Kenya on the up & up

Kenya’s economy grew 5.6 percent last year, according to figures by Kenya’s National Bureau of Statistics, making it one of the fastest-growing in Africa.

Kenya has set out its ambition to become a middle-income country by 2030. To achieve this, the government reckons the country needs to grow 6.8 percent a year.

The World Bank dismissed the country’s ambition as “far-fetched”. Despite high growth levels, four out of 10 Kenyans are still poor.

New sectors such as telecommunications, and the expansion of existing sectors such as agriculture, real estate and manufacturing, have boosted the economy. The manufacturing sector grew 10.3 percent and the agriculture sector grew 5.6 percent.

Kenya has invested heavily in infrastructure, including roads, railways and power plants. Financial services consultancy Deloitte calculated that Kenya had the most infrastructure deals in East Africa last year on the back of the expansion of railway and large real estate projects.

To overcome its infrastructure deficit, the African Development Bank estimates that Kenya needs annual spending on infrastructure of $4 billion – about 20 percent of the country’s gross domestic product over the next 10 years.

The first phase of Kenya’s centrepiece project, the $3.8bn standard gauge rail project, will run from Mombasa to Nairobi. Subsequent phases will extend the rail to Uganda, Rwanda, Burundi and South Sudan. In 2014, Kenya sold $2.75bn of Eurobonds to fund the infrastructure expansion.

Kenya’s development plan, Vision 2030 launched in 2008, is divided into five-year phases.

Infrastructure in Kenya accounted for 27 percent of the country’s national budget, according to the African Development Bank. However, poor execution, little focus on maintenance and corruption have undermined the quality of infrastructure investments.

The World Bank has bemoaned the fact that red tape with budget allocations for infrastructure not released on time had led to delays, cost overruns and rising debt.

Kenya’s high economic growth has been unable to translate into mass job creation, with the economy unable to absorb current and new jobseekers.

Kenya has the most unemployed youth in East Africa, according to a World Bank report. One in every five youths is unemployed. Measures, such as the National Employment Policy are inadequate.

Kenya has to improve the quality of its education system to make youth more employable. The country urgently needs vocational training centres where youths can learn technical skills. New investors must be compelled to employ and train young people.

The government has set up a Youth Enterprise Development Fund and the Uwezo Fund to provide funding for young entrepreneurs. It has also set aside opportunities for youth procurement for government services and products.

Kenya has used new technology innovatively to boost development. Standard Bank reported that M-KOPA Solar, a pay-as-you-go energy provider, is adding more than 500 new homes off the grid. Kenya’s pioneering M-pesa cellphone money transfer service has contributed to 25 percent of GNP flows. Kenya has made efforts to diversify its economy; it must now add value to agriculture produce and build spin-off industries

Kenya has adopted public-private partnerships (PPP) where the government does not have the capacity. It will be crucial for such projects to transfer skills, management and technology, to bring informal businesses, youth and woman businesses into supply chains of government services, foreign investors and PPPs.

Inequality persists in Kenya, with 10 percent of the richest households controlling 36 percent of the country’s wealth. Development is still along old colonial patterns, with areas where white colonial settlers used to live and urban areas better developed. The Rift Valley, Coast and North Eastern provinces are marginalised. There are also stark inequalities between urban and rural areas.

Political, economic and cultural power still runs along ethnic lines. Ruling governments mostly appoint those of their region, ethnic group or family into key positions. Kenya will have to introduce rules which compel political parties to have broad ethnic representation.

Kenya has committed itself to gender equality by 2030. It is a constitutional requirement that one third of women be represented in elected positions. Currently, women account for 33 percent of Kenya’s cabinet, 25 percent of parliamentary representatives and 37 percent of the public service. The government has also introduced a procurement policy where 30 percent of public procurement is set aside for women, youth and the disabled.

In spite of the formal rules set to achieve gender equality, Kenyan society will have to change social, cultural and traditional patriarchal attitudes which devalue women.

Attempts to devolve power and opportunities more equitably across the regions have not been wholly effective. It will be crucial that new empowered regions should not conduct their politics and development on ethnic, patriarchal and sexist lines.

Poor governance, political actions that undermine democracy, and rising corruption not only affect economic growth, they also risk instability. Kenya has continuously slid down Transparency International’s Corruption Perception Index.

Last year, almost $1bn allegedly disappeared following the sale of $2.75bn Eurobonds meant for infrastructure development and to pay off government debt. Kenya must muster the political will to tackle corruption.

In 2014, the government introduced stringent rules for the registration of civil society groups, deregistering hundreds of NGOs accusing them of either failing to pay taxes or collaborating with terrorists or Western powers.

The government has threatened to cap foreign funding for NGOs to 15 percent of their total budgets. Rightly, this proