Innovation capability hurts Kenya’s policy framework ranking

By Rawlings Otini

Kenya dropped two places in the 2019 world ranking of most competitive countries in terms of policy framework.

The country’s dwindling performance in innovation capability and health led to the drop.

Kenya was ranked 95 out of 141 countries this year by the World Economic Forum’s Global Competitiveness Index compared to position 93 in 2018.

The ranking helps to attract foreign direct investments to a country. Firms and individuals use the index to compare potential investment destinations and to judge which country will give the highest returns on investment.

Innovation capability, where Kenya was position 78 out of 141 countries, was determined by investment in research, trademark application, diversity of workforce, international co-inventions among others. Germany is the world leader in innovation according to the report.

Health index

According to the report’s health index, measured by life expectancy, Kenya was ranked 115 out of 141 countries.

“Kenya is not doing too bad, but the report is a sobering. We have a lot of room for improvement. If I was an investor I would say it is a yellow light, not a green light for investors,” said Economist and businessman Robert Shaw.

Shaw said the government needs take such reports seriously to help it improve its investment environment

“We just need to provide the basics, for instance quality health and education. The rest are secondary,” said Institute of Economic Affairs chief executive Kwame Owino. Kwame added that Kenya does not need to build fast trains when it cannot supply basic healthcare and clean water to its people.

“We should not import education systems from abroad, let’s just do what we can afford,” said Kwame said.

The drop was also due to lack of sufficient rail infrastructure and airport connectivity. Rail line density helps to provide affordable transport compared to roads.

Most of Kenya’s rail network is old and dilapidated except for the Standard Gauge Railway.

Kenya’s road network and quality was, however, ranked 82 out of 141 countries.

Electricity connections scored 73 per cent with its quality, however, getting a 19 per cent score because of its unreliability.

The economy improved in macroeconomic stability, which assesses the level of inflation and fiscal policy, scoring 72 per cent, driven by the government’s ability to maintain stability in financial markets.

Kenya also scored 64 per cent in business dynamism, a measure  for cost of starting a business, the time it takes to start it and solvency laws. Kenya is also dynamic in business by virtue of its strong entrepreneurial and risk taking culture and growth in innovative companies and firms adopting a disruptive culture.