David Ndii on the Kenyatta-Odinga “Handshake” and what it means for Kenyan politics going forward

Ndii contends that “whatever comes out this [Kenyatta-Odinga handshake] … will not be transformational.” It is merely a “containment.”

Ndii also concedes that it’s impossible to work around ethnicity as the primary basis of organizing Kenyan politics.

The whole thing is worth watching:

President Uhuru Kenyatta’s State of the National Address to Parliament

On Thursday President Uhuru Kenyatta presented his annual report to the joint session of Parliament. You can find the text of the speech here and the youtube clip here.

Key achievements of his administration over the last three years include (i) rural electrification (nearly all primary schools have been connected to the grid — THIS IS PRETTY BIG DEAL); (ii) the construction of a new railway line (the project is a corruption boondoggle, but the speed with which it is being carried out is stunning); and (iii) power generation.

Below is a word cloud showing some of the issues the president focused on. Corruption, health (hospital), security, and general service provision were the main policy areas that the president chose to focus on.

I was surprised by the failure of “agriculture”, “land”, “education”, and “infrastructure” to make the top twenty. “Road” had a respectable show. There was also a lot of politics — mainly directed at the opposition and civil society.

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Perhaps in reaction to David Ndii’s provocative article on the failure of the Kenya Project, the president’s speech was particularly nationalist. The words “Covenant” and “Nationalist” appeared 27 and 22 times, respectively, well ahead of key policy-related terms.

I am personally worried that the word “development” outperformed “economic/economy.” I hope this is not a signal that the government views the running of the economy as a massive “development project.” We all know how those usually turn out.


Rating Kenya’s Presidents

Jomo Kenyatta’s regime was corrupt, illiberal and competent. Moi’s was corrupt, illiberal and mediocre. Kibaki’s was corrupt, liberal and competent. So, Moi scores zero out of three. Jomo scores one out of three. Kibaki scores two out of three. Now it adds up!

Jubilee’s [Uhuru Kenyatta] stock has fallen not just because it is seen as corrupt, but because it comes across as also illiberal and incompetent. Like Moi’s regime, it scores zero out of three.

….. Which is more harmful to society, mediocrity or corruption? Mediocrity is by definition below average. It stands to reason that all other things equal, mediocrity is more costly than corruption.

It goes without saying that a corrupt mediocracy is even more deleterious. When mediocre rulers are also corrupt even their corruption is mediocre. Because they are unable to generate sufficient returns, they eat into the capital. That’s what the decay of our infrastructure during Moi was — they ate the capital.

What’s more, what mediocre corrupt leaders steal they squander. Mobutu’s billions have never been traced.

That is the ever-insightful Kenyan economist David Ndii writing in the Daily Nation.

And of course Kibaki was the best president Kenya ever had. He went to Mang’u High School (along with many other key people in his government).

But on a more serious note, can Kenyatta’s administration be redeemed?

I think so. Part of the problem has been the total breakdown of constructive communication between the moderate elements in Kenyan society and State House. The ensuing siege mentality at State House has left the president open for capture by the thuggish elements that are rapidly criminalizing the Kenyan state. But progressive Kenyans need not concede the presidency to these corrupt, incompetent and illiberal characters. There is still room for constructive engagement.

Unlike Moi President Kenyatta appears to have an instinct to delegate (some say he is clueless at Government). The challenge is how to make sure he delegates to the right people.

Kenya’s super rich are betting on future stability, and that is a good thing

One of the historical features of “Kenyan exceptionalism” in Africa – outlined by Bob Bates and others – has been its elites’ reliance on immovable assets, mostly agricultural land. This is in contrast to most other African countries where insecure property rights, lack of good investment opportunities, and outright kleptocracy have over the years bled national economies dry of capital. A study of 33 countries in Sub-Saharan Africa showed that between 1970-2010 about 0.814 trillion dollars left the region (in constant 2010 dollars). That was more than the total aid ($659 billion), and more than two and a half times the FDI ($306 billion) received over the same period.

The study shows Kenya to have lost $4.9 billion in capital, ranking it 21st on the list. This despite having been among the region’s top five economies and its largest non-mineral economy over the same period. Kenyan politicians and their associates were by no means less venal than their regional counterparts. They definitely stole, too. A lot. The difference is that they invested a good chunk of the stolen money in land (agriculture) and other assets within the country.

The same Kenyan trend appears to continue, even in an era of relatively liberalized financial flows. A recent report on Kenya’s top 8,300 wealthiest high net worth individuals – who also control wealth the equivalent of about two thirds ($31 billion) of the country’s annual output – shows that they have put more than a quarter (26%) of their wealth in real estate, a most immovable asset. 18% of this wealth is in equities, with only 12% in liquid cash [Just to be clear, $31.4b is 62% of Kenya’s GDP, not its total wealth. The latter figure includes the total accumulated net value of all wealth in Kenya, including both public and private household wealth].

The Business Daily reports that:

This level of wealth multiplication has caught the attention of Kenya’s super-rich making them invest 19.5 per cent of their total assets in residential property, 5.4 per cent in commercial property and 1.3 per cent in foreign property in 2013.

Obviously the wealth disparities outlined in the report should concern Kenyan politicians and the super-wealthy elite alike. 8,300 people make up 0.0002075% of Kenya’s 40 odd million people. This is total insanity. But the investment choices of the country’s wealthiest are an implicit endorsement of the country’s property rights laws and a sign that the super rich are betting on the continued stability of the country and its economy.

Now the challenge for chaps at State House, the Treasury and the Ministry of Industrialization and Enterprise Development (of course with some help from Parliament) should be how to incentivize investments in sectors that will generate mass employment. This is a drum that I have been beating for a while now (see also here). It is also the point that David Ndii neatly summarized in his recent critique of the government’s apparent blind belief in mega-projects as the panacea to Kenya’s endemic poverty problem. Dr. Ndii’s argument was that mega infrastructure projects only target the middle class and up, forgetting the rural poor who need investments in agricultural productivity. While I wouldn’t go as far as outrightly dismissing the utility of new major roads and railways, I think that the government should be a bit more proactive in ending rural poverty – a task that will necessarily require getting people off the land and providing alternative livelihoods in wage paying jobs.