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Office of Chief Economist would help to promote value for money

Tuesday May 21 2019

The Kenya Railways commercial cargo train

The Kenya Railways commercial cargo train. Why contract an American company, Bechtel, to expand Mombasa Road at Sh1 billion per kilometre when that would undermine the struggling SGR? FILE PHOTO | NATION MEDIA GROUP 

KENNEDY CHESOLI
By KENNEDY CHESOLI
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The “Kenya Economic Update” released last month by the World Bank lays out familiar recommendations for boosting agricultural productivity. But the bank also projects economic growth to reach six per cent in 2021, underpinned by, as usual, private consumption, industrial activity and services.

POVERTY LEVELS

The government is likely to be startled by this for it has, inevitably, been expecting and promising an infrastructure-led growth. The country has borrowed inordinate amounts and invested in transport, energy and water infrastructure including dams, airports, railway, highways and seaports. But disaggregated data shows that transport and storage were unchanged, contributing to no more than 0.5 per cent to economic performance.

We are unlikely to experience significant infrastructure-related boost to employment and economic activity. Returns on investment are dismal. This is troubling, since countries that have prioritised infrastructure spending, like China and Ethiopia, have achieved stellar multi-year double-digit growth and managed to pluck millions of their people out of extreme poverty.

Since experts say African nations require to sustain growth of at least seven per cent to claw back on their high poverty levels, Kenya’s poverty figures are likely to remain unchanged for the remainder of the Uhuru Kenyatta presidency.

Many of the regime’s projects are disjointed, ill-conceived, counterproductive and unsustainable. The Galana Kulalu irrigation project is a money pit and, without the Lapsset corridor, Lamu Port and Isiolo International Airport are likewise doomed. And why contract an American company, Bechtel, to expand Mombasa Road at Sh1 billion per kilometre when that would undermine the struggling SGR?

A Chinese company is to build JKIA-James Gichuru Expressway, a project to probably run simultaneously with a JKIA-CBD commuter train project funded and likely implemented by the French.

If the goal is to ease city traffic, why not do a commuter rail from JKIA to Kinoo through the CBD? And since we may not be able to extend the SGR to the Ugandan border, why not expand the road to Uganda.

TERRIBLE IDEAS

Other terrible ideas include pursuing industrialisation by favouring locally assembled European vehicles, the housing levy and building 57 dams. Their staggering debt-financed costs, low returns and potential to create large deadweight and market distortions are worrying.

The offices of the Controller of Budget and Auditor-General have performed well in ensuring public resources are utilised properly and as per the law.

But regular audits and other oversight mechanisms have not prevented wastefulness. For 16 years, considerable resources have been spent through the Constituency Development Fund, which is routinely audited, yet many schools lack the basics.

Perhaps we should create a constitutional office, “Office of the Chief Economist”. Unlike the Chief Economist at The National Treasury, this office should be autonomous, delinked from all line ministries.

Not only would it help to curtail wastage, poor programming, economic exclusion and marginalisation, but also undertake expert analyses and give the governments strategic economic advice and guidance.

The office would ensure public projects and policies are properly formulated and are anchored on economic principles, provide state guidelines that advance value for money, prioritise impact, efficiency and effectiveness of government action as well as foster economic coherence. It could also advance social and economic inclusion.

The office would complement the work of the Auditor-General and Controller of Budget by reviewing and following up on all government action to ascertain value for money.

Mr Chesoli is a New York-based development economist and global policy expert. [email protected] @kenchesoli

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