Why The Future of Kenya's Economy is Bleak

Published on 6th November 2019

Patrick Ngugi Njoroge, Governor of the Central Bank of Kenya and Prof. Bitange Ndemo, Professor of Entrepreneurship at the University of Nairobi’s Business School have raised concern about Kenya’s declining economy. The Governor bemoans economic growth without accompanying jobs and income. Bitange Ndemo on the other hand decries the collapse of manufacturing. Many companies are closing, leaving people jobless. Many citizens have no coin in their pockets. The country is saddled with a crippling local and international debt that needs servicing from the ordinary citizen.

What aileth our economy? What model can revive it?

Our economy is ailing because of many things. First, after the economic crisis occasioned by the increase in oil prices, it was thought that market fundamentalism in form of neoliberal policies would revive African economies in general and Kenya in particular. The World Bank and IMF protagonists forced African countries to float their currencies, introduce cost sharing in services, privatize government parastatals and open up markets. The structural adjustment packages were painful as a many people lost jobs, died because they could not raise hospital fees, dropped out of school and saw some of their towns like Thika lose their industrial base.

Mwai Kibaki’s attempts to stem the tide yielded an iceberg with no roots. The rising middle class had no roots in any tangible structural economic base like manufacturing. Most of them were government tenderpreneurs benefiting from increased government spending or importing goods from abroad for local consumption.

Second, the infrastructural bubble in Uhuru’s government has no roots and it’s not transformative. It still perpetuates the extractive infrastructure paradigm of moving goods from the hinterland to Mombasa. The infrastructure is geared to support the 5 percent of the population who use it mainly for consumption purposes. There is no infrastructure to support small scale farmers in sugar, maize, tea fruits and vegetables from the source to markets. For example, Pascha milk processor located in Kagwi and Fresha Dairies encounter a myriad of problems transporting milk from the farmers to the factories. So do farmers in Kisii transporting bananas from farms to Suneka for onward transmission to Nairobi. 

Sorghum and sugarcane growers in Western Kenya experience insurmountable problems while transporting goods to towns. Moving fish from the landing beaches in Lake Victoria to Kisumu is a nightmare. Goat traders from North eastern Kenya have to walk their goats from farms to the nearest markets which makes the goats to lose weight and value while vegetable and potato farmers from Endarasha and Kinangop have stories to tell about the time spent in pushing and pulling trucks out of mud. The infrastructure is not bringing down the cost of transporting essential goods from the farm to the markets.

Third, the rising middle class is a mirage. Their consumption habits are outward oriented. They will shop in the malls which are stocked with imported goods. This means that any money made in Kenya is being exported outside the country and little remains in the country. This is a big blow to our local economy and time will tell how long this cash outflow will be sustained.

Fourth, the policy institutes which were supposed to serve as think tanks for entrenching neoliberalism have also been wanting. They are more inclined in carrying out one time surveys to study the economy. They carry out surveys to find out the impact of SGR or the impact of the express of way in Nairobi. Usually their results are always on the positive that SGR will benefit the economy. Their work is largely theoretical and lacks serious modeling of long term data to come up with development models that will steer development. The universities on the other hand lack critical or radical development thinkers who will question development trends and model alternatives to the current development. For example, most of the theses and dissertations written in the University of Nairobi investigate issues like factors affecting women entrepreneurs, factors affecting the take up of microfinance rather than modeling on how microfinance will shape the economy in the next twenty years. This means that most of the planning is not based on solid knowledge basis. The problem is also complicated by the fact that the government tends to rely on outside experts for its project planning because they are the financiers. This leaves little room for local generation of knowledge that will drive development.  This is not surprising because there was no government representation in the recently concluded African Studies Association for Africa where the need for decolonizing knowledge was being discussed.

Needless to say, there is need to come up with urgent models of development that will replace this neoliberal private sector led development. We should derive our models from the large informal economy and peasant production exchange models which have a long history of self-reliance and solidarity. Self-reliance means working for oneself and relying on own resources, skills and creativity in production and exchange. Solidarity means working together with others not in competition but in solidarity to carry out transactions. Evidence of self-reliance and solidarity in collective action is seen in several activities such as in the case of Fresha Dairies, Endarasha community water production and harvesting, Wangige water works, Kamukunji Jua kali works, Uhuru Market  and Kisii soap stone production. It is also evident in many women self-help groups that engage in leather and beads production, weaving and pottery. These modes of production are free of debt, inclusive and self-sustaining. We need to understand them and move them to the next level in order to confront the vagaries of Neoliberalism as well as help them with digitization.

By Mary Njeri Kinyanjui PhD

Institute of Development Studies, University of Nairobi

[email protected]

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