Kenya Missing on Global Economic Radar

Published on 25th March 2008

The January 2008 issue of the ‘Global Investor’ has an illustration of radar with circular concentric rings depicting economies that focus on food, shelter, security, possessions, knowledge, personal development and self fulfillment. While emerging markets are closing the gap between them and the developed markets (which are at the core) Kenya is nowhere near the food ring. Kenya like an undiscovered planet, lies hidden beyond Pluto. How can Kenya gain economic resilience and reduce vulnerability?

For Kenya, the key words to look for when discussing a stable economy are ‘patriotism’ and ‘colonialism!’ In a country with more than 42 tribes, the most urgent step ought to be to review the constitution to bar one community from ‘colonizing’ the rest in the name of ‘patriotism’. Kenya’s economic resilience was hinged on its geopolitical positioning as an ally of capitalism during the cold war and as an Eastern Africa gateway. Unfortunately, the economic and political stability façade made both local and international observers to ignore a cancerous discontent that had been brewing up for a long time.

Last year's disputed presidential poll results exposed the fact that the republic of Kenya is built on a weak foundation. Kenya whose economy relies on agriculture to employ 80% of its population, and close to 50% of its export earnings had glossed over land disputes for the last 44 years. A few political elites are said to be controlling over half of Kenya’s 20% arable land, pushing the rest of the population to squeeze on remaining space or jostle for what is left in arid areas. To increase the country’s economic resilience, land rights disputes must be urgently addressed and other non agricultural avenues that can facilitate income generation for the communities opened. Calls for truth and justice are informed by arguments that land was unfairly acquired by political elites at independence, marginalizing a section of the community from participating in productivity.

The aspect of one community colonizing others is based on the fact that Kenya inherited a constitutional framework that simply mimicked the colonial government of the 50s. First, the constitution confers imperial powers to the presidency; ingrained in the constitution are excessive discretionary powers vested in the presidency and senior officers that are not only open to abuse but provide the bedrock for corruption. Second, it renders opposition [parties] as enemies of the republic (then it was Africans). Third, it empowers the person in the office to dole out national resources to sycophants and tribe-mates in the name of business contracts and protection by state instruments. In other words, for a Kenyan or a foreigner to successfully run business in the country, he has to ‘have lunch with the president or a senior government official’. If one is not in government, more so in the kitchen cabinet, one is left to be a spectator and watch economic growth charts assume an upward trend for a few at the expense of the majority.

Political suffocation of business and economic activity is further buttressed by bureaucratic bottlenecks. For example, if one wanted to start a newspaper business; it will take a minimum of 3 months. One has to file applications through the Attorney General’s office, and wait for the intelligence arm to do background check before the license is granted; a clear signal that Kenya still has ‘thought police’ in place. Whereas in developed countries it might take a single day to register business, if one is lucky in Kenya, it takes a minimum of one month. Once registered, he will be faced with other hurdles such as operating licenses, and a queue of underpaid bribe seeking civil servants both on the highways and offices.

Assuming one survives the initial hurdles, the Kenyan tax man, will be waiting to collect taxes but not deliver services! Businesses not subsidized by government contracts have to also brace themselves  for international political trade deals that rarely recognize the uncompetitive nature of our businesses. Faced with challenges such as poor transport infrastructure; in the 2007/8 budget, instead of reducing the tax on automobile spare parts, Kenya’s Finance Minister increased tax on the same and plans to set up a government run auto spares factory! Local businesses face three main threats: the government, emerging and developed country producers.

For Kenya to build a resilient economy, it is imperative that the productive activities of individuals and businesses operate on ‘auto – pilot’ as opposed to relying on the political whims of the day. This can be attained through a sober constitutional review process that will ensure credibility of institutions, address tribe-colonialism, and leadership. At the moment the credibility of Kenya’s institutions, right from the presidency (executive), judiciary and legislature (parliament) are wanting. Members of parliament are understood to have paid enormous amounts of money as ‘listening allowance’ to voters (euphemism for voter bribery), the presidency is said to have used its discretionary power to tamper with vote tallying and subsequent record swearing in. The judiciary on the other hand if not being accused of favoring the executive, is known to be the most inefficient outfit in Kenya.

It is of strategic importance to the economy that Kenya sets up a truth and justice process that can help rebuild nationalism as opposed to the prevailing negative tribalism. This will offer an opportunity for elites to own up on past economic and human rights crimes.It might call for hard choices for both the aggrieved and the accused as it may involve pardon or legal sanction. It is important that Kenyans be allowed to heal by surfacing the ills they committed to society.

The business community takes a bigger share of the challenge assuming that political interference ceases to be a main obstacle to entrepreneurship in Kenya.  Take for instance tourism which earned the country an estimated Ksh 56.2 billion in 2006 has remained largely a raw ‘commodity.’ Tourists are expected to come and see our wildlife, savor our beautiful landscape and take pictures. What our strategists fail to focus on is the fact that the same tourists can still enjoy such a ‘commodity’ in Uganda, Tanzania, South Africa and other African countries in general. What then would be Kenya’s tourist competitive advantage?

Borrowing from the wisdom of Michael Fairbanks, the CEO OTF Group; business and nations ought to refocus their strategy to fit into the era of ‘total competition.’ Competitiveness relies on productive deployment of resources while recognizing that it is industries and companies that compete; but not nations.  Our business leaders have to urgently rethink their strategies away from relying on protected markets, influence from politicians, natural capital, government as a master strategist, paternalism, economies of scale, macro economics and redistribution of wealth (because Kenyan business people are busy angling for government contracts).

Industries and companies must therefore focus on market-space as opposed to the traditional market place. This will not only involve focus on regional markets but also reinforce the fact that Kenyan communities need each other for purposes of increasing market-space! Other aspects to focus on include competition and globalization, micro economics, human capital and knowledge, meritocracy, innovation, wealth creation and shared vision and collaboration.

In a country where 10% of the richest households are said to control more than 42% of incomes in Kenya, there can be no other method of ensuring economic resilience other than that which will pull more people into efficient productivity. Kenyans must start by a revolutionary change of the constitution which will provide a framework through which the economy can insulate itself from political upheavals and developed economies onslaughts.

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