In the Sunday Nation of September 12, 2021, I began to unveil the Utu economic model. First I described the dualistic nature of Kenya’s top- ‘tenderpreneural’-led trickle-down economy, which creates a minority ‘haves’ and majority ‘have-nots’.
I then examined how Kenya’s factors of production – land, labour and capital - can be strategically harnessed to ensure their availability to all Kenyans and other investors.
In this sequel presentation, I will tackle how factors of production can be converted into economic growth; the way the resultant growth is shared; and market access by primary producers. But first let us define two terms: Utu economic framework and economic growth.
The Utu economic model encompasses the democratisation of a nation’s economy to affirm people-centeredness so that control of the factors of production and the derivative economic growth are distributed equitably.
Economic growth is the increment of economic goods and services through sound management of the means of production to achieve a rise in national and individual incomes. Such upswing, if and when equitably shared, mitigates poverty, unemployment, underemployment and generally, peoples’ marginalisation.
How is economic growth to be achieved within an Utu economic model?
Kenya must carry out a country-wide resource mapping and grow the economy using, in the first instance, the country’s identified local resources. Currently there exists a striking mismatch between national investment and Kenya’s resource portfolio.
Due to the peoples’ appetite for foreign products, we, for example, continue to import cotton products such as mitumba. The ultimate beneficiaries of the mitumba sub-economy are business magnates, with hawkers and small traders distributing the wares for peanuts. We import shoes from Italy, juice from South Africa, and eggs from Uganda and China. We import many goods that we can produce.
In the 1960s through to 1990s, Kenya was a leading cotton producer in Nyanza, Eastern, Rift Valley, Coast etc. The Kisumu Cotton Mills (Kicomi) founded in 1964 was a thriving company producing sarongs among other products and employing many people and benefiting thousands of farmers. When the government allowed invasion of polyester and mitumba, the company folded in 1982. Even when revived as a parastatal, it closed shop in 1993.
The Rift Valley Textiles (Rivatex), United Textiles Industry and East Africa Fine Spinners faced similar tribulations. Since 2007, Moi University runs Rivatex.
Arguably, if the textile companies had been properly managed and shielded from preferential tax breaks for imports, the country’s textile industry and local production of cotton would today be thriving.
For the country’s economy to grow rapidly, we must substitute unnecessary imports with locally produced goods. We should not import what we can produce. When we do that we cede jobs to foreign countries. Currently, we are importing more than we are exporting, hence an unfavourable balance of trade.
Growing the economy from the bottom entails promotion of cottage industries. Value addition in the rural environment must be prioritised. The government’s main roles become elaboration of policy and legal framework and establishment of standards. Production will then lead to aggregation and marketing.
With the support of sub-national governments, value addition through cottage industries can be established by the private and public sectors in each of our current 1,450 wards, or 290 sub counties to begin with. The youth can through social entrepreneurship establish start-ups. The next level must be the creation of cottage industries for the majority with the potential to graduate into manufacturing and export of surplus.
To spur a grassroots-based economy, rural and informal settlements’ infrastructure is essential. This can be anchored on labour-intensive technology. In the Kenya of 1970s, young people built durable all weather roads. Recently in Machakos, the youth have been engaged in making murram roads.
Through labour intensive methods, groups can be mobilised to build road networks, dams, rural and informal settlement housing, environmental conservation and rehabilitation, afforestation etc. These labour gangs can even work in three 8 hour shifts a day.
To catalyse economic growth, foreign direct investment must be encouraged. However, the question of local content in any manufacturing by a foreign company should be negotiated. The Associated Vehicle Assemblers of Mombasa, and Makindu Motors of Makueni County, are able to assemble vehicles and motorcycles to obviate the country’s reliance on similar imported items.
The Utu model acknowledges Africa’s culturally hallowed work ethic and self-reliance. However, it also embraces equity for all classes, as distinct from welfarism. There must be equal access to health, education, public service and security. The elite enjoy security services while the majority are not served, especially by the police. The youth perceive the police as an enemy, not protector.
Security must be decentralised to the villages and informal settlements. Community policing should be legalised and prioritised so that citizens have a role in their own policing. Clearly, policing must be made universally available.
Before the 2010 Constitution, many regions in Kenya felt marginalised. Devolution is beginning to change that historical reality. The development portion of the 85 percent national equitable share and nationally based development partner funding must be distributed in such a manner as to guarantee equitable socio-economic development.
We have never, for example, undertaken an analysis of how the 1963/1964 to the present national budgets have been allocated to districts, and now counties, to determine which regions require top-up affirmative development action.
One major constraint in the country’s economic framework is the distortion of the market through its capture by middlemen/women.
Our economy is a middleman-driven economy; what Willy Mutunga called a bandit economy. Farmers, to give an example, have their produce bought by profiteers who sell at high prices in the market. The primary producer is exploited due to lack of market knowledge. Real economic growth will never occur where majority producers are swindled by cartels and corrupt public servants.
Previously, a national government ministry of supplies and marketing, where Musalia Mudavadi once served, tried to assist farmers market their produce. Such dedicated marketing strategy at both national and county government levels should be revitalised.
The National Cereals and Produce Board (NCPB) began as an institution that would stabilise and guarantee decent return to the farmer. Farmers were to aggregate produce and sell it to NCPB. However, brokers began to buy directly from farmers and then sell to the NCPB. This subversion of the original intent must be dealt with.
Also goods produced in jua kali and other cottage industries should be standardised and supplied to the market.
Ultimately, the Utu economic model calls for fundamental structural economic reforms to ensure small economic units and activities form the base for pervasive national development, to facilitate shared growth and prosperity.
The benefits of economic growth then accrue to each according to their effort, and to all, beginning at the grassroots up to the middle class and elite, according to the equitable development principle.
In the final piece of the Utu model, I will discuss the political and community infrastructure needed to support and actualise the paradigm.