Mwai Kibaki used tact and experts to grow economy

Former President Mwai Kibaki. [Mbugua Kibera, Standard]

Kibaki’s presidency was like an Arctic summer when flowers briefly blossom. Coming after Kanu's long and unchallenged reign, the country could finally breathe a sigh of relief, ranked as the most optimistic in the world after the 2002 polls.

Two years later, we got ourselves a Nobel laureate, Wangari Maathai. I recall the envious eyes in a lecture room in the US Deep South when news filtered that a fellow Kenyan had won peace Nobel prize. 

It was perhaps this newly found freedom that led to rapid economic growth, the Kibakinomics. We last saw such high level of growth after independence because of the “feel good effect” before the realities of our politics set in by the end of the 1960s. 

Kibakinomics was also based on tapping into experts with the right skills in every sector. And less talked about self-reliance built on banning public harambees.

Under Kibakinomics, confidence and freedom led to more investment and consumption and faster economic growth. One of the bellwether events of his regime was low-interest rates without any regulatory intervention. Uhurunomics, which is a subset of Kibakinomics tried unsuccessfully to cap the interest rates. 

Why the low-interest rates under Kibaki? Suppliers of credit, read banks, competed leading to lower interest rates, lower cost of credit. Another reason for cheaper credit is that the government got a cheap source of money from privatisation. Do you recall all the initial public offerings (IPOs) so common in Kibaki’s presidency?

It was a cheap but efficient way to mobilise capital and avoid debt. The bond market grew, promoted by amongst others, Jimnah Mbaru, who chaired the Nairobi Securities Exchange then known as the Nairobi Stock Exchange.

Kibaki cut government expenditure and reduced borrowing; there was money from more taxes and privatisation. He also reduced the bank cash ratio and reduced the crowding effect, leaving debt markets smiling. He faced corruption head-on -- recall the 400 procurement officers sent home?

He was able to balance the Friedman school with Keynesian school. The former believed in the power of the free markets. Kibaki entrenched the market liberalisation that was forced down the throat of Kanu. We saw the invisible hand of the market, popularised by Adam Smith more than 200 years earlier at work.

I would love to see his undergraduate and postgraduate transcripts or the textbooks Kibaki read in school. That would give us a hint on who influenced his economic thinking. He was also Keynesian, believing that the government should play a part in economic growth by creating demand for goods and services, sometimes through deficit financing.

He came up with Kenya‘s first long term plan, Vision 2030 with its mega projects. Such projects would not only improve the productive capacity of the economy, but create lots of jobs through demand for goods and services. Vision 2030 was a bold vision with American educated Dr Wahome Gakuru at the helm. I had a chance to help him in editing Vision 2030 draft, without blowing my trumpet. 

Mwai Kibaki cut government expenditure and reduced borrowing; there was money from more taxes and privatisation. [File, Standard]

A government think tank, National Economic and Social Council (NESC) did the heavy lifting for the government. Its composition ensured that ideas were well analysed before implementation. My 3-year stint at NESC as a research fellow gave me great insights into how the government works.

The involvement of the government in the economy was best espoused by the introduction of an economic stimulus package after a dent in his presidency, the 2007/2008 post-election violence. Like Vision 2030’s Wahome Gakuru, at the heart of the stimulus package was another American educated Finance minister, Uhuru Kenyatta. 

Copied US system

The American influence was not just felt in economics. It got entrenched in another of Kibaki’s legacies, the 2010 Constitution. We got senators, governors and Supreme Court. So influenced were we that we even renamed our ministers Cabinet Secretaries, an archaic term that was to be abandoned, courtesy of BBI. Corporate sector long retired the term secretary. 

But we copied the US system or was it Nigerian selectively. We did not notice that in the US, state governments sit between counties, and federal governments.  We did not notice that Washington DC is not a state, and made Nairobi a county. We also failed to see the absence of nominated senators and MPs in the USA constitution. We failed to see how brief the USA constitution is, about 27 pages excluding amendments, while ours is 211 pages.

Devolution was the other key plank in the new Constitution. Political power was devolved to the counties, formerly districts. The power of the District Commissioner was diluted by an elected governor. But unlike America, economic power was not devolved. How many counties can run their affairs without funding from the national government? 

