Kenya’s made big strides, but work remains

The high level of investment confidence manifested by local and foreign businesses is a good measure of government performance as outlined in the State of the Nation speech last week. Overall, Kenya has continued to make socio-economic strides despite a number of acknowledged challenges. Nearly all macro-economic indicators point in the right direction.

Reduction of terror-driven insecurity has been a notable achievement by the government. Security is a “commodity” that is always taken for granted when it is there, but whose absence can shatter every aspect of our economy and lives.

It is evident that security systems especially intelligence management have improved significantly, and this has permitted tourism to bounce back.

Stewardship of the constitutional transition is another effort that will need to be acknowledged.

Nearly all elements defined by the new constitution are essentially in place. As expected the transitional journey has been quite bumpy, but intentions and efforts have evidently been in the right direction.

Specifically, devolution has been a rough ride, but we are now finally seeing county systems taking good shape and benefits are gradually trickling down to local populations.

However, devolution remains very much work in progress requiring disciplined and focused leadership.

In the speech, the President mentioned that the total national public service payroll costs consume 50 per cent of national revenues.

These high costs are mostly driven by vastly expanded (national and county) governance structures as detailed in the new constitution. These costs are definitely crowding out delivery of essential services and development projects, and forcing increased government borrowing.

A number of politico-economic analysts have failed to acknowledge that the huge public service costs may be the main cause of mounting national debt.

Instead, they selectively apportion blame on what they label as “mega” projects, especially the SGR. Projects, large or small, are an essential part of long term economic capacity building.

Public service costs should be part of a wider national conversation. No government can put forward a socio-economic development manifesto without sufficiently addressing reduction of public service costs.

The alternative is to astronomically grow the economy to increase taxable incomes and revenues to finance these costs.

Let me now turn my focus to infrastructure. No one can correctly underrate the amount of attention paid by this government to coastal infrastructure projects.

Over the past four years the President has focused on making Mombasa a port city that works efficiently, with emphasis on the ongoing port expansion, the SGR, reticulation of Mombasa West roads, and linkages with the South Coast.

In addition, the Voi to Taveta road is nearly complete, while groundwork for Lamu port and the Lamu- Isiolo highway is started.

The SGR is certainly a milestone achievement that will transform and modernise logistics and hopefully bring down costs. However, SGR benefits and economies of scale shall be fully realised only when the line finally crosses the border into Uganda.

The President detailed achievements made in the area of industrialisation. With improved investment climate and the expanded county systems, opportunities exist to establish new industries and expand capacities of existing ones.

However, it is important that the government institutes fiscal and regulatory reforms that truly encourage, nurture and protect local manufacturing and production.

We should target meeting the majority of our local consumption demands from local sources by achieving visible reduction of imports.

In respect of interest rate capping, concerns persist in respect of reduced access to credit especially for the SMEs. My gut feeling is that banks may be misrepresenting the situation to support a return to the old order.

The banks should instead proactively introduce SME education and empowerment to make SMEs responsible borrowers with reduced risks.

Yes we need to objectively acknowledge all positive achievements while accepting that there are genuine challenges that require ongoing attention and solutions.

Nationhood is always work in progress, with challenges forming a basis for future improvements and reforms.