Taxes and more firefighting will not grow Kenya

No country has ever experienced economic takeoff by being a dutiful student of the International Monetary Fund (IMF), the World Bank, or any donor country.

The economic histories of all the successes of the last 60 years – most of them in Asia – are textbook lessons on the virtues of being willing to take unorthodox but smart gambles for development.

The reason here is simple: institutions like the IMF and the World Bank (and the donors that dominate them) are interested primarily in fighting crises with a limited set of tools.

In short, they are firefighters. Now everybody understands the usefulness of firefighters during emergencies. But it would take a fool to imagine that firefighters make for good architects.

It is fair to say that when President William Ruto succeeded Uhuru Kenyatta, our overall macroeconomic situation needed firefighting.

The previous administration had borrowed heavily and squandered a lot of cash on theft and commercially unviable projects. Kenyans were prepared to give the new administration a chance to clean up shop and put the economy on a path to recovery and robust growth.

However, so far President Ruto’s economic team have only demonstrated their ability to fight fire with foreign assistance – as shown in the draft Finance Bill.

They are yet to show us that they know how to rebuild. It is good that we avoided default. It is good that we have removed the monopolistic interests that had come to dominate the economy under Kenyatta.

It is good that the administration was willing to experiment on policy to stem the shilling’s slide. These are commendable efforts.

Yet the economy needs a lot more than just firefighting. While it is good to raise revenue to make sure we do not default, it is also worth remembering that too much taxation will kill economic activity.

Same goes with too much theft and mismanagement – which in some areas have gotten worse under the current administration.

How can the President ask Kenyans to tighten their belts when his administration gives them fake fertiliser and squanders taxpayer shillings in scandal after scandal and wasteful spending?

Kenyans do not expect miracles. We do not want angelic politicians.

All we want is a government run by people who understand the urgency with which we need to reform economic policymaking.

Government cannot just be about taxation and wasteful spending. It must also be about growth and good faith efforts to improve human welfare throughout the country.

-The writer is a Professor at Georgetown University

 

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