In his recent State of the Nation Address, President Williammmm Ruto stated that the Kenya wouldn’t default on its debt, adding that were he not the President, Kenya could have plunged into economic turmoil.
The misguided notion that the President has to make tough decisions to fix the economy needs to be dispelled. The truth is that he doesn’t need to. Rather, he needs to make Solomonic and smart decisions, which unfortunately he is not making. This makes him partly to blame for our economic crisis.
Granted, there are external factors to the current situation, but as the President he still takes ultimate responsibility for navigating us out of it. Remember that during President Uhuru Kenyatta's tenure, we had a bigger crisis of Covid-19 and the Russia-Ukraine war, yet he, for the welfare of the citizens, cushioned Kenyans through subsidies and economic stimulus.
While Kenyans are still in the desert and need to eat before reaching Canaan, President Ruto has decided to remove the ‘manna’, which are the subsidies and left Kenyans to fend for themselves.
It is true that the shilling has been depreciating over the years. It has not started now. However, to gauge how the various administrations have done in order to keep the shilling relatively strong it is helpful to look at the depreciation percentage per year from the time of Daniel arap Moi.
Within the last 15 years of Moi’s rule, that is between 1987 and 2002, the shilling depreciated by 352 percent, which is an average of 23 percent annually. For the 10 years when Mwai Kibaki was president, which is from 2002 to 2012, the shilling depreciated by only 11.6 percent, which is an average of 1.1 percent per year. Between 2012 and 2022, which is a period of 10 years when Kenyatta was the president, the shilling depreciated by 80 percent, which is an average of 8.0 percent per year.
Now within only a period of 1 year, that is from 2022 to 2023, when Ruto is the President, the shilling has already depreciated by 32 percent per year. It is left to you to gauge in whose tenure the shilling has lost value the most.
We have heard that the Kenyan GDP was larger than those of the Asian Tigers such as Singapore, Japan and South Korea. But then how did the Asian Tigers get to where they are and leave others behind? The answer is in the economic model that they adopted.
Besides the economic model, physical assets and human capital also determine the economic advancement of a country. Physical capital implies all kinds of resources a nation possesses and utilises for its growth.
These natural resources are the basic elements such as raw materials that directly connect with an economy's strength. Nations blessed with them can earn larger revenue by properly using them. These are complemented by other capital assets such as advanced equipment, real estate, transport, communication and money, among others, which help directly and indirectly increase national income.
Economic strength, on the other hand, is the human capital. It implies education, skill, wisdom, experiences, talents, and active cum strong workforce, among others.
In that regard, a country with rich human capital is a strong economy. In the face of an economic crisis, such a country gets rebuilt within a short time as the people can easily generate higher incomes using their available resources.
I’m concerned about the way the Ruto administration is handling matters education, for example. It is a fact that investing in education is one of the ways of building a stronger economy. Focusing on fertilisers while starving the education system by removing funds, which has become one of the hallmarks of the President's so-called Bottom-up Economic and Transformation Agenda is therefore not Solomonic.
Dr Ogola is the CEO at African Health and Economic Institute and Director of the Institute of Strategy and Competitiveness.
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