 million TRW in sales
5600 technologies transferred
40 % of R&D funding come from private companies
Beijing and Tsinghua Universities
spinned-off over 120 high tech companies,
some spin off companies listed in the Chinese Stock
Market
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10. Lessons Learnt
Research can lead to technological and economic
development
For this to be realized in African R&D Institutions, there is
need to
Increase Investment in R&D by our governments
have in place innovation and inventive support structures
and
enabling policy incentives
48
Key Constraints in promoting
industrialization through R&D
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KEY ISSUES IDENTIFIED
Low Funding of STI
Low utilization of IPR
Low level of commercialization of STI findings
Low level of utilization of Reverse Engineering
Inadequate Technology Transfer policy
Lack of entrepreneurial culture
Weak linkages between STI organizations and SMEs
Weak marketing practices in STI and SMEs
Inadequate utilization of local knowledge
Weak linkages and networks amongst STI institutions
Inadequate utilization of cleaner production techniques
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Key Issue1.
Low Funding of STI
Objectives and Strategies
•
1. To increase funding of R&D from 0.3 % to at least 2-3 % of the G
• Lobby government through sensitization
2. To formulate national industrial research programs
• Undertake industrial research needs assessment in the identified
strategic areas
• Develop mechanism for funding
3. To Establish a National Industrial Research Fund
• Lobby government and development partners through sensitizat
NOTE: The GoK must fund strategic research
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Key Issue 2.
Low Utilization of IPR
Objective
1. Promote the generation, protection and utilization of
intellectual property assets in STI organizations and SMEs
Strategies
Create an IP literate STI personnel
Create focal IP points in STI Institutions and SMEs
Develop IP policies in STI organizations and SMEs
Provide policy incentives for the generation,
protection and commercialization of IP Assets
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Key Issue 3.
Low Commercialization of R&D and innovations
Objective
4. Promote commercialization of innovations and R&D outputs
Strategies
Create technology transfer offices in STI
organization
Develop technology incubators
Develop technology parks
Create venture capital
Create industrial innovation fund
Establish Units for prototype development in STI
organization
Promote use of business development services
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Key Issue 4.
Low Utilization of Reverse Engineering
Objective
5. Promote technology development through reverse
engineering
Strategies
Strengthen industrial and technology information
center
Promote use of patent documentation for R&D and
innovation
Promote patent mining
Promote industrial exchange
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Key Issue 5.
Inadequate technology transfer policy
Objectives
6. Review and develop technology transfer policy
7. Formulate appropriate laws and regulations to back the
policy
Strategies
Review existing policies on technology transfer
Develop appropriate Sessional paper
Review and update laws and regulations relating to
technology transfer
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Key Issue 6.
Lack of entrepreneurial and technology culture
Objective
8. Promote entrepreneurial culture in STI activities
9. Promote technology culture among Kenyans
Strategies
Strengthen formal entrepreneurial education
Nurture entrepreneurship among the youth
Demystify STI
Create awareness on the importance of STI to
development
Reward creativity and innovation
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Key Issue 7.
Weak linkages between STI Organizations and
Industries
Objective
10. Strengthen linkages between STI organizations and
industries
Strategies
Embracing entrepreneurial culture in STI organizations
Generate technology oriented SMEs from R&D
outputs
Promote business linkages with industries
(consultancies and contract research)
Promote the uptake of R&D outputs by industries
Provide policy incentives for industries to finance
R&D
Finance joint R&D activities between industries
and STI institutions
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Key Issue 8.
Inadequate utilization of Traditional knowledge
and local resources
Objective
11. Promote the use of TK and local resources
Strategies
Develop policies that promote increase local contents
in technology
Utilize TK in technology development and
utilization
Develop technologies for value addition to local
resources
Promote a culture that encourages consumption of
locally manufactured products
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Key Issue 9.
Weak linkages amongst STI Organizations
Objective
12. Promote networking and collaboration amongst STI
organizations
Strategies
Undertake capacity audits in industrial research
amongst STI organizations
Promote joint and multidisciplinary research
Promote sharing of research equipment
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Key Issue 10.
Weak marketing practices in STI Organizations
and Industries
Objective
13. Strengthen marketing practices in STI organizations and
industries
Strategies
Embracing marketing culture in STI organizations
Embrace strategic marketing practices in industries
(SMEs)
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Conclusions
Rationalize and priotize R&D activities in line with high
potential sectors/clusters of the MSEs that will serve as
seedbed for industrialization
Establish Technology Service Centers to serve as hub for:
Technology identification, sourcing, Negotiation and
Technology acquisition
Establish Technology and Business Incubation Centers
There must be a deliberate effort to embrace STI as a tool
for industrial and economic development
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Conclusions contd
Lead Technology missions and study tours
Establish functional partnerships with relevant
Government Ministries and other Departments, NESC, etc
Establish functional partnerships with local, regional and
international Organizations & RTIs
Lobby GoK to support initiatives to develop the NIRP and
establish a NIRF along the lines of ARF
Kenya must attract, train and retain high calibre scientists
and engineers to drive the process of industrialization
Kenyan must embrace entrepreneurial and technology
culture in order to industrialize
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