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Thursday, July 27, 2017

Maintain economic momentum

Throughout human history, in any great endeavour requiring the common effort of many nations and men and women everywhere, we have learned it is only through seriousness of purpose and persistence that we ultimately carry the day. We might liken it to riding a bicycle. You stay upright and move forward so long as you keep up the momentum.” — Ban Ki-moon

Kenya certainly faces many challenges, but its economy is growing. Kenya is the envy of the continent. The momentum must be maintained.

In the past four years, the economy has been stable, reaching a high of 5.8 per cent in 2016, and exceeding – at all times – the African average of 1.5 per cent. In economics, whether one is analysing a stock or the performance of an economy, context and benchmarking are crucial.

There is no question that the business environment in Kenya has been revolutionised, with greater security, simpler and sensible regulation, a rebirth of tourism, and strong remittance inflows. Most importantly, incredibly ambitious and successful government infrastructure programmes have made Kenya a place where ease of doing business is increasing by the day.

Total national employment levels have been going up by 5.9 per cent annually, with almost a million jobs created in the formal and informal sectors every year. This inevitably leads to increased revenue collection (the highest in East Africa) and better government services.

Kenya is ranked as the second most attractive Foreign Direct Investment destination in Africa. And, for the second year in a row, Kenya has been ranked the third lost improved country globally in which to do business.

The amount of FDI coming into the country is perhaps the most incredible achievement of President Uhuru Kenyatta’s four years. It soared from $259 million (Sh26.9 billion) in 2012 to $1.9bn (Sh197.8 billion) in 2016. These numbers are amazingly impressive by any global standards.

The shilling has remained stable against all major world currencies and interest rates have been crucially stabilised, thanks to shrewd and tight monetary policy.

Some 200 large international companies have set up office in Kenya, with many more in discussions to join them. This will provide thousands of Kenyans with jobs. About Sh25 billion has been injected into small businesses through the Youth, Uwezo and Women’s enterprise funds. Fifteen million people have received support through these funds.

Jubilee’s manifesto is one of hope, progress and, most importantly, crucial momentum. The long-term strategic nature of the proposals will ensure the reduction of waste, which will generate at least Sh1 trillion over five years. This isn’t short-term populism, it is long-term planning.

By working with the farmers and ensuring food availability, the cost of living will be attacked immediately. Improving storage, government food purchase, agricultural productivity and guaranteeing price caps on basic food items will add short-term relief to the long-term sustainability plans.

Irrigation of at least one million acres, subsidising seed and fertilisers and expanding the Strategic Food Reserve, will have both a medium and long-term positive impact on every Kenyan’s cost of living.

These successful policies to reduce the cost of education and healthcare as well as the huge development projects in transport and energy infrastructure, will continue in earnest. The proposed gigantic low-cost housing programme will contribute to significantly lowering the cost of living for millions of Kenyans.

While the large-scale projects will make every Kenyan’s life easier on a day-to-day basis, Uhuru and his team have been careful to focus on those most in need. Increasing tax relief by yet another 10 per cent, for example, will increase the lowest taxable income from Sh11,135 per month to Sh13,486, meaning low-income Kenyans will go home with more money in their pockets.

This economic race is a marathon, not a sprint. We have gained momentum as we climb the hill together. When the hill is most steep, we are left with no choice but to keep moving, because to stop now would mean a tragic fall for the people of Kenya.

Charles Mulila comments on topical issues

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