On March 4, 2013, Kenya successfully concluded peaceful elections under the new Constitution of Kenya 2010, ushering in new leadership in a devolved form of government. President Uhuru Kenyatta and Deputy President William Ruto, at the apex of this leadership, are faced with the surmountable task of revamping economic growth and implementing the new constitution while seeking to deliver on promises made to Kenyans during their campaign. The new government is faced with a tight resource environment within which to maneuver, hence the need to carefully identify priorities that will facilitate a quantum leap of the economy in the next five years, including measures to achieve an appropriate balance between private and public sector investment in the economy.
Kenya’s economic performance in the last five years has been on the upswing from its low 2008 performance, but still faces some challenges. In 2010, 2011 and 2012, the economy grew at 5.8 percent, 4.4 percent and 4.5 percent per annum, respectively. It is projected to grow at an annual rate of 5.1 percent, 6.0 percent and 7.1 percent in 2013, 2014 and 2015. However, these growth rates remain below the 10 percent per annum target envisaged under the national development blueprint Vision 2030, and they remain removed from the double-digit growth rates promised by the Uhuru administration. Government resources are stretched with a rising wage bill estimated at 458 billion Kenyan shillings ($5.6 billion)—about 12 percent of gross domestic product (GDP). While revenue performance at approximately 24.3 percent of GDP remains strong, the pattern in the growth of taxes has not aligned with overall government policy aimed at encouraging savings and investment. Income taxes continue to contribute more than 35 percent of the total revenue. These income taxes are growing faster than their respective tax bases.. Moreover, Kenya’s population is growing at 2.7 percent per annum, accompanied by an ongoing demographic shift: The proportion of the population that is youthful, relatively skilled and urbanizing and either underemployed or unemployed is growing quickly. This shift compounds the pressing need for resources to implement devolved governance structures.
Geopolitically, regional and global situations show some signs of both stability as well as emerging threats. Kenya may reap from the peace dividend with the renewed efforts to fight the conflict in Democratic Republic of Congo and Somalia. However, the al-Shabab threat still remains latent. Globally, the International Monetary Fund has downgraded global growth projections. According to the April 2013 World Economic Outlook, the United States is experiencing low growth with lack of a credible medium-term fiscal plan to reduce its debt, while the European Union is facing financial strains arising from the sovereign debt crisis. For Kenya, these developments have potentially adverse implications for remittances, demand for exports, as well as development assistance and foreign investment from these countries.
The Jubilee Manifesto, the electoral platform on which the Uhuru administration was elected, has the theme of securing prosperity for all Kenyans. It aims for a future with the promise of prosperity and opportunity for all, built around the pillars of unity, the economy and openness. It describes 23 programs covering elimination of ethnic division; keeping Kenya safe and secure from terrorists; making the country a strong trading partner in Africa; securing Kenya’s legacy as a sporting nation and celebrating its culture; building a healthier Kenya; empowering youth and women; increasing social protections; building an enterprise economy; leveraging Kenya’s information and communication technologies (ICTs) advantage; promoting tourism; making Kenya a property-owning democracy through land reform; securing Kenya’s energy supply; ensuring safe and clean water for all; enhancing agriculture and food security; protecting Kenya’s environment; providing decent housing for all; creating a world-class transport and infrastructure system; improving governance and securing devolution. President Kenyatta, in his speech to the joint session of Parliament on April 16, 2013, elaborated a nine-point plan seeking to realize the Jubilee Manifesto. The plan involves pursuing honest and transparent government, with public services that are open and accountable to the people; swiftly ending corruption; implementing devolution and the constitution in full; protecting citizen rights and freedoms; ensuring peace for citizens; creating jobs; streamlining government; and extending basic services of water and electricity to all Kenyans.
The resources required to facilitate implementation of the Jubilee Manifesto are huge, but in no way unattainable. In the broad context of these national, regional and international challenges, we opine that, in order to address them and lay a firm foundation for the delivery of the Jubilee Manifesto and the electoral promises made, the Uhuru administration will need to prioritize. It will need to do so because it has to prepare the economy and people of Kenya to deliver these promises. It needs to take robust steps to not only generate more resources, but to also use them efficiently. It will need to ensure that the power of public procurement not only creates first-round investment jobs, but also provides resources for re-investment in the economy and generates value for money. Ensuring a more secure and cohesive Kenya will be a critical input in reducing the transaction costs in the economy. These challenges facing Kenya and the goals targeted by the Uhuru administration will require a focus on the following six priorities.
