The Kenya Kwanza coalition on Thursday launched its ‘Bottom-Up Economic Transformation Agenda 2022-27’ at the indoor arena of the Kasarani Stadium.
Our view at the Institute of Economic Affairs is that a review of such a plan must start with what it demonstrates about the understanding of the drafters, the candidate, or both; about the legitimate role of government. We argue that for a low-income country such as Kenya, government effectiveness is best demonstrated by the concentration on the provision of what economists refer to as public goods.
In this respect, the Kenya Kwanza plan presents an interesting revelation. For instance, the word ‘government’ (and its variations) appears 56 times in the document. And that is expected because this is a governance plan that is being launched. That notwithstanding, our judgement is that the drafters and the candidate have a far rosier view of their personal and public sector’s ability than we do. This contention is based on the fact that this coalition consider that government solves problems primarily by spending money. Consider that the word ‘fund’ (and its variations) appears at least 50 times in a 66-page document.
The coalition proposes to establish, reform or conceptualise new funds as a major plank of public governance. In all, we counted up to 10 new funds, with only a single instance in which a suggestion is made for merger of existing funds to achieve efficiencies and lighten the bureaucratic burden faced by citizens. We think that “Governance By Fund” is not a model that a government that will succeed Jubilee Party should still recommend to Kenyan citizens. But, perhaps, old habits die hard. The proposer of the plan is a co-governor with the incumbent.
Secondly, the plan bears an interesting laudable contrast to that of their main competitors, the Azimio coalition. To the credit of its drafters, their diagnosis of Kenya’s economic and political challenges is in many chapters quite detailed and makes for good reading and delivered with erudition and credible quantitative grounding. On this score, a set of chapters suggests that there is at least one very informed head in that drafting team. While it is too heavily pitched with alarmist political slogans, the first two chapters, named Perfect Storm and Why Bottom Up?, contain the coalition’s interpretation in why Kenya faces the crises that it does and that most of these are outcomes of the political economy arrangement. They are largely correct, except for the wide berth given to the fact that Kenya Kwanza leader and most of its political cadre were part of the Jubilee administration. The hanging part of these well-written chapters is they are stating surreptitiously that Kenyans should trust them to have better judgement next time. That’s a hard sell.
The plan acknowledges that prioritisation is essential for effective governance. And the early portions of the plan selects five sectors, including agriculture, MSMEs, housing and settlement, healthcare and digital superhighway and the creative economy as core pillars of the plan. The plan provides seven solid reasons for the choice of agriculture and this connects to job creation, foreign exchange earnings, reduction of costs of living and income growth, among others. The disciplined approach of the economic parts of the plan are evident because the coalition’s commitments here tightly tie the problem to its commitments. Unlike their main competitors, their document presents seven commitments and shows fiscal awareness by declaring an estimate of the financial cost of that implementation.
One could argue about the accuracy of their estimates, but the intention and its fiscal effects are speed out, implying that any expenditure above this estimate would require explanation to taxpayers. In our view, the woolliest part of this focus on agriculture is the reintroduction of the Guarantee Minimum Return policy. The coalition’s leader acknowledged a tension between the households’ requirement for affordable goods against the interest of farmers for high incomes per unit of produce.
It appears that in placing the GMR at the centre of agriculture policy, Kenya Kwanza and its leaders have resolved this tension by siding with the producers, against the consumers. How come, in farming, this coalition seems to be siding with the dynastic farmers with surplus produce, against the hustler who has to buy his supplies from the market? Regardless of the sign of this GMR policy, it will offer a disproportionate surplus to large-scale farmers, most of whom would fit Kenya Kwanza leader’s definition of “the dynastic” club.
On healthcare, Kenya Kwanza diagnosis of the national challenge is worthy of reciting here. The plan reveals the fact that the public sector pays for 63 per cent of all spending in Kenya, with the rest made by households and private insurance schemes respectively. The plan shows consciousness for the fact that improving the health service outcomes in Kenya will depend greatly on how the government’s buying power is deployed to achieve better welfare outcomes. Again, the coalition has a set of five commitments whose highlight is the establishment of a three-tier Universal Health Coverage (UHC) model. The proposed reforms would result in three tiers with a primary healthcare portion that is fully financed but allows for choice, complemented by the universal health finance system and the third tier being the national fund for chronic diseases.
This is a very sensible arrangement and the goals are laudable. It also states that Kenya Medical Supplies Authority scandals must end and that’s true, except that some of those cited in the reports bythe audits conducted at the behest of Parliament place Kenya Kwanza’s leading governor candidates as “persons of interest”. We highlight this to suggest that Kenya Kwanza would have difficult days ahead if it plans to achieve these reforms. An additional crease to the solutions proposed for reform of the National Health Insurance Fund and human resources for health is evident. With an ostensible commitment to equity in distribution of doctors, Kenya Kwanza seems to cop out in fear of confronting the public sector unions representing medical professionals by choosing to “mediate between county governments and medical professionals on recruitment, training and deployment choices”.
If it quacks like a duck, then it is one. This is an unequivocal capitulation to licensed professions, which tend to have disproportionate power in the public sector and thereby affect service delivery spatially and in terms of quality. Kenya Kwanza must choose to fight all dynasties or risk looking like hypocrites.
Kenya Kwanza intends to confront the regulatory quagmire that allows the NHIF to act as regulator, fund manager and service provider, all in one. Predictably, this “quagmire” is responsible for the fact that this institution is the hotbed of corruption that all citizens know and colludes with many private sector hospitals, to the detriment of contributors. Kenya Kwanza states that reforms... “would entail separation of fund management, claims administration and regulatory functions.” We assert that confronting the administrators as suppliers of corruption and inefficiency is well supportable and in the public interest. However, to confront that side, while leaving occupationally licensed professions to straddle the public sector and demand inclusion of a health commission in the constitution is a show of tackling only unpopular administrators.
Besides, we think Kenya Kwanza doesn’t fully appreciate that the inclusion or not of a health services commission in the Constitution or change of governors’ relationship with “medical professionals” is not a matter for which the national government itself is free of some blame. On the political side, we don’t think the mediation being sought is one that taxpayers would approve. Show some steel against public sector union folks! This oversight is repeated in the alacrity with which the plan proposes to hire an additional 116,000 teachers within the next two years when its credible data shows that the larger problem in public sector education is the inequitable distribution of teachers and that mere recruitment without changes in deployment policy wouldn’t be a good solution. The Kenya Kwanza plan also lacks a dedicated chapter to state divestiture and privatisation. It is not clear from reading the document whether this is considered a politically risky declaration or not. The word privatisation appears once and in a positive sense but is neither elaborated upon nor addressed in other forms.
In our view, the document, in the economic chapters, is crafted by a policy scholar who has superior understanding of the ground in which policy is administered. Our fear is that many of the political leadership and journeymen in the think tank are none the wiser by simply copying the assignment of its smartest economist in the class.
Kwame Owino and Leo Kemboi work at the Institute of Economic Affairs