The Jubilee Party is running down Kenya

Uhuru Kenyatta

President Uhuru Kenyatta. 

Photo credit: File | Nation Media Group

Kenya is a failed state and, if in doubt, consider President Uhuru Kenyatta’s latest admission that his government was losing Sh2 billion every day to corruption. While it is bad for a company to lose a third of its revenue to corruption, it is worse for the CEO to seem unmoved by this level of leakage and incompetence. There is hardly any corporation that would keep such a CEO but, since Kenya is not a company, the President’s position is secure.

The admission was not surprising, however, for we have seen how graft has become endemic and systemic in the national and county governments. Critics have long held that Jubilee Party was nothing but an enterprise of thieves, a handful of whom have since captured the State.

President Mwai Kibaki steered a fairly good government which had, nevertheless, some bad and corrupt fellows in high places. Some of these individuals even put John Githongo, the then-Permanent Secretary for Governance and Ethics, to flight. Others attempted to undermine the Government of National Unity by rocking it from within, fomenting never-ending controversies and turbulence and instigating ethnic animosity.

This notwithstanding, President Kibaki managed to deliver significant reforms, including a new Constitution in 2010. He also launched signature projects and left us with a national development blueprint — Kenya Vision 2030. There was a decent, professional government bureaucracy, functioning state enterprises and a healthy balance sheet. When his economy grew, it was as if the tide had come in; everyone’s boat was lifted.

And then things changed.

Not sure

Some people are not sure how a government could lose Sh2 billion a day to graft. But it is the President telling you that — about his own government. Where, then, is the international community — including diplomats, the United Nations, the IMF and the World Bank? Why aren’t they shining a spotlight on this problem?

But has the President even sought help, or it’s yet to reach crisis levels? Why isn’t he and his team stopping individuals from taking so much of our money — every day? Are the beneficiaries the President’s foes or allies, and does it even matter?

I have previously questioned the World Bank’s economic assessment that ignore these realities and rank the country among top performers globally. This is simply inconceivable given realities on the ground, including the worsening of the core fundamental pillars.

How would these impressive projections be realised when excessive domestic borrowing by the State is crowding out private investment, debt repayment is creating massive capital outflow and high taxes are bound to kill private enterprise? The bank’s assessment does not align with economic theory and is inconsistent with its own work on, say, the Worldwide Governance Indicators (WGI).

Research project

Since 1996, the bank and the Brookings Institution have been working on WGI as a research project to develop cross-country indicators of governance.

There are six indicators that capture the broad dimensions of governance: Voice and accountability; political stability and absence of violence; government effectiveness; regulatory quality; rule of law; and control of corruption. Using this data, empirical studies have since concluded that the rule of law, control of corruption and voice and accountability were positively correlated with gross domestic product (GDP).

In other words, quality of governance is deemed a major predictor of economic growth and development. Efficient institutional structures, the rule of law and regulatory quality help to address uncertainties in the market and resolve information asymmetry. Addressing corruption and embracing freedom of expression and transparency and accountability have a positive impact on economic growth.

Corruption, and the weakening of property rights and institutions such as the Judiciary, increases risk and uncertainty about ownership and potential returns on investment. It, therefore, follows that external investors often exit countries experiencing poor governance.

The World Bank’s WGI indicators reveal a disturbing picture regarding Mr Kenyatta’s government. It has reversed gains made by Mr Kibaki across all the six indicators. For instance, after peaking in 2014, voice and accountability has fallen rapidly, reaching 2007 levels last year. Government effectiveness has also declined significantly. We are now back to the 2010 levels. There is also a steady erosion of the rule of law and regulatory quality.

In brief, we are in a race to the bottom, heading back to the days of President Daniel arap Moi.