Mwai Kibaki - Kenya's towering economist without a 'school'
| Apr 28th 2022 | 4 min read
Former President Mwai Kibaki is in a league of very few leaders in history that have taken their countries to greater heights of economic growth as he did when they grew the Gross National Product (GDP) from - 2 per cent to a whopping 7 per cent. Despite graduating from the London School of Economics and teaching briefly in Makerere University, no one can really say whose Economic disciple Kibaki was.
As economists would say, Kibaki is now in heaven, a joke is often told of Harvard trained economist John Kenneth Galbrath who said that when economists die St Peter asks them, what have you done on earth to increase the Gross National Product? If this is the question that Kibaki will answer during his judgment, then it will be easier for him to get to the ‘heaven’ that economists go to. Now that he is gone and he never liked publicity, could we start seeing the development of Kibaki school of government and Kibakinomics becoming a global brand?
Very few leaders can match President Kibaki’s success; among his peers would be Lee Kuan Yew of Singapore, Mahathir Mohamed of Malaysia, Muarmar Gadaffi of Libya and General Surhato of Indonesia. These people inherited rag tag countries only to build world class economies and are all revered.
According to experts, what Kibaki achieved as president is what he had set to do when he was Finance minister in the 1970s. He had seen the birth of financial institutions like Jimba, Rural and Urban, Consolidated Finance, Consolidated Bank, Home Savings and Mortgages, among others.
Just like alcohol and drugs, money is a controlled substance and not many regulators actually wanted the Laissez-faire approach that has seen the growth of Safaricom’s M-Pesa and Equity Group.
As for GDP, the government’s budget was just a mere Sh162 billion in 2002, soon it doubled to Sh300 billion and Sh3 trillion during President Uhuru Kenyatta's time. This remarkable growth leads us to ask, which school of economics did Mwai Kibaki ascribe to?
Some have called Kibaki a Keynesian, which is an oversimplification of this guru. This is from John Maynard Keynes who published the General Theory in 1936. Keynes based his argument on the “classical economists”, a name invented by Karl Marx to cover Ricardo and James Mill and their predecessors, for the founders of the theory which culminated in the Ricardian economics.
All these people postulated that the government must do more than just creating a conducive environment for business, they must subsidise, and pump as much money to the economy. Hence Kibaki revived Kenya Cooperative Creameries, National Youth Service projects and gave capital injections to Kenya Commercial Bank, Kenya Pipleline, Kenya Airports Authority and Kenya Airways. This would have been interpreted as Keynesian but more so a preserve of Karl Marx who said that the government must be on the driver’s seat all the time. Kibaki, however, found a role for government without directly managing institutions of the economy hence he shifts from classical economics.
During the 2005 debacle of the Kilifi draft of the constitution, one could see Kibaki refusing to yield to big government and a high taxation regime. As such, he can be classified as a student of Friedrich Von Hayek who was directly opposite what Keynes proposed. Von Hayek said that wealth was actually generated in a situation where the government did not interfere with the economy apart from creating a conducive environment.
This economist influenced two major world leaders of the time, Margaret Thatcher and Ronald Reagan who led America when its growth trajectory had reached a climax. These two brought what the Bretton Woods propagate today - that governments must stay away from making money through participation in business. As such, the World Bank proposed the liberalisation of Kenya’s economy, cost sharing in hospitals, among other, reforms.
In a shift from Milton Friedman’s proposal that there is no free lunch, Kibaki showed Kenyans that it is possible to have a situation where free primary education can be achieved. Against the advice of Bretton Woods, Kibaki expanded the civil service and lifted the freeze on hiring that had been imposed by the World Bank. Indeed, President Kenyatta has continued with the mantra expanding free education to secondary school.
However, there is an existing misconception of Kibakinomics. It is assumed that the government will always have money and she will be able to give county administrations up to 35 per cent of the national budget. This certainly is not going to be the case and the infrastructural growth spree started by Kibaki and Uhuru will soon be saturated. We are about to have roads that will lead to nowhere. We shall see roads no one uses and even industrial parks that are abandoned. Driving through Newark New Jersey, Bronx in New York, and Fresno in California among many other places in USA, this is likely to be the case hopefully in Kenya. When the time comes Kibaki will not turn in his grave.
We are about to start seeing the decline of the Kenyan industry. This largely will be because youths under 20 years are almost 65 per cent of our population.
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