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January 22, 2019

Policy making agility is key for a thriving economy

Nairobi County. /COURTESY
Nairobi County. /COURTESY

I thank The British High Commissioner for the invitation to a reception where the guest of honour was the U.K's Foreign Secretary Boris Johnson. As you know, I am a big proponent of ''serendipity'' and believe it can be shaped. John Hagel III and John Seely Brown in their outstanding article ''MANAGING YOURSELF Shape Serendipity, Understand Stress, Reignite Passion'' reckon three choices determine how we shape serendipity:

1. Where we spend our time.

2. How we spend our time. These physical and virtual environments attract a large number of people. How do we stand out and get noticed so that we attract unexpected encounters?

3. How we maximize the value of the unexpected encounter. If we are not prepared when the unexpected encounter finally occurs, it will not yield much value.

So there I am looking to insert myself into the flow. I introduced myself and then turned and asked ''Foreign Secretary, have you met the Central Bank governor?''

''Whats inflation?'' asks Boris.''9.3%'' says Dr. Njoroge.''Whats the interest rate?'' Boris

''14%'' says Dr. Njoroge. We both added ''drought''

We did not have time to add President Kenyatta's comments from his annual State of the Nation Speech where he had said:

''On the issue of access to credit for SMEs, it is unfortunate that the un-intended consequence of the capping of interest rates was a slow-down in lending by our commercial banks” The growth in credit dropped from 16.8 per cent in January 2016 to 4.3 per cent in December as per the latest Central Bank of Kenya figures.”

“This is an issue that concerns us and is one that I will actively seek to resolve so that credit can start to flow again to the real drivers of our economy,” said the President.

It is now widely accepted except by the die-hard Rate Cap Deadenders that “The rates cap needs to be removed so that banks and the government can work together to implement solutions proposed earlier,” said Mr Habil Olaka, the chief executive of the Kenya Bankers Association (KBA).

“The law was passed in good faith, but the negative consequences we highlighted are now emerging.”

And here people is a key issue between countries that win and countries that lose. Its all about the speed that policy-making adjusts. Like Lao Tzu has said:“Men are born soft and supple; dead they are stiff and hard. Plants are born tender and pliant; dead, they are brittle and dry. Thus whoever is stiff and inflexible is a disciple of death. Whoever is soft and yielding is a disciple of life. The hard and stiff will be broken. The soft and supple will prevail.”

This is not the time to be stiff and inflexible, this is the time to be soft and supple.

The Central Bank of Kenya lifted its moratorium on licensing of new commercial banks, now it’s the turn of policy-makers to move with despatch as well.

Aly-Khan Satchu is a financial analyst


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