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Economy reeling from effects of policy conceived five decades ago

NATIONAL
By Patrick Muinde | September 4th 2021

Ethics and Anti-Corruption Commission officers raid Kenya medical supplies Authority(KEMSA) headquarters at Industrial area in Nairobi on September 2020, over corruptions allegation.[Edward Kiplimo,Standard]

This past weekend, an obscure and self-confessed billionaire opened up to the nation through an interview on a national TV station.

Probably driven by the quest to present himself as an alternative credible presidential candidate, he proved his eloquence and ability to articulate issues. But beyond the veneer of ‘an astute policy wonk’ impressions created, he probably inadvertently gave us snippets into the dark world of the country’s political economy.

From a macroeconomic point of view, it is quite baffling how an individual private citizen can conceptualise, design, determine the project costs, negotiate the construction and financing contractual agreements and then bring it to a government elected through popular suffrage for implementation as it is. This gives credence to the famous ‘bandits economy narrative’ voiced by none other than a former Chief Justice while still in office.

Many questions come to mind in quick succession: One, in what capacity were such persons acting? Two, on what basis are such conceived projects translated into national developmental priorities? Three, whose interest does such a conceptualised project serve - public interest or the individual greed of the proprietors of the project? Four, what is the agency fee and what criteria is used to determine it? Five, is it humanly possible to objectively and correctly price such a project to guarantee a return on investment, cost-effectiveness and sustainability? And six, after the private commercial interests have been fulfilled, what ensures value for money to the poor tax payers? The list is endless.

Poisoned Chalice

This model of initiating developmental projects of such consequential impact to several generations is strange to modern economic systems. However, in our context, its origin seems to have been a calculated elitist policy move from five decades ago. As it turns out, the struggle to institutionalise an innovative, effective and efficient public service is almost as old as the country’s independent history. To be specific, the founding president established a Commission of Inquiry on Public Service Structure and Remuneration of January 9, 1970.

Maybe setting the precedence for many such commission reports to come after it, scanning through the introductory sections, the report exudes an aura of finesse on the part of its authors. For instance, right from the onset, the report implores upon the public service to assume an almost sacred responsibility to manage the economy, identify and solve national problems. It envisions a change oriented civil service, a robust system to reward initiative and experimentation, concern for cost-effectiveness and an institutionalised routine of evaluating the efficacy of all ongoing programmes.

Other propositions include finding a balance between centralisation and decentralisation of services, strong action and time-sequencing of government intervention with clearly defined goals. But the most sacred proposal was for the civil service to retain ‘a consciousness of its role as the servant, not master of the public, in its effort to induce change –not self-defeating’. However, beyond the glossy proposals, the authors cleverly introduce what with hindsight appears to have been the true intent of the establishment of the commission.

The flaws

Reflecting on the developmental priorities envisioned under Sessional Paper Number 10 of 1965, they boldly propose a need for the civil service to assume a greater and direct role in the country’s economic activities and/or localisation of the industrial production. The report coincidentally argues for a case to Africanise the private sector from the then already established colonial control. Not surprisingly, the report then proposes five assumptions (all left purely to the discretion of the individual public officers), that if observed, the public officers could freely engage in private commercial activities. This is emphatically advanced as a major conclusion and recommendation of the report.

Whether by design or error of omission, the policy shift was hinged on three tragic flaws: the assumptions upon which civil servants were allowed to engage in private business are purely left to the discretion and conscience of the individual public officer; the policy proposals fail to define boundaries, limits and/or enforceable guidelines for engagement in private commercial activities by the public officers; the policy changes conveniently ignore the need to institutionalise an implementation, monitoring and evaluation framework, nor a defined deterrent punishment for the violators.

At the technical level, the taste of a good policy is largely depended on the correctness of the assumptions upon which it is based upon. If the assumptions are flawed, then the policy itself is defective ab initio. So opening the public service to engage in private commercial activities based on flawed assumptions set the nation into a self-destruction mode. It would therefore seem the seeds of official plunder were deliberately sown disguised as a public service reform agenda.

Thus, when we hear of private citizens and confessed huge campaign donors make claims to have single handendly determined monumental public infrastructure projects, it leaves nothing to imagination. The next logical question then is what are the economic consequences and cost to the nation?

Implications

In a functional democratic governance system, developmental priorities and projects are an outcome of an open, transparent and accountable planning process. Thus, public investments would reflect the aspirations of the majority, albeit with the direction of elected leaders. Such projects are likely to pass the test of cost-effectiveness, return on investments and value for money. The financing structure would also most likely preserve the sovereignty of the nation, respect intergenerational equity and promote local industry.

On the contrary, privately conceived and procured development projects are opaque, highly inflated, biased to serve the individual greed of the initiators and almost certain of being a mispriority and unsustainable. Once the individual greed is served, public good and interest can go to the dogs. Secondly, while it is a common practice for private sector to seek to influence public policy to direct government spending to their sectors of interests, it is extremely dangerous when only a few privileged individuals dictate the economic policy.

This results in the economic disenfranchisement of the majority of the populace and uneven distribution of economic resources. It also manifests itself on widespread poverty, unemployment, runaway corruption and repressive political regimes to maintain the status quo. There exists a lot of empirical economic evidence that these structural factors are fertile grounds that breed civil unrest and revolutions.

Michael Gordon says these were critical factors that triggered the Arab Spring in late 2010 through 2011. The self-immolation of Mohammed Bouazizi was simply a catalytic factor that triggered the unrest and revolutions.

While so conceived projects may appear to be serving public good, the truth is that they suffer from a huge burden of legitimacy. For as long as the majority of the citizens perceive them as projects that serve the interest of a minority privileged few, they suffer the risk of rejection or target in case of regime changes.

Economic history teaches that in every oppressive society, there comes a time when the masses outmanoeuvre the political elites and loyalties to install revolutionaries. The revolutionaries thus destroy the old older for the society to make socio-economic progress.

I have this nudging feeling that the nation is ripe for another 2002 moment.   

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