- One thing that I have been very passionate about, and if I am going to run for president of Kenya, one of the main reasons that will drive me is my strong belief that Kenyan politics should start serving enterprise Kenya.
Mukhisa Kituyi has been heading the United Nations Conference on Trade and Development (UNCTAD) since September 2013.
With his second four-year term ending next year, the former Kenyan Trade minister and lawmaker has had to contend with questions about whether he plans to rejoin the country’s public life.
Dr Kituyi spoke to the Business Daily in Nairobi on Kenya’s government handling of the Covid-19 pandemic and his vision for enterprise Kenya.
What is your analysis of how Kenya has handled the Covid pandemic?
We have not faced a severe life catastrophe like many parts of the world. But we should not get complacent about that. The reality is that Covid is with us, it’s resurging and that means we should constantly remind people that the measures that have been taken should not be aborted.
Some steps taken by the government are positive like the decision to lower personal taxes from 30 to 25 percent, which in net terms means giving everybody a salary increase.
It is a statement of solidarity and empathy, but also, by giving people disposable income, you trigger the consumption economy, which is necessary for recovery of business. But much of that money actually comes back through VAT because of everything that they spent the money on.
How should the government strike a balance between stemming the spread of the virus and falling revenue?
The government has to be very judicious on how it uses limited resources. It sends a wrong signal when we are in such uncertain times to be busy discussing how to build a larger political bureaucracy to the burden of taxpayers.
The government has to know that recovering enterprise Kenya is the most important thing apart from saving people from Covid.
These are times of credit squeeze and Kenya is already spending substantially on debt service. Kenya’s debt to GDP is already at 63 percent and even before Covid-19, 40 percent of revenue was going toward servicing of debt.
Kenya was initially reluctant to take up the offer of debt relief by the group of world’s 20 major economies. Was this the right decision?
The level of vulnerability, even for economies whose debt was manageable, are becoming very challenging. Therefore, they have to accept to be part of the global campaign that some of us have been leading.
Unfortunately, the Kenyan government voluntarily declined to use the possibility of $900 million on the debt service suspension initiative at a time when we are having a substantial challenge servicing external debt. Even economies which are in much healthier and stronger positions than Kenya are running at that.
The Treasury has argued that deferment of debt payment will injure Kenya’s credit rating given that the G20 deal has not roped in private bondholders in the Eurobond.
Kenya’s credit rating by Standards and Poor’s has already gone to negative. The rejection of the DSSI (Debt Service Suspension Initiative) has not in any way slowed down the negative impression of Kenya’s credit rating. In fact, taking that on board would have sent a message of a country that is slowing down the negative consequences of debt pressure.
The fact that we rejected it has not taken away pressure from the Kenyan shilling, which still remains under extreme pressure in exchange markets. The idea that you can cheat the world that you are comfortable because you are refusing cheaper money and then you go and borrow expensive money, to a larger extent, is self-delusion.
With Covid, the marketplace is increasingly going digital. What is your assessment of Kenya’s preparedness to participate in the global digital economy?
The question should be how we can optimise the value of the digital economy. Kenya has done a lot more than other African countries, but it still has a lot to do. We do not have a sufficient ecosystem for growing digital enterprises. The government should take the initiative to teach young techpreneurs how to identify niches for digital service provision.
For example, “servicification” of Internet value chains is creating new opportunities where you can be an intermediary between consumers and producers of goods on the basis of the apps that you can develop.
The government should help create the ecosystem for this country to be a competitor in that area. But when we have innovative start-ups, we still have them go to the banks and are asked to give credit history and assets which they can use to secure loans. Sometimes, the ideas in their heads and the laptops are the only instruments they have.
What are your plans when your term comes to an end in a year’s time?
The longest I am going to stay in the UN is another seven to eight months from now. There’s a very good possibility that when I am done with my job at the UN, I would rejoin Kenyan politics.
I believe in politics of purpose where you are driven by a desire to put into play the best practices you have seen elsewhere in the world, and have faith in the potential of Kenyan entrepreneurs to get us out of a very difficult economic situation.
What will you bring on board?
One thing that I have been very passionate about, and if I am going to run for president of Kenya, one of the main reasons that will drive me is my strong belief that Kenyan politics should start serving enterprise Kenya.
And to serve enterprise Kenya is to say how can we make ourselves competitive as a destination for FDIs (foreign direct investments). How can we be the regional hub for all those who want to see the possibilities of the new digital economy as a way of building resilience?