Cost-cutting and taxation will not revive economy

The dilemma on how to handle the ballooning national debt and general scarcity of money is real but some of the measures being proposed by those responsible are disingenuous.

The President has, for instance, signed the Finance Bill, which sensibly scrapped the initial plan to tax essentials like bread, but which has replaced that with an equally punitive excise tax on data and voice for mobile-phone users.

One can hardly think of anything that has positively impacted the way we live and interact than the mobile phone. Ironically, the mobile phone penetration was spurred by the removal of tax on the cost of handsets a few years ago.

Now the government is going to take Sh36 (Sh20 for excise tax and Sh16 for VAT) from every Sh100 that one spends on buying airtime or data. This is extremely burdensome and could well have a limiting effect on the penetration of the mobile phone services and the incredibly facilitative role it has in promoting financial inclusiveness.

Elsewhere, the Teachers Service Commission (TSC) and the Kenya National Union of Teachers (Knut) are having a tussle over the decision of the former to freeze salary increments over the next two years. In fact, Knut is making noise because it can.

The rest of the civil service faces the same prospect as the proposal actually comes from the Salaries and Review Commission. It proposes to freeze salaries of all civil servants for two years or so. We should, therefore, expect more noise from representatives in the coming days.

These decisions are actually part of the conditions that have been stipulated by the International Monetary Fund (IMF) as the pain we have to suffer if it is to support our plea for cash to service Kenya’s colossal debt and continue breathing. There is going to be plenty of this pain because we are being forced to be more disciplined. The big three public universities, already on their knees because of resource scarcity, are expected to cut costs further – basically shed off more people to reduce the wage bill.

Monster of corruption

There is nothing wrong with being efficient. It is a required discipline in life that prudence in expense be exercised at all levels. The challenge is that the measures are not voluntary and could hardly have been necessary if the right decisions were taken in the first place. Further, these proposals do not spring from a genuine desire by the country’s leadership to lead by example.

Our government is the most extravagant item on our national balance sheet at the moment. The excesses at both the county and national levels are extraordinary. They employ more people than are necessary and more are added every day not because of need, but because of political patronage.

Almost a decade into the implementation of the 2010 Constitution, many counties have never rationalised their staff to match their needs. All the governors simply added layers of new staff on the establishment that they inherited from the dissolved municipalities and county councils. At the national level, services may have been devolved but the human beings employed at headquarters generally stayed on. It is quite bizarre.

But one could be generous and accommodate these excesses if only there was efficiency and productivity. When President Mwai Kibaki introduced the performance management tool in the civil service and personalised its application to the effectiveness and productivity of the individual, we felt the impact. Delivery of services was efficient and the knock-on effect on the economy was tremendous. The novelty of that tool has worn off and it needs a review.

The other reason more taxes and salary freezes will not lift us out of the hole we are in is simply corruption. President Uhuru Kenyatta has done a lot of things right and generally has been inspired by the desire to do the right things for the country but he has failed to deliver in the one area that mattered most – decisively tackling the monster of corruption. This is the one vice that underpins the inefficiencies we suffer. It is the one that has fed the craving for more debt. It is the one that feeds the reluctance to achieve efficiency because it thrives best in opacity and absence of clarity.

It is corruption that has stolen the heart of Kenya. Freeze salaries, tax the life out of wananchi, lie to them about serious intent to repair their battered bodies. It will not matter. It is like Lazarus waiting for resurrection, only that Jesus is not passing by any time soon.

The writer is a former Editor-in-Chief of Nation Media Group and is now consulting. [email protected], @tmshindi