Kenya, like India, must choose its pathway to prosperity more carefully

What you need to know:

  • India cannot pollute her environment, as China did, to grow. A strong civil society cannot allow that.
  • For any developing democracy to succeed without resorting to benevolent dictatorship, there must be a thriving civil society. 
  • Kenya will never see any entrepreneur evolve from such funds as Uwezo Fund or Women Entreprise Fund. 
  • During the conservative rein in Western capitals, the Bretton Woods institutions were urging that we sell public enterprises, and we did. 

With a population of approximately 1.3 billion, India is undeniably the largest social democracy in the world. 

They did not become a social democracy by accident.  The preamble of their 1949 Constitution reads:  

We the people of India, having solemnly resolved to constitute India into a Sovereign Socialist Secular Democratic Republic and to secure all its citizens: Justice, social, economic and political; Liberty of thought, expression, belief, faith and worship; equality of status and of opportunity; and to promote among them all Fraternity assuring dignity of the individual and the unity and integrity of the nation…, do hereby adopt, enact and give to ourselves this constitution.

Although India has not achieved these aspirations that their forefathers had at independence, it is a democracy of repute.  The citizens here actively participate in politics and civic life. 

To demonstrate their political rights, voters in state elections in Delhi gave popular Prime Minister Narendra Modi, who was elected barely nine months ago into office, a “whipping”. 

An upstart party, Aam Aadmi Party (Common Man Party), pledging to fight corruption won 67 of the 70 seats in Delhi.  On Television, Arvind Kejriwal, AAP’s founder and formally an anticorruption activist told his supporters, “This is a victory of the people, a victory of truth.”

MODI IN TROUBLE

The victory gave the ruling party, Bharatiya Janata Party (BJP), with its nationalist tendencies, a warning that all is not well.  Retail inflation jumped to five per cent in January up from four per cent in December.  The prices of food are serious business in India and BJP knows this well. 

When the price of onions went up in August 2013, BJP, then an opposition party, demanded the resignation of Chief Minister Sheila Dikshit.  Years earlier, the Delhi Chief Minister, Sahib Singh Verma, had to resign over the price of onions.  

Delhi Lieutenant Governor Najib Jung (R) watches as Aam Aadmi Party (AAP) president Arvind Kejriwal (C) greets his supporters during his swearing-in ceremony as Delhi chief minister in New Delhi on February 14, 2015. Arvind Kejriwal promised to make Delhi India's first corruption-free state and end what he called its "VIP culture". AFP PHOTO | PRAKASH SINGH

Indeed, this is how democracy gets to hold those in office to account, but in Kenya tribalism and special interests stand in the way of democracy.

Prime Minister Modi is increasingly getting into trouble, my acquaintance, Sanjiv tells me.  He is not controlling his party stalwarts who want to see a greater role of religion in government.

Hindu nationalism is raising religious tensions in India, he says, a fact that is disenfranchising more than 300 million non-Hindu Indians and which contravenes the constitution. 

In spite of the fact that BJP won a landslide victory and more than 300 seats in the 543-seat Parliament, Modi is not taking any chances.  After the Delhi drubbing, BJP has gone into overdrive to form an alliance with People’s Democratic Party (PDP).

Modi simplifies his vision for India, reported on First Post Online, into just a sentence and it reads as though it was intended for Kenya.

'YOUTH AND PROBLEMS'

Addressing traders, investors and chartered accountants in New Delhi as he campaigned for the country’s top post, he stated that urbanisation, professionalisation of the public sector, technological advancement, skills development and IT, and prevention of corruption would be his key highlights on rebuilding the economy.

 He singled out two sectors, emphasising that "We need to increase productivity in agriculture, industrial and manufacturing sectors. There is insufficient focus on technology in agriculture”. “Value addition in agriculture will create employment," he said. 

Further he added that democracy, youth and demand are India's biggest strengths, but due to lack of determination and dedication, India has not been able to grow. "There is no other nation that has these three qualities. With these qualities in place, India can grow at a really fast pace," said Modi.

Whilst Modi sees the young as a strength we see them as a problem, and numerous speeches by our leaders always use the words 'youth' and 'problems' in the same sentence.

India and Kenya are basically battling the same problems of poverty reduction, skills development for greater technological advancement and corruption, through professionalisation of our public sectors. 

The two countries are also attempting to reform their economies within a democratic state.  India cannot pollute her environment, as China did, to grow. A strong civil society cannot allow that.  The internationally acclaimed Center for Civil Society, through their multi-disciplinary research brings the government to their senses.

INNOCENT PEOPLE IN COURT

As a result, it has won awards for its approach across several sectors, spanning research and analysis, policy reform, proof of concept, and advocacy in education, livelihoods, governance, and rule of law. 

