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Ideas & Debate

War on corruption, state capture and way forward

 

The last time I wrote this column, I suggested we prepare for blood whether or not Kenya’s latest war on graft succeeds. In other words, we finally round on the “whales” (not big fish) or revolution calls. Since then, the 2018 Football World Cup has provided an excellent break from our usual “navel-gazing”.

It’s also a month since the 2018 Budget Statement was read, and many are little the wiser about Kenya’s future economic prospects. Indeed, I currently find myself often being asked three questions. First, is Kenya headed for economic crisis? Second, what should I do to survive? Third, how can I help?

Sorry, no specific answers today, but each question raises an interesting perspective. The first suggests a view that we might already be headed in the wrong direction. I would argue that the second and third questions reflect our steadfast resilience; we all want our country to succeed and we want to contribute to this success.

The economic uncertainty is not without merit. At the beginning of 2016, in the face of debt-fuelled mega-investment amid recurrent cash flow difficulties at the time, I suggested that the Jubilee administration faced two extreme options, or paths.

The Samson option envisaged a continuation of the “hell for leather” investment path that would extend the “happy hour” all the way to 2017 at any cost. Latest fears are that the pursuit of this option now means we might soon need a serious “debt haircut”.

The Troika option — foreseen earlier by others — predicted a likely three-part IMF intervention; to stabilise the macro-economy, fiscally squeeze spending back into revenue and downsize government. After an initial “cheerleading honeymoon” it appears that today, the IMF is able, willing and ready to play Delilah to our Samson with its forthcoming standby credit arrangements for Kenya. This uncertainty isn’t helped by a 2018-2022 medium-term plan that doesn’t publicly exist; a Big Four plan that’s also a ghost in its detail and has probably jumped “policy and planning” and gone straight into “budgets and procurement”; a Budget that promises to magically reduce the fiscal deficit from an incredible 9.1 per cent of GDP at the end of 2017/18 to 5.7 per cent by the end of 2018/19; and revenues based on several regressive proposals that hurt those in need more than those with greed.

Don’t forget that debt service this year will equal half of our tax collections. Or that the law on interest rate controls faces repeal at a time when the government is increasingly debt-stressed (not yet distressed). Maybe it’s time to speak the truth to what has been referred to as our “casino economy”.

I see three parts to this. A “bandit economy” that drives our politics and governance. A “bubble economy” of tenderpreneurs, middle class “salarymen” living on consumer loans and shopping malls as tourist sites.

Then the “kadogo economy” where Kenyans increasingly find themselves; a growing market opportunity for our reported Kariobangi-Eastleigh counterfeit product manufacturing and retail industry. Think again about the revenue proposals in the 2018 Finance Bill.

Then think about which economy was hit hardest. Now we may begin to answer the earlier second and third questions I mentioned.

An initial reflection on the renewed war on graft might also guide our view of the future. Clearly, the general public has warmed to this effort. As I recently wrote, “heads are rolling, arrests are flowing and the people are ogling…now we need to see a prison population that’s growing”.

The role of intelligence in the investigations process has also surprised. Every criminal knows that our history of police-led investigations is a farce, while we never really got going with prosecution-led investigations.

It also appears that we finally have detectives who are detecting. We’ve had too much investigation in the past with zero detection. Now we need convictions, not cases presented.

But here’s a final set of thoughts based on my four-roles theory of government (policy-growth-service-fiscus). Service is where we have seen recent progress (through Huduma Centres and other easy-access citizen services) in reducing petty corruption and bribery.

The current effort clearly targets the fiscus; grand corruption and bribery, where goods were probably delivered at ridiculous cost, and growth — the looting end of grand corruption, with anything from shoddy to defective to zero product. This effort recalls what former President Mwai Kibaki once referred to during the Anglo-Leasing days as “stealing the mbuzi” (as in, whose goat was stolen?), although he was probably referring to a different mbuzi.

“Draining the swamp” of all manner of looters saves our public “mbuzis” (resources).

Yet, nirvana will only happen when we get to the policy level whose bane is state capture. Recall that policy is ultimately supposed to address societal problems. In the long-term, state capture frustrates and sabotages the people’s aspirations as a whole.

That’s where our “realpolitik” begins and ends; where the “owners of Kenya” will be challenged. It might take us longer to get here; serious political reform matters. For politicians in panic, this may or may not be about 2022.

Nevertheless, it is still possible to see some gains from the current approach, if credible and successful. We halt the theft of “the fiscus” and “the service” as well as the looting part of “the growth”. Not the final answer, but better to start somewhere, right?

We may now answer the three questions I mentioned at the beginning.

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