No, you cannot liberate the economy from politics

Newly independent African countries faced two daunting challenges. The challenge of political development — namely, how to forge disparate tribes and races into stable nations; and the challenge of economic development — namely, meeting the high expectations of material improvement that the new citizens harboured.

The founding fathers viewed this as a choice of one or other. Only a few chose to focus their energies on political development, Nyerere being the best example. Ours chose to put their energy into economic development. This began with the dismantling of the Independence Constitution and was consolidated in Sessional Paper No 1 of 1965.

The core of the Sessional Paper was what we call today trickle-down economics: “Problems such as Africanisation, education, unemployment must be handled in ways that do not jeopardise growth. The only permanent solution to all these problems rests on rapid growth.”

They (genuinely) believed that the economy would grow fastest by investing in what were then considered high-potential areas: “To make the economy as a whole grow as fast as possible, development money should be invested where it will yield the largest increase in net output.”

And they persuaded themselves that reinforcing existing inequities would not become a political problem: “This approach will clearly favour the development of areas having abundant natural resources, good land and rainfall, transport and power facilities [but] Vigorous implementation of traditional political democracy [and ]African Socialism will eliminate the factors supporting a class system.”

On both counts, they were mistaken. On economic growth, in the theory and experience, poor countries grow faster than wealthy ones, just as start-up businesses have more growth potential than big mature ones. The same applies to regions within a country. The decision to neglect the so-called low potential areas is the main reason why the post-Independence economy ran out of steam so quickly.

On distributional grievances, dissenters did not heed Kenyatta’s call to end “debates on theories and doubts.” They had to be silenced. Thus began the succession of retrogressive amendments to the Constitution, right up to the introduction of the single-party clause, Section 2A. Rather than the Constitution governing and guiding policy, the Constitution was subordinated to the policies of the government of the day.

By 1990, the political system was arguably more repressive than the colonial administration at any time other than the Emergency. A little spurt of economic growth following the 2002 general election tempted some members of our economic elite to entertain the thought that we could survive our political backwardness. They opined, smugly, that the economy had finally been “liberated” from politics. But reality was lurking just round the corner.

Political development is the foundation of economic development. As Adam Smith, the patron saint of capitalism, famously said, “Little else is required to carry a state to the highest degree of affluence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

The Constitution we inaugurate today heeds Smith’s wisdom: Economic development is built on a sound political foundation. The Constitution has, in my view, three important economic pillars. The first is the clear separation of powers between the three arms of government.

This is widely seen as reducing the powers of the president. Far from it in my view: What it seeks to do is strengthen the other two arms, in particular the judiciary, which remained emasculated by the executive as parliament was liberated by the return of multiparty politics.

One provision that has escaped discussion is the establishment of a Judiciary Fund, which gives the judiciary considerable degree of financial independence from the executive. I should hope that the judiciary will reciprocate by rendering a more than just tolerable administration of justice.

Second, the new Constitution responds to distributional grievances, particularly the regional development disparities (because geography and ethnicity are intertwined, these grievances fuel ethnic political mobilisation.) This it does by devolving at least 15 per cent of national revenue. One only needs to contemplate the impact of CDF, which devolves a mere 2.5 per cent of revenue, to realise the potential impact of devolution.

Third, it legitimises, formalises and makes transparent the politics of resource allocation. It also shifts the theatre of public resource distribution politics from the executive to the legislature. This should free the national executive, that is, the president and Cabinet to concentrate their energy on national affairs.

Some opinion leaders have argued that government will be too big and costly. Let us do the math. The whole governance edifice — that is, elected and appointed officials named by the Constitution — numbers just under 2,500. Now, if each of them were to cost us what we are currently paying MPs, this translates into just about Sh25 billion, which is 2.5 per cent of this year’s trillion-shilling budget.

I like to think of democratic governance as an insurance policy against violent conflict and tyranny. As vehicle owners, we pay upwards of 4 per cent of the value of our cars every year for insurance cover. My view is that 2.5 percent is a more than fair insurance premium against state failure — I’m sure that our Somali and Congolese brothers and sisters would concur.

Another criticism from business is that the Constitution is all about distribution of the national cake, with nothing said about baking it. This argument, I am afraid, is a throwback to the trickle-down economics of Sessional Paper No. 10. The distributional grievances in Kenya are not a trade-off between production and consumption.

Rather, they are about marginalisation and exclusion of some regions and large sections of society so that they are unable to realise their full economic potential. “What improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” This is not Marx. It is Adam Smith.