What would it take to put Kenya on a sound economic footing?
It would have to be a sustainable inclusive economic growth.
Granted, Kenya’s economic prospects has fluctuated overtime.
Overall, however, the economy has been on an upward trajectory.
In 1998, for instance, the economy declined from 3.3% to 0.6% in 2000. It rose again to 8.1% in 2010 after a 0.2% dip in 2008. This year, a 5.5% growth is expected. This is according to the World Bank.
Per capita income on the other hand rose from USD 97 in 1960 to over USD 2200 currently, an exponential 130% growth in real terms.
So why is there a mismatch between this growth and the actual living conditions of most Kenyans?
Some have argued that the reason is because benefits do not accrue overnight. I submit however that there will never be an improvement in overall wellbeing for the greatest number of Kenyans as long as our accountability measures remain at worst mediocre and at best unenforceable.
The way forward would be to prioritise, beginning with putting in place efficient and accountable public institutions indispensable for great nation building. Our political system since independence has suffered an accountability crisis that breeds endemic corruption and weak governance. That must be corrected!
In any economy, external benefits residents receive from new economic development are the major incentives for local development programs.
Therefore, the incoming government must ensure a more enabling business environment through increased investments in high-quality infrastructure, enhanced security, and a highly skilled citizenry.
These three lower the cost of doing business and are a magnet for attracting investors.
There are three government objectives for economic development. Jobs and income creation are the top two. Fiscal and physical improvements is the third.
A country with high unemployment rates, low wages and underemployment is typified and correctly so as having a loose labour market. Kenya is such today.
But job creation and income growth that leads to a better quality of life for everyone can correct this.
Meaningful job creation should therefore rank high on the next government’s priority.
The primary focus should be on per capita and not aggregated income growth.
For per capita growth improves individuals’ purchasing power and investment potential while aggregated growth is only but a paper tiger that may benefit only a few. Kenya’s jobless millions or underpaid labour force in a supposedly growing economy epitomizes the folly of measuring growth in aggregate terms.
Concomitantly, the incoming administration must focus on attracting new businesses
by reducing the cost of doing business through faster business registrations, superior public service, and zero tolerance to corruption while strategically investing in the education of the citizenry in critical sectors.
The benefits of this are threefold.
High end businesses contribute to more tax revenues for more enhanced development. They also provide better employment.
Superior human capital on the other hand drives and sustains economic prosperity.
Once a sound economic foundation has been put in place, the next priorities must be to maintain and enhance Kenya’s competitive edge.
Nairobi is already a global hub. This can be improved and replicated in at least one other major town in each of the 47 counties.
Here 2 opportunities present themselves.
The first is tapping and nurturing young skilled labour. In today’s service economy, ICT is the single most important determinant of development. The incoming government must invest in the right technology infrastructure and applications and the accompanying capacity building, and the time is now.
Research and development would be the second. There are no two ways about this. Proper funding for university research and development and their purposeful partnership with industry are the antidote.
Reliable infrastructure, responsive public service, guaranteed public safety and high-level skills development are the recipe for enduring economic growth that benefits all. In other words, create an environment that enhances entrepreneurship, stupid!
The writer is a development expert based in Washington DC, USA and a holder of a Master’s in Economics and Public Policy. You may reach him at [email protected]
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