Bold lake region economic plan could be more innovative
What you need to know:
- The blueprint identifies seven flagship areas that are in turn merged into three sectors namely productive sectors, enabling sectors and social sectors.
- Just because sugarcane forms the largest industrial crop in the region doesn't mean that it also forms the main gateway for value addition and income growth.
- Given that the region also forms Kenya’s borders to both Tanzania and Uganda, the commodities market has great potential in a regional bulking centre.
A professional colleague handed me the Lake Region Economic Blueprint, developed on behalf of some counties by a business advisory firm with support from the Ford Foundation.
It represents the quest by counties situated close to Lake Victoria to foster growth and improve the welfare of the people resident in these counties. Towards the end of its preparation, Kericho, Bomet and Trans Nzoia applied to join the initial ten comprising Busia, Bungoma, Homa Bay, Kakamega, Kisii, Kericho, Kisumu, Migori, Nyamira, Siaya and Vihiga.
While I am a sceptic of documents and master plans purporting to direct economic and social development, I find this quest laudable for many political and economic reasons, primarily because these 10+3 county governments have initiated a development process independent of the national government.
While the plan wisely cites the intention align itself to prescriptions of Vision 2030, it also signals that county governments, whether alone or corporately, have ideas that they wish to implement independently.
This suggests that the wheels of the devolution train are moving ahead and are unstoppable even if the train can be momentarily delayed at some stations.
While these plans will not all be a success, failure is an experience that central government has had in abundance, the record of which requires modesty on its part.
Contained in the blueprint are interesting insights and connections that inspire and others that repeat clichés of development thinking in Kenya. The blueprint identifies seven flagship areas that are in turn merged into three sectors namely productive sectors, enabling sectors and social sectors.
Agriculture and tourism are fronted as the productive sectors in which the 10+3 counties will drive growth and improve livelihoods. It is difficult to argue against the idea that there is need to provide incentives for investments in tourism in the region.
Coming to the proposals on agriculture, it is unclear whether a sufficiently critical lens was applied to the analysis, because the blueprint maintains the false dichotomy between food crops and cash crops.
A grand plan ought not to reiterate this false dichotomy because food products are also amenable to exchange for cash provided surpluses are generated. The implication is that the errors of agricultural policy analysis at the national level have informed this plan.
LOOK AGAIN AT SUGARCANE
This is a material finding because from this false dichotomy comes emphasis on intensifying production of cotton and sugarcane. For sugarcane, this is a curious proposal because the plan states that of the 10 counties in the plan, Kakamega County has the highest poverty head count and is also the site of highest sugar production.
Just because sugarcane forms the largest industrial crop in the region doesn't mean that it also forms the main gateway for value addition and income growth.
Indeed, poverty levels in the regions most dependent on sugarcane growing suggest that the people of these counties are locked in a crop that correlates highly with poverty.
A bolder plan consistent with the objectives of welfare enhancement ought to have cautioned on its continued production, if not suggested the abandonment of the crop altogether.
Another diagnosis in the blueprint makes the very intelligent suggestion of the development of a commodities market. This is informed by the understanding that agriculture is a major activity of households, and seeks to capture efficiencies and bulking of these commodities through efficient trading.
Given that the region also forms Kenya’s borders to both Tanzania and Uganda, the commodities market has great potential in a regional bulking centre. The blueprint mentions in passing the proximity to these countries but its advantage as a gateway to trade within East African Community (EAC) could be more prominent.
WHY A REGIONAL BANK ?
In the area of infrastructure investment, the blueprint stands out for bold ambition. It seeks to build a ring road connecting the original ten counties, which is important because it requires a considerable amount of investment in partnership with the national government.
Here though, the blueprint shows a dearth of innovation in the financing of infrastructure by relying on conventional methods such as direct investments, foreign funding and public private partnerships. Bold ideas such as a joint county infrastructure bond could be pioneered by the 10+3.
The blueprint proposes the formation of a regional bank as a solution to the finding that this region shows low penetration by banking and financial institutions. Whether this low penetration is driven by the low level of urbanisation or poor monetisation of agriculture is unexplored, which raises doubt as to whether establishing a regional bank is an appropriate policy response.
I doubt the counties should spend public money to establish a facility for which no demand has been demonstrated, but which will surely prove lucrative for advisors during its establishment.
For their boldness, the 10+3 deserve good luck, but this plan can get them only 65 per cent of the way there. The ideas contained in it ought to be improved by working with a bold but smaller and smarter programme.
Kwame Owino is the Chief executive Officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame
