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New president must make tough choices to kickstart economy

DP William Ruto speaks at Bomas after the declaration of the August 9, 2022, presidential election results by the IEBC. [DPPS]

By the time of writing this article, the presidential polls were too close to call contrary to the opinion polls.

Their prediction was confounded by lower voter turnout and another simple fact that voting is secret. We can’t tell how someone will vote till they have voted. 

The close nature of this election is why many had suggested that the incumbent president should have been neutral. 

Enough on politics, let’s turn to the topic that was at the heart of the campaign - economics.

It masked our tribal differences and other issues that divide us. Economics more than our ethnicity tied us together during the campaigns. Some key economic issues await the next president.  1

One is costly holidays. My back-of-the-envelope calculations demonstrate the economic cost of the two holidays - one for voting and the other for the inauguration of the president. They will cost us about Sh72.5 billion, almost enough to build the expressway. Our GDP last year was $110.35 billion (Sh13.24 trillion, according to the World Bank.

Divide that by 365 days in a year then multiply by two and convert into Kenya shilling at Sh120 to the dollar. 

It could be higher considering that lots of citizens are relaxing while waiting for the results. And not everyone works during the weekends and holidays. We can’t be talking about economics as the key campaign issue and then waste such precious time.

Such holidays also mystify the elections. I do not recall a voting holiday in the US, the country whose constitution we borrowed heavily from. Working is one way to fulfil the economic promises of the leading presidential contenders.

We should get back to work as soon as possible. Whether it’s bottom-up economics or the other that promises stipends, we must work!

The manifestos of the political parties did not tell us that we must work, and that is what economic growth is all about.  

Two, to jumpstart the economy, we need to take advantage of the most available resource - time. Can we make Kenyans a truly 24-hour economy? That would create more jobs. We already have a market for our goods and services in the enlarged East African Community (EAC) and Africa free trade area. We can then pan to the rest of the world.

Three, the new government must make some bold decisions, some fiscal, others monetary. Can we reduce the tax rate such as value-added-tax (VAT) to 12 per cent? The spike in consumption could compensate for the loss in the rates.

A tax rate cut would be a good economic stimulus. It sounds counterintuitive but let’s try it. The Kenya Revenue Authority (KRA) has been exceeding its targets. It would do even better with a softer approach. At the county level, why not reduce the licence fees to attract more entrepreneurs? 

Counties should also focus on sectors that will bring the highest social-economic returns in the next budget cycle. They should aim at stimulating their private sector, not expanding their public sector. 

Four, expand the Kazi kwa Vijana initiative. We have lots of manpower in this country. The programme only focused on the youth cutting grass on the roadsides. What of dams, roads, tree planting, and other civil works?

That might not be the dream job for many youngsters, but it’s a start. 

Four, the fuel and food prices will not come down immediately. That could tempt the State to raise wages and salaries. It is a good political move, but that would fuel inflation further. That is why a tax cut looks like a better option. Cut fuel tax too. 

Five, sport is low-hanging fruit. Why not start inter-county games? That would not only keep our youth busy but start a whole industry before we branch to the Olympics and other games. Think of a football match between UDA and ODM counties. Such games would not only dissipate tension but enrich cultural interaction. Why do games end after schooling? 

Six, what magic did Kibaki do to reduce interest rates? Can we licence more banks to increase competition and reduce the rates?

Have we leveraged the Credit Reference Bureaus (CRBs) to price credit? Since capping interest rates never worked, we can try the market?  Seven, let’s leverage technology to reduce the cost of running the economy. Can we build a post-Covid-19 economy that is more efficient, leveraging ICT? 

Huduma centres should expand their reach. Maybe it’s time we started voting online. Why are debating the use of tea picking machines in the 21st century? This is tied to taming corruption, our soft underbelly. 

Eight, so far we have conducted our elections peacefully and we expect peace after the ultimate political prize is announced. That will earn us immense goodwill. It will become easier to renegotiate our debts and attract investors as well as donors. 

Nine, one observation I have made during voting and tallying of the votes is the global interest in our polls. It seems we underestimate ourselves. Whether it’s from neighbouring countries or across oceans, we are being watched.  We are seen as role models to be emulated. We should not let the world down. We must let the world know we have learnt from our past mistakes. 

Ten, it’s not just about the new government; it’s also about you individually.

What plans do you have for your enterprise? To start a new one or expand the existing one?

What of your salary or wage? How much do you save or invest?  Remember the government takes about 30 per cent of your salary or profit. You keep the 70 per cent. Your actions and decisions have a bigger effect on the economy than the government, which you fund!  

Finally, the next government must make it easier to do business, and let entrepreneurship and innovation flower from our cities to the villages.