The Daily Nation of September 9, 2021 headlined “Battle of economic models” featured economic paradigms by William Ruto, Raila Odinga, Kalonzo Musyoka and Musalia Mudavadi forming their 2022 electoral arsenal. The Deputy President now believes to counter his bottom-up mantra, other politicians are switching from politics of tribe to politics of the economy.
Are we witnessing the reincarnation of issue-based politics as ignited by Kenya’s Sessional Paper No. 10 of 1965 African Socialism and its application to planning in Kenya and Mwai Kibaki’s Economic Recovery Strategy for Wealth Creation & Kenya Vision 2030?
I have had the opportunity to crowd source ideas from youth organisations, the faith sector, professionals, academia, business class, civil society, diaspora, grassroots populations in Makueni and elsewhere, on how Kenya’s economy and the state can be fundamentally reformed for citizens’ general good. In particular, I have benefited tremendously from academic exchange with Prof Thomas N. Kibua of Strathmore Business School.
Further, I wholly embrace Henry Timms & Jeremy Heimans insight: “The future will be a battle over mobilisation ... How do you create ideas that the crowd grabs onto, makes stronger, and helps spread?” (2018:11).
As a prelude to creating a country’s economic framework, one must ask: Why has the past denied the country’s majority citizenship? Why does a country cry for a new economic order?
Inequality in Kenya is deeply entrenched. In 1974, J M Kariuki described the country as home to ‘10 millionaires and 10 million beggars’.
In 2017 an Oxfam study established that less than 0.1 percent of Kenya’s population (8,300) owned more than the bottom 99.9 percent (more than 44 million people).
Recently, President Uhuru Kenyatta revealed that the country loses Sh2 billion daily through corruption, an equivalent of two years’ equitable share disbursed to counties.
Clearly, Kenya’s almost 60 years of top- ‘tenderpreneural’-led trickle-down model has created a dualistic economic structure in which the haves do very little to uplift the poor. They literally enslave the latter with handouts and token development initiatives.
The colonial economic edifice has survived well into flag independence and continued to perpetuate the accumulation of wealth and incomes by the few.
Productive resources are predominantly owned by the rich. As a consequence, this inequitable system has produced a large under-class consisting of a pool of underpaid workers, the unemployed, under producers in agriculture and, paradoxically, yet loyal voters for their ethnic kingpins.
The wealthy minority gobbles any growth in the economy. They are a super elite ‘Ownership Club’ whose riches are not necessarily the product of hard and honest work. No wonder Oginga Odinga described Kenya as ‘Not yet Uhuru’.
The above predicament should awaken anybody coining an economic model to the following realisation. The cardinal objective of the paradigm should be to create political government that promotes sustainable governance and development that is, economic growth, reduction of poverty and inequality.
Any economic model that does not restructure and democratise a country’s economy so as to empower the masses and drivers of clean business is bound to fail. On the contrary, an Utu economic model as I will subsequently demonstrate, if well conceptualised and implemented, will turn around the country.
We are re-imagining a reconfiguring of the human resource, land, and capital arenas to guarantee the economy continues to grow, poverty is drastically reduced, and inequality is significantly resolved.
Majority of Kenyans are capital starved. They cannot afford bank loans whose interest rate hovers around 18 percent a year. Predictably, self-employment and business options for the majority are constrained by lack of accessible and affordable credit.
Historically Kenya Industrial Estates, Industrial Development Bank, Agricultural Finance Corporation and Industrial and Commercial Development Corporation were national institutions created to provide easy and reliable credit to emerging entrepreneurs. The promise of such credit evaporated when the institutions were handed over to politically correct managers.
Therefore, we should create a second tier of community-based financial institutions owned by communities, particularly in the rural areas through policy and law. Models of such institutions exist in Bangladesh (Grameen Bank), Bolivia and Indonesia.
Kenya’s microfinance institutions still levy high interest rates. They are also hampered by onerous Central Bank requirements. For over four years, Makueni County has been unable to register its Ene Microfinance due to a silent freeze on licensing of such new institutions.
Loans from saccos and financial service associations, although more accessible to the rank and file attract relatively high interest.
Legal reform can facilitate the flourishing of revolving funds associated with chamas/merry-go-rounds and welfare investment clubs. Significant unregulated capital resides in these informal settings. Once regulated, these can provide capital to initiators of micro small enterprises (MSMEs), youth owned start-ups and other sole proprietorships. In Makueni, we initiated Tetheka Fund, which loans residents at an administrative cost of 3 percent.
Community insurance schemes should also be introduced to protect the uninsured.
Unless ownership of capital is also community based, grassroots economic empowerment will continue to be a pipe dream.
Human resource in terms of education and health is a critical factor of production. For people to be productive, they must possess the requisite knowledge, training and capacity as well as be healthy. Therefore, equitable access to quality education and health are necessary for overall peoples’ growth.
Public educational and hospital institutions should be decentralised, well equipped and staffed. Each sub-county, to begin with, should have a level 5 referral hospital. Staff should even be hired by the hospital, just like in the private sector. An affordable and reliable public medical insurance should be established.
Educational opportunities should be equalised. Each sub-county, and later ward, should have their own equivalent of Alliance High School as a centre of excellence. It is discriminatory to have national, extra county, county and sub-county schools with differing facilities and capacities. At least each county should have a university and a high level technical institute.
Article 60 of Kenya’s Constitution provides that land “should be held, used and managed in a manner that is equitable, efficient, productive and sustainable …”. This clause authorises necessary reforms in relation to the land factor of production so as to guarantee entitlement and use-based ownership.
Land should be owned only by those who put it into economic use. Absentee land owners should be heavily penalised through taxation. This would neutralise land speculation. Previously at the Coast, land belonging to absentee owners has been turned over to squatters.
The state should facilitate availability of land to those who want to farm; those who wish to develop real estate, establish industries and public institutions, construct their own dwelling houses, etc.
In a sequel article, I will discuss how the Utu economic model can spur economic growth.