In his speech at the beginning of this week, President Kenyatta
made some arguments that got Kenyans thinking about the affordability,
numbers and applicable principles of public budgeting.
The
variety of responses to the speech and interpretations of it made it
clear that the view Kenyans of this country is very different from
reality.
It may not be polite to say, but it has become
clearer that few Kenyans understand the place of this country in
regional and international development.
So I will dwell on common misconceptions that inform debate about the economy and Kenya’s place in the world.
First,
many Kenyans seem unaware of either the size of their country’s economy
or of its place relative to other countries. The clouded view is that
this country has an enormous economy relative to our neighbours and is
therefore indispensable to the world.
"NOT A MAJOR ECONOMY"
The
truth is that compared to the world, Kenya has a substantial population
and geographical size, which place it among the top 25 per cent in the
world. However, Kenya is not only a small economy but also a nation of
poor people.
Consider that the total income produced in
Kenya last year is slightly above US$50billion. Again, while it is the
result of inspired work by all Kenyans, it is a very small income for a
country of 43 million people.
So, as far as an economy
grows, Kenya may have lots of potential but is not a major economy
because it did not contribute even one per cent of world output in 2014.
Based on the new method of national accounting,
Kenyans assume that the country has entered middle-income status. Thus,
many responded to the Sunday speech by asking how a nation of
middle-income status is unable to increase basic pay for teachers.
They seem oblivious to the fact that the phrase “middle-income status” does not mean “middle-income” literally.
A
quick arrangement of all countries’ GDP shows that to get to actual
middle-income status would require an average national income of at
least US$5000 per person. This would require an economy four times as
large as exists in Kenya today.
Thus, Kenyans ought to
understand that the conventional use of the term “middle-income”
implying an annual income of more than US$ 1000 per person is merely
symbolic and mathematically incorrect. Truth be stated, Kenya is not a
middle-income country yet and we have work to do.
OUR ECONOMIC PEERS
Because
of a misunderstanding of the real scale of Kenya’s economy, some
citizens, who consider themselves more patriotic, routinely speak
disparagingly of Kenya’s neighbours.
After the speech
by the President, some of these posh and serious patriots took offense
that the president dared compare their beloved and super-successful
economy to Burundi, Uganda, and Tanzania. The uninformed refrain was
“How can we be compared to Uganda and Burundi?”
This
crassness betrays the false belief that Kenya is much more
sophisticated than the region and ought to be compared to countries such
as South Africa, Taiwan and Malaysia, informed by the false narrative
that we were at comparable levels a generation ago.
To
state it plainly, our neighbour Burundi may have poor growth prospects
based on very undemocratic leadership, but it is a more sensible
comparator because Kenya’s economic structure is far closer to Burundi
than to South Africa or Brazil.
To state it simply,
Burundians are more likely to catch up with Kenyans in economic
development than we are to catch up with either South Africa or Brazil.
Whether
by deliberate reflection or by chance, the President was not mistaken
to compare pay in Kenya to these countries. Brazil and South Africa are
not our economic peers. Burundi, Rwanda and Uganda are.
REGIONAL LAGGARD
In
Kenya, total tax revenue and public spending are very high relative to
income levels. Despite this, Kenyan citizens do not enjoy better public
services, or exhibit higher life expectancy or literacy than their
regional peers.
For instance, the East African
Community (EAC) publishes a regular report on facts and figures in the
region. It shows that in 2013, Kenya had the lowest literacy rate of 62
per cent of all adults among the five members. This confirms that Kenyan
is not so far ahead that it can assume leadership in the EAC.
Kenyan
society is the regional laggard in the literacy of adults despite being
the highest spender on education. We should be as modest as our
national income is.
The message of the Sunday
speech is that we are small and poor, and we shouldn’t exaggerate our
economic position. We shouldn’t have our noses in the air because
neither our economy nor our growth rates are superior.
A great country is built on a national narrative based only on facts.
Kwame
Owino is the Chief Executive Officer of the Institute of Economic
Affairs (IEA-Kenya), a public policy think tank based in Nairobi.
Twitter: @IEAKwame
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