Almost two decades ago, when Kenya’s economy was averaging seven per cent growth, Njuguna Ndung’u, who was then the Central Bank of Kenya (CBK) governor, reminisces about a question he was asked on the streets.
"Why are we not feeling this economic growth you keep talking about?"
“The teacher in me woke up and said: You cannot feel the growth because it is not like a bus that you wait at the stage to get in. You have to be a participant in the market. That is where vibrancy is felt. But if you are outside the market you cannot feel that growth,” recalled Prof Ndung’u said during the launch of the Kenya Economic Report 2023 by the Kenya Institute for Public Policy Research and Analysis (Kippra).
Ironically, this is the same question in the minds of a majority of Kenyans even as the economy this year is expected to grow by 5.7 per cent ahead of the global average of 3.1 per cent as per CBK’s prediction.
Yet, the majority of Kenyans, who bought into the hustler dream that manifested a good economic environment for them to thrive, have been faced with increased taxes, high cost of doing business, shrinking wages and an administration that seems to have vacated its Bottom-up Economic Transformation Agenda(BETA) and instead prioritising their needs.
The BETA Agenda, as espoused in the Kenya Kwanza manifesto, was meant to provide inclusive growth so that even the mama mboga and bodaboda can feel the growth. A hustler fund was launched to rehabilitate the majority of these individuals so that their credit scores can be worthy before financial institutions.
However, in a bid to tame the runaway inflation, which now stands at 5.0 per cent, the CBK Monetary Policy Committee has consistently raised the CBR rate which now stands at 13 per cent, making credit unaffordable to a majority of Kenyans, especially small businesses.
Additionally, both the Finance Act 2023 and the Finance Bill 2024 have provided very little reprieve for the ordinary Kenyan who now not only do not feel the expansion of the 5.7 per cent economy but also could be growing negatively.
The justification of President William Ruto's administration that some of the decisions the government is making, like the recent Sh200 million private jet trip to Washington DC, United States, are for the good of the country does not seem convincing at all.
Yet his associates, including the country’s chief economist Prof Ndung’u, who is the Cabinet Secretary in charge of National Treasury and Economic Planning, signed the BETA Agenda.
At the launch of the KNBS 2024 Economic Survey, Ndung’u, while detailing the structural effects the economy has suffered due to long persistent negative shocks, among them global supply chain disruptions and Covid-19, said the BETA agenda was key in reversing this trend that is abnormal of the expected (negative) shocks.
“We are now moving into a position where, for us to reignite and protect that growth, we have to come up with a totally different idea and that is where BETA agenda becomes critical for purposes of turnaround and unwinding the negative shocks and its permanent effects. It is an agenda. It is not a model. And because it is an agenda, you have ticking points. You tick what you have done and then move next agenda,” Ndung’u said.
He said some of the problems the country has faced have caused desperation citing the effects of climate change which resulted in floods, which was followed by a drought in 2022 never seen in 40 years which led to retrogressive growth in the improvement of the economic status of Kenyans.
“Fiscal resources, including support from development partners, was shifted to save lives. Even though we did that, the devastating consequences in terms of poverty and inequality returned us almost 20 years where we had come from,” he said.
“What followed was El Nino that we got ready for but we shifted resources from national government and counties as well as development partners to save lives. We are now facing floods and we are doing the same thing. That kind of persistent shock leaves layers and layers of impact.
While these challenges are genuine and do warrant the shift of resources, it is the allocation of the same to what can be termed as luxurious activities for the executive that negates the BETA agenda which has left the lives of Kenyans no better.
A look at the budget estimates for 2024/25 shows renovations to State House, State Lodges, and the offices and residences of the Deputy President will be allocated close to Sh3 billion.
Agriculture, which recovered from negative growth in 2022 to record 7 per cent in 2023 has its parent State Department budget slashed by Sh13 billion.
Data from KNBS Economic Survey 2023 also shows Agriculture, inclusive of forestry and fishing, is the country’s second-largest employer after manufacturing with 302,400 jobs created in 2023, which speaks of the ripple effect such may have on these two sectors if funding is reduced.
Further, the revelation that Sh20 billion of the newly introduced Affordable Housing Levy which deducts 1.5 per cent from businesses and employees' gross income, is being invested in bonds and bills, raises questions on how committed the government is to the BETA agenda as this deduction was touted as the avenue to provide jobs to hundreds of thousands of jobless youth who will be engaged in the construction of units, as pronounced by President Ruto.
Economist David Ndii, who chairs the president’s Council of Economic Advisors and is the brains behind the BETA agenda, told Spice FM that the reason why this agenda is important is because the country’s economy performs below its potential due to capital capture.
