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Ideas & Debate

Critical policy issues raised in BBI report

BBI report
President Uhuru Kenyatta reads the BBI report when he received it at State House, Nairobi, on November 26, 2019. PHOTO | PSCU  

So, what does the Building Bridges Initiative (BBI) process portend in terms of changes with implications for economic policy. This is my take on some key suggestions and recommendations by the BBI taskforce that carry implications for the running of the economy.

I find the idea of increasing the share of resources to county governments to at least 35 percent of the last audited accounts to be very ambitious, especially in the context of the current poor state of public finances.

The promise to restructure spending by increasing allocations to development budgets and forcing county governments to maintain a ratio of 70:30 for the development budget versus recurrent expenditure may also prove to be difficult to achieve.

There are suggestions in the report for a return to the days of directed credit - where commercial banks are required to lend to priority sectors as defined by the State. There is a suggestion to minimise taxation of new and small businesses by granting them tax holidays of at least seven years.

It is also recommended that the private betting industry be dismantled and replaced with a government-run national lottery where profits are used to fund activities that profit the youth.

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The BBI task force has proposed strengthening the capacity of the Controller of Budget to be able to detect and respond in a timely manner to cases of misappropriation and wastage of public resources. It also proposes rationalisation of the parastatal sector and passage of the Government Owned Enterprises Bill.

Finally, it is suggested that parastatals carrying out county government functions be either wound up or restructured. This whole thing is about how we can insulate the economy from the effects of disruptive political competition. The theory around the new architecture of leadership positions created by the BBI, including prime minister, leader of the opposition, deputy prime ministers etc - is that when you open up many jobs and opportunities for the political elite, the premium of becoming president is watered down.

According to this theory, politics then become less disruptive to society and especially to the environment of doing business. This is the experiment we have been trying with the 2010 Constitution when we introduced the county government system.

Nearly 10 years later, the allure of becoming president is a strong as ever. The devolved system of government has not watered down the stakes has had been predicted. We had also hoped that the Constitution would bring and promote broad and inclusive multi ethnic coalitions that would reduce the stakes in losing elections and pre-empt marginalisation. It has not worked.

Political parties keep splintering. When a coalition splinters, the stage is set for other hurriedly crafted ethnic coalitions pitting the interests of one ethnic coalition against the other. Nearly 10 years after the 2010 Constitution, we are yet to move the country’s politics beyond the logic of ‘its our turn to eat’. As we have witnessed with the Jubilee coalition of President Uhuru Kenyatta and Deputy President William Ruto, or even the Narc coalition of Mwai Kibaki and Raila Odinga - opportunistic alliances built around ethnic chieftains are tenuous edifices always on the verge of collapse, constantly rocked by grievances over which member of the ethnic coalition has been given ‘half a loaf’.

The rest of us can only sit and watch as they bungle the economy. Just see the public debt mess in which the Uhuru-Ruto coalition has put the country in. We are at a point where we are spending close to 40 percent of ordinary revenues on debt service. The National Treasury has to raise tens of billions every week on domestic debt rollovers.

I still remain optimistic that some changes we are witnessing will soon liberate us from the politics of blind allegiance to ethnic chieftains. What is the basis of my optimism? Rapid urbanisation, the telecommunications revolution, entrenchment of the devolved system of government, and a constitutional dispensation that has left the citizenry with an inflated sense of rights and freedoms.

In my view, the significance of BBI is in the fact that it is forcing us to look into the mirror and to accept that our faces have become ugly. Whether the process has sown the seeds that will spawn a much broader ethnic coalition especially after Mr Kenyatta leaves the scene remains to be seen. Until we get our politics right, this economy will never take off.

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