The economic fears and prospects of 2022
By XN Iraki
| Jan 2nd 2022 | 5 min read
The year 2020 should be designated as a period of fear resulting from the Covid-19 pandemic. 2021 was a much better year with the economy picking up before the Omicron variant reared its ugly head. Does a virus have a head?
You may have noted that Omicron, despite all its publicity did not elicit as much fear as the Delta variant. Maybe, we eventually got used to Covid-19, either after suffering from it or knowing someone who suffered from it.
Experts say it’s more transmissible but less fatal. The great stigmatisation from Covid-19 has slowly ended. Remember contact tracing?
Remember isolation wards? Schools closing and other social gatherings curtailed? Remember curfews? The way Africa dealt with Covid-19, avoiding the worst-case scenario is still being debated. Was it the weather?
Was it the demographics with younger population or was it immunity because we have been exposed to many other viruses?
The truth will one day be known.
What is clear is that Covid-19 disrupted our lives. Beyond getting used to it, we need a cure or a vaccine that has no breakthroughs.
My head is already spinning; how many boosters shall we need? To virologists, why don’t we get boosters for other jabs? Enough on Covid-19. What does the new year hold?
Last year, the economy recovered, thanks to our resilience and ‘getting used’ to Covid-19. Sectors such as ICT, tourism and construction have led the recovery.
The reopening of schools was a good economic signal that things are getting back to normal.
A growth of about five per cent is close to the pre-Covid rate. But we must add, it was growth from very low rare, almost zero. One big worry over this year is the General Election slated for August. Will it disrupt our lives like Covid-19?
There is a silver lining, the 2013 and 2017 polls do not seem to have dented the economic growth like Covid-19. Does that mean we are maturing politically?
Will that pattern be replicated this year? A peaceful General Election will be Uhuru Kenyatta’s greatest legacy. Some think that by having key economic players declare their preferred choice to succeed President Uhuru Kenyatta, they are paving way for minimum economic disruption.
Others opine that since the leading presidential contenders are not poor people, they will be obliged to safeguard the economy, for which they are key stakeholders.
Covid-19 was disruptive because we knew little about it. The polls could be equally disruptive if we do not know enough about them.
The Constitution gives us a framework on holding polls but the policies of the next president are put in their manifesto or extrapolated from their public pronouncements.
What they say is more like an iceberg. The greater truth will emerge when the president is given power and authority.
I am of the opinion that the current Constitution provides enough safeguards against misuse of power.
The Building Bridges Initiative tried to change that. And the next president will certainly try again.
Ingeniously, in the current Constitution, the power is so much distributed that no one has enough power to do something dramatic.
But something else keeps me awake at night “the floating power” that is neither in the Constitution nor legislated.
Where do policemen get power to seek bribes? Where do some public officials get power to hold extra meetings and get extra allowances? Extra school levies? You can populate the list.
It’s this floating power that makes me uneasy with the next president, whoever it shall be. Who thought the current president could militarise some State corporations?
Constrained by the Constitution, was this the easier option? Will the next president use this avenue more? My hunch tells me yes.
How shall the economy react to the new president? Kibaki gave us freedom to exploit our potential, he banned Harambees, self-dependency led to a spurt in economic growth. Never mind that Harambees have come back through WhatsApp groups.
The big fear is that the two key presidential contenders are likely to be focused on controlling the economy than letting the invisible hand of the market do its work. I have argued that their economic models are two sides of the same coin.
You control the politics and the economy through the men and women you put in positions of authority to lead the key sectors.
Once you see the cabinet of the next president and the calibre of representatives from Members of the County Assembly (MCAs) to Senators, you can predict the likely economic direction.
In absence of that, we can only speculate. Will the next president and his team be firm believers in the private sector? Will they be statists? Will they allow the State to overexert itself in the economy?
Both key presidential contenders appear statists (concentrating extensive economic, political, and related controls in the State at the cost of an individual). Where do you get money for bottom-up economics when the “bottomers” have no money? Where do you get money to pay stipends?
Both contenders are likely to lean towards a big government and its costs. There are lots of stakeholders to appease. This could end being a drag on the private sector.
Remember the introduction of chief administrative secretary posts?
There is likely to be external pressure to reduce government spending but internal pressure to create more government jobs.
A political victory is not about singing songs, the “investors” will seek returns in jobs and contracts. Will some people be “sacrificed” to create jobs for the winning side?
What will be in store for the private sector? Will the regulations be tightened or loosened? Will it become easier to do business and raise more revenues for the government?
One silent question is the role of external powers in the Kenyan economy and politics. Will our key trading partners just watch? What of our neighbours?
What of key world power, read EU, UK, China, USA and increasingly assertive Russia? Whose else has strategic interests in the Kenyan polls?
The winner, in addition to appeasing his supporters, must contend with debt and conditions set by the International Monetary Fund (IMF).
The next president has work cut for him. “The economy is projected to grow by five per cent in 2021 and 5.9 per cent in 2022,” said Africa Development bank.
The New Year definitely looks better than 2021. It could be even better if we handle political transition soberly, maturely and focus beyond the polling day - just like a couple should focus more on life after the wedding day.
Top oil marketers tighten dominance in first 3 months
- Banks warn of more expensive loans as inflation climbs sharply
- Marketers seek to deepen sector's capacity as the society turns 60
By Ishaq Jumbe
- Magoha sued for failure to name quality control team
- Regulator recovers over Sh38m from rogue insurers
- Safaricom loses over 400,000 users in SIM registration drive