Dear Governor Sakaja, it is my thumbs up for you that you have a school feeding programme and you recently appealed to the president to buy you one machine that can produce one million chapatis a day and the president has authorized you to look for such a technology. I hope sir that you are not looking for it abroad for that could very easily turn out to be a slap in the face of the promised bottom up economy by the president.
First and foremost, if you asked me Sir, I would say that investing in a single large technology to feed the pupils of Nairobi may be good but not the best developmental strategy. Whether it is imported or locally sourced, such a single technology may mean concentrating capital in the hands of large-scale investors yet this is what the chairperson of the President’s Council of Economic Advisors (CEA) in President Ruto’s State House, Prof. David Ndii preached against during the UDA campaigns in favour of decentralizing capital to the bottom of the pyramid via his bottom up theory.
Allow me use some statistics sir. A good jua kali type machine can make 300 chapos an hour or 2400 chapos an 8-hour working day. 1 million chapos a day will require about 4 200 Jua Kali machines. Production of such machines will require inputs that lead to a rich multiplier effect in the economy including creating direct and indirect employment. Fabricating the 4200 machines will create a better distribution of wealth and contribute better to the bottom up economy than investing in a single machine concentrated in the hands of one or a couple of investors.
Sir, no single school will require 1 million chapos a day therefore the proposed machine will be producing for several schools from a given location. That then gives rise to distribution logistics and possible red tapes or delays
I talked to an outside catering operator who told me that 1 million chapatis will require 80 000 kg of wheat flour (2kg of flour produces 25 chapos) and at sh. 80 a kilo the flour will cost ksh. 6.4M. The 2 kg flour or 25 chapos will require 0.5l of oil working out at 20 000l of oil for the 1m chapos with this working out at Ksh. 5M. She did not cost water and heat (cooking fuel). A chapo sells on average at Ksh. 20 hence 1m chapos will generate a Ksh. 20M revenue and a Ksh. 4-5M daily gross profit when water and heat are taken int consideration.
The message from these figures is that 1M chapos will yield tremendously for the inputs producers and the traders. Properly designed and executed this is a project that can create and advance the bottom up economy philosophy.
| Key cost of daily production of 1million chapatis (COST) | |||||
| Item | Units | Unit cost Ksh | Amount required | Total cost
Ksh. |
|
| 1 | Wheat flour | Kg | 80 | 80 000 | 6 400 000 |
| 2 | Cooking oil | Ll | 250 | 20 000 | 5 000 000 |
| 3 | Water | ||||
| 4 | Heat | ||||
| 5 | Total key cost | 11 400 000 | |||
| Sales of 1 million chapati (REVENUE) | |||||
| 6 | Chapati | Pcs | 20 | 1 000 000 | 20 000 000 |
| 7 | Total revenue | 20 000 000 | |||
| 8 | Estimated Gross Profit (7-5) | 8 600 000 | |||
Your excellency sir, in my opinion you should focus on a strategy to buy (outsource) the chapos rather than produce them. Your policy of buying the chapos should be accompanied by creating an environment for many to produce between themselves the 1 million chapos using appropriate technologies and appropriate marketing strategies rather than one single machine in the hands of one capitalist doing so.
A conducive environment for many to produce the chapos for you to buy could include a business incubation programme to help the unemployed Nairobians in their startup efforts. If you used a well thought out hybrid of aggregate buying from the many producers or aggregate selling by the many producers’ model then you could create more jobs along the producer-consumer distribution channel and enhance the bottom up economic model.
Sir, when many produce the chapos then they create demand for a number of inputs including wheat and technology. When the small-scale wheat farmers get market for their wheat then this raises their standard of living as the Prof. Ndii’s bottom up economic theory promised. Looking for a mass production technology which is likely to be an import means we shall export jobs and add one more firewood in an already boiling pot of local unemployment. Sir, it is an open secret that importation in Kenya comes with procurement corruption.
Even if the technology is not an import, capital would have been concentrated in the hands of one investor and this would create the top-down economic theory which Prof. Ndii critiqued.
Production by many creates demand for appropriate production technology. With an appropriate policy, local institutions like JKUAT, KIRDI, Numerical machines etc would then invest in this appropriate technology and even the Jua Kali would improvise such appropriate technology. The bottom-up philosophy will be boosted.
Sir, allow me use an analogy. I was the chairman of Kenya Investment Authority (KIA) during the Mzee Kibaki regime. By President Kibaki simply declaring free primary school education the demand for education shot up. With it came demand for school furniture and jobs were created in the forestry and particularly in the carpentry sector. Demand for school buildings shot up and employment opportunities in sand harvesting, stones cutting, cement production sectors shot up. The school uniform sector generated extra jobs. I may not exhaust the backward and forward linkages as well as the multiplier effect associated with the single decision to have free primary education. The bottom line is that through linages and the multiplier effect the economy gained and there was money ithe pockets of many Kenyans. The banking sector too gained when agency banking services flourished.
My KIA team who went on casual observations and research on the outskirts of Nairobi were told by a group of hitherto idle building materials brokers that out of the savings generated by not paying fees for their kids, they graduated from “air burg” lunches to Githeri lunch. Some said that they had used what they would have paid for fees to open kiosks for their wives.
A casual evaluation of he explained Kibaki regime situation revealed that there was no concrete or formalized sustainability strategy for the gains of the free primary education particularly in matters employment creation. This then can be taken as a learned lesson.
Sir, make a decision to outsource chapos and this would lead to a multiplier effect that may include more demand for inputs including wheat, oil, hot pots, name them. The indirect benefits associated with such a decision can be tremendous.
No sir, you do not have to just announce for chapo supplies pre-qualifiers. There is need for some proper project planning and management complete with a sustainability approach.
Prof. Henry M. Bwisa.
teetv.mukmik.co.ke
proffbwisa@gmail.com