- The first order of business will be the creation, recreation and re-engineering of government at both the national and county levels, which is necessary for a lean, rationalized and well-coordinated government that can focus on identified national development priorities. Unity of purpose must be secured between the two levels of government to avoid unnecessary confrontation and tensions raised, including potential resource waste. This effort must deal with alignment of mandates and remove mandate overlaps to secure better service delivery to Kenyans, enhancing its capacity and capability to make and implement public policy, making it more open and accountable, ensuring that public agencies are able to respond and adapt to rapidly changing circumstances, as well as improving their efficiency and effectiveness. It will require more focused performance management, rationalization of processes and procedures to remove unnecessary red tape, as well as a review of existing and planned policies and programs. It should be about building a joined-up, functional, cost-effective and efficient government that will ensure smooth and speedy implementation of policies and programs necessary for economic growth and development.
- Dealing robustly with insecurity in all of its manifestations, internal and external, will be a herculean but doable effort. Cases of insecurity and disregard of the law must be dealt with through robust and visible responses by the security and judicial apparatus. It will require an expansion, on a priority basis, of the capacity and capability of the law and order organs to ensure that crime is not only detected, but dealt with conclusively. Security at Kenya’s borders should be intensified to filter out criminal elements entering the country. Achieving security and safety will be important in the overall effort of reducing the cost of doing business and creating an enabling environment for domestic and foreign investors. The presence of the Kenya Defence Forces (KDF) in Somalia is testimony of this commitment. Moreover, the KDF must be allowed to complete their work and domestically; the same resolve must be displayed by the administration in dealing with existing and emerging security challenges.
- Creating meaningful jobs on a large scale and across the country is imperative. Active participation of both the private and public sectors will be required to create the 1 million jobs annually on the scale and magnitude required to reduce unemployment levels. Pursuing an export-led growth strategy, as enunciated in the Jubilee Manifesto, will require a robust shift from the current strategies that have seen minimal expansion of the manufacturing sector, to more dynamic ones that will rapidly expand investment in infrastructure, agriculture, tourism, ICTs, education as well as develop value-adding light manufacturing industries, which are labor absorbing. The capacity and capability of the domestic construction industry must be enhanced on a priority basis. This will not only ensure that the youth get jobs but will also economically engage women, thus increasing the chances of eradicating poverty. These processes will provide the platform for achieving double-digit growth on a sustainable and inclusive basis as per the Vision 2030 strategy. Productivity improvement and competitiveness of the private sector will also be essential to export-oriented growth.
- Pursuing food and nutrition security must be an overriding objective of the Uhuru administration. It will require targeted investment to secure better advisory services; expand and improve agro-technologies to increase production, preservation and better utilization of food; increase investment in high-value traditional and non-traditional foodstuffs as well as enhance access to and reduce the prices of inputs. Moreover, it is important that the country moves from dependency on rain-fed agriculture to irrigation- and technology-based agriculture to ensure food and nutrition security all year round. Relevant agricultural sector institutions need to be strengthened. Food supply chain linkages and value-addition processes must be supported by the government. The target is to be self-sufficient in food production, divert contingency funds used in drought relief to development projects and significantly lower the cost of living in urban and rural areas.
- Rebuilding Kenya’s image regionally and globally is a key linchpin in ensuring that the world understands its people and what is happening in Kenya in a manner that does not constrain the flow of much-needed investments and tourists. More importantly, Kenya will need to be more aggressive in securing existing markets, pursuing new ones and generally creating more and better trading opportunities for Kenyan products. Economic and commercial diplomacy must strongly come to the fore. Kenya’s oft-stated desire to pursue an export-led growth and development strategy will not take off if both the existing and new markets for its products are not aggressively pursued and utilized, trade in services is not increased and the quality and diversity of products are not expanded The link between state organs responsible for trade and foreign affairs must be closer than ever before, including stronger and more effective application of its embassies and high commissions abroad.
- Reinvigoration of the private sector in all its variations will be essential in ensuring that existing and new opportunities are fully taken advantage of. Engagement with and building the capacity and capability of the domestic private sector to take part in the opportunities that will become available should be a running theme. This move will include active measures to secure the position of youth as business leaders and not just as providers of labor.
Along with the six priority areas, the president has to unite Kenyans by ensuring a sense of belonging by all in his government. He must address, in a clear and robust fashion, the schisms that may have been opened in the national social fabric arising from the outcome of the recently concluded general election. Furthermore, the government has to deliberately manage expectations of opponents and supporters. This will be important in affording it the necessary space to execute its development agenda. In this effort, the new government will require the full support of all of Kenya’s development partners.
Implementation of these priorities will allow the Uhuru administration to leverage existing resources to build a secure foundation for the more ambitious programs it must put in place to achieve the goals of robust double-digit growth that will create 1 million jobs annually across the entire country, while ensuring that the country remains secure and united. By ensuring a lean and performance-oriented administration, President Kenyatta will free up resources gained from elimination of waste, while ensuring a more coherent, focused and joined-up government. The key words in 2013 for the Uhuru administration should be prosperity, accountability, inclusiveness and security.
It’s hard for me to see how [a no deal Brexit] would benefit the EU at all. By nature of the single market, you’ve got a heavily integrated economy that would come to a screeching halt.