Handshake or Handcheque, Real Economic Reforms Needed

As the dust settles on the first anniversary of the handshake between President Uhuru Kenyatta and opposition chief Raila Odinga, the event deserves a commentary.

The walk by the two gentlemen down the stairs of Harambee House under the scorching sun, adorned with shining designer suits on 9^th March 2018 momentarily throwing in smiles and snippets of hidden secrets remains clearly imprinted in our memories.  Like the biblical Israelites Passover, this event in Kenya’s history is among the key occurrences worth discussing with my daughter years to come.

But besides the handshake, Kenya still needs serious economic reforms. Otherwise, this becomes just another pipe dream, too much hype but little to show.

Kenya’s public debt is unbearable. Our current debt stands at approximately Kshs 5.6 trillion. This is a sharp increase from 2008 by around 42.8%, yet it may rise to 7.7 trillion shillings by 2022. In essence, this means that the country owes more than 56% the value of its economic output (GDP).

The debt burden is a mix of both short term and long term obligations whose weight is normally felt by Musangi and Wanjiku. The most likely scenario is that, with the external debt almost at its ceiling, the government is probably going to borrow more domestically. With interest capping, then banks will possibly view this as a safer investment platform as it has happened in the last two years. We will experience low private sector credit growth and businesses suffer more due to lack of capital access. Again, let us brace ourselves for a tougher 2019.

It’s hard to talk about corruption without alluding to my beloved country. The amounts in question are insurmountable, the individuals involved are perturbing.  Billions of shillings have been lost through fraudulent procurement transactions and some cases of circumventing laid down government systems leading to massive losses of public wealth. The fight against corruption seems focused, but lacks political goodwill hence keeps encountering hurdles and blocks of deliberate resistance.

The event this week of a young lady who resigned to fate and gave birth at Uhuru Park is a sign of desperation and a sign of no confidence, that the general public finds it hard to trust government institutions to take care of them even in times of lack. Photos of drought-stricken communities in Baringo and Turkana exemplify a neglected community and a country at war with itself. The economic means for these communities, hugely reliant on livestock seems to have diminished.

Revenue generation seems to lack the progress and innovation required in this generation. Those who remember in the 2005 -2006 fiscal year, KRA managed to exceed collection targets by KSh4 billion. This is not the current scenario. Coupled with pilferages within government systems, reported misses on annual targets, ballooning recurrent expenditure and less accommodation of innovation in economic designs, we will remain in deficit and reliable on debt to finance development.

Finally, there is a mismatch between the government agenda and the reality on the ground. Vision 2030 seems to have taken a periphery despite the size of projects launched during the Kibaki government, which seemed to steer Kenya to the right path. One example is Konza City– a KSh1.5 trillion technology metropolis in Machakos whose implementation was delayed, as we lose most tech-related business to Kigali Innovation City. Rwanda’s tech city was launched in 2015 is slated for completion next year and has experienced remarkable progress.

So, as we celebrate the handshake, if outstanding gains are to be realized, Kenya needs tremendous economic restructuring. This process requires strong political will and acceptance to install sustainable governance systems.