You may have read the old joke that there are three things which have the greatest influence on the likely success of a new hotel: and that those three things are location, location and location.
This joke is actually intended to make the point that in certain types of investment, the central consideration is that of where that business is located.
For example, if you were to build a 5-star hotel somewhere along River Road, no matter how luxurious that hotel was, it would not likely attract very many guests. But if you built it inside the Ngong Forest, or inside the Nairobi Arboretum, then you would have a much better chance of getting the rich clientele that like (and can afford) such rarefied levels of hospitality.
Academic economists have taken this very much further, and there is actually a field called “economic geography” that was, to a large degree, pioneered by Prof Paul Krugman, and which won him the Nobel Prize for Economic Sciences in 2008.
His research was on what is now called “the New Economic Geography” and it can be distilled to the basic idea that it explains “why economic activity clusters in specific locations rather than spreading evenly.”
Let’s consider this example from Kenya’s tourism sector: ideally, we should have our tourism attractions (and especially wildlife) spread out all over the country, so that many regional communities would be able to claim a share of the tourism revenues.
But as it happens, the best tourism attractions are all in what we may call traditional Maasai ancestral lands (specifically the Maasai Mara and the Amboseli game parks).
A game park needs thousands of essentially empty savannah grasslands, where you can drive for hours without seeing a single small-scale farm, or a village shopping centre.
So, it is through an accident of history and culture that the traditional Maasai lands are the regions of this country where we have what the New Economic Geography defines as “self-reinforcing agglomeration effects”. This basically means that whereas in other parts of Kenya where there are plenty of wide open spaces and lots of wild animals, you do not find many incoming investors, when it comes to the Maasai Mara, the government has actually had to impose strict limits on new hospitality facilities.
If more opportunities to build game lodges and tented camps inside the Mara were to be made available tomorrow morning, by evening they would all have been snapped up by investors, local as well as foreign.
What I am getting at here then, is that one way or another, geography plays a surprisingly large role in the economic development of any region or any nation.
This is a factor that needs to be borne in mind as we continue with the debate on whether or not President William Ruto will be able to get Kenya on a clear path to becoming “the next Singapore”.
One thing overlooked in this debate is that although both Kenya and Singapore were relatively poor countries around 1960 or thereabouts, their economies were actually very different. Kenya had a robust agrarian economy and was an exporter of many agricultural products. Singapore, as you will see if you look at any map, was – and remains – far too small a place to have nurtured the kind of large-scale plantations of thousands of acres each that were common in Kenya before Independence.
Singapore was a trading and logistics hub. And that is what the founding fathers of Singapore built on to create the massively successful trading, logistics and financial centre that it has since become.
If Kenya is arguably “the gateway to East Africa”, Singapore has long been defined as “the gateway to Asia” – a much larger market than East Africa, and with far greater opportunities for the Singapore service sectors.
So, I am not at all sure that Singapore provides a viable model for rapid economic growth in a country like Kenya.
by WYCLIFFE MUGA
