Our ailing economy needs quick healing


A guard pulls down security grilles at a Nairobi restaurant following confrontations between opposition Nasa supporters and those of the ruling Jubilee Party on September 9. PHOTO | KANYIRI WAHITO

As I wrote this article, the results of Thursday’s repeat presidential election were beginning to trickle in.

With the main opponent of President Uhuru Kenyatta, Mr Raila Odinga, having withdrawn from the race, all indications were that the former was on a home run to victory. However, there are no signs that political temperatures will die down soon.

Indeed, Mr Odinga has already served notice that he will be pressing on with his crusade for political reforms – the tools of trade of which will include street demonstrations, economic boycotts against regime-friendly companies and civil disobedience.

Clearly, and depending on how successful Mr Odinga is in mobilising his supporters to his cause, the clouds of uncertainty that have been hanging over the economy since the electioneering period started many months ago, are not likely to subside soon.

Today, we live in a fragile society where any mention of a protest rally inevitably sends the capital city-Nairobi- into a state of panic and paralysis.

The police- or even the Army- can give you security. But you soon realise that it is impossible to force ethnic harmony and good neighbourliness in the society by force even if you deployed battalions of soldiers.

Indeed, an environment where the capital city of a developing country like ours is constantly rocked by demonstrations- where protests and run-ins between teargas canister- carrying policemen and protesters are frequently flashed on the screens of international TV networks- is very harmful to the image of the country as an investment destination.

What we need now are leaders committed to holding the country together and to replenish the confidence and hope of all citizens.

This country needs a healer to treat the wounds that have been inflicted on the economy by bad politics- and a pilot committed to navigating the nation onward to a modern state where citizens live and relate to one another as compatriots and not just as ethnic kinsmen.

We are at a point where leaders must now demonstrate capacity to change and learn from past experience.

If we are to bring political temperatures down, exorcise the grievances over the presidential elections- and provide space for healing, there will have to emerge - from both sides of the political divide – leaders who avoid inflammatory speeches, can restrain tempers of their ethnic followers and are willing to make compromises with their adversaries.

The Kenyan economy is on a downturn. Despite rosy predictions for growth, the evidence of stagnation is all out there.

Profitability of companies is on a downward trend. From the recently published audited accounts of monopoly electricity distributor, Kenya Power, consumption by both household and industrial consumers is also on a downward trend.

The number of profit warnings issued by listed companies are up. Tax collections by the Kenya Revenue Authority are low, reflecting the bad times in the economy.

Take-up of credit by the private sector from banks is on a downward trend. A very big chunk of our banking sector is in distress.

Meanwhile, going by the numbers we have recently seen from the supplementary budget that was presented to parliament by Treasury secretary Henry Rotich, the government is currently walking a tight rope in terms of its finances.

READ: Kenya’s political uncertainty to dent economic activity

The government is in the middle of a public expenditure crisis evidenced by the distorted allocation of the national budget between wages, debt service, development and operations and management.

The disproportionately high share of tax revenues devoted to debt service itself reflects the high stock of both external and domestic debt that the government has accumulated.

Indeed, the statistics from the supplementary budget reveal that the budget for external debt service in this financial year has ballooned to Sh58 billion, while the cost of domestic debt service will this year consume a whopping Sh212 billion.

In the coming months, I see the government soon finding itself with no choice other than to seek some fast-disbursing support to enable it swap expensive syndicated foreign and domestic debt for concessional debt from international financial institutions such as the World Bank.

More than ever before, we shall need peace and political stability.

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