strengthening the social contract?

Occasionally I come across news that make me think that Kenya is still on the right track. The circus that is the current debate on the review of the constitution is definitely a reminder that the east African nation has a long way to go. But things are looking better elsewhere. For one, more Kenyan businesses (which include some of the noisemakers in parliament and their relatives) are lending to the central government. This is encouraging news in two ways:

First, it means that more people are investing in Kenya Co. and therefore will have incentives to make sure that the country does not go the way of the Ivory Coast.

Second, it means that more of the idle capital will get utilized in the provision of public goods, albeit inefficiently. They may have been late and not smartly implemented but I was quite impressed by the Finance ministry’s counter-cyclical policies to alleviate the effects of the slump. Job well done.

Now if only we could find a way of pooling all the cash that routinely gets used to over-subscribe to IPOs and package it in order to meet the treasury’s minimum requirement for investment in public debt. It would be kind of neat to see millions of wananchi investing in their own country. In this way they can indirectly pay taxes while at the same time strengthening the social contract because they will have incentives to monitor how government spends the money they loan it. Just a thought.

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