Kenya on the other hand cannot fast track-development, simply because cartels, through the courts, are stifling development.  The much needed voice of a well-coordinated civil society, with the skill level of the Center for Civil Society in India, is nonexistent. 

In this photograph taken on June 19, 2014, an Indian labourer sorts onions at a wholesale market in Vashi on the outskirts of Mumbai. As fears grow in India over spiralling inflation, onion traders in the bustling markets of Mumbai say new premier Narendra Modi will have to take on the middlemen hoarding vegetables for profit. AFP PHOTO | PUNIT PARANJPE

As such, our civil society is outfoxed by “tenderpreneurs”, who are now misusing the courts to delay development. That is why innocent people get hounded to courts at the urging of cartels that sit behind mega-tenders. 

For any developing democracy to succeed without resorting to benevolent dictatorship, there must be a thriving civil society.  Many people may think that Civil Society organisations are an irritation, but in any democracy they are a necessary nuisance.

Although there are many extremely rich people in India, here, social democracy foundations ensure that everybody is taken care of.  They have never pursued controversial economic theories such as those of Milton Friedman, the intellectual architect of the free-market policies – who largely inspired Western Conservative leaders such as Reagan and Thatcher – that see deregulation and individual initiative as the keys to economic success.

REVEAL OPPORTUNITY AND EXIT

Although there was some form of liberalisation in the early 1990’s in India, it has remained stagnant, irrespective of the ruling party. No party has yet solved a variety of politically difficult issues, such as liberalisation of labour laws and reduction of agricultural subsidies.

There exists a lively discourse in India as to what made the economic reforms sustainable.  Prior to the deregulation push in the late 1960s, India was a basket case till Indira Gandhi’s policies turned it around.

Unlike Kenya, India has succeeded in entrepreneurialism. Several sectors have benefited from deliberate government support to ensure private sector participation and growth.  The creative economy in Mumbai, which includes Bollywood, for example, has benefited from government support, and today employs close to 2 million people and with an employment generating capacity of 40,000 every year. 

The Government of India recognizes the role media and entertainment plays in economic growth, and endeavors to lend support to the sector to ensure its sustained growth.  

Entrepreneurs do not emerge in countries where opportunities are masked.  The state must play a key role to reveal these opportunities, then find some way to exit and allow the private sector to take off.

Kenya will never see any entrepreneur evolve from such funds as Uwezo Fund or Women Entreprise Fund.  It is an utter waste of resources to throw money at people who hardly understand the prevailing opportunities to exploit. 

We must take the approach where the state invests to exploit local opportunities.  For example, the government can invest with a number of youth or women in extrusion of plastics to make syringes locally and provide market in government hospitals. 

KEYNESIANS ARE RIGHT

After some time these incubated entrepreneurs will begin to make more complex plastics, to the extent that there may be no need to import such basic commodities and more importantly, the learning curve will eventually enable them to begin to innovate with the materials. 

As it stands now, we keep on importing and we are not building any local capacities.  Instead of creating public-private partnerships, we are wasting meagre resources to trade in useless imported plastics.

This is why in my view, Keynesian economists are right when they argue “that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle.  Keynesian economics advocate a mixed economy – predominantly private sector, but with a role for government intervention during recessions”. 

During the conservative rein in Western capitals, the Bretton Woods institutions were urging that we sell public enterprises, and we did. 

Some Western countries such as Canada, that did not buy Friedman economics, opted to corporatise state-owned enterprises, with the government exiting later in a more civilised manner.  They succeeded.  We failed.

BREAD AND ONIONS

We must always be reminded of what caused the French Revolution.  Several historians have attempted to explain the causes but there is consensus on the following:    

Economic: The deregulation of the grain market, advocated by physiocrats, resulted in an increase in bread prices. In period of bad harvests, it would lead to famines which would prompt the masses to revolt.

Social: The emergence of an influential Bourgeoisie which was formally part of the Third Estate (commoners) but had evolved into a caste with its own agenda and aspired to political equality with aristocracy.

Financial: France's debt, aggravated by French involvement in the American Independence War, led Louis XVI to implement new taxations and to reduce privileges.

Whilst in France the price of bread caused a revolution, in India the price of onions caused a Chief Minister to resign.  It does not have to get to that level to understand the plight of the poor.  The economic policies we choose to adopt have a greater impact on the lives of our people.

We must therefore choose our pathway to prosperity more carefully, paying attention to the social economic conditions of the poor.

Paul Krugman said, “I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty. I believe in democracy, civil liberties, and the rule of law. That makes me a liberal, and I’m proud of it.”

The writer is an Associate Professor at University of Nairobi’s Business School and a former Permanent Secretary in the Ministry of Information and Communications. Twitter: @bantigito