Opposition needs to give Kenya an alternative economic plan

Azimio leader Raila Odinga addresses a gathering at Kamukunji Grounds in Nairobi on June 27,2023 during a consultative meeting. [Denish Ochieng, Standard]

Now that the president has signed the Finance Bill into law, focus has shifted to the demonstrations called by the opposition. For an opposition still smarting from election loss, mass action must be attractive since it taps on widespread disaffection engendered by the hard economic times. This option is however ill-advised for a number of reasons.

To start with, given our past history of violent demonstrations, such a move destabilises the country without addressing the underlying economic problems. Despite our political differences all must recognise that survival of the nation is our collective responsibility and not just the government in power. Our opposition must graduate from throwing stones to offering constructive alternative ideas of how to resolve prevailing economic problems.

Additionally, losers in a democratic election must appreciate that an election victory is an approval of the winning party’s election platform. The winning party cannot therefore adulterate the mandate given at the ballot box to incorporate the wishes of an opposition whose platform was roundly rejected. In our case, it would betray the mandate of the many who  voted for the hustler platform for the Kenya Kwanza government to agree to some boardroom bipartisan consensus. 

Instead of demonstrations then, a constructive option is for the opposition to offer an alternative to the government’s economic plan. A reference case study is the Republican response to US President Carter’s strategy to tame inflation and unemployment by trying to influence demand. Despite the best efforts of the Carter think-tanks, the policies failed miserably because as conservatives argued, the real problem with the economy were inefficiencies of the American industries.

To address this supply side problem, conservatives proposed a strategy of revamping American industrial base to catch up with competitors such as Japan and Germany who had rebuilt their industries with new technology after the Second World War. Ideologically, the supply side economics mantra was additionally in line with the conservative preference of empowering the private sector and reducing the role of the government in the economy.  

Reagan’s supply side arguments appealed to many Americans because it offered a fresh and creative solution to intractable economic problems that had defeated Carter administration. For an Azimio brigade raring to get rid of Ruto’s government, the take away from Reagan’s supply side coup is that an opposition does not have to throw stones or wear pots on their heads to take over government. Instead of staging demonstrations, the Azimio brigade can serve the nation better and achieve their aim of removing the Ruto government by offering an alternative economic plan.

Azimio should start by interrogating the Kenya Kwanza economic plan which is based on the assumption that robbing household their buying power will be more than compensated by the multiplier effect of government-funded hustler projects. Like American supply siders, the government is correctly focusing on production rather than consumption by channeling funds to MSMEs. The centerpiece of this bottom up economics is the affordable housing project whose multiplier effect is intended to act as an economic stimulus.

To fund this ambitious plan, the government intends to raise taxes and borrow from local and external lenders. The most controversial part of the intended increase in taxes is the proposed raid on pay checks through the housing levy/savings plan/tax (pick one) and increased VAT on fuel.

If the opposition were to put their economic thinking caps rather than running shoes, the glaring weakness of this hustler strategy is the fact that increasing taxes will depress demand and most likely offset the multiplier dividends of their supply side economics. The blow to the economy occasioned by shrinking household disposable incomes is in addition exacerbated by tight monetary policy adopted by CBK to bring down the inflation rate.

Mr Githieya is a political and economic analyst