We got a political system that had been tested for over 200 years into a 45-year-old country. While importing American ideas, we forgot how to integrate the country. How do foreigners get integrated into the US including “our Obama“?  This should have been our greatest lesson from America. 

The transition from a highly centralised Kanu era to a more liberalised era may have overloaded the political system; it almost buckled under the post-election violence, leaving a blot on Kibaki’s legacy. Allegations of corruption, remember Anglo-Leasing was another blot.

We can’t rule out some external factors in Kibakinomics. China was in ascendancy and Kibaki faced East with one eye on the West. Perhaps he realised that the rise of China was inevitable. East African Community had just been revived in 1999 before he became the president. The world economic outlook was good with the dot-com economy in its infancy. Internet and mobile phones were just becoming widespread. We are yet to quantify their effect on our productivity and Gross Domestic Product. But we got a hint, which is the most valuable listed company in Kenya?

Some argue that Kibakinomics overemphasised economics over soft issues like cohesion. Did the fast economic growth rate under his regime leave majority of citizens behind leading to dissatisfaction and therefore post-election violence in 2007/2008? 

After PEV, and a new political dispensation, Kibaki’s second term was characterised by power-sharing and gradual economic recovery. Constitutionally, he had to leave after two terms. He was neutral in his succession game, a show of true statesmanship.

In his memoirs Interventions, Kofi Annan (fourth-left) is unflattering about President Kibaki’s Kitchen-Cabinet. [File, Standard]

He took a low profile after retirement never commenting on political or economic issues. He would be found in the church on Sunday, often in company of one of his vice presidents, Moody Awori. Like his boss, Awori took a low profile too after leaving politics - very American. 

Kibaki is remembered for reviving the economy after Kanu era. Many ordinary Kenyans say there was money during Kibaki era. It seems during his presidency, the trickle-down economics actually worked. We also remember him as a golfer. I once found him seated alone at VetLab Golf Course. Golfers often invoke him when searching for tees, small pieces of wood or plastic on which you place your ball before hitting it. They often fly away after hitting the ball. They say he had to get his tee if ever it got lost.

Upbringing and global experience

To illustrate his “economic” focus; a tee is very cheap and most golfers do not bother to look for it. One golfer who played with him around 1999 recalls he was fold of saying “bure, bure kabisa” even before his club hit the ball. Perhaps he could tell wrong settings would lead to bad results, even in economics. Asked how he would turn around the economy by that golfer who prefers to remain anonymous, he said, “confront corruption.”  He was then the leader of the official Opposition in Parliament.

His success in political and economic circles may be attributed to his upbringing and global experience. He grew up in the rural areas before coming to Nairobi. He had the experience of the two worlds, rural and urban. As a politician or economist that is a big asset, you understand the people, their behaviour and motivation. And the implications of the policies you make. 

He studied in Kenya, Uganda and United Kingdom. This broadened his worldview and networks. Curiously he never tried to clone himself politically. His children are yet to join politics unlike his predecessors.

Makerere, his alma mater, was a hive of intellectual activities with students from East Africa and beyond. London School of Economics was even more diverse. His primary school, Munaini, still stands in Othaya while Mang’u High School still taunts Alliance High School that they have never produced a president!

More importantly, he lived through colonialism and uhuru. That experience is unmatched. And he had two presidents before him to understudy. He had served as a Finance minister under Jomo Kenyatta and vice president under Daniel Arap Moi. I would have loved to ask him what he learned from each of them. 

Except for a library at the University of Nairobi’s Lower Kabete Campus named after him, the Mwai Kibaki name is rare. He never started any institution that bears his name, unlike his predecessors. Does this confirm his love for privacy, leaving history to judge him? His face did not appear on our currency notes, except a funny 40 shilling coin.

Comparing his economic performance with his predecessors and successors, he scores very high. Without post-election violence, he could easily rank as the top-performing president this far. In years to come, when our sample of presidents has increased, we could revise the ranking. What we can’t dispute is that Kibaki earned himself a place in our history as the third president, soft-spoken and an economist who showed that theory can be converted into practice.

On the economic front, we shall be left speculating what trajectory our economy could have taken if Kibaki had become the president earlier, when the country was younger and more innocent. We shall leave the social and family life of Mwai Kibaki to experts in these areas from sociologists to genealogists. But from the few media reports on that, there is no doubt he was human, like all of us.  

Prof Iraki teaches at the University of Nairobi, School of Business

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