Why Kenya is busy with the wrong economic debate

 

By DENNIS KABAARA
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The “bottom-up” economic model and “hustler ni form” debate that has apparently changed our electoral conversation away from tribal/ethnic coalitions to the better dignity of living

and livelihoods might be a game-changer. I have said that the biggest impact of Covid-19 was not lives (health) but living (society, mental health, the dignity of life) before we wake up to our hardy livelihoods.

Kenya’s basic tragedy is that our illegal unofficial campaign trail is leading us into responses that don’t make sense. To be clear, Deputy President William Ruto is more or less running away with the popular economic agenda, and, as my favourite blog says, “sleepwalking to the presidency” while everyone else is grasping for the straws of social welfarism. Social protection here. Tax cuts there. Kenya is a movie.

No one is talking proper and realistic numbers yet, because that would require a revisit of our collapsed fiscus. It is easier to speak to thoughts like “growing the economy out of debt” or “paying for social protection of the poor by cutting budgets” than to publicly reflect on the notion that Kenya is 20 seconds away from where Greece was the other day.

More intriguingly, our putative presidential candidates speak as though devolution doesn’t exist; or crudely, that it is basically a political handout.

It is difficult to conceive a potential next national leader, ten years into the implementation of the 2010 constitution, who speaks to what “national” will do rather than offer what counties might do.

A great illustration of this is certain promises to throw cash at the Big Four agenda – a great idea, but in truth, an invasion of devolution. The essence of “bottom-up”/top-down” political argumentation must begin with the basic idea that Kenya is the sum total of its counties, not the trickle-down effect of its centre.

First, we thought agriculture was a third of the economy. Well, it turns out that, while still our biggest economic component, it’s a fifth now. Crops (shamba) that was a quarter of the economy is actually a sixth. Simply, the agriculture agenda that leapfrogs our development isn’t quite there. Why is that?But it’s more than that. Our most recent economic (as in GDP) rebasing taught us a couple of new things. Here are hard truths for reflection as we listen to and watch all of those campaign trail promises.

Well, tiny little transport that was a twelfth of our economy is now one shilling out of every ten. Welcome to the “nduthi” (boda boda) economy! Oh, and real estate is another shilling out of ten. “Wash Wash” anyone, coz it can’t be a mortgage market of 20,000 out of million-plus bank accounts?

Let us proceed. In our rebased economic shape, tourism is double what we thought of one shilling out of every hundred.

ICT is two and a half times tourism’s size. Our creative economy of “ma-youth” is triple what we thought of three shillings in a thousand. The economy of “household support” is twice our creative economy. This isn’t just food for thought, but actual thought food at home.

Manufacturing you ask? Rebased from one out of six to one out of eleven shillings of GDP. The government itself (public administration and defence) now occupies one out of every 20 bob in our economy; up from one from 30 shillings. Everything else (finance, utilities etc) stayed at pre-basing level. So too did education, health, mining and construction as shares of our overall economic output.

Now let’s go back to our economic debate. Since this is our penchant, at which problem or opportunity do we throw public and private money? Having financialized the economy before we properly agriculturalized or industrialised it, where is, and who has, the job-creating solution to this quandary?

Unfortunately, these would be the national questions we struggle to answer. A more clever answer might get the national versus county imbalance in our country’s economic development agenda. In other words, how to drill down from this new national economic picture to local “vitu kwa ground”.

“Building Back Better” from Covid-19 is an excellent rallying call. To think and act better and smarter. Social welfarism is fine, but what about a universal basic income as the really big picture solution?

Then, growing ourselves out of debt needs specific anti-corruption answers as much as it needs the innovation that Kenya is recognized for as a standout player.

For some reason unexplained, we tick the “first world” boxes of prosperity triggers but struggle with our “third world” boxes that lever human progress.

But here’s the really tricky part. Nice economic ideas only work if our fiscus does. And, right now, it isn’t. The simple test of the credibility of the economic “Alice in Wonderland” voodoo we are hearing is to ask two things. Which economy are we talking about? How is this achieved on the fiscal front?

May we call this the starting point for a proper economic debate for our putative 2022 leaders?