The fortunes of President William Ruto’s administration seem to be on a steady climb in Western capitals. This is after the Bretton Woods institutions opened their purses further this past week to bail out our admittedly cash-trapped economy. In addition, the President did the nation proud with a well-delivered address to the European Union Parliament in Strasbourg, France, after attending the G20 Investment Summit and Compact with Africa Conference in Berlin.
Interestingly, while the West openly embraces the still young Ruto administration, things do not look as rosy back home, at least based on random social media reactions following his current official trip to Europe. It does not help the President gaffed big time without anybody’s prompting by suggesting that his trip to Germany was intended to secure an estimated 200,000 jobs for hustlers. I do not imagine any hustler takes him seriously after similar gaffes on recent trips to Silicon Valley in the US and United Arab Emirates.
Within the region, debate on the Central Transport Corridor is fast gaining momentum as the primary alternative route for imports destined for our landlocked neighbours including Uganda, Rwanda, Burundi and the Democratic Republic of the Congo (DRC). Effectively, this shall be the final nail on the ongoing controversy over the administration’s handling of oil supplies destined for the region and the Joint East Africa Crude Oil Pipeline (EACOP).
Watching these scenarios play out simultaneously, one cannot fail to wonder what exactly are our national priorities at the geo-economic and political level? Can one sustainably antagonise her dependants, despise her immediate neighbours’ needs and yet satisfy the interests of allies further away? While a nation’s economic and foreign policies are complex and multifaceted at any given time, common sense dictates that a country must self-preserve first and foremost, before attempting to solve complex geo-political problems.
In any case, leaders must be brutality honest with the realities of the country and the people they lead as they consider diverse geo-political policy choices. For instance, in diagnosing the current predicament, does it mean that there is something that the West foresees in the current administration that the citizens and our neighbours do not? Or is it that the Western bureaucrats have missed out on key insights that us as locals and our neighbours better understand? Who is fooling who here?
Unless there are candid debates happening behind the curtains, it appears the Kenya Kwanza administration is least bothered by the shifting power balance in the region’s economics, trade and politics. Looking backwards, as the fallout over big infrastructure projects like the Standard Gauge Railway unfolded, the Kenyatta administration’s response was to mutate into what they called a coalition of the willing. Later, the main financiers of the project raised definitive questions on the economic viability of the project once Uganda and Rwanda bolted out.
The outcome has been what the media now describes as a Railway to nowhere as it terminates abruptly in Naivasha instead of connecting the entire region as originally designed. With policy inconsistencies over the Inland Container Deport at Kedong after port services were reverted to Mombasa, the attainment of long-term commercial goals of the project remains doubtful. This would probably explain why there aren’t any excited financiers to cover the next phase as it was when the project was started.
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Instead of addressing the hard questions on cost accountability over the project raised by the partner States, the previous administration treated them like annoying children crying over nothing. We falsely believed that we could export padded corruption and shady dealings to them. Our neighbour to the South and fair competitor in the region’s endowment with a coastline, Tanzania, noticed the opportunity and made their move. They are on course to complete the longest Standard Gauge Railway estimated at 2,561 kilometres to link the Port of Dar es salaam with Uganda, Rwanda, Burundi and through them the DRC.
It is this railway line, complimented by a robust modern road network and gas pipelines, that has turned the central corridor into the true game changer for the region geo-economic politics. These projects are all delivered at much cheaper cost compared to ours, despite lagging behind in terms of contracting and implementation period, and forex volatilities.
It is worthless to argue over the impacts of the intra-regional trade reversals and Foreign Direct Investment inflows in favour of Tanzania and Uganda. The data speaks for itself and I have consistently demonstrated it in this column. It is however a strategic and mortal blunder for the Kenyan government, and specifically for the KK administration to treat these shifts as inconsequential to the domestic economy and for the region’s power balance.
Ceding our strategic leadership role and responsibility for the region’s influence on account of individual leaders’ greed for power and official plunder of public resources is the greatest betrayal our generation can commit against the nation’s future generations. Unfortunately and tragically so, it appears those entrusted with the reigns of power are least bothered for as long as their bread is well battered from the sweat and blood of poor hustlers. In another world, and as a good student of strategy, I know for a fact it is only a fool who underestimates the power and capacity of a competitor who is willing and ready to try.
In a study published in the Japan and World Economy Journal in December 2022, Zheng Han and Hangtao Li find better infrastructure facilitates international trade more than internal trade. This is because better infrastructure induces sizeable gains which concentrates on the host country, increases real income by reducing internal trade costs, and reduces absorption rate. Narrowing specifically on transport infrastructure, the findings suggest a 10 per cent increase in transportation infrastructure induces 3.9 per cent increase in real income and more than 95 per cent of the gains concentrate on the infrastructure-improving country.
Gabe Alpert, in an article posted on Investopedia.com and updated on August 2023, argues that while government spending on infrastructure creates significant economic stimulus compared to other forms of spending, the benefits are not always straight forward or guaranteed. This is despite physical infrastructure spending being popular with politicians since they can show visible results.
Gabe argues that infrastructure spending is only effective in stimulating the economy when the dollars spent create additional private-sector spending. For greater impact, such spending must be timely and well-targeted to get to the hands of people who will spend it quickly to multiply impacts.
This evidence bites deep into what is wrong with our model of doing critical infrastructure. It is an open secret that most of our infrastructure projects are designed and driven not through a sound prioritization process, but out of wheeler-dealing and to feed the individual greed of political and bureaucratic elites. Furthermore, it beats the very purpose of developing infrastructure when the government institutes simultaneous toxic fiscal policies that drive businesses away and erode consumer spending power.
This is why any Kenyan of sound mind must shudder when our neighbours invest in infrastructure well-designed and targeted to take away private capital from our domestic economy. While we cannot stop our neighbours from pursuing their developmental goals, at least we must demonstrate fair market play to remain competitive. And even if we were to lose in such competition, this cannot be on account of private greed!