- We’re missing the warning signs of a youth unemployment, but more broadly, structural economic reform, time bomb long in the making.
President Uhuru Kenyatta tells us we have a constitutional moment, as does Opposition leader Raila Odinga. Has modernisation finally met reform in a transformative way for Kenya?
On the other hand, we may have a “software” moment, as five Kenyans have asked our courts to determine what’s and what’s not we protect in our constitution. Fancy court buildings are nice, but let’s wait for the decision.
In the meanwhile, September 4 was the Senate’s dateline for Auditor-General reporting on our Covid-19 spend. September 16 was the President’s deadline for official investigations into Covid-19 corruption. October 25 is the date our National Assembly wants the same report Senate wanted September 4. For the avoidance of doubt, it’s September 18 today.
A week ago, our mechanical national budget train was launched. That’s the 2021/22 to 2023/24 process. The language was dominated by a “Post Covid-19 Economic Recovery Strategy” (PC-ERS). Let’s pick a couple of slides from the virtual presentation. On currency movement in these times, our shilling’s roughly between the Burundi and Rwanda Franc, less stable than, say the Ugandan and Tanzanian shillings. Yep, but better than Ghana Cedi, Mauritius Rupee, South African Rand and Namibian Dollar.
Ah, that’s looking outwards. Which is good because, a couple of months ago, we were doing a balance of payments surplus, mainly due to the current account (imports versus exports). Hmm, less trade? And our forex reserves look fine at around six months’ import cover. Now, let’s get back in the house.
On a year on year basis, revenue was down by over 10 percent (ordinary revenue plus 13 per cent decline). Income tax down by 15 plus percent, VAT by over 22 per cent. Jobs-incomes-transactions right there. Expenditure? Ah, that grew by over 30 percent. In these Covid-19 times, public pension costs more than doubled, while the fiscal deficit by August 2020 was almost ten times a year earlier.
What’s the thinking going forward? A growth path not close to our Vision 2030 eight to ten per cent target before (or after) 2025. We’re a Sh10 trillion economy today, we’ll be a Sh18 trillion one then. 80 percent more in GDP, you say? What about six to seven more Kenyans by then? Before the inequality.
Where’s the growth coming from? Agriculture and mining. Services, except an expectation that tourism only gets back to black in 2022. ICT is projected at plus 11 percent in five years. Manufacturing, electricity and the rest of the secondary sector? Yawn, nothing over five per cent before 2025.
Oh, yes, there’s the brand new Sh50 billion or so promised to counties. It is impossible to understand the “casino royale” rationale that underpins Kenya’s “abracadabra” macro-fiscal framework. It is more difficult to understand why it’s been so hard to implement Chapter 12 of our Constitution.
Allow me to stop this boring lament. Let’s instead consider our Covid-19 hiatus a “transformation moment”. Sunday Nation columnist Sunny Bindra, a good friend, former working colleague and brilliant strategist recently explained this Covid-19 moment with the best clarity I’ve read. Once we’ve internalised our “lizard brain” self-survival mode in the face of the virus, we’ve got an uncertain, maybe 12 to 18 month period of adjustment; and the next two years to re-imagine the 10 years that follow.
It’s already happening at an individual level. It’s happening in families. It’s going on in the companies that want to remain smart and relevant. For some reason however, it’s business as usual in government. Don’t be fooled by the digitalism and gadgetry. The economic model isn’t changing.
Here’s a simple perspective to illustrate the point.
A young relative’s Sheng perspective on Covid-19 (selected items only): “Covid-19 si vako. Ka tu wathii wameomoka juu yake. Hakuna uradi. Jara pia ngori. Ma-Bankiko hazina ganji. Indaa imegenya”.
Eighty percent of Kenyans hear that voice.
For the other 20 percent of us, here’s the translation: “Covid-19 is real. So are the Covid-19 millionaires. Economy isn’t good. Jobs are gone. Banks are losing money. Industry is dead”.
We’re missing the warning signs of a youth unemployment, but more broadly, structural economic reform, time bomb long in the making.
Again, it is difficult to describe it but, hell, aren’t we witnessing a truly democratic moment in Kenya?