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Can Cabinet’s Sh250 billion economic stimulus plan resolve Kenya’s crises?

TURNING POINT
By | August 25th 2009

We are a nation confronted with multiple crises that threaten to paralyse our socio-economic order with respect to food, water, insecurity and energy.

Millions face starvation and rely on food aid. Several industries are not producing optimally due to power rationing, with energy costs remaining an impediment to productivity, growth and competitiveness in manufacturing.

The natural environment is threatened by population pressures and conservation failures. Climatic changes attributable to obliteration of forests and water catchments are already having a catastrophic impact, evidenced by failing rainfall, drying rivers and receding lake water levels.

Despite the positive impact of our education system, millions are unemployed or underemployed. Unemployment levels rise daily. Why?

The capacity of our economy to absorb youth in productive engagement, whether as entrepreneurs or employees, is a matter of portentous concern. Indeed, rising unemployment is a key factor in rising insecurity and social conflict.

Why this state? Many of these crises are of our own creation. Others are matters to do with Government’s ineptitude, while others we can blame on Mother Nature. But the inescapable fact is that our country’s state of preparedness remains wanting.

This country has just come out of a political crisis, which saw social unrest with devastating humanitarian and economic disruptions. Our resilience hinges on our ability to hold dazzling optimism and not despair.

That has always been the energy that has kept our nation going during past crises, and indeed in today’s crises, but we cannot bank on it endlessly. It is in these myriad challenges that Government must demonstrate resoluteness, as a matter of national emergency.

It cannot be business-as-usual. Repeat: It must not be business-as-usual.

The Cabinet’s Sh250 billion economic stimulus programme must make a difference, so as not to become a delusion of grandeur. What, then, are the success factors?

Firstly, the stimulus programme must be reoriented and integrated within the investment outlay of Vision 2030, with predetermined, targeted impacts and deliverables.

Fundamental impact

The overall programme must be mapped out in a matrix that not only defines resource implications and priority allocations, but also envisions impacts and implementing agencies.

In this respect, the planned priorities must be aimed at those with fundamental impact in realising socio-economic transformations across the country. We must seek accelerated and progressive economic growth to engender sustainable employment absorption capacity of the domestic economy.

For this, we must identify and support critical productive services and sectors to encourage job creation and/or induce productive entrepreneurship.

Secondly, the Cabinet stimulus plan must be accompanied by appropriate legislative framework to ‘ring-fence’ it against politics and create accountable systems of management.

Further, the ways and means of mobilising the colossal financial resources to the tune of Sh250 billion have not been identified clearly.

Financial difficulties

The areas of focus are said to include irrigation of food and cash crops, power generation, supply of clean water, conservation of water catchments, fisheries and what has been characterised as ‘rural development’.

The implementing agencies, are regional bodies, many of which face management and financial difficulties.

The question is: Will these regional bodies fulfil the mission? How will the resources be ring-fenced from being consumed by the billions of accumulated financial deficits by these so-called development bodies? These investments need rethinking.

Thirdly, priority investment must go to creating a robust infrastructure — national and rural road networks, and power generation and supply.

Moreover, measures on irrigation farming and better pricing for food production should make a real difference in the ability to feed the growing population. The development of domestic energy capacity and integration to regional energy supply infrastructure must be given priority and support in the plan.

The level of unexploited local production is undermined by lack of financial resources and politics. Indeed, several plans have been developed on geothermal production, but are yet to attract funding due to other competing priorities.

Representation overload

However, the shortage in supply of power and its effect on economic development demand immediate priority allocation of resources.

The gestation period of energy development also requires early planning and predetermined incentives to encourage private sector partnership.

Finally, the National Economic Social Council (NESC) and Vision 2030 secretariat should, ideally, be charged with implementation of the stimulus.

It is important to reconstitute NESC with more private sector participation and reduce Cabinet representation. A reconstituted team would cultivate enhanced public-private sector partnership without an overload of Government representation.

Priority investment and overall reorientation of Government institutional reforms will have an enduring effect in spurring economic growth and social political stability. This is a matter of great public interest!

—Comments and suggestions to: [email protected]

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