To reboot the economy, we must not focus on sectors at expense of others

 

On the Saturday of December 12, 2002, I was part of the sea of humanity that took over the entire of Eastlands from the airport, the Central Business District and Uhuru Park. There was an aura of change on the country’s top leadership.

The current president was the ruling party’s presidential candidate. The captain of the Opposition had been injured on a road accident days earlier and flown to the UK for specialised treatment. And he was returning home for the ballot that would end the 40-year-era of the independence party. At that time, nobody worried much that the captain was injured because around him was a robust team.

The climax of the day was a chaotic rally at Uhuru Park late into the evening. The import of my discussion today is from the speech of the then vice captain, the late Michael Kijana Wamalwa.

In his wisdom, he had captured the essence of the moment with these words: “For a great leader to realise his greatness, he must stand on the shoulders of other great leaders.”

This statement sums ups the workings of an economic system. The economic growth that we measure under the Gross Domestic Product (GDP) is a sum total of several independent variables interacting under the directive of top leadership in the country.

Extractive political institutions destroy the genius of economic forces to organise the national endowments, talents and the reward system to generate the desired economic outcomes.

Identify investments

In the eyes of the late Wamalwa, for an economy to redistribute the national wealth equitably, then policy and political leaders must not only focus on the parts of the economy but also their interactions as a whole. In the current regime, big infrastructure projects have been highlighted as the pillars of President Uhuru Kenyatta’s legacy. Unfortunately, a legacy is not something that you can do projects towards, but the outcome of several daily activities happening across all government sections and departments.

Empirical evidence on economic development identify investments in physical capital, human capital, technological progress, natural resources and property rights, and political stability as drivers of economic growth. On the other hand, government consumption spending, political and social instability, trade barriers and socialism reduce economic growth. If these are the drivers and inhibitors of growth, how then do we appraise the preoccupation with the legacy projects?

All sectors matter individually and collectively. Investments in physical capital include machinery, tools and building that enhance workers productivity. It is unacceptable that the economy is heavily reliant of subsistence farming using equipment of the agrarian era. This implies that the country has failed to leverage on modern productive capacities to exploit her labour force.

Human capital refers to the combination of education, health and other non-physical assets of the nation’s workers to enhance their productivity. Relevant education that impacts economic growth is both formal and informal. Formal education is measured through public spending to finance learning institutions and time students spend in formal schooling. There is a positive relation between the number of years students spend in school and the economic growth of a country.

The informal education is considered from the competencies that a country’s workforce acquires from the workplace. According to World Bank, Kenya’s spending on education as a ratio of the GDP was 3.93 per cent in 1971, 7.3 per cent in 2005 and 5.3 per cent in 2018. While this is higher than the sub-Saharan Africa average, the return on investments is lost with the higher levels of unemployment or underemployment.

The economy is heavily dependent on imports and predominantly informal that it misses out on the informal education economic benefits. On health, in 2018 Kenya spent a paltry 5.17 per cent of her GDP compared to the world average of 9.85 per cent. This would imply that in addition to the national disease burden, Kenya’s workforce productivity would be significantly compromised due to health-related complications.   BY THE STANDARD MEDIA