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Roadmap to a new social and economic order

Entrance to the Treasury Building. [Denish Ochieng, Standard]

In many ways the 2022 presidential election has re-organized the established economic and political order in the Country.

The elevation of the President-elect William Samoei Ruto is a big inspiration to millions of young people across the country that every dream or ambition is valid. Sir, in this column we salute you and pray you will remain true to the trust bestowed on you by the people of Kenya.

That said, this column exist to proffer a balanced evidence and analysis on things that impact folks and call out for leadership accountability. As you are already aware, your election to the most powerful office in the nation has upset long established myths, economic and political interest. You are indeed a trail blazer.

However, while we celebrate your achievements, we have to remind you winning the election was the easy part. The journey ahead will be long and winding. The brighter side is that there are evidentially few things that if you get them right from the onset, you shall be able to fulfill the huge expectation of the nation and make your presidency consequential. There cannot be trial and era on this. 

Here I share at least seven key points that you must action on decisively within your first year in office.

First 100 days

The first thing that you must get right is your appointments into the cabinet and other strategic positions that come soon after you are sworn in. Here you start with a baggage of been perceived as a leader who has only rewarded his own with appointive opportunities that have come your way. It is also important to bear in mind that at least 6.9 million people voted for your closest competitor with another about 7.8 million being a no show at the polling stations.

The rules of democracy and good governance demand that you bend backwards and reach out to good leaders from you opponents camp to incorporate them in your administration. The outgoing government, of which you have been part of, is perceived to have only offered plum public appointments to their support base. This is what has fueled the winner-take it all ethnic census and made the presidency a matter of life and death.

Most importantly however, you are taking up a battered economy from both internally instigated shocks and battling external global challenges. To midwife the nation through this, you will require the best brains and able hands the nation has to offer.

The problem is this caliber of folks that you require to steer the nation through this delicate path may not necessarily be within the high ranks of your campaign team. As a good student of the Holy Scriptures you may seek guidance from Luke 12.48 ‘To whom much is given, much will be required’.

The second thing that will require you immediate intervention is to comprehensively address the unbearable cost of living. On this you must take a decisive detour from the cash subsidies of the Jubilee administration to tax based subsidies targeting essential basic goods for a period of 6-9 months. Priority here would be on fuel and petroleum products, maize and wheat, and farm input subsidies. The cash subsidies have been ‘administratively opaque’, prone to fraud and abuse and interfere with the forces of demand and supply.

It makes absolutely no economic sense for the government to collect taxes from the target products and purport to re-imburse the same to the dealers. The rational thing to do is not to collect the tax from a cost-benefit analysis point of view and administrative ease.  Third point is a comprehensive public expenditure rationalization – as per the 2022 economic survey, the country is spending close to Sh. 700 billion and Sh. 850 billion on debt interest and public wage bill alone against Sh. 2.034 trillion revenues collected in the 2021/22 fiscal year. If we add principal redemption, the debt charge crosses the Sh. 1.1 trillion mark. These two are the priority charges on government revenue. Given the fact that the outgoing administration has struggled to demonstrate a legacy, you can be sure the true state of affairs is a lot worse than official data has presented. The only option available to your administration is a conclusive re-organization of public expenditure and total rein on official waste. For instance, the outgoing administration created unconstitutional positions like the Chief Administrative Secretaries to reward political cronies.

Second Phase

Based on government procedures, the second set of interventions may take anything between 3 -9 months. The fourth point of intervention will be a well thought out fiscal policy reforms. The Jubilee administration has remained completely out of touch with the real issues that affect ordinary folks in pursuit of the so called ‘Big push’ investments. Government spending must be reorganized to inject adequate money into circulation within the economy and find a healthy balance between taxes for government revenues and facilitate business activity.

The mantra that ‘people do not eat’ GDP is absolutely true. If government policy does not drive trickle down impacts to household incomes and on employment, then they are failed policies. Complex tax systems are a big disincentive for domestic and foreign investments. The fifth point and closely related is debt restructuring and prioritization. In the short term, focus must be to slow down the interest burden on government revenues and wean the country from debt driven development model. It is without a doubt part of the debt is on recurrent spending and corruption padded development projects. This wipes out returns into the economy.

The sixth issue speaks to your proposed hustlers fund and systemic pending bills at the national and county levels. The failure by government to pay for legitimately procured goods and services has ruined many businesses. This not only deprives the businesses of working capital and debt troubles but also robs the economy of money circulation. Lack of a predictable payment plan has also necessitated exorbitant pricing for government procurements leading to lack of value for money.

On the ‘Hustlers fund’, while the idea is good, the means of implementation must not follow the failed models before it. It is my considered view that this money should be channeled through lines of credit to established commercial banks and finance institutions for two reasons: One, it will allow for proper appraisal of business ideas and remove the ‘tag’ of free government money from it. Two, it will attract private capital to supplement the government capitation to avail access to credit for small businesses and formalize them. This worked very well in the late President Kibaki’s administration in 2003-2007.

Finally is restructuring of capital investments and consolidation of state agencies. The 40 per cent local procurement thresholds must be enforced and infrastructure development pegged on transfer on knowledge to local communities. It will be wise to remember legacies are not domiciled in written speeches but are experienced in real people’s lives. The writing of your legacy started from the moment you were declared the President-elect.