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After political revolution, can Ruto cause economic miracle?

President William Ruto addresses a congregation during Interdenominational thanksgiving prayers at State House in Nairobi on September 25, 2022. [Denish Ochieng, Standard]

“When you view not just the what they built, but the culture of innovation they inspired, it becomes clear that the real revolution in America after the Civil War was not political, but economic,” conclude Harvard University scholar Clayton Christensen, Efosa Ojomo and Daren Dillon in The Prosperity Paradox: How Innovation can lift Nations out of Poverty.

William Ruto starts a prodigious task of fixing a broken economy, but the play area is not wide enough. Compounding the problem is that he is inheriting a soaring national debt whose interest payments are equivalent to the education and health budgets. Dr Ruto is admired for his singleness of mind; that is the political part of the equation. He will earn loyalty by the effectiveness and efficiency by which he turns around an economy that is out of kilter.

Real growth is not seeing more kinyozis, or more stalls for Mama Mboga to sell their ware or more boda boda. Not it means lifting this group or those who would eke out a living from menial work into earning decent, formal jobs.

People who end up working in kinyozi or in the boda boda sector do so because their options to a livelihood are even worse according to Gavin Kitching, professor of Social Sciences at the University of New South Wales. His conclusion from numerous studies is that the informal sector is critical, but not good enough.

People need good, decent jobs with good disposable income because it can sustain a decent living with a good education for the children, good housing and health insurance and a balance to “enjoy life”.

Former President Luiz Inacio Lula da Silva turned around Brazil after inheriting a ramshackle economy. Lula’s social programme - Bolsa Família, or Family Stipend lifted 20 million out of poverty. Economic growth rose from 1.9 per cent to 5.2 per cent and created 13 million jobs reinforcing the role of policy in growth and progress. 

Ending subsidies in consumption (fuel and unga), subsidising production (fertiliser), ending borrowing while exhorting people to save more and focusing on the bottom-up are all noble. The East Asian Tigers are famed just not for their conscientious work ethics, they also are dutiful savers.

He is right to stop borrowing for the simple reason that higher debt levels (now estimated at 70 per cent of GDP) hurts the poor first as interest payments divert funds from public services.

At the centre of Kenya’s problems is a hollowed-out public service: Education, health, transport, energy, security, and housing all need urgent fixing. These are things dear to Dr Ruto’s Hustler constituency. But because he will be relying on a demoralised, demotivated civil service that has long been subjugated to the political class, it’s a mixed bag for him. Dr Ruto’s bottom-up economic model is essentially grounded on the understanding that all must feel that there is something in it for them. No doubt, inviting those on the fringes of the economy to the centre creates a multiplier effect.

Henry Kissinger says the Singaporean model only succeeded because Lee Kuan Yew - its transformative leader set out “to have an economic growth to sustain its population; sufficient domestic cohesion to permit long-range policies and; a nimble foreign policy” to survive the needling from China and Russia.

The first two are a must if President Ruto is to be a consequential leader. He (Yew) Kissinger adds, “knew that to succeed, his quest had to become the enduring pattern not a personal tour de force,” 

Dr Ruto’s version of the “American economic revolution” will start with shifting from push-to-pull strategies. Pull strategies, say the Harvard scholars “are far more effective at triggering sustainable prosperity.”

For example, by connecting such infrastructure like roads and ports and railways to “market-creating innovations” they “become more viable and are able to attract the necessary capital (from trade and commerce) for construction and maintenance.”

Also, sticking to the fundamentals of free markets; low interest, low inflation, and a loose monetary policy will go a long way in laying the ground for an economic miracle South of the Sahara, North of River Limpopo. That is besides coming up with better and more creative ways to encourage investment and unlock capital. He also has to be clear on how he will raise more taxes without antagonising enterprise.

Also, perhaps, he ought to disabuse many of the notions that the State is an employer and a benefactor. It could be helpful too to recall Winston Churchill’s famous quote: “A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, next year… and to have the ability to explain why it didn’t happen.”

Mr Kipkemboi is Partnerships and Special Projects Editor, Standard Group

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