Blame incoherent government policy for the Uganda sugar debacle
What you need to know:
- In the sugar debate, the discourse adopted increasingly intransigent tones, giving way to partisan and ethnic stereotypes.
- There is little policy coherence in Kenya’s sugar industry, and the Executive will do what is politically expedient at the time.
- Unlike the pretend analysts who claim that this political discourse is bad for the economy, I think the issue should be fully ventilated.
Interns and young analysts at theInstitute of Economic Affairs are often reminded that applying the principles of economics to public affairs does not require a genius.
I am now compelled to insert a qualification, that it is disingenuous to cover political prejudices in economics language through pretend analysis.
There is no doubt that the quest to open up the country to freer trade in agriculture or other goods, with Uganda or other country, is welfare-enhancing and worthy of unqualified support.
Whoever fails to appreciate the value of unilateral liberalisation of trade will not benefit from the rest of this piece and should probably take a detourhere first.
Trade liberalisation sometimes creates divisions and hardens political opinion between those who favour market opening and those who favour closed economies. Yet there is unequivocal, high-calibre economic research showing that free trade is good public policy and that it is consistent with both political and economic freedoms.
This is not to state that the political persuasion and horse-trading that brings about liberalisation is easy, but just to assert that free-trade societies are also wealthier, safer and generally have more civilised political engagement than we see in Kenya.
The reception that announcement of this policy choice has received in western Kenya betrays not only the understanding of its political leadership, but also that many Kenyans retain recent experience, and suspicion, that governments in Kenya have pursued policies intended to deliberately impoverish entire regions.
'VITUPERATIVE INDIVIDUALS'
What the policy has resurrected is the fear that personal and community fortunes can still be determined by policies of the Executive. All these calls for people to vote wisely and be in “government” reinforce that fear. It’s not enough to tell people to be rational when their experience tells a different tale.
It is clear that distrust of government that runs political campaigns based on open exclusion and characterisation of regions as poor and non-receptive to development plays a big part.
A package of Lugazi Sugar from Uganda in a Kisumu household on 19 August 2015. Ugandan sugar is making its way to households in Kenya amid heated politics surrounding its importation and sale. PHOTO: TONNY OMONDI | NATION
This discourse has not been helped especially by the arrogant engagement of the Deputy President in communicating his own disappointment with the leader of the minority party at every turn and on every issue.
While the more rational economic argument for liberalising sugar imports has been with the administration of the majority party, there is an acute failure to realise that the politics of free trade require communication from less vituperative individuals. Perhaps the Cabinet Secretary for East African Cooperation is most suitable for this task.
Every keen observer of policy discourse in Kenya understands that a number of Kenyans communicate in mainstream media and other alternatives specifically to support political positions.
In the sugar debate, the discourse adopted increasingly intransigent tones, giving way to partisan and ethnic stereotypes. For instance, the argument became that citizens of western Kenya are less able to run economic activity and must rely on government assistance, often without showing gratitude or maturity.
This position may not be officially endorsed by political leadership of the majority party, but it signalled a belief that if you fail to persuade people, then you can get the Twitter head prefects to insult them.
Coming back to economic policy, the subvention offered to the Mumias Sugar Company two months ago and the subsequent opening of the markets provides a final lesson, that there is little policy coherence in Kenya’s sugar industry, and the Executive will do what is politically expedient at the time.
MISPLACED ANIMUS
As I stated then, it was bad economic policy to provide subvention to a corporation with private shareholders, poor management and poor economic reasoning.
While the President meant the best on both occasions, the incoherence only led to questions about his intentions when the policy choice did not agree with its expected results.
If the Executive wishes to run to the rescue of every failing firm, then its policy must be published and coherent.
Unlike the pretend analysts who claim that this political discourse is bad for the economy, I think the issue should be fully ventilated. This may lead to a realisation that the sugar industry in Kenya may already be beyond salvation and the animus towards Ugandan exporters entirely misplaced.
When Kenyans get to focus on the options, the Institute of Economic Affairs (IEA-Kenya) would be willing to provide a concise, reasoned memorandum with options for farmers and landowners.
And we promise that unlike the political pundits designing job programmes based on zero understanding of how markets function, we will not send an invoice demanding 37 million shillings per bullet point on a PowerPoint slide.
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
