Big Bang Change Initiatives Never Work

In 1843, Daniel M’Naghten tried to kill Sir Robert Peel, England’s prime minister at the time. M’Naghten thought that Peel wanted to kill him and while trying to shoot Peel, he inadvertently shot and killed Edward Drummond who was Peel’s secretary. Medical experts at the time testified that M’Naghten was psychotic, resulting in a not guilty by reason of insanity verdict. Following the subsequent public outrage, the Lords of Justice had to define what the defense of criminal insanity was: “Insanity is a defense to criminal charges only if at the time of the committing of the act, the party accused was laboring under such a defect of reason, from a disease of the mind, as not to know the nature and quality of the act he was doing; or, if he did know it, that he did not know what he was doing was wrong.”

Last Monday December 3rd 2018, much of Nairobi was brought to a standstill by a badly executed decision to ban matatus from the central business district. I want to imagine that there was a management committee meeting to plan such gargantuan decisions. In that meeting, the chief engineer would have said something like “a matatu is X metres long and Y metres wide thus it would require Z square metres of space in a terminus. The termini that we are envisaging for these matatus has a total of Q square metres of space and therefore has the capacity to hold  a maximum of ( Q divided by Z) number of matatus at any given time.” The chief city planner would have said, “Actually to your point, we have discussed with the matatu owners association and been informed that there are a total number of R matatu saccos, a total number of  S matatu routes and a total number of T matatus. The termini that we are designating for these routes will therefore have V number of matatus designated to going through it during a 24 hour cycle.”

 

The leader of that meeting, who would be seated at the head of the table in a faux leather executive chair, would swing on his seat from side to side nodding keenly. He would then lean forward, gently placing his elbows on the buffed faux mahogany table and form his fingers into a steeple. “What are the risks we are facing here, good people? What could go wrong, if we decide to go big bang and just announce a total ban?” To which his chief of staff would have said, “Well, based on the numbers being tabled before us, it is unlikely that we can accommodate all those number of vehicles in the designated termini. I suggest we first start with a pilot route, and we undertake a phased approach by testing it on a low traffic day like a Sunday to see the vehicle movements. We can then take the next step of pushing the pilot phase into a weekday to see the real effect. I suggest we start with one Eastlands route that has got heavy matatu traffic and that terminates where there are other operational matatus that can pick up the terminating passengers to take them on to the city centre.”

The fearless leader would lean back with a thoughtful expression on his face. “You!” he would point at his finance manager. “You’re always playing the devil’s advocate at our meetings. What else are we missing here?” The finance manager would pretend to look upset when he is secretly pleased that his contrarian views have been found to be useful. “Well, if we go big bang rather than do a pilot test, how far would people have to walk? Where would they walk? Is it possible that there may be a human traffic situation that criminal elements could take advantage of? What if there isn’t enough space in the termini, would that mean that the matatus could spill over into the streets and cause a tailback leading to a massive traffic gridlock? What if…what if it rains? What would happen to commuters? How about the disabled ones or the ones who are sick?”

“Enough! I’ve heard enough. Going big bang has more risks than benefits. We have to first do a pilot to understand how this might work following which we can figure out how to mitigate the known and yet to be known risks.” The legal manager would lean back and breathe a quiet sigh of relief. This big system change that his colleagues were proposing could later be viewed through a M’Naghten lens: Did management apply reason in their decision making and, where no reason was applied, did they know that what they were doing could have catastrophic consequences? I think Nairobians now know the answer to that.

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Twitter: @carolmusyoka

Kenya Railways Should Be A Retail Giant

[vc_row][vc_column width=”2/3″][vc_column_text]The SGR debate on both print and social media has been extremely stimulating over the last two weeks, peppered largely by opinion, bias and, in a few entertaining posts, actual experience. But as Bitange Ndemo aptly covered in his opinion piece in this paper last Wednesday, the greater opportunity here is the potential to convert the real estate within and surrounding the SGR stations into catalysts for a 24-hour economy.

The aviation industry already does this well by utilizing airports as retail hubs. Data from Airports Council International shows that 44% of global airport revenue comes from non-aeronautical services offered within an airport. With millions of passengers travelling in and out of this prime real estate, concessions within the airport have a captive market made up of customers who want to eat, drink or just shop. The numbers are revealing: 54% of global concessions are dedicated to selling food and drink, 36% to non-duty free items and only 10% are dedicated to duty free sales.

In the United Kingdom, Network Rail is the owner and operator of Britain’s rail infrastructure with over 1.7 billion journeys taken by passengers annually. Over 30 passenger and freight train operators use the rail infrastructure, which thus requires Network Rail to maintain the tracks and signals at optimal performance for both efficiency and safety. It does this through an investment of £50 billion (Kshs 6.7 trillion) in not only the train related infrastructure, but also the stations through which passengers flow. Just like our very own Kenya Railways, Network Rail is one of the largest land and property owners in Britain and between 2009 and 2014 it generated £1.4 billion (Kshs 187.6 billion) from commercial activities that it reinvested in its rail estate. It generates revenue in commercial activities by leveraging off the 510,000 square feet of retail space at 18 of the largest stations across the country that enjoy a combined annual footfall of about a billion people.

This is where it gets interesting. Network Rail reported that the retail sales at its train stations showed a growth of 5.6% compared to high street retail sales of just 0.75% in the same period in 2014. One way of explaining this could be the fact that online retail sales are growing at a similar rate, creating a decline in mall and high street footfall. What’s obvious though is that your railway passenger,who might have become an online shopper, still has to travel to and from work or visit family and their presence at a railway station is an enormous opportunity to get a share of their wallet.

