Hard truths about the Kenyan economy

The World Bank has just released a must-read report on the state of the Kenyan economy. Here is just one of many excellent observations about the structural impediments to accelerated growth in Kenya:

Screen Shot 2016-03-09 at 11.00.50 PMCompared with other fast-growing economies, Kenya invests less and the share of investment financed by foreign savings is higher. The economic literature and post-World War II history illustrate that investment determines how fast an economy can grow. Kenya’s investment, at around 20 percent of GDP, is lower than the 25 percent of GDP benchmark identified by the Commission on Growth and Development (2008). Kenya’s investment rate, as a share of GDP, has also been several percentage points lower than the rate in its peer countries. At the same time, the economy has largely relied on foreign savings as a source for new investment since 2007, while national savings have been declining. National savings—measured as a share of gross national disposable income (GNDI)—has not surpassed the 15 percent mark over the past decade. In contrast, Pakistan’s savings is above 20 percent of GNDI, and Vietnam’s is more than 25 percent. Cambodia had a low savings rate in the 1990s, but it more than doubled the rate in the 2000s.

You can find the whole report here.

 

what if ruto and uhuru were jailed by the icc?

Kenyan politics is currently in flux. Two key presidential candidates, Uhuru Kenyatta and William Ruto may be barred from running for public office next year on constitutional grounds. The key beneficiaries of such an eventuality will most probably be Raila Odinga and Kalonzo Musyoka, the Premier and Vice President respectively.

But what would such an eventuality mean for Kenya?

I’d say not much.

Over the last few weeks Uhuru and Ruto have been crisscrossing the country and holding chest-thumping rallies to prove to someone – either the ICC or the Kenyan political and economic elite – that they have the support of the grassroots. They have also issued thinly veiled threats that violence may erupt in the country if they are whisked to the Hague and barred from running for president in next year’s general election. Why does Uhuru and Ruto feel the need to do this?

In my view, and according to the rules of power politics, a tiger need not shout about its tigritude [I believe it is the great son of Nigeria, Wole Soyinka who coined this phrase].

That Ruto and Uhuru have felt compelled to shout about their support-base and issue threats tells me that they are feeling the heat. The fact of the matter is that the key backers of the duo are the ones who would lose the most in case of a resurgence of violence – think of Kenyan retail, banking, insurance, media and transport barons. These are the people that will lose the most when the Mombasa-Kampala Highway is impassable and Equity Bank closes everywhere. They know this and Uhuru and Ruto also know this. Furthermore, igniting further violence would most certainly attract sterner reaction from international watchdogs like the ICC and the UN Security Council.

There is also the [small] matter that now ordinary Kenyans will also know where exactly the violence is coming from.

Violence is therefore not an option. Not for Ruto and Uhuru. Not for their backers. And most certainly not for the rest of Kenya.

I suggest that the rest of Kenya call their (Uhuru and Ruto’s) bluff about violence next year.

Their battles with justice should not derail the much needed institutional reforms that will take the country out of the miasma of mediocrity that continues to engulf most of the Continent.

In the final analysis, the words of former VP George Saitoti will ring true: There comes a time when Kenya gets bigger than any single individual. Ruto, Uhuru and the wider political class are about to be schooled on this maxim the harsh way.