Columnists

Policy making requires new energy

cash

Kenya's ministries and spending departments are not able to produce regular accounts. file photo | nmg

I want presidential candidates who will go beyond tabling lists of so-called flagship projects to give clear costed plans for implementation, giving impact details of the big spending plans on the shrinking fiscal spaces.

We are at a point where what we need most is big, bold, economic thinking.

In just a matter of months, we will have elected a new government. Yet in the air, you don’t feel or smell anticipation of new direction in economic policy.

I say so because economic policy making in this country has become lazy and unpredictable. Take that ritual of annual Budget Speech, for instance.

When you read through the Budget statements or even the budget policy statement, it’s basically an exercise at spending a few more billions for roads, ports, electricity, railways police housing and vehicles, and the Kenya Defence Forces and teachers salary.

Economic policy making has been turned into taxing and profligate spending — and into rapid expansion in government borrowing— with the IMF and the World Bank cheering on and telling us not to worry since we are still within debt sustainability thresholds they set for us.

We should press these presidential candidates to give us a completely new approach to fiscal policy.

We all know that agriculture remains the mainstay of the economy.

But in terms of budgetary allocations, the lion’s share of spending will always go to mega projects ostensibly to improve infrastructure, but in reality to open rent- seeking opportunities for the political elite.

Until we start seeing a vigorous rise in agricultural and manufacturing output, a strong recovery of the export sector, a substantial spike in corporate profitability, strong recovery in the profitability of the financial sector including capital markets, and a boom in consumer confidence as reflected in profitability of the Nakumatts, the Tuskys, the Naivas of the world, we will still be wallowing in economic doldrums.

Indeed, the structure of our economy has acquired a frame whereby conventional tools of macro-economic management can be applied without making a significant impact.

You can lower interest rates, raise them, spend more, spend less- but the impact will be negligible until you address the root problem-namely, a breakdown of production and productivity of the main engines of the economy.

Failure by institutions that manage the economy is part of the problem.

Public financial management is in a total mess both at the national and county levels.

The government still operates the archaic cash- based accounting system that cannot take you to general ledger compiled through double entry book-keeping.

Unlike South Africa and other countries, for example, our ministries and spending departments are not able to produce regular accounts.

It is why we have difficulties having a functioning integrated financial system (IFMIS) and why the National Treasury is unable to implement the proposed Single Treasury Account.

Methinks the mix between economists and financial and accounting experts working at the Treasury is part of the problem.

We have too many economists at the helm of this critical institution despite the fact that financial accounting is a key mandate of the National Treasury.

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

This campaign period is the time to ventilate and to get the presidential candidates to commit to giving this economy a new kick-start.