Based on the social media narrations of those who’ve taken the Madaraka Express to and from Nairobi, a number of passengers have missed the train due to inevitable traffic delays en route to the station. In the aviation industry, “dwell time” refers to the time passengers have to mill about the airport waiting to board a plane and is used as an indicator of potential retail spend. The distance of the SGR stations from the CBD both in Nairobi and Mombasa speaks to the obvious fact that passengers will now have to get to stations earlier if they want to catch the train without huffing and puffing their way to a heart stopping screeching embarkation two minutes before departure. Classic dwell time opportunity lies here for retail operators within and proximate to the airport to tap into not only SGR passenger wallets, but the neighboring residents as well.

Network Rail for instance has been using sensor technology at its busiest stations that has revealed that there are tens of millions more visitors in addition to passengers at the stations, who come to shop, eat and drink. From Syokimau to Miritini and every station in between, Kenya Railways can transform the lives of small business owners through concessions at its prime commercial real estate at the SGR stations in much the same way its predecessor line created bustling towns from Mombasa to Kisumu at the turn of the 20th century. By ensuring that only quality operators provide these critical services relating to dining and shopping, Kenya Railways can set a benchmark for the retail business model in Kenya.

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Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

The City of Nairobi as a Financial Hub

‘Our ultimate aim is to create a vibrant and globally competitive financial sector that will promote high level of savings to finance Kenya’s overall investment needs. That will not happen without extensive reforms. Let me highlight some of the most important. First, we will establish a Nairobi International Financial Centre. Our model is the City of London. Once complete, it will consolidate Kenya’s position as our region’s hub, while also supplying the world-class financial services that East Africa’s rapidly growing oil and minerals sector needs.’

The above mentioned quote is extracted from a presentation made by Manoah Esipisu, the Secretary of Communication and State House Spokesperson on February 3rd 2014 at the Bloomberg Africa Forum. So I decided to dig up a little information on why the City of London stands tall and worthy of emulation in Esipisu’s educated eyes. First of all, the Greater London administrative area is made up of 32 boroughs. There are two cities within the 32 boroughs, namely the City of London and the City of Westminster. The City of London is the trading and financial nucleus of Greater London. Colloquially known as the Square Mile due to its geographical acreage of 1.12 square miles, it houses the London Stock Exchange, the Bank of England and Lloyd’s of London. Over 500 banks have offices in the City while a number of the world’s largest law firms are headquartered there and, consequently, the Square Mile accounted for 2.4% of United Kingdom’s GDP in 2009.

As at the last census in 2011, the City has a population of about 7,000 residents, but over 300,000 commute there daily to work, mainly in the financial services sector. Administratively, the City of London Corporation headed by the Lord Mayor governs the City. According to Wikipedia, the 2001 census showed the City as a unique district amongst 376 districts surveyed in England and Wales. The City had the highest number of one-person households, people with qualifications at degree level or higher and the highest indications of overcrowding. It recorded the lowest proportion of households with cars or vans, people who travel to work by car, married couple households and the lowest average household size: just 1.58 people. It also ranked highest within the Greater London area for the percentage of people with no religion and people who are employed. The City has its own police force with slightly over 800 police officers separate from the Metropolitan Police Service covering the remainder of Greater London.
My conclusions: to live in the City of London you have to be paid a ton of money to do a lot of work and have a total lack of discretionary time for matrimonial, social or religious matters! Oh, and that thing called traffic? What traffic? The public transport works quite well thank you! Well enough to get 300,000 in and out of the City environs daily.

So I look at Esipisu’s speech again, especially with regard to the aim of becoming a key financial centre for East Africa’s oil and minerals sector. A friend of mine providing consulting services in the rapidly expanding local Oil and Gas sector told me that there are at least over thirty foreign oil exploration related companies in Kenya closely followed behind by their attendant service providers in aviation, drilling equipment, security and what have you. They are located all over Nairobi as there doesn’t seem to have been foresight at central government level to create a bespoke business district for this critical source of foreign direct investment. Neither have there been any efforts on the immigration side to fast track work permits for the hundreds of specialized professionals that are flying into Kenya to work in the exploration fields. They arrive at JKIA and it takes 3 hours to get from the airport to their hotel rooms because the green city in the sun is actually the gridlocked city in the smog. The average Joe doesn’t want to drive if he can take clean, reliable and decent public transport. But for as long as the city’s transport policy is written by an individual who has a driver waiting for him at his designated parking spot under a cool parking shed, we will struggle to achieve the dream of becoming a financial centre. If goods and services cannot move or be provided freely in Nairobi then providers and consumers of capital, which is a key tenet of a global financial centre, will not come to deliver Esipisu’s dream.

If the Governor’s solution to the endemic traffic jam is to tell Nairobi natives to wake up earlier to get to work, then we’re sunk. Nairobi is not made up office working minions imprisoned on swivel chairs. It’s made up of entrepreneurs who traverse the length and breadth of the metropolitan area buying and selling goods and services. It’s made up of professionals moving from place to place to deliver their professional services as well as their customers coming to them for the same. It’s made up of citizens seeking medical, banking, insurance, education and a whole host of government services between 8 am and 5 pm. Nairobi natives cannot be trusted with the heavy responsibility of choosing the lesser evil between an ex-CEO of a grossly mismanaged corporate versus a stone thrower or, God help us, a bejeweled, money splashing hustler if 2017 rumors are to be believed. In my own view, a college of voters who constitute business owners should elect Nairobi County’s administrative leader. A staggered system of votes, based on number of employees can be designed so that those with more skin in the game have more say. A business owner with 10 employees or less would have one vote, one with 20 employees two votes etcetera.
Only then can we start seeing business minded individuals drive the social and economic agenda of this critical county and lay the groundwork that would help make some of Esipisu’s dreams of a regional financial centre valid.

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Twitter: @carolmusyoka