Are we likely to see shifts in macro-economic policy after the elections?
And, what is the likelihood that Kenya will be able to return to the growth momentum of the early years of the administration of former president Mwai Kibaki?
In diplomatic cocktail circles today, you will find these questions being asked over and over again.
In my view, the most important thing that we should achieve before thinking about likely shifts in economic policy is violence-free elections. We must first graduate from the basket of nations that experience widespread violence when facing elections.
Thankfully, we are going into an election with a Judiciary that widely enjoys a perception of independence and objectivity.
Even though it is something we hardly acknowledge, a Judiciary with a reputation of independence is a very big national asset in a country like ours that does not have statesmen.
Very few of our institutions enjoy the image of objectivity to enable them play honest broker in situations of intense political conflict. In the build-up to the elections, we have seen several civil society institutions — even political players — rushing to the High Court to litigate on matters that shouldn’t have come up had the Independent Electoral Commission (IEBC) been enjoying a solid reputation of objectivity.
You can choose to dismiss these bodies that have recently been rushing to court to sue the IEBC as a bunch of obstructionists.
But at the end of the day, it is a big statement about widespread anxieties and doubts surrounding perceptions about IEBC’s objectivity and independence.
In the coming weeks, the greatest challenge before the management of IEBC will be how to constantly make decisions that project independence and objectivity. Which takes me back to the question I started with: in terms of macro-economic policy, what are we likely to see after the elections? Frankly, it is difficult to predict.
But in terms of general policy orientation, it seems to me that there isn’t much that is different between the competing parties.
From the manifestos and what they say, both sides still believe that economic growth happens when you collect more taxes and spend it in ‘flagship’ projects.
There will be minor differences on how and when to spend the money. But there is near unanimity across the divide that growth can only be achieved by spending more on infrastructure.
Yet when you look at trends closely, it is clear that after nearly 20 years of experimenting with expansionary spending by both the administrations of Mwai Kibaki and Uhuru Kenyatta, we have reached a point where we cannot continue taxing and spending without compromising the stability of the macro economy. That is why growth has stagnated in the last five years.
The limitations of expansionary spending is why we are beginning to see just too many contradictions.
Even as leaders talk themselves hoarse about robust growth and green shoots of recovery, tax collection by the Kenya Revenue Authority are on a downward trend. Listed companies are reporting poor profits or issuing profit warnings.
We have witnessed widespread financial distress among leading supermarkets. Nakumatt, the largest, is facing a barrage of creditors fighting to foreclose the company.
Even as the government touts an exponential rise in the number of electricity connections, statistics from audited accounts of Kenya Power — the monopoly power distributor — show that this growth in connections is not reflcted in consumption of electricity by either households or industrialists.
And, statistics from published accounts of commercial banks show widespread distress among small banks. Worse, pick up of credit by the private sector is at a historically low point.
Aggressive spending on infrastructure is not bad policy. But at some point, you must only spend the wealth produced.