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Letter to Uhuru on rebuilding economy

By Patrick Muinde | Jun 28th 2020 | 4 min read
By Patrick Muinde | June 28th 2020
President Uhuru Kenyatta.

Dear Mr President,

By now, majority of Kenyans have read, heard or hold diverse opinions about Covid-19 and what they ought to do to avoid or survive it.

What is undeniable is that every day millions of citizens expose themselves to the risk of contracting the coronavirus disease so they can put food on the table.

The following are the facts. One, even before the current crisis, the economy was fragile and not prepared for such an external shock.

As a result, policy makers and bureaucrats are struggling to craft a tangible economic stimulus package to protect disadvantaged households, vulnerable employees and small business.

They also have to ensure that revenue is still getting to government.

Two, Covid-19 has shattered the illusion of building a legacy around the Big Four agenda. Our sickly medical system has exposed the proposed universal healthcare programme as a pipe dream.

Housing cannot be a priority on an empty stomach and local manufacturing, in large part, only exists on policy papers. The economy was completely reliant on imports from China and elsewhere.

Food security by 2022 also remains a mirage.

Three, we have pursued a defective economic policy that has focused on huge infrastructure projects, with no local transmission mechanisms, at the expense of domestic enterprise, local industry and soft infrastructure such as integrity, values and ethics - the building blocks of a balanced society.

But it pays no dividends to cry over spilt milk. The beauty of life is that with experience and some ingenuity, we can always produce more and better milk. Here are my five proposals.

First, as a matter of priority, we must establish a sovereign wealth fund where at least five per cent of revenues collected annually are saved and managed professionally.

A similar fund must be established for each of the 47 counties. This fund must be independent of the current emergency funds mandatory under the Public Finance Management Act.

It’s obvious those emergency funds exist on paper for compliance purposes only. The wealth fund must be put under the trusteeship of 3-5 eminent citizens and only be accessible under extraordinary times like the current crisis. And as a bonus, how about transferring all recovered proceeds of graft to this account?

Failed policies

Second, the economy must be shifted from the informal to a formal structure. Over the past decade, official policy has leaned on the informal sector as a strategy for growth and to create employment. Covid-19 has exposed the fallacy of this plan, which is simply a decoy to cover for failed economic policies.

In better organised economies, it has been easy to craft stimulus economic packages to save small businesses, offer targeted tax subsidies, protect jobs and even remit cash coupons to the most vulnerable households.

For us, even if we had the money, only heavens know how similar measures would be executed in our current state.

Third, Covid-19 has provided a golden opportunity to think, act and live the ‘Buy-Kenya-Build-Kenya’ mantra. In times like this, the first natural law of survival is self-preservation. Our local industry has proved beyond any reasonable doubt that it’s capable not only of producing what we need, but also exporting our creativity to the rest of the world.

The temporary ban on mitumba imports must never be lifted. We must concretise clear protectionist policies before we re-open our borders. Surely, even within the World Trade Organisation protocols there are rules to stop importation of toothpicks, match boxes, mosquito coils and bathroom sandals.

Fourth, a moment has come to climb down from ‘vendor-driven debt-financed foreign-contractor-foreign-supply tax-exempt’ project models.

The tragedy of these are mega infrastructure projects with absolutely no local economic transmission and impact. Any recovery plan must be premised on the supremacy of spending domestically and local consumption.

Our own engineers must design and build our roads and bridges, our pharmacists and chemists create our pain killers here at home, our biologists and agriculturists produce our farm supplies.

Know why we had grandiose projects and a broke citizenry during pre-corona days? Look no further.

Finally, it’s time to re-constitute a lean but effective and efficient national economic council. I am aware of the current economic emergency committee, but I am talking of a fresh team devoid of official extravagance and system thinking.

A team of true patriots and a collection of the finest brains our land has to offer. Its mandate shall be to inject fresh thinking into the management of the economy; offer you a candid and honest analysis of the state of the economy; proffer credible and practical policy options; and provide a simple and clear action plan on the way out with tangible deliverables and timelines.

This team must work under your direct supervision to shield it from bureaucratic shenanigans.

Sir, while the immediate priority is to contain and avert a coronavirus tragedy, the health crisis is intertwined with the recession. The most difficult job of re-engineering, re-tooling and resuscitating the economy lies ahead. That’s the only option to craft a legacy.

Dr Muinde is an economist

Covid 19 Time Series


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