A debt trap is a place where debt is so high that covering the interest and repayment leaves too little to pay regular bills, so the indebted borrow more just to keep going, just to pay the rent, or, for governments, just to pay the civil servants.
Kenya is in a debt trap. It doesn’t currently raise enough income to pay for all its public costs and its debt servicing too.
But, the more the indebted borrow, the worse the problem gets, with debt repayment steadily eating away at first lunch and then dinner too.
Instead, solving Kenya’s deepening debt trap means reducing regular spending, or increasing income. And both are possible, literally staring us in the face, as lessons from history, from world markets, as appeals from our trading blocs, particularly Comesa, and as realities based on our potential and the place where almost all our resources are focused.
For why, oh why, are we not sorting out the mess in our cupboard marked ‘agriculture’?
As things stand, tourism isn’t the most resilient of industries when the world lives through a decade of Great Recession and terrorism adds a badge that empties planes and hotels.
Banking, the health industry, even our manufacturing, all are working and slowly moving forwards, but none are enormous industries. None employ millions of Kenyans. None have been flagged as offering the potential that Kenyan agriculture has.
By contrast, the UN’s Food and Agriculture Organisation (FAO) graced us all, years ago, with analysis that showed Kenya could feed East Africa, and much of Africa too, with the crops it has the capacity to grow. We have the land, the climate, the markets, the farmers.
Yet we keep going along a path of self harm, forever baulking at freeing our big earners, and killing whole sectors rather than liberate them from (costly) State interference that is riddled with issues of financial mismanagement.
As a result, our wonder crops have become names of shame, not from our ability to grow them, but from our inability to process them, and our addiction to State-controlled, old-fashioned, market distorting policies to keep the small players and private sector out.
We brought explosive growth to milk production by liberalising our market. But look at sugar. Look at pyrethrum. Nowadays, we only read how these crops are finished, farmers disillusioned, production costs out of hand, payments seemingly some miracle to organise.
Yet here we sit, in 2019, hanging on to anti-competitive policies in some legacy from the 20th century. Thus, we have set aside the monopoly of a single state-owned pyrethrum processor only to add a license fee of Sh1m a year for any size or scale of pyrethrum processor to operate in our country at all. The ‘lock out’ effect is the same. We call it a barrier to entry. It’s a phenomenal cost to cover for any small-scale private processor, the kind that has to pay for its pyrethrum or farmers don’t deliver.
Yet the world is short of natural pyrethrum. The synthetic kind was found to harm the environment and make people sick, so everyone wants natural again now, and Kenya used to make 80 per cent of it.
Analysts suggest we could earn Sh7.5bn a year and create livelihoods for more than three million Kenyans from pyrethrum alone. But even a small-time pyrethrum nursery – a single farmer who wants to provide seedlings – must now pay a license fee of Sh100,000 a year.
Happily, China has expanded so massively in the pyrethrum production we used to make that it has money to lend us, for interest and repayment ahead.
But for us, we get an Agriculture Ministry that bans competition in sugar – our farmers get ‘zoning’ that makes selling to one plant compulsory if they grow – we get massive license fees, we get a closedown on research spending and extension, and we get slow GDP growth and a debt crisis as we move inexorably to Egyptian sugar and Chinese pyrethrum.
It would take only months to liberalise our agricultural big hitters, and end this parasitical state machinery that is costing us our economy. It is just time to go Agriculture 2.0.