Trade blocs, not secession, will help poorer regions to develop

Tuesday January 2 2018

Lake region economic bloc

Governors from the Lake region speak at the Grand Royal Swiss Hotel in Kisumu on November 9, 2017 where they said they had resolved to form a regional economic bloc. PHOTO | TONNY OMONDI | NATION MEDIA GROUP 

By BETTY M. GACHIRE
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The latter part of last year was dominated by talk on secession, which is not likely to go away soon as its advocates still allege marginalisation.

The proponents of secession claimed it would cure alleged marginalisation, which they said contributed to their regions’ underdevelopment. What has not been clear is if, indeed, secession would actually solve the problem of underdevelopment.

At the formation of the United Nations in 1945, there were about 76 independent countries. Today, there are almost 200 nations. The disintegration of the former USSR opened the floodgates for secession. It has also promoted a discussion on the economic viability of secession and if the size of a country matters.

One of the leading economic analysts on this topic is Joseph Schumpeter.

EDUCATION

He states the benefits of a larger country as, first, the lower per capita costs for public goods such as infrastructure, security, healthcare and education. This is because when you have many taxpayers the costs will be shared among a larger group, therefore reducing the individual costs.

This is particularly an important point to ponder because the regions that are said to be marginalised and underdeveloped have been depending on the tax redistribution from the national government to the county or from the richer to the poorer regions.

This is why poorer regions would want to form larger countries to include the richer regions while the latter may prefer independence so as to avoid sharing resources.

Poorer regions need to ponder on the expenses of forming a new government as the inability to invest in public goods can only lead to more underdevelopment.

A second issue to consider is that a larger country (in terms of population and national product) is less subject to foreign aggression.

AGGRESSION

This is because, with a larger population, there is capacity to form a military for its defence and its sheer size alone can detract aggression.

Thirdly, the size of the country affects the size of their markets. A larger market increases productivity and economies of scale. This is the reason why, globally, many countries are partnering within their geographical regions to form regional trading blocs.

The formation of regional trading blocs has become an important way of protecting countries’ trade and particularly helping poorer regions to integrate and come out of economic recession faster than if they were alone.

This is why the Kenyan government has been working hard to ensure the success of the East African Community (EAC) because all the region’s countries will reap better trade benefits if they worked as a single common market as opposed to individually.

GLOBAL MARKET

This is crucial for African countries that are the last to industrialise and will face stiff competition in the global market. They must, therefore, take advantage of their internal market for economies of scale and promote efficiency of their products regionally before expanding to the global market.

However, the disadvantage of a big country is that ethnic diversity increases and, therefore, more individuals and regions will be dissatisfied with the central government.

It is for this very reason that our Constitution allows for devolution, which would “recognise the right of communities to manage their own development, promote their own interests…while fostering national unity by recognising diversity” (Article 174).

Given that there are more benefits in maintaining Kenya’s territorial integrity, those calling for secession need to capitalise on devolution to strengthen their regional economic policies so as to get the benefits of size while promoting their economic interests.

MERIT

However, the right for communities to promote their own interests does not mean a misinterpretation of the County Government Act as Kiambu County has done. Article 65 (1) and (2) of the County Government Act sets out the requirements for hiring in counties.

The provision for 70 per cent of workers to be from the dominant ethnic community is only meant for county government jobs and not any other within the counties. However, hiring must be done considering merit, fair competition and representation of the diversity of the county as the overriding factors.

Secession or balkanisation is not in Kenya’s economic interest and those agitating for it are only doing so for their own political mileage.

Ms Gachire is a lecturer at the Kenya School of Government, Nairobi. [email protected]