Peg salaries to results for faster take-off

Economists have argued over the past decade that seven of the world's ten fastest-growing countries have been on the African continent.

In eight years of the past decade, Africa has developed faster economically than the famous "tigers" of East Asia, including Japan.

There is growing optimism that Africa will soon break into the global market for light manufacturing and services such as call centres.

Aptly described as an 'Africa Rising' narrative, the story of the continent's rapidly growing economies is truly inspiring and reinforces the global hope and expectation that Africa is now ready for take-off.

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The World Bank's latest "African Pulse," an analysis of Sub-Saharan Africa's economic growth status and prospects, has attributed this rate of advancement to vastly increased investment in natural resources and infrastructure, and household spending in recent years.

To sustain this growth, Africa needs to engage a higher gear and borrow a leaf from China.

In 1978, the government of China embarked on a major programme of economic reform in an effort to awaken a dormant economic giant.

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While pre-1978 China had seen annual growth of 6 per cent a year, post-1978 China saw average real growth of more than 9 per cent a year.

Curious about China's success, an IMF research team examined the sources of that nation's growth and arrived at a surprising conclusion that increased productivity through worker efficiency was the real driving force behind the economic boom amidst robust growth in new factories, manufacturing machinery and communications systems.

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Fast forward to Kenya in 2015.

The country is implementing Vision 2030 and investing in infrastructure development. Blessed with a skilled human resource base and a new constitution and forward-looking system of government, the future for Kenya can only get better, especially if the nation gets its priorities right.

The devolved system of government, in particular, carries with it the promise of a more equitable distribution of resources as a model for development.

It could become the proverbial magic bullet that ensures efficient delivery of public services at the grassroots level while providing a strong platform on which uneven economic growth, income disparities and other poverty-related inequalities would be addressed.

The two-tier system of governance is meant to introduce a new threshold for investment.

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All said and done, demands for salary increases should be strictly based on productivity and efficiency to achieve Vision 2030 socio-economic development goals.

Therefore, we should take care of the objectives of the devolved system of government.

Like China, productivity and performance in Kenya will be the yardstick for socio-economic development.

The need to be rational in order to achieve rapid growth requires that we ensure that counties are managing their resources well.

Importantly, for every shilling spent by county and national government structures, a large percentage should go towards improving Kenyans quality of life in accordance with the Public Finance Management Act.

What our need for rapid socio-economic development requires is reversing our current trends of expenditure as released by the World Bank report, which revealed counties spend 46 per cent of their budgets on wages and salaries, 30 per cent on other recurrent expenses, with a paltry 21 per cent going towards development projects.

We can either take the path adopted by China and India who top the global league table for growth in labour productivity and remain the largest and most dynamic economies with 8.7 per cent and 5.4 per cent growth in labour productivity, respectively.

Or take the path of Greece, Spain and Malawi who failed to factor productivity and performance in managing the public wage bill. The results, inevitably, was a fiscal catastrophe.

In the face of a near-crisis public wage bill, the clamour by public servants and private workers for salary increases without due consideration to performance and productivity is frightening.

As per the Vision 2030 strategy, job security and equitable income are highly dependent on sound economic and social policy, based on productivity and performance.

For the sake of current and future national prosperity and cohesion, investment in productivity, efficiency and effective utilisation of resources is key.

Higher productivity in an economy forms the basis for enhancing human welfare and provides the highest benefits to the lives of the people of any nation.

In my mind this is what 'Africa Rising' is all about.

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Salaries Economy