GROWING KENYA'S ECONOMY

How to create jobs, wealth for Kenya's economy

There is no God-given reason why we should not embark on an aggressive programme of value addition in agriculture and pastoralism all over the republic

In Summary

• In our National Bureau of Statistics, the SGR, costing billions of shillings, had now entered our records as part of our national wealth, or GDP. 

• The higher the organic composition of capital the less labour is required to produce surplus value and accumulate profit as new capital.

President Uhuru Kenyatta inspects the Em-Bulbul SGR tunnel in Kajiado County.
President Uhuru Kenyatta inspects the Em-Bulbul SGR tunnel in Kajiado County.
Image: PSCU

When I was the Minister for Planning and National Development in the Narc government from 2003-05, the President charged me with the task of translating our manifesto into a five-year development programme.

Our manifesto was entitled "Democracy and Popular Participation." We interpreted popular participation not simply in its narrow political sense, but also in the wider sense of "the full participation of the people in their economy."

I was aware that it is quite possible for the people to live in an economy that is growing but not really be part and parcel of that growth, or, to be more accurate, be peripheral to that growth. 

 
 
 

So when we gave the title of our blueprint for implementing our manifesto as "Economic Recovery Strategy for Wealth and Employment Creation", a good number of people in civil society were mad with me.

They accused me of abandoning the poor and only paying attention to the rich just by talking about "wealth creation." I was actually quite shocked since our title meant creating wealth and employment, since the two should, in a "healthy" capitalist economy, go together.

In my class on political economy taught by professor Bert Hoselitz at the University of Chicago, I was told that capital and labour, though antagonistic to each other, must hang together in a capitalist economy.

Capital creates the space filled by the worker to create surplus value (unpaid labour), which is then accumulated as capital, and this propels the engine of growth over and over again.

But these days, we live in capitalist societies that may not be that "healthy".

Perhaps unhealthy capitalism is the nature of big capital all over the world, whether in the US, Canada, Nigeria or Fernando Po! Healthy capitalism is perhaps only found among small and medium enterprises where labour and capital are still closer to each other. 

I will give you an example. We have just finished building the SGR from Mombasa to Nairobi.

 

When this was going on, a hell lot of people got work - masons, labourers, engineers,  surveyors, cooks, lawyers, insurance executives and weather forecasters etc.

Once the railway reached Nairobi, a hell lot of people lost work, especially the labourers and non-skilled once. It was now the turn of pure professionals, who are not that many, to take over.

In our National Bureau of Statistics, the SGR, costing billions of shillings, had now entered our records as part of our national wealth, or GDP.

Never mind the fact that we borrowed heavily to build this railway. The money came in and created wealth here, not elsewhere.

It is the ability of the SGR to create further wealth by employing more people, carrying more goods as imports as well as exports and triggering further wealth creation in the rest of the economy that we should further look into.

We may, however, be taken aback when, even before we reap these growth dividends from the SGR, we begin repaying the loan rather heavily from the wealth created from other sectors of our economy.

So, while the Bureau of Statistics had already recorded that the SGR has contributed significantly to the growth of the economy by the end of 2018, the bureau was not yet in a position to tell us whether that growth will trigger other growths or could easily be a source of de-growth as we begin heavily servicing our loans on a rather low performing investment.

Let me widen the net a little, and bring in the tremendous real estate development in Kenya over the last couple of years.

President Uhuru Kenyatta and Uganda's President Yoweri Museveni in Mombasa on March 27, 2019.
SGR LOAN DEAL: President Uhuru Kenyatta and Uganda's President Yoweri Museveni in Mombasa on March 27, 2019.
Image: PSCU

All these have added to the growth of wealth, measured as GDP, in Kenya. And that is good. They have also have had some multiplier effects, with multinationals opening up their offices in Kenya and employing our professionals.

But the total number of people employed may not be that big, as substantial work in this sector is now outsourced to other offices all over the world and the Secretary or Office messenger are obviously endangered species.

 
 

Again with the above example, we note that the Bureau will obviously record figures of economic growth, but this could easily be classified as "jobless growth", and those who send their children to school so as to get jobs will justifiably complain that "we neither see nor feel this growth".

And they are right. So capital has learnt how to make profit with minimum involvement of Labour, a situation Bert Hoselitz used to characterise as "a very high organic composition of capital." 

As capitalism develops and uses more technology in producing goods and services, it employs less and less labour.

In other words, the higher the organic composition of capital the less labour is required to produce surplus value and accumulate profit as new capital.

This is the essence of capitalist development as it becomes more expanded and more global.

If we are not careful in an economy such as Kenya, we may find ourselves being mere producers of raw materials at cheap labour costs for a world capitalist system which blossoms, expands and leaves us behind.

This is perhaps what our people are resisting. But all is not lost. There is a way out.

The way out is to deliberately intervene in this global process of capital accumulation by intensifying production at our local level.

For example, there is no God-given reason why we should not embark on an aggressive programme of value addition in agriculture and pastoralism all over the republic with respect to our diverse land, vegetation and weather endowments.

If we link this up with the supply of appropriate machinery and technology inputs from vocational and technical training centres we shall create many more jobs and create much more grassroots wealth than we are doing at the moment.

That is wealth creation that reaches wider among the popular masses than that derived from high technology manufacturers.

Not that we abandon embracing high technology in our economy. Nay. Not so. But we deliberately balance it with low-level but efficient technology that brings our agricultural and SME production into the central matrix of our economy. 

I am, therefore, very excited about the current emphasis that the government is placing on technical and vocational training centres.

Linked to our polytechnics and geared towards providing appropriate technology and technical training for higher productivity at various levels of our economy, these institutions are bound to create more jobs and wealth than was ever dreamed of in our age-old import substitution industrialisation whose historical possibilities is now gone! 


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