This is what needs to be done to pull Kenya out of economic slump

The Kenya-shilling bank notes.

Photo credit: File | AFP

What you need to know:

  • Like so many others around the world this economy has been severely mauled.
  • So we must get out of our psyche that government monetary intervention is the silver bullet.

We need to get real very fast indeed if we are to get out of the deep ditch Covid-19 has driven us.

Nearly a third of low income workers have lost their jobs, many others have been laid off and much of the economy and commercial activity is hardly functioning or just limping along. It is estimated 1.7 million Kenyans have lost their jobs in the last three months.

The measures of partially opening up the economy and activity generally should not be misconstrued that we are getting back on track and things will stabilize. We are at the beginning of an exceedingly long, complex and tricky road to economic climb back.

At the same time we should stop this shallow banter about what sort of ‘economic stimulus package’ we need. We are just playing with words.

It is a complete and total misrepresentation of the grave situation and predicament we are in. It is a cynical exercise in smoke and mirrors. It also exhibits a fatal lack of understanding of the monumental economic and commercial havoc, indeed destruction, Covid-19 is causing in Kenya and much of the world.

We are not tinkering with the economic engine of Kenya because it is in need of service or because it has a slight splutter or is acting lethargically. Like so many others around the world this economy has been severely mauled.

Some would say it has gone beyond that and is in need of extensive surgery and resuscitation. I would agree with this and add that it is currently in the HDU High Dependency Unit (HDU).

Careful interventions

To put it another way we have been thrust into the jaws of the ‘pestelo’ age where we are confronted by a formidable combination of challenges and forces: political; economic; social; technological; environmental; legal; organisational.

In short, we can get out of it but only with a combination of careful interventions, serious nursing and concerted action from all of the players in the economy.

And let us not talk about the economy as if it is one unit. It is made up of all of us and everything we do in one way or another. It involves many activities and actions. We are all interlinked and interdependent drivers of it.

What we should be concentrating our many minds on is an extensive, all-embracing and holistic plan of action involving everyone and with the government as an important facilitative player but not necessarily the driver.

At the end of the day it is us, the movers and shakers and the working ants, who will really get it moving again.

We are the drivers of the economy. If we wait for government to do this we will not succeed.

Various incentives

I do not want to underplay the role of government. It has an important, some would argue pivotal, function especially in facilitating and even enforcing a conducive environment. This could be in several forms such as legislation, policy guidelines, various incentives and even penalties.

But a word of caution is needed. In the Kenyan context one should not expect the government to provide much, if any, money for bailouts, subsidies or stimulation.

The reason is simple in that the government is severely strapped for cash and has a problem even paying for its day to day operations.

Nor does it have a lot of leeway on the borrowing front. The government is very heavily over-borrowed both domestically and internationally.

So we must get out of our psyche that government monetary intervention is the silver bullet.

Available resources

There is an additional factor. Post Covid-19 economic havoc is a worldwide phenomenon and is greedily gulping up any spare monies and resources available. It will be a thin spread whichever way one looks at it. Much of the world has been hit and so there are many, many demands all round.

Yes, government can give a few tax incentives but again the options are limited since the government needs every shilling it collects. The fact that the government decided to increase fuel taxes twice in such a short time on the back of the decline in international fuel prices is a good example of its hunger for revenue.

Where government is key is facilitating and putting together a team of exceptionally capable people with a vision and capacity to steer and guide this economic reconstruction. We have yet to see this. Maybe we should be thinking of a super Ministry of Economic Reconstruction

This brings us back to the remaining viable options which are key to a successful revival. They revolve around the drivers of economic and commercial activity and the environment in which they operate.

The approach has got to be comprehensive, sector by sector and holistic but within a conducive operating environment.