Is Raila really bad for the economy as Jubilee suggests?

Sunday December 11 2016

Cord leader Raila Odinga addresses a press

Cord leader Raila Odinga addresses a press conference at Capitol Hill on December 8, 2016. Mr Odinga is neither good nor bad for the economy. PHOTO | JEFF ANGOTE | NATION MEDIA GROUP 

By DANIEL K. KALINAKI
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During a tour of Central Kenya last month, President Uhuru Kenyatta appealed to area residents not to vote for opposition leader Raila Odinga saying he was not good for the economy.

Accompanied by his Deputy, William Ruto, the President said: “When Kibaki was in power, the economy grew by close to eight per cent in 2007.

"When Raila joined the coalition government in 2008, the economy contracted to 0.5 per cent. This is not a man you want in government.”

This is a simple yet powerful message that is likely to resurface ahead of next year’s election but is it true?

First, we need to check the integrity of the figures Mr Kenyatta gave.

According to official figures from the Kenya National Bureau of Statistics, Gross Domestic Product (at constant prices) grew at 6.2 per cent in 2007 and by only 1.1 per cent in 2008. 

The discrepancy can be explained by many factors, including which figures one is looking at, but the core argument – that the economy grew at a much slower pace in 2008 than in 2007 – remains valid.

The issue, then, is to distinguish between causation and correlation – whether the slower growth was because of, or despite Mr Odinga joining the coalition government.

For this, and the wider argument – that Mr Odinga’s presence in government is bad for the economy – we need a lot more data than the two years.

So let’s expand the data from 2002 to 2013, again from official government data, and overlay it with who was in office and what was going on in the political-economic environment.

In 2002 the economy grew by 0.7 per cent, 3.1 per cent in 2003, 3.9 per cent in 2004 and 5.2 per cent in 2005.

UNTRUE STATEMENT

This was all under the Kibaki government in which, between 2001 and his sacking in November 2005, Mr Odinga was variously minister in charge of Energy, Roads and Housing.

This year-on-year growth continued into 2006 (5.6 pc) and into 2007 (6.2 pc), suggesting that economic growth wasn’t necessarily because of Mr Odinga and others dropped out of the government in 2005. 

In 2008 growth bucked its growth curve and plunged to 1.1 pc.

Then in 2009, with Mr Odinga part of the Grand Coalition, it rose to 2.6 pc, then to 5.7 pc in 2010, before slowing to 3.9 pc in 2011 and rebounding to five per cent in 2012.

That the economy rebound shows that the sharp drop in 2008 was an outlier caused by significantly adverse conditions – the post-election violence – not Mr Odinga’s presence in government. 

In fact, between 2003 and 2007 when Mr Kenyatta was the Leader of Opposition, the economy grew by an average of 4.8 pc.

Between 2008 and 2012 when Mr Kenyatta was part of the Grand Coalition government as Deputy Prime Minister and Finance Minister, it grew slower, by an average of 3.7 pc.

One could thus argue that Mr Kenyatta’s inclusion in the government put a brake on growth but this would, like the claims made in central Kenya last month, be inaccurate and fanciful.

The slower growth in that period was probably down to the lingering effects of the post-election violence as well as the financial crisis in key export markets in Europe and America, not the presence or absence of particular individuals from the government.

DETERMINING FACTORS

In summary, the facts do not support the accusation that Mr Odinga is bad for the economy.

This is not to say that the presence or absence of particular individuals in the government cannot impact on economic growth; in 2013 it dropped to 1.7 pc, the second lowest growth rate in a decade weighed down, possibly, by fears of a repeat of 2007/8 and the International Criminal Court indictments against the President and his Deputy. 

Growth has risen since, with the same leaders in charge, on the back of, among others, large infrastructure investments and lower crude oil prices.  

It is quite possible that the vacation of the ICC charges helped boost confidence in the country’s political stability but while leaders can craft and influence policies that drive or hinder economic growth, their mere presence in government does not necessarily drive aggregate demand for goods and supplies.

Mr Odinga is neither good nor bad for the economy but whichever policies his government pursues, together with external factors such as the state of the economy, would determine growth.