Managing Kenya's economy is becoming a political matter

There is a common view that if Kenyans argued less about choices, rights and politics, and concentrated more on “matters economy”, then the country would more easily zoom into proper middle-income status.

This is an extremely absurd statement. Those who make it are often merely disapproving of a certain political style and confuse that for the substance of policy arguments.

Whatever a person’s economic or political ideology, it is clear that the stewardship of the Kenyan economy is becoming a political matter, for several reasons.

The first is that every Kenyan now understands that both the President and the Deputy President hold the view that the country’s economy is sound and well.

The mere fact that the Executive’s leadership states in public that the economy is sound against a serious cash problem, record deficit, growing national debt, declining terms of trade and successive downward revision of growth targets must alarm any student of economics.

I concede that economists and social scientists receive degrees designated as “Arts” but that’s not to mean that those holding credentials marked “Science” should ignore the obvious.

Unless the nation’s leadership uses different measures to understand the state of the Kenyan economy, it is not right to claim that the ship is sailing well.

This disconnect between the stated position of the Executive and the reality of numbers generated within the Treasury and the Central Bank leaves me alarmed enough to conclude the state of the economy is a political issue after all.

Thanks to the new Constitution and the rights that it gave to Kenyans, there is a more open discussion about public spending and revenues.

INSUFFICIENT TRANSPARENCY

It is evident that in spite of the statements supplied to Parliament and the Press by the Treasury, there are troubling issues around the nature of debt contracting and the management of accounts for revenues the government has received.

As these questions are being debated, the only certain thing is that public debt is rising rapidly. Debt contracting is rising while questions about older public debt have not been resolved.

While a partisan approach to unravelling the question of the Eurobond contracted a year ago remains, the insufficient transparency and changing narratives around it have infused politics into the state of Kenya’s debt.

This may not be ideal, but as a citizen I much prefer that all arms of government be held to higher standards of transparency and proper conduct.

We cannot just believe what is declared to us because the Treasury is managed by truly accomplished professionals.

If there’s a place for politics in ensuring improvement in public affairs, the budget must become the centre of it.

All that Kenyans should demand is that the accountability game is played with minimum partisanship.

Analysis by the Institute of Economic Affairs shows the difference between total spending and revenues received by the public sector was 56 per cent in the period from January to August 2015. What this means is that spending is far ahead of collections and other revenues.

Is it any surprise that there is a problem with “cash flow” today?

TIME FOR A DEBT CLOCK

That difference is covered by borrowing, which adds to the total debt borne by Kenyans. I remain unconvinced that the gap will be adequately covered by tax collections during the year. The presence of public borrowing from one source to repay another lender means there is arguably inbuilt momentum towards more debt for the medium term.

For those who doubted, it is clear now that the decision not to adjust the salaries of teachers at this time was correct.

Without major reductions elsewhere, it is not clear to me that those wages would be affordable. This situation requires that the tax and debt burdens in Kenya be an everyday discussion and if that is political, then so be it.

It is also time for Kenyans to have a large debt clock placed prominently in the central square of every large city to show the minute-by-minute growth in the total stock of debt, together with the implied liability per working Kenyan.

In that way, one feature of Kenya’s economic progress, or lack of it, will become so salient that it will support more informed dialogue.

At a minimum, it will ensure that Kenyans see the irony of a minority coalition that is alarmed at fast-growing debt, but that was urging the Executive to load more debt onto Kenyans by raising teacher pay just weeks ago.

That would be good politics meeting sensible economics, and then we could say that the economy is sailing well. Not today.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi, Kenya.