Bold fiscal reforms needed to curb wastage

If someone were to ask me, what single most important lesson on matters development have you learnt in the years you have served in government?

My answer would be simple: Governments (and not necessarily Kenya’s) have a huge propensity towards being wasteful. At times the entire structure of government appears like a huge conspiracy against the people.

Of course, governments render a positive contribution to the common good. They render public services like education and health. But the inherent bias towards hidden vested interests suffocates common people’s interests, particularly a centralised structure of governance. And there is a biblical basis for this conclusion.

The Bible records that Israelites sought Prophet Samuel to “appoint for us, then, a king to govern us, like other nations”. This request displeased Samuel. He warned the people that kings lay heavy burdens on a nation.

He stated: “These will be the ways of the king who will reign over you: he will take your sons and appoint them to his chariots and to be his horsemen to run before his chariots, and he will appoint for himself commanders of thousands and commanders of fifties, and some to plow his ground and to reap his harvest, and make his implements of war and the equipment of his chariots. He will take your daughters to be perfumers and cooks and bakers. He will take the best of your fields and vineyards and olive orchards and give them to his courtiers.”

Samuel’s views seem like a modern indictment of a huge and expanded government.

Technically insolvent

Take a keen look at the Kenyan government structure. The country has more than 350 state-owned parastatals and entities. The majority are technically insolvent but the government continues to sink billions into them each year.  

These include the Kenya Bureau of Standards, which sank into a huge budget deficit in the year ended June 2021. Other loss-making entities include National Museums of Kenya, the National Oil Corporation of Kenya, the Kenya Post Office Savings Bank (Postbank), the Postal Corporation of Kenya, Nzoia Sugar and the National Environment Management Authority, Kenya Airways and Development Bank of Kenya.

Other agencies have been rendered redundant by devolution but the national government retains them on spurious grounds . 

For example, regional bodies no longer serve any public good. They include Ewaso Ng’iro South Development Authority, Ewaso Ng’iro North Development Authority, Tana and Athi Rivers Development Authority, Kerio Valley Development Authority, Lake Basin Development Authority and Coast Development Authority.

Others have conflicting roles. For example, women rights are human rights and hence it is never clear why the National Gender and Equality Commission should exist as a standalone institution when Kenya National Commission on Human Rights exists.

 Female Genital Mutilation (FGM) is a crime under Kenya's penal code but someone found it wise to establish an entity called Anti-FGM Board. Probably the same wisdom should be extended to create an Anti-stealing board or Anti-murder board.

I do not suggest these bodies are not doing a good job. The issue is simply whether a leaner government can achieve intended goals and save public resources.

If radical measures were undertaken to reduce the size of the national government, billions would be freed and re-directed to sectors that impact the common man directly. For example, in December 2022 it was announced Kenya Airways will get an additional state bailout of Sh34.9 billion.

Assume these monies were redirected towards extending National Hospital Insurance Fund (NHIF) coverage. Sh34.9 billion is enough to pay NHIF card fees for 5.8 million households annually at the rate of Sh6,000 per household.

The average household size in Kenya was 3.9 members, according to the 2019 census. That translates to 22 million Kenyans being newly NHIF-covered after redirecting KQ’s Sh34.9 billion bailout.

Of course it can be argued KQ has about 4,000 employees who deserve protection. It also serves Kenya’s strategic interests of making Nairobi a business hub, facilitates export business and promotes tourism (though it is not clear how these objectives cannot be served by other airlines ). But can these reasons outweigh the interests of 22 million Kenyans?

Or assume these funds were redirected towards primary school feeding programme to boost class attendance. In 2021, nearly 10.2 million pupils were enrolled in primary schools in Kenya.

Murang’a County’s Early Childhood Development Education (ECDE) porridge programme shows that one cup of fortified uji costs an average of Sh12 per learner.

If this was extended countrywide for 10 million primary school learners, that would translate to a budget of Sh21.6 billion per annum. The beneficiaries would not just be the pupils; the parents’ out-of-pocket expenditure would be saved and redirected towards other productive causes.

Free education

Assume these sums were redirected towards secondary day scholars. In 2021, Kenya had approximately 3.7 million students in public and private secondary schools. Those in day schools are about two million and they pay Sh10,000 per annum for their food. The government needs Sh20 billion only to achieve absolutely free day school education.

The above points illustrate why the government’s intention to sell off loss-making parastatals is a good idea.

Such bold measures explain why Margaret Thatcher remains a popular former British Prime Minister (1979-1990). Thatcher’s economic policy championed for lowering of direct taxes on income and increased indirect taxes. She increased interest rates to slow the growth of the money supply, and thereby ensure lower inflation; introduced cash limits on public spending and reduced expenditure. 

By 1982, the UK began to experience signs of economic recovery; inflation was down to 8.6 per cent from a high of 18 per cent. By 1983, overall economic growth was stronger, and inflation and mortgage rates had fallen to their lowest levels in 13 years. Kenya deserves such bold reforms.

Dr Kang’ata is the Governor of Murang’a County.