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Raila Odinga's third economic revolution should create a strong middle class

By Suleiman Shahbal | October 5th 2021
ODM leader Raila Odinga. [Wilberforce Okwiri, Standard]

Raila Odinga’s greatest redeeming strength is the capacity to reinvent himself every few years. He has made sudden unexpected political changes that have left friend and foe confounded. His mastery of political chess is unrivalled. Last week he made a famous declaration that it's time for a “Third Liberation”, this one is economic and designed to transform the country economically.  I have a few suggestions.

First, Kenya needs to create a strong middle-class base. Kenya’s current middle class is very small and is under increasing financial pressure, which is pushing it under and back to the lower levels. Less than 2 per cent of Kenyans earn above Sh150,000 today and with the rising cost of living, even this class is now an endangered species. Interestingly, the Washington Post recently released five editorials that focus on “How to close the wealth gap from the bottom up.” There are very interesting lessons for Kenya. The editorials identified three key parameters for building a middle class. These are home ownership, enhancing access to university education and creating and encouraging pension retirement schemes.

In the United States, most of the Middle-Class own homes and this accounts for over 70 per cent of their net worth. In Kenya, less than 2 per cent of the Middle-Class own homes. Wealth in the form of property grows faster than income and appreciates more in value over decades. In the US' lower income brackets, those owning a home are worth an average of $105,000 while those renting have an average net worth of barely $1500. If Kenya is to build its middle class, we need to find ways to increase homeownership.

Education is the greatest equaliser. We need to push more of our youth into the universities and technical colleges yet the transition rate to university is still very low. County governments should invest in any high school graduate with A and B grades and ensure they all make it to university.

Most Kenyan businesses are small or medium enterprises, (SME’s). Despite government making all the right moves to support this sector, it has not made any serious impact. We should change this. Funds, training and incentives are not reaching the intended recipients and not helping to lift them to higher levels.

Finally, we need to encourage internal and external investment. Raila calls this “the new money”. Government bureaucracy and a convoluted legal system are the biggest impediments. We need government, but we also need to sidestep its bureaucracy.

The courts have become the biggest impediment to investment.  The courts allow cases to take years to resolve, they entertain frivolous cases in the name of “the public interest” and forget that the greatest public interest today is finding a job.

We don’t need to reinvent the wheel. We need to go back to the basics and smoothen out the problems. If a Raila Presidency can sort out these basic issues, then Kenya will join its rightful place amongst developed countries. It’s possible.  

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