Everywhere you go, citizens all across the world are compressed and complaining about something.
The war in Ukraine has affected wheat prices globally, with the country accounting for 10 per cent of global wheat production, a significant chunk that ends up in Africa.
In the US and Europe, their citizens are complaining about the cost of living and the wealth gaps the last 50 years have created.
What matters, however, is not the complaining but the actions people are willing to take to improve their situations.
Mostly, the most impactful solutions require collective and collaborative action something to achieve a shared objective.
In Kenya, tax is the main topic of discussion today, with a majority of citizens and businesses feeling over-taxed.
Others also feel that government services are eligible to a small class of people and that this perceived discrimination causes some elements of our society to suffer even more from problems.
I opine that Kenyans misunderstand their government’s purpose and therefore misunderstand their collective responsibility in ensuring the purpose of their government is achieved.
Kenya has a population of nearly 50 million people with an average age of 19 years.
About eight million people are over 60 years old and most of us are below the age of 35 years.
Our average income per month is $130 (Sh17,940). 8000 Kenyans are dollar millionaires and about 5 are dollar billionaires. We have nearly 500,000 graduates from local and international universities.
Kenya is ruled or governed by the rule of law. The supreme law is the 2010 Constitution, easily the most progressive constitution of the modern age.
The ambitious constitution does not change the fact that our total budget is only $30 billion.
‘Only’ is used to highlight the fact that if Kenya was a company, it would be in the bottom 100 companies in the Fortune 500.
Of this $30 billion (Sh3 trillion), Kenya collects about $20 billion (Sh2.74 trillion) in taxes and has to borrow the balance of $10 billion (Sh1.38 trillion) from local and international markets.
If we were to divide the total budget per person per annum, we would allocate $600 (Sh82,800) dollars per person per annum. Which is $50 (Sh6,500) per person per month.
In some parts of Kenya, 50 is more money than most usually see on a monthly basis.
These people include those in the refugee camps or in very hostile areas in the arid and semi-arid regions of Kenya.
In other parts of Kenya, $50, is the price of a good steak and glass of wine.
The truth is that for the average person anywhere in the world $50 per month barely meets any of the basic needs such as housing, food, water and internet.
With this allocation of $50 per person per month we expect the government to provide basic low-cost housing, world-class health facilities, the best education for our future generations and faster internet to watch Netflix on.
I bet you would agree with me, that an easy shared objective would be to improve that budget per person to at least $1000 (Sh138,000). That’s nearly 20 times what it is today.
To do that in 10 years we would need to grow Kenya’s revenue at 34 per cent per annum for the next 10 years.
This is mathematically possible, but nearly impossible and has never been done before.
The more realistic target is to ensure that our children 30 years from today can enjoy the twentyfold allocation. This would need sustained growth of 11 per cent per annum for the next 30 years.
If all these calculations sound familiar, they are. Similar arguments were made with the Vision 2030 Project that the Kibaki administration initiated.
To achieve 11 per cent growth the country would need to ensure that we are creating value from within and without. To create value would mean that we would have to create as many jobs as possible and start as many businesses as possible.
This would need local and global capital. This would improve tax collections from PAYE Tax, Income Tax, Domestic and Import VAT.
To attract capital anywhere in the world, the owners of capital must trust the system they are allocating the capital. Kenya scores highly due to the fact that we are governed by the rule of law.
This means no one personality is a supreme authority. Additionally, the people accorded powers by the rules that govern us, need to be trusted too.
Unfortunately, this trust does not exist. The people who work in government do not trust their citizens and businesses and vice versa. We need to trust each other to do the right thing. Trust is built by actions and not words.
When trust is in place, we can then move to formulate a plan of action. If each stakeholder trusts the other and the rule of law manages for accountability, the speed and momentum would have the additional benefit of psychologically providing dignity of work and purpose. This would mean a healthier society in the long run.
Any plan of action would entail making Kenya a competitive place to be for labour and capital.
The first action would be to identify what areas in the economy need a booster shot to pick up momentum and start generating jobs and attracting the capital to achieve the annual 11 per cent growth.
Without going into too much detail, the key areas that typically make any country competitive are its tax policy, state of critical infrastructure, price of energy, quality of workforce and the entrepreneurial abilities of its citizens.
In the last 20 years, we have made a lot of progress on our critical infrastructure with new roads, ports and railways. We have been able to reduce the cost of electricity and our workforce and entrepreneurs are without a doubt world-class.
Unfortunately, we have neglected our tax policy and as a result, we are still unable to solve the economic liberation so many of us need.
We need to offer tax incentives for opportunities for growth such as Fintech and Start-Ups as this tax revenue would be negligible in the short and medium term but would consequently create jobs and value for the long term.
Tax policy should be predictable, it should be fair and it should stimulate the growth of the economy.
The writer is the chairman of the Digital Financial Services Association of Kenya (DFSAK)
