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Someone needs to hit the reset button to return country to economic growth path

NATIONAL
By Patrick Muinde | June 26th 2021

A trader kneels down in search of a shoe for a customer in Busia town on June 17, 2021.[Mumo Munuve,Standard]

In all fairness, Kenya has made some significant developmental milestones since independence in 1963. In his  Madaraka Day speech this year, President Uhuru Kenyatta sought to retrace the nation’s development trajectory to the colonial era.

While there are many things that speak to improved standards of living, the primary driver is the impact on household incomes.

That would probably explain why Gross Domestic Product (GDP) growth rates and GDP per capita remain the most popular ratios to measure economic progress. In today’s piece, we trail the country’s development agenda to draw the comparatives, the gains and the misses.

As the evidence shall demonstrate, it would appear ours has been a vicious circle to nowhere, albeit with some modifications.

Missed take-off

Since the 1960s, the world has witnessed different economic growth trajectories. Acemoglu (2008), in an article on the role of institutions on growth and development, best characterises this as either economic miracles or economic disasters of the second half of the 20th Century.

Comparing income per capita from 1960 to 2000, he demonstrates how countries like Singapore, South Korea, Botswana and India emerged from economic insignificance to join the league of high-income countries like the United States, United Kingdom and Spain.

Others like Nigeria, Brazil and Guatemala barely changed or had a decline in the per capita incomes over the period. The major driver of growth in this period was the shifting fortunes from the Industrial Revolution to knowledge economies. But of great significance to us is the fact that majority of these economic miracles are our former peers.

It is widely acknowledged across the political divide that something went terribly wrong in our growth path. For some reason, we missed out when others were taking off. Ironically, while official speeches seem to paint a picture of a prosperous land, political agenda like the Building Bridges Initiatives acknowledge an aborted Kenyan dream. The political maestros of the yesteryears who still dominate our public life campaign on this platform.

The question is: What is it that they will do differently now should they be accorded the chance to lead after next year’s General Election, bearing in mind that most of them have held key government positions over the past five decades.

Between Independence and Jubilee’s Big 4 Agenda, there have been at least seven medium-term or long-term developmental plans. These include Sessional Paper No 10 of 1965 on African Socialism and its Application to Planning in Kenya; Sessional Paper No 1 of 1986 on Economic Management for Renewed Growth; Sessional Paper No 1 of 1994 on Recovery and Sustainable Development and Poverty Reduction Strategy Paper (2001-2004).

Independence struggle

These plans could rightly be seen as a representation of the founding fathers’ ideologies. This is because the founding President Mzee Jomo Kenyatta and Daniel Moi were in one way or the other involved in the struggle for independence. The second generation of plans represent the post- independence party era. They include the Economic Recovery Strategy Paper for Wealth and Employment Creation (2003-2007); Vision 2030 targeting a middle-income country by 2030 and Jubilee’s Big 4 Agenda of 2017.

Outside the lofty words used in these plans, the national problems and priorities have remained the same. Poverty, illiteracy and diseases are the primary problems all these plans have sought to address. While many imagine that the Big 4 Agenda represent the genius of our time, the four priorities simply are about the three primary issues at independence. Before somebody throws stones at me, allow me to demonstrate.

The primary philosophy of Sessional Paper No 10 of 1965 was that “let the young African nation find unique solutions to its unique challenges”. It is widely acknowledged that this is the “magic bullet that Lee Kuan Yew borrowed from Kenya and adapted to turn Singapore from a Third World country to First World nation in under one generation (in development economics it’s a period of 30 years).

When we were growing up in the early 1980s, the developmental song was piped water and electricity for all by the year 2000.

As those aspirations went up in smoke, the late Kofi Annan inadvertently gifted the political elites with new targets in the form of Millennium Development Goals (MDGs) by the year 2015. Due to lack of proper data, it’s hard to determine how much of the MDGs we achieved as a nation.

The Kenya National Bureau of Statistics released a National Poverty Analysis report in August 2020, which analysed deprivation among children, youth, women and the elderly. It considered at least seven variables, namely nutrition, education, economic activity, information, water, sanitation and housing. For children, the variables captured physical development (stunting), health and child protection.

Poor Kenyans

More generally, the findings indicate that at least 53 per cent (23.4 million) Kenyans are multi-dimensionally poor, that is, deprived of at least three basic needs, services and rights. Of these, children, youth and the elderly accounted for 48, 25 and 6 per cent, respectively. Poverty incidence was found to be more severe in rural areas at 67 per cent compared to 27 per cent in urban areas.

Analysing the poverty incidence in relation to income, the evidence shows that one in three Kenyans are monetary poor. The poverty incidence is 40 per cent in rural areas compared to 29 per cent in urban areas. In case of children under 18 years, 53 per cent (or 11.1 million) were multi-dimensionally poor, with average deprivation of 4.1 of the 7 attributes analysed.

Rationalising mediocrity

In several forums, I have heard arguments that we should not compare ourselves with countries like Singapore because they have smaller populations (Singapore has about six million people compared to Kenya’s 47 million). From an economic perspective, we should actually be ashamed of ourselves that such a small population, with a geographic size less than Mombasa, our smallest county, can produce so much wealth.

A huge population and geographic advantage imply a wider talent and skills set, a bigger market for local products and services, more hands for production and higher probability of natural resource endowment. While most modern economies are driven by knowledge, ours has largely remained agriculture-based. Worse still, the farming activities are done at subsistence level and with little value addition.

According to the 2019 national census, about 6.4 million of the 12.2 million households practised agriculture. The main crops cultivated were maize (5.1 million households) and beans (3.6 million). Only 369,679 households were practising irrigation. Livestock keeping was done by 4.7 million households, acquaculture 29,325 and fishing 109,640.

Data show that we largely produce only for domestic consumption. The 2019 Economic Survey on Employment Distributions shows that of the 18.1 million people in employment (excluding small-scale farming and pastoralist activities), about 17 per cent (3.1 million) people were employed in modern economy.

At least 83 per cent were in the informal economy. This was a major decline compared to 1998 when at least 34.3 per cent of those employed were in the modern economy. Annual jobs created in the formal sector declined from 132,100 in 2015 to 78,400 in 2019.

This sobering reality should and ought to be the fodder for those who dream of becoming Kenya’s next chief executive in 2022. For, to heal a nation and reset a national economy, a leader must first confront head-on the demons that torment his people.

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