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Ideas & Debate

Disdain for policy, love of shortcuts hurt Kenya growth

Too much of operations and maintenance spend is about corrupt deals. FILE PHOTO | NMG
Too much of operations and maintenance spend is about corrupt deals. FILE PHOTO | NMG 

The essential developmental trouble with the current Cabinet appointment is the need to balance interests not by ethnicity or geography, or to secure anyone’s legacy, but between one side that believes in mega projects and another that lives on mega-payments.

In short, we have a PFM (public finance management) problem. In long, we have a 2022 “fund-raising versus project delivery” dilemma.

In 2013, these interests were balanced through the middle stage known as procurement. Read AGPO (Access to Government Procurement Opportunities).

Recall the multiplicity of funds offering procurement opportunity. Read Eurobond and the projects that are yet to be accounted for. Follow our mega-infrastructure (and mega-borrowing) binge. Heed our “Double D” problem — deficits and debt.

Then, understand why, post-election, maize subsidies are gone, and electricity is more expensive. Think about free secondary education without desks. Don’t forget the National Youth Service (NYS) — our “payments project” poster-child.

This is what happens when we don’t consistently work through the seven “Ps”. First, policy that links political promises to the needs of the people. Then programmes to implement policy through projects. Finally, procurement based on project needs and payment based on project delivery.

Without the policy-led approach to running government that our clever Constitution demands, Kenya will be in eternal developmental crisis. Think politics-people-policy-programmes-projects-procurement-payment. We seem unable to respect this cycle, and love to “short-cut” it in the name of “hustling”.

It doesn’t help that our National Treasury initially didn’t get it, first focusing its latest circular to national MDAs (Ministries, Departments and Agencies) on “project completion” outside a programmatic framework based on clear policy, before, at the last minute, issuing an undated notice calling for proposals and submissions on President Uhuru Kenyatta’s ‘Big 4’ agenda.

My view is that Mr Kenyatta’s agenda, excluding his disregard for democratic governance, is a fine one. It embraces a big part of Article 43 of the Constitution. It realises that people do not eat roads, electricity or railways.

But it needs to be more than a PR gimmick. And it needs to happen within the context of three things. First, the realisation of investment returns on infrastructure spend.

In other words, moving beyond “we have built” to “they will come”. It is common knowledge that both the World Bank and the IMF have advised Kenya to develop clear, transparent and ethical capital investment rules.

We cannot be a “Green Economy” when we’re importing coal from South Africa for the proposed Lamu power plant. We cannot be a “Blue Economy” if we’re buying tilapia from China and cannot control access to our international waters.

Second, fiscal consolidation. Kenya’s problem is not weak revenue collection, but bad spending. In normal countries, incoming administrations perform “public spending reviews”.

There is huge deadweight loss in our public expenditure, and it isn’t just about the wage bill. Too much of our “O&M” (operations and maintenance) expenditure is about corrupt deals.

This is not to say we can’t improve revenue collection. In the last public expenditure review by the World Bank it was noted that 1,000 companies contribute 70 per cent of national tax collections. Out of almost half a million companies.

As the Institute of Economic Affairs (IEA) boss Kwame Owino once commented, 75 Safaricoms would cover Kenya’s entire tax collection effort. Yet, tax must come with service, and we’re struggling there.

A national digital identification infrastructure might have helped here, as it would for next year’s (2019) national census. This will require a mightier heft of political will than happened with an earlier programme envisaged by Mr Kenyatta in 2014.

A unified identification system is good for taxes, public services and elections too.

There is a third point – Devolution. Serious governors will by now have a socio-economic assessment of their counties. Devolution is central to the Big 4 agenda.

So it works where governors have clarity on their various agricultural value chains, specific “packages of health” and county housing needs. It would also help if value addition and low-cost manufacturing thinking is clear before investment summits are called.

Back to the beginning. Kenya will not develop through projects, procurement and payments.

It begins with policy that reflects the will of the people through free and fair politics. If Mr Kenyatta has a lesson to learn from his first term, it is that development is about policy-led progress, not procurement-driven projects.

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