Life is getting tougher every day, but you ain’t seen nothing yet

The talk all over the country is how tight everything is.

Money is scarce, business slow and the wheels of commerce grinding slower and slower. The election and drought of 2017 was bad enough, but some say this year could be worse.

One reason is that, as the government approaches the end of its financial year, the flow of money from it goes down to a trickle.

Budgets have been used up and new money will only hit the account in July. It is, literally, running much of its necessary business on IOUs.

The other is that we have just been through one of the driest and hottest periods in more than 35 years.

The country was parched, crops got stunted or even failed and what did reach the consumer had galloped in price. The whole food chain dependent on agriculture virtually seized up.

FOOD DEFICIT

A good example of this is that what was planted in our major maize-producing area in North Rift has largely failed; so, we will have a much smaller maize crop this year and imports will have to start sooner or later.

Should the rainfall persist, we might get a little relief with some short-term crops — which will be better than nothing but would not fill the food deficit gap.

Inflation has been rising, squeezing consumer spending and slowing commercial and economic activity. Less goods are being bought, which, in turn, reinforces the overall downturn.

Flows of the much-talked-about anticipated investment have just not been forthcoming. Compared to 2017, the cause is not a “wait and see” factor.

On paper, we have some big pluses: Kenya is a regional hub with relative political and economic stability. It has a productive workforce with plenty of potential.

CORRUPTION

The elephant in the room is the mega corruption and looting. This not only diverts what would otherwise be productive resources, it puts off people, especially current and future investors.

A current investor will slow down or hold back on investments and prospective investors look for alternative countries.

Coupled with this is the growing scepticism on the so-called war on corruption. Despite spirited attempts by Director of Criminal Investigations George Kinoti and Director of Public Prosecutions Noordin Haji, progress is slow and patchy.

And then the cynical, but blunt, observation that the ‘big fish’ are still untouchable. The anti-graft talk is not being walked and the true cost of corruption could be nearer the three per cent lost growth range.

One indicator to watch will be the transparency or otherwise of the forthcoming maize importation. Past cases have been common looting grounds.

But this time round, there is a sense that even with all of the above factored in there are still other deeper causes.

KRA ARRESTS

Anyone who has scraped the surface of the onslaught on a number of KRA officers knows that what is taking place is both groundbreaking and momentous.

The Customs Department of KRA has been one of the corruption-hardy perennials for years. It makes Kenya’s traffic policemen look like minor offenders.

Remember, Customs oversees and operates the tariff collecting regime on imports. That involves large revenues from the relevant duties. Skimming off a little of that is mega bucks.

The methods used are alarmingly simple but even bolder and cruder methods can be applied. Much more on this saga will come out, but it has all the makings of a long-running and lucrative corruption spree involving billions of shillings.

IMPORTS

The honing in on these scams is good news, but it also has macroeconomic consequences, which could fit in the final pieces of the slowdown jigsaw.

Customs is in disarray. Its operations have slowed to a snail’s pace. Clearing and forwarding of goods is crawling.

Shortages of imported goods are increasing. Imports, a key cog in the economic engine, are held up and, worse, importers cutting back on orders.

Its impact on the slowdown is yet to be known, but it looks like it could give clues to the puzzle.

Mr Shaw is an economic and public policy analyst: [email protected]