By XN Iraki

The architect of Constituency Development Fund (CDF), former MP Muriuki Karue lost his seat in the last general election. The gentleman must be very satisfied that his idea has been taken to the conclusive end if the latest Budget is anything to go by.

The Budget pushed more money to the grassroots, through CDF. The move was so popular that our MPs found it very hard to criticize it or see any errors. Increasing the money through CDF was a popular move, but does it make economic sense?

Is the CDF model based on solid economics or is it "voodoo" economics to quote a popular slogan in one of US presidential campaigns? Can it be improved?

Other observers have suggested that the popularity of CDF is as a result of the failure of the high economic growth from 2002-2007 to trickle to the grassroots with the Government getting lots of flak, with questions like, "if the economy has grown, where are the jobs?"

Truthfully, CDF is in its infancy, but it can be improved, to base it on sound economics. Here are some suggestions.

measuring development

First, the CDF is about development and the parameters and measures of that development should have been given. When do we say a constituency has developed?

The most popular measure nowadays is the Human Development Index (HDI), which is broader than the popular Gross National Product (GDP) growth rate.

The ranking of countries based on HDI yields very different results from GDP The index takes into consideration not just the increase in the goods and services produced in the economy, but how the citizen welfare is affected in terms of life expectancy, literacy, educational attainment, and GDP per capita.

United Nations Development Programme (UNDP), observes that development is about widening the options of persons, giving them greater opportunities for education, health care, income, employment.

set targets

The central Government in collaboration with the CDF stakeholders must allow the voters set targets for each of these measures of development. The targets could be certain percentage increments in HDI from one year to the next. Before the CDF is dispersed, the targets achievements are reviewed.

The central Government should then reward constituencies that have either achieved the target or exceeded them.

The rewards should be in terms of increment in CDF. Such an incentive will hopefully spur the leaders in each constituency to be more focused. Without such objective measures, the temptations to come up with ghost projects will remain high.

Once such targets are set, accountability will set in. More importantly, HDI is long-term; some variables like life expectancy are not achieved overnight. Use of HDI will force our leaders even at the grassroots level to think long-term. Two, we focus too much on how CDF goes to each constituency.

We forget on where that money comes from. We suggest that constituencies should also generate their money. The central Government should then match this money.

If we can merge constituencies, county councils and districts this would be very easy to implement.

An example. If Samburu district/constituency raises Sh100 million this year, the CDF can be matched say 1:1 and the central Government adds them another Sh100 million. This approach will discourage dependency and spur political entrepreneurship, where our leaders will think of how to raise funds beyond charging motorists for parking.

One ingenious method of raising money for districts or regions is to make them attractive to investors, both local and foreign. Districts or regions will be forced to make sure there are good schools, good roads and other amenities to attract investors.

attract investors

This will start a self-perpetuating cycle since investment will raise more money, government give you more money for making more money and so on. This approach would allow us to convert Vision 2030 to 2020 or earlier.

Three, the management of CDF is wanting. ICPAK observed that and so did the retired president Moi. The thinking behind CDF was that it would be a neutral fund, blind to voters’ political affiliation.

That was the ideal case. Recall that CDF was a political decision, and the proponents of CDF were unlikely to stop there. Truthfully there are some MPs who follow CDF money with altruistic motives, but a few others see it as a political tool, free money to seek re-election.

Without management structures to handle CDF, many Kenyans see it as windfall, a largesse from the central Government, after all more will come next year!

Four, some observers suggest that through CDF and other Government funds such as women enterprise fund and youth funds, the Government is crowding out the private sector, which should be the engine of economic growth.

Some have boldly asked if the CDF money would not be more effective in private hands through tax cuts at the grassroots. The previous sentence may contain lots of truth.

change in thinking

Five, it is wrong to assume that all that is missing at the grassroots is money.

A lot of change in thinking is needed to make citizens understand how their own actions affect their future without blaming witches, nature and neighbours.

More importantly, they must understand that the Government does not scoop money from a well, it is generated by our collective sweat through taxes.

Finally, CDF may be here to stay with some observers boldly suggesting that the Grand Coalition has brought economic devolution before political devolution.

The effectiveness of CDF can be increased if we focus more on the entrepreneurship side, how the money is generated and give incentives to those who generate it.

After all, solid economics focuses on how money is generated and efficiently utilised. Voodoo economics doesn’t, preferring its distribution without worrying about the sources.

The writer is a lecturer at the University of Nairobi, School of Business. xniraki@aol.com