President William Ruto recently retreated with his top government executives to clarify the government's economic development agenda for 2022.
This of course comes against the background of stagnating growth, high cost of living, and mounting public debt.
While the new government has proposed some initiatives, including widening the tax base, increasing savings, promoting farming, and reducing debt dependency, a single overarching economic blueprint is yet to emerge.
But even more conspicuously missing, is a radical, government-wide decision to promote business growth which in itself can solve the range of economic problems we currently face.
The much-touted Hustler Fund reveals an innate knowledge that the cost of capital is one of the barriers to entrepreneurship.
However, overregulation, bureaucratic red tape and cartels, are bigger economic hurdles. At this point, it bears remembering two economic moments that set the tone for two of the world’s largest economies, more than 40 years ago.
The Ronald Reagan era in the US heralded the neoliberal economic age: massive deregulation slashed taxes and public spending. The government largely got out of the way of business.
In China, in the late 70s and early 80s, Deng Xiaoping’s liberalisation of the Chinese economy set the tone for unprecedented industrialisation backed by massive foreign investment.
The State initiated five Special Economic Zones that attracted FDI and scaled up industrial and technological enterprises that propelled economic growth, created jobs, and built up an export-oriented industry.
These two examples, I feel, offer a credible way for President Ruto’s government to transform the economy.
In Africa, Kenya has the largest number of SEZs with 61, ahead of Nigeria, South Africa and Ethiopia. However, these have not really taken off owing to the lack of a coherent policy.
The long-proposed KenGen Industrial Park proposes to sell cheap electricity to factories to enable them to produce competitively and take advantage of the nearby road and rail network. It has yet to take off. Low funding is blamed.
President Ruto on a recent trip to South Korea announced that he had secured funding for the Konza Technology City. He also spoke of reviving the Galana Kulalu farming project.
A corruption and inefficiency-ridden white elephant.
At the Coast, the Dongo Kundu SEZ is to be accelerated in development, to be ready by 2025. Details are scanty.
Mixed-use SEZs like Tatu City, Northlands etc, are also plagued by ambiguous and conflicting regulations, and a lack of clarity as to the quantum of incentives available to investors.
All this is to say, the patchwork of proposed SEZs lacks a clear, consistent policy framework.
Both Shenzhen City in China, and the SEZs in Costa Rica, show how farming-based backwaters can be transformed into high-tech industries.
Costa Rica for example earns most of its foreign exchange from exports of high-tech products something that can be done at KoNza.
The SEZ Authority in Kenya is woefully equipped both legally and with resources. It needs clear, unambiguous imprimatur from the highest levels of government to drive a policy of orienting these zones to drive the country’s economic agenda.
This policy should also rope in Counties and KRA to ensure a one-stop shop for investors to ease the flow of investment dollars to these zones.
Counties, for instance, need to plan around SEZs in terms of housing, amenities, schools, hospitals and so on to provide a suitable environment for the zones.
We now have regional economic blocs formed by counties that want to partner in common economic projects.
Roping them in as partners in SEZs such as Galana Kulalu, Naivasha, Kisumu, Dongo Kundu etc, will not only make buy-in easier but also implementation as they will feel part and parcel of the projects.
They will also provide jobs and business for their counties and by extension, revenues.
The writer is a data protection lawyer who writes on legal and policy issues.Â
TWITTER: @jgmbugua
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