Economic pitfalls in actualising devolution

The decentralised system of governance entrenched by the constitution in 2010 is one of the best ever post-independence decisions. The promise of devolution was to decentralise power, take public services closer to the people, allow the people a chance to take part in decisions on how they are governed and ultimately assure equity in economic development of all regions.

But six years on, have the real economics in our counties, sub-counties, wards and villages changed? Can we genuinely say that folks in our rural and urban areas in the regions have better sources of livelihoods? Is there any crystal clear and observable improvement in household incomes from the country’s demographic data? Ultimately, the true measure of the success of our devolution shall only be a real change in livelihoods and household welfare among folks.

This past week I got an assignment in my home town and decided to commute from the village. Mid-week the skies opened and I was re-awakened to the realities of my village life two decades ago. First, I had to abandon my beetle in town for it could not navigate the slippery and murky roads to the village. Second, once back to the heart of the village, folks were discussing the possibility of another crop failure, just like several other seasons before this one.

Annual average

Sadly, despite devolution and its proximity to the county headquarters, this village has remained the same. Its economic activities, means of livelihood and infrastructure haven’t changed. Exactly about the same time I came into my village, Deng Xiaoping, declared to the Chinese people, then ravaged by famine and hunger as a consequence of the cultural revolution of 1966 -1976, that “to get rich is glorious”. Later in 1980, he earmarked Shenzhen, a poor fishing village in Guangdong province as the first special economic zone to experiment capitalism in communist China.

Four decades later, while my village of birth has remained at a standstill economically, the once small and poor Chinese fishing village of about 30,000 inhabitants, has been turned into the fastest economic juggernaut known to recent human civilization.

Now Shenzhen City, this village has grown in size to stand at 1,991 Square Kilometres. In December 2017, the city’s GDP picked at 2.2 trillion Yuan (US$ 338 billion). At its current annual average GDP growth rate of about 8.8 per cent, this once tiny village must surpass the GDP of Nigeria currently at $376 billion and the largest economy in Africa by close of 2018.

With a population of 12.53 million residents, Shenzhen is now the wealthiest city in China (per capita) and has over 3 million registered businesses. Known as a tech entrepreneur’s magnet, it’s estimated that about 90 per cent of the world’s electronics hardware is manufactured in this city. The once small fishing community personifies the Dragon economy’s astounding growth.

So, what lessons can we learn from this former fishing village? One; we must be courageous enough to challenge and abandon bad economic policies that haven’t worked. Deng Xiaoping’s experiment with capitalism was a bold move against the communist in-ward looking economic policies perpetuated by the idolized Chairman Mao Zedong, especially during the Cultural Revolution era that caused China great poverty.

Two; the only limit to economic prosperity is the poverty of ideas and not capital. Just how did a once fishing community turn into a techno hub? With absolutely no begging from any foreign capital, the then poor China attracted and continues to attract foreign capital into this city.

Unprecedented heights

Three; the power of diversity is a great and limitless resource that any government can tap into for growth. Right from the outset, Shenzhen city attracts immigrants from all over China and the world at large. As a result, there has been no limit to the innovation and the creativity of this city. Tragically for Kenya, our economic and political opportunities have been woven with the chords of ‘the tribe’ and nepotism. Our 47 Counties have perfected these tribe, clan and family bonds into unprecedented heights in equal measure. Let’s not sugarcoat anything on this, there can only be one outcome: incest of ideas and economic doom in the medium and long term. Our villages are doomed for the same reasons, and that’s it. 

Finally, we must invest strategically for economic growth to happen. An analysis of the Controller of Budgets county reports gives no hope to our villages. For instance, in the 2017/18 financial year, of the Sh303 billion absorbed, Sh151.09 billion (49.7 per cent) and Sh85.85 billion (28.3 per cent) were spent on personal emoluments, operations and maintenance respectively. The total development expenditure for all the counties was a paltry Sh66.89 billion (22 percent). Similarly, total own source revenue grew marginally by 23.5 percent between 2013/14 -2017/18 (from Sh26.3 billion to 32.49 billion) over the five year period. This is the clearest indicator of negligible increase in the economic activity across the counties given that in 2013/14, the new devolved governments hadn’t settled to efficiently collect revenues.

Ironically, the economic classification of expenditures of the county governments indicates no expenditures on Research and Development. Contrast that with Shenzhen city that spends about 4 percent of its GDP since 2013 on research. In the circumstance, can there be any hope to our villages?

Dr Muinde is an economist