My experience from previous years of writing opinion columns is that there is no surer way to make your reader turn the page – or in these times, scroll downwards – than to make it clear that you propose to write about anything to do with the economy.
Most Kenyans, I suppose, are aware that the state of the national economy has some impact on their personal wellbeing. But they do not seem to want the matter discussed in any detail. Certainly not in the kind of detail which they find fascinating when it comes to what percentage difference there was between President-elect Dr William Ruto and his chief rival in the presidential election, the former Prime Minister Raila Odinga.
Yet even if the tiniest fraction of the lavish promises made by those two during the campaign period are to be fulfilled, this will depend largely on the next government’s fiscal policy and monetary policy.
For it is only through such policies that a president’s vision, or a government’s programmes, can be effectively pursued.
Now to the bad news.
Unless I misread the extent of our national indebtedness, the decisions over these policies will either soon be out of the hands of the next president and his team; or they are even now already out of the hands of the team serving President Uhuru Kenyatta at the Treasury.
For what may yet be remembered by future generations as Uhuru’s most enduring legacy – the massive upgrade of public infrastructure – was not achieved without cost. The government seemed to borrow from just about any lender willing to add to Kenya’s ever-growing debt.
And then there are the global factors no Kenyan president could have controlled: the Covid-19 pandemic; the drought in the Horn of Africa; and the Russian invasion of Ukraine. All these have had a negative impact on the economy, one way or another.
Money owed by a nation is rather different from what an individual may owe. In the case of an individual, the bank or savings and cooperative society or (increasingly these days) digital lender, does not care where you get the money to repay your loan. They just want their money back on schedule.
A different approach applies to nations: Basically, the lenders will take over your decision-making process – which is to say your fiscal and monetary policies – and dictate what you must do, with a view to ensuring repayment.
And the focus then will be not so much on the fulfilling of the president’s campaign promises, as on limiting government expenditure while increasing taxation. These steps are usually presented to the public as “economic reforms”. And, as a rule, such “reforms” are never pleasant in their impacts on the lives of ordinary people.
An example of this comes from the 1970s when Britain (which we are accustomed to thinking of here in Kenya as a rich “donor nation” that is always giving Kenya grants and loans) had to borrow from the IMF:
“In 1976 Britain faced a financial crisis. The Labour government was forced to apply to the International Monetary Fund (IMF) for a loan of nearly $4 billion. IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy.”
A more recent and somewhat more spectacular example is Greece, perhaps Europe’s most famously indebted nation over the past two decades:
“Greece is set to graduate from post-bailout monitoring — and government and creditors are touting the exit as the end of a dark era that inflicted deep scars on the economy and society… “After 12 years … a difficult chapter for our country comes to a close,” Greece's Finance Minister Christos Staikouras said in a statement last week, adding that this will allow the country greater freedom in making economic policy.”
I quote from these online sources to make the point that any country at all – rich or poor – which has to resort to extensive borrowing, will not be able to make its own policy decisions on the economy.
These crucial decisions will be made by “outsiders” with little thought given to the expectations of voters in the indebted nation.
And that may well be where Kenya is now.
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