Kenya’s 60 years via lens of writer


The collapsed Rural Urban Credit and Finance Limited was among the many politically correct banks. FILE PHOTO | NMG

Kenya is 60 years old and I thought it was an opportune time to attempt a brief contemporary economic history of the country from the lens of a veteran scribe- a fly on the wall who has been observing and reporting on the milestones as the nation was transiting from a command and control economy to an era of deregulation and privatisation.

A comprehensive job of the broad trends would not fit in this space. So, I will flag a few broad trends and milestones. What I found most fascinating when I became a business reporter was the price control regime.

We had joined the business desk when the regime was at its tail end - when the very last person to hold the office of the price controller in Kenya- one Sarah Wainaina- was in office.

She was a very powerful individual. Every year, manufacturers would go to her office- cap in hand- with applications for price increases.

You had to present complex spreadsheets about your fixed costs and margins to justify a price increase. Based at the Treasury, the office was supported by provincial price controllers stationed throughout the country, with the power to invade shops and business premises without notice to conduct search and seize raids.

Literally, all fast-moving consumer goods were on a price control schedule.

When the country transited from price controls to a new regime of regulation of monopolies and restrictive practices, Ms Wainaina became the first director of the Office of Monopolies and Prices Commission under the Treasury.

She served under three Finance ministers, Mwai Kibaki, Arthur Magugu, George Saitoti, and Musalia Mudavadi. The price control regime was abolished in 1994.

The two other key pillars of the command and control era we found fascinating as young reporters straight out of neoliberal economic classes university were the Imports Control Department at the Ministry of Commerce and Industry and the Foreign Exchange Department and the Central Bank of Kenya.

As an importer, you had to get approvals from this department first, before applying to the foreign exchange allocation committee at the Central Bank of Kenya for foreign exchange.

If the product you intended to import was manufactured in Kenya, you had to seek a ‘‘no objection’’ certificate from the manufacturer first. In those days, you had to apply for allocation even to buy an air ticket.

A job at either the foreign exchange department of the Central Bank or the import licensing Department of Commerce and Industry was a ticket to riches.

With regard to public procurement. We did not have a legal framework and the system was run on a document that was known as a supplies manual.

The big ticket projects were procured centrally at the Treasury-based Central Tender Board. And, this is yet another area that produced our first crop of successful businessmen.

When I decide in future to write a complete contemporary of Kenya from a lens of a journalist, there will be a chapter on the evolution of banking regulation and the entry of African businessmen into banking.

When it became fashionable to own banks, local elites did not bother to mobilise enough capital to give these institutions a strong base.

Rural-Urban Credit, the Continental Group, Nationwide Finance and the Jimba Group have poorly capitalised outfits with little inbuilt resistance to catastrophes.

These banks survived out of political support and regulatory forbearance. And when support and the forbearance they had been enjoying were switched off, they all collapsed –like dominoes.

The next group of African businessmen to own banks did not do better.

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Note: The results are not exact but very close to the actual.