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GDP a bad measure of digital economy

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SAM WAMBUGU

By SAM WAMBUGU
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How technology transforms the economy and society is one of the most storied subjects.

Digital technologies have risen to prominence as a critical determinant of economic growth, national security, and international competitiveness.

The digital economy has a profound influence on the world’s trajectory and the well-being of ordinary citizens. It affects everything from resource allocation to income distribution and growth.

As the economy has evolved from industrial to services, to information and digital, our basic measurement systems have not kept pace.

Gross domestic product (GDP), the oft-used barometer of prosperity, was developed during the industrial age. But it’s a distortive measure, one that is grotesquely inadequate for measuring the digital economy.

Using GDP as the archetype for a country’s welfare has well-known problems but in the digital age, those problems compound. Standard GDP statistics miss the bullseye of technology’s benefits.

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Conceptually, the digital economy comprises goods and services that either are produced using digital technologies or include these technologies.

But GDP fails to account for the productivity gains achieved by technological advancement. It ignores the efficiency that modern technology provides us with.

It turns a blind eye to the widespread tech tools that keep the word in business, just because we don’t directly pay for them.

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For example, GDP does not count free products such as open-source software, even though corresponding proprietary software is recorded and valued at its market price.

This measurement fails to account for the time saved by drivers who use Google Maps or researchers who, instead of a trip to the library, turn to freely available online resources.

Think about the immense time gained by consumers when they shop online.

Even the use of facilitative services like mobile money transfer services is grossly undervalued, yet they are critical to our lives.

The ubiquitous social media platforms such as Facebook, WhatsApp, and free email applications that play a pivotal role in facilitating communication and boosting businesses by providing means for entrepreneurs to advertise their goods and services do not feature in GDP computations.

GDP assigns a zero value to goods with a zero price, yet those goods aren’t worth nothing.

Changes in quality occasioned by technology and global intellectual capital are perhaps the most significant challenges associated with the measurement of digitalisation.

Given that we live in a digital and interconnected world where the use of physical capital is shrinking, GDP is simply an inadequate measure of welfare and growth.

Wrong measurements of our prosperity lead to poor decision-making.

Because of the rapid technological transformation, it is even more important to get reliable information on the condition of the economy and changes in economic structures.

In sum, the age-old GDP measurement is off-kilter; it is a bad barometer for the digital economy. It’s about time it’s amended or axed.

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Our wizards saw the Brave New World, but none saw coronavirus

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By CHARLES ONYANGO-OBBO

Last year in December, Nation Media Group held its first Kusi Ideas Festival in Kigali. The festival tried to peer ahead the next 60 years in Africa.

There were many Brave New World ideas about how that future might look like, and also the perils that progress almost always brings. Needless to say, no one saw Covid-19 coming.

A futurist curtain-raiser in The EastAfrican, titled Africa in 2079, came close to outlining a mirror universe to the one Covid-19 is bequeathing us.

Between London, Zimbabwe, and the corners of Africa where Econet’s fibre optic network reaches, Strive Masiyiwa, founder and chairman of Econet Wireless and former chair of the board of AGRA wrote:

“I recently invested in a tech start-up that has created an Uber-like platform for tractors, enabling farmers to link up with a central database and order a tractor via SMS…freeing the farmer from the drudgery of the hoe. This service is particularly valued by women farmers, enabling them to circumvent social norms that might otherwise hamper their ability to hire a tractor.” From wherever we are hiding from the virus, unable to roam the farm, Uber farming could be the new way a lot of our food is produced.

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From Tanzania, Aidan Eyakuze, who is executive director of Twaweza East Africa and has been confined in-country as an elegant prisoner for nearly two years because of his love of inconvenient data, painted an intoxicating but strange utopian-dystopian picture of Africa at the end the century.

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By 2079, he foresaw the “vast majority of Africans earn their living through multiple micro-tasking (MMTs) ever since every ”job” was unbundled into its component tasks…leaving only those unbundled micro-tasks needing social intelligence, creativity or dexterity to be done by people. All ”taskers” are always-on private contractors who bid relentlessly for the privilege of tasking.

Incomes are kept low by the relative scarcity of tasks requiring the human touch.

“The unrelenting competition for tasks is both stressful and socially divisive — you are competing against everyone all the time…even marriages have renewable term limits, ‘in case someone better comes along.’” With work-from-home regimes, the former has come 78 years earlier.

Indeed, even for the latter, more people now probably think being cooped up with the same man or woman in the house “for better, for worse, for richer, for poorer, in sickness and in health, to love and to cherish, till death us do part,” is a very archaic model.

Between Italy and Kenya, the Society for International Development’s Arthur Muliro, peered into a what a truly borderless Africa might look. Among others, his gaze settled on, of all places, Libya.

“Libya…was now welcoming other Africans and allowing them to settle. The peace deal that had come after a decade of civil war was holding and there was new optimism, in part boosted by the arrival and expansion of new migrant groups who had settled there and were helping rebuild their adopted country.”

On a close re-reading, turns out Aidan hinted that Turkey, which jumped in the Libyan fray as the coronavirus made its way out of Wuhan, might have something to do with it.

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Stadiums progress welcome – Daily Nation

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By EDITORIAL

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Last week, the Sports ministry’s top officials, led by Chief Administrative Secretary Hassan Noor Hassan and Principal Secretary Joe Okudo traversed the country to access the ongoing construction of stadiums.

President Uhuru Kenyatta also made an impromptu tour of the Nyayo National Stadium to ensure that all is well besides giving Cabinet Secretary Amina Mohamed full support. That has made sure that renovation works resume at all the stadiums — including Kasarani, Nyayo, Kipchoge Keino, Kamariny and Wote — and that everything is running on schedule.

Upon completion of some of these arenas, the country will have positioned itself to host major world events, especially in football, athletics and basketball. The ministry must, therefore, ensure that, while it has given contractors an ultimatum to finish their work, it also insists on quality delivery.

But there are concerns about work at county stadiums, especially in Mombasa, where those who redesigned the arena have done away with the internationally approved running track.

The new stadium has been designed for football only hence won’t host any track and field events. The four lane track will only be for warm up and this has raised eyebrows.

Mombasa County Chief Sports Officer Innocent Mugabe said Bububu grounds in Likoni and Kenya Ports Authority’s Mbaraki Sports Club will be upgraded for sports use. Mombasa being at low altitude, it is suitable for staging major World Athletics events, having staged the 2007 World Cross Country Championships.

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Kenya is bidding to host the 2025 World Championships in Athletics and Mombasa can easily be the venue with a good stadium in place. There is still time to build a county stadium.

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Ensure reopening of schools runs smoothly

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By EDITORIAL

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When Education Cabinet Secretary George Magoha announced a fortnight ago the postponement of school reopening to January next year, he gave an exception. Universities, teacher training colleges and technical training institutions were directed to be ready to reopen in September.

Consequently, they were asked to put in place safety measures prescribed by the Health ministry, including reorganising classrooms and hostels to ensure social distancing. Just a month to the planned reopening, are those institutions really prepared?

In the past few days, Prof Magoha has convened meetings with the heads of the institutions to plan for the reopening and visiting the colleges to assess their preparedness. Preliminary reports from these engagements indicate that just a few institutions are ready.

POOR STATE

At the university level, so far, only Strathmore has been declared ready for reopening. Ensure reopening of schools runs smoothly

For teachers’ colleges, three — Murang’a, Kibabii and Kericho — have met the threshold. Assessment is ongoing for the technical training institutions.

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But the broad observation is that most of the institutions are not ready. Though not surprising, most of them are ordinarily in poor state and Covid-19 has just exposed them. Beyond the situation, long-term actions are required to revamp and revitalise them.

Reopening the colleges in September will be the starting point for relaxing restrictions in the education sector. The reason for beginning with colleges is that they have mature students who understand the health protocols and can, therefore, take care of themselves and minimise infections. Their experience would then inform plans for reopening primary and secondary schools.

REPEAT CLASSES

Closure of schools and colleges has dealt a huge blow to education. Learners in schools have lost a whole year and have to repeat classes next year. This comes with high social, economic and psychological. Indeed, this is the first time in history that schools are being closed for a year.

The last time the education sector suffered most was in 1982, when, following an abortive coup, the University of Nairobi and then-Kenyatta University College were closed for nine months. That created a major backlog and that took five years to clear. This is the reason steps should be taken at the earliest opportunity to mitigate the damage.

The challenge, therefore, is for the colleges to work on those health protocols to prepare for reopening. All other sectors, such as transport and tourism, are reopening and, therefore, colleges have no reason to lag behind. We ask the management of the institutions to expedite the required processes and get ready for reopening in September as directed.

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