Are we in a crisis? the intricate web of socio-economic challenges we are facing today leaves us no room to answer the question any other way but in the affirmative. As such it is safe to say that our defining challenge is the ability to create an economic momentum that can sustainably help us put a material dent on poverty.
Economic growth is the key through which a society unlocks opportunities, raises living standards and avails mass prosperity. It is more than abstract economic indices. For the fortunes of the citizens rise and falls on economic growth.
While it may be convenient to look back and point fingers, we must realise that buck-passing will certainly not offer solutions to the people of Kenya.
When public policy does not encourage the productive capacity of citizens then you know you are staring at a polity that is headed into an abyss.
That is why besides the president’s pet projects of avoiding default while raising production, he may also want to focus more seriously on regional integration.
With a population of 238.7 million people the East African community provides a market so big that if we are to get our acts right then a healthy competition which includes but not limited to removal of non-tariff barriers will not only see emergence of thriving industries but also help us deal with the problem of sovereign debt.
This is how. Part of the reasons why we are now drowning under the heavy weight of the sovereign debt is that our currency has weakened significantly against the dollar; The currency in which the debt was borrowed. As at June 2024, we will spend 50 per cent more on debt repayment on account of shilling depreciation alone.
If you compare Kenya’s debt situation and its advanced peers like Japan which the previous administration liked to compare it with whenever the debt to GDP ratio debate popped up, you realize that the comparison is of two very disparate scenarios. Japan has a huge export portfolio that earns it immense revenue in foreign exchange thus strengthening the Yen against other currencies. Japan, just like America also pays its debt in its own currency. If push came to shove, they can print themselves out of debt.
The combined EAC economy under a common currency would literally awaken the sleeping economic giant that it is. Secondly, that currency would stand up to other foreign currencies like the dollar and the pound. The East African Community common currency can then now become the means through which we pay our debts and not the shillings.
Free flow of capital within the community would also incentivize competition as consumers would be looking for high-quality goods at affordable prices. The resultant economic growth would provide the foothold with which to fight some of the seemingly intractable challenges facing the region such as radicalisation, triple planetary crisis and, the mounting disease burden.
A genuinely unified EAC on the economic front would then have the fiscal muscles to undertake major infrastructural projects without draining close to 20 per cent of the GDP of one particular country in one infrastructural project without the buy-in of neighbouring countries thus rendering the project a white elephant as we did with SGR.
May the uncertainties of these present times remind us, as the citizens of the East Africa region that we are better together. We have dragged our feet for too long on the issue of the common currency as well as on the common market.
The writer is Convenor; Inter Parties Youth Forum [email protected]
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