Ideas & Debate

Why we should stick to long-term economic plans

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National Treasury building. FILE PHOTO | NMG

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Summary

  • Tunisia's historical GDP growths were impressive with future trends predictable with a high degree of certitude.
  • The rest of Africa including Kenya was quite the opposite.
  • For Tunisia, tourism was the main economic driver, supported by some oil resources, and fruits agriculture. The political environment was stable and tolerant.

In 1983 I was in a business planning meeting in Tunis to review long term business plans for Esso/Exxon affiliates in Africa. The Tunis venue had been selected with a reason. Esso Tunisia always delivered the highest petroleum sales growth, target profits, and experienced no fiscal obstacles remitting dividends to the parent company. Perfect business performance. And it was the country’s investment environment that made this possible.

Tunisia historical GDP growths were impressive with future trends predictable with a high degree of certitude. The rest of Africa including Kenya was quite the opposite. For Tunisia, tourism was the main economic driver, supported by some oil resources, and fruits agriculture. The political environment was stable and tolerant.

Our Tunisian colleagues explained the economic success as due to disciplined long term economic planning and implementation, ring-fenced from haphazard changes by politicians. They explained that politicians “come and go” while a competent civil service systematically implemented development plans previously debated and endorsed by parliament.

In 1960/70s Kenya had a semblance of consistent long term economic planning with clear guiding principles aimed at kick-starting a newly independent nation. Focus was on modernisation and commercialisation of agricultural sectors with value addition manufacturing to reduce imports. This was coupled with a rapid creation of skills at all levels in all social and economic areas. Long term economic plans were guided by a series of sessional papers.

In the 1980s, economic planning became hazy with haphazard development implementation based mainly on selected areas of political and vested interests. Corruption diverted resources and development virtually ground to a halt, leaving the economy on a survival mode. The 1990s was the decade of IMF imposed structural reforms which in essence undid most of economic systems and capacity achieved in 1970s.

In the 2000s President Mwai Kibaki returned a semblance of aligned economic planning and implementation starting with infrastructure. Unbundling of Nairobi capital city traffic; debottlenecking of Mombasa port; opening-up of northern Kenya via Lamu port; undersea fibre optic cables; and ICT technology all became visible and well-resourced plans and projects. The guiding principle was that infrastructure was necessary to subsequently open the wider economy-which indeed was subsequently achieved.

This was followed by Kibaki’s Vision 2030, a 20-year visionary plan which signified a return to long-term economic development planning. The plan came with a permanent institution to steward implementation. Unfortunately, we no longer hear much reference to Vision 2030, an indication that the Plan may have ceased to count.

Five-year development plans hatched from electoral manifestos every five years may not be as effective in consistently driving the country into the future and may put undue pressure on budgetary capacity to fund new projects without disrupting ongoing projects and programs. There is always the danger in ficve-year plans based on political manifestos as these may not add value and synergy to overall economy. Sometimes new projects divert funding from ongoing projects from previous administrations.

There are two deadly disruptors of long-term development plans, no matter how well they are done. The most serious is corruption which diverts funds and resources intended to drive development. Corruption removes objectivity from development planning as projects and programs are skewed to benefit targeted beneficiaries.

The other economic disruptor is negative electoral politics. Kenya effectively loses two years out of every five due to high octane electoral politics which scares away investments, while also diverting government resources and time away from active economic development. I am not sure I know how and when this perennial problem shall be sorted out, considering how we have failed to learn from previous experiences.

Yes I would urge whichever government that comes into office in 2022 to seriously consider developing a Vision 2040 plan based on widely agreed guiding principles that will guide Kenya towards increased jobs and incomes derived from targeted economic activities that accelerate value addition to Kenya’s resources.

Such a plan should be institutionalised in an Act of Parliament to guarantee its continuity, and to allow formal debate on changes and updates to the plan. It is this level of consistency in planning that will give confidence to investors. Time spent clearly thinking through planned economic development is worth the while.