Take risks and exploit fortunes to grow your potential, MP Shahbal urges state

Kenya, like most African countries, is afraid to take development risks despite the countless opportunities there are in the country, a regional MP has said.

East African Legislative Assembly MP Suleiman Shahbal on Monday said contrary to popular belief, Africa is not the richest continent. 

“We are in fact one of the poorest continents in the world. And it is not because we don’t have potential. There is enormous potential.”

Shahbal said the rate of development in Kenya and the continent has been affected by the inability to convert ideas into bankable projects because of the risks involved.

Speaking during an Economists Society of Kenya forum in Mombasa, Shahbal said this fear makes governments satisfied with only being labeled 'potentially rich'.

“It does not help us if there is gold in the ground. It will not help us if the gold in the ground is extracted by foreigners for their benefit,” the MP said.

Kenya, he said, is Africa’s third largest producer of coffee, making USD265 million (about Sh32 billion) in coffee exports annually.

“Germany, which doesn’t grow a single bean of coffee, exports USD2.6 billion (about Sh353.6 billion), ten times what we are making. Clearly there is something we are doing wrong so we need to retrospect and see what we need to do.” 

Infrastructure projects usually yield great returns, Shahbal added, but ideas must first be turned into bankable projects.

“If we are to bridge that infrastructure gap, governments must encourage Private Public Partnerships and create conditions which will make in conducive to bring in private capital into the opportunities that we have,” he said.

Some EAC member states have called for home-grown solutions which need policy changes. The PPP policy in Kenya, for instance, should be refined to remove impediments and make it investor- friendly.

“We have reached a point where, to some extent, the political establishment is even hostile to investors, and investors begin to feel like they are hunted species,” Shahbal said.

The MP pointed out that infrastructure projects in Kenya are capital-intensive, but the government "always claims it does not have money". He does not believe the problem is a shortage of capital.

“There is no bank in Kenya today that is willing to invest in development risk. That is why we have hundreds of opportunities that will remain as opportunities and never see the light of day,” Shahbal said.

The MP explained that while a development bank will lend money to a project, an investment bank will take the risk to ensure the project's success from inception to fruition.

“And that is why we need to develop our own investment bank in Kenya and in East Africa Community.”

To mitigate this, the MP is drafting a bill in the regional Assembly to come up with an EAC investment bank that will invest in the risky development stage of such projects.

Further, the various funds including retirement and pension funds, which the country is sitting on, run into trillions of US dollars.  

“If you look at the returns that these funds are making, there is a serious need to re-evaluate how these funds are being managed,” he said.

Challenges like climate change provide opportunities that should be taken advantage of. The international community has committed USD12.8 billion (about Sh1.7 trillion) to the Green Climate Fund.

“How do we convert that into an opportunity? Our challenges are also opportunities.” 

Nonetheless, Shahbal said projects should not be politicised. The affordable housing units, which the government came up with to use available land, has been turned into political fodder.

“We need to find a way not to sabotage every single project that comes along politically but to recognise that any great venture will always have challenges,” Shahbal said.

If a piece of government land benefits 500 families but can benefit 2,000, it is only prudent to opt for benefiting the 2,000 families, to serve the greater good.

He called on economists to identify the challenges and come up with solutions.

Cabinet Affairs PS Idris Dokota said formation of regional blocs has brought uncertainties in terms of unitary currency.

The formation of the East African Community, he said, has brought about export restrictions.

“Some countries have restricted export of certain commodities so that they can protect their food reserves and food security.

“Geopolitical uncertainties have really caused mayhem and affected global economies. It is time for economies to sit down and look at structural changes in terms of legal policies and the regulatory framework to see how best to cope with the problem caused by geopolitical uncertainties,” Dokota said.

Kenya has started implementing structural changes and the shilling is now gaining ground to the US dollar. He underscored the need for data in decision making, urging economists to give advisories on the same.

“Without the right advisory then the country will always come up with decisions that are not backed by data and end up being the wrong decisions,” the PS said.

Economists Society of Kenya chair Dunstone Ulwodi said many economies are going through difficulty, which need changes in policies.

He agreed that economic policy changes need to be informed by data and not driven by pronouncements by authorities.

“We are ready to support policies that are transformative that will change the country for the better,” Ulwodi said.