When some say we can actually beat sanctions, this is the stuff of fantasy

Tuesday December 4 2012



When you hear presidential candidates speak at political rallies, they don’t come through as if they have a good grasp of economic issues or policies.

Economic issues have been relegated to the back-burner. The obsession of the moment is ethnic arithmetic and deals between political chieftains.

I don’t get the sense that the presidential candidates understand where we are right now — where we are likely to go in the medium term — and what must be done to put the country back to the economic growth path that was interrupted by the violent elections of 2007.

Without any qualms or shame, they emerge from smoke-filled rooms to announce to us that they have just selected ‘technical teams” to work on how to share plum public service positions.

Technical teams? What is so technical when all you are doing is shamelessly haggling over how to apportion public property between your tribesmen?

These ethnic alliances are not about a better future for the ordinary Kenyan citizen. Indeed, patronage politics is what has held back our economy from realising its full potential.

It is only in Kenya where you can introduce new anti-corruption laws, establish overlapping anti- corruption institutions, introduce a new public procurement regime complete with a system for appeals, introduce an ethics system requiring all public servants to declare wealth, and still end up with more corruption.

When you organise politics around coalitions of ethnic chieftains, the President will be permanently under pressure to expand the public sector because he or she has to accommodate the interests of all the tribal chieftains.

Appointments based on agreements between political leaders are the reason why we have so much indiscipline within the civil service. As a top civil servant, you are forced to conduct your business as if you are only accountable to the person who appointed you.

Is it, then, surprising that we have so many cases of unpunished corruption within government?

I want to see competing visions for the economic future of the country. I want to hear fresh ideas on how to finance and manage the over-extended State, which we must put in place after the elections.

A devolved system of government is a good thing, but it is going to come at a big economic price. This thing could destabilise the finances of the government in major ways.

I am worried about the trends I see on the country’s external account. The out-going administration of President Kibaki borrowed excessively and threw all the money they could marshal into building roads, ports, airports and energy projects.

But the flipside has been a widening gap in our external account that has left the shilling permanently under pressure.

Compare the following statistics. Excluding oil, the exports of goods and services used to cater for 109 per cent of its imports in 2003. Last year, our exports could only cover 79 per cent of our non-oil exports.

It is a very worrisome trend. The current deficit has increased from $ 3.3 billion in December 2011 to $ 4.3 billion in September last year.

How can you argue that we don’t need the rest of the world and we can survive through international economic sanctions with these kinds of numbers?

When some of them argue that this economy is strong enough to survive through sanctions, they are engaging in fantasy.

Since last year, we have been forced to go to the international market twice to borrow money to fund government operations. Just the other day, we were there to borrow billions to pay for the biometric voter kits.

We are planning to borrow more through a euro-bond next year because borrowing in the domestic market has become too expensive for the government. Right now, we are on an IMF programme.

The point is this: Kenya’s economy is perhaps more integrated into the international market than any of its peers in sub-Saharan Africa.

We are more exposed to sentiment in the international market than any other country within the region.

Let’s hope that we will emerge from the elections with better relations with the rest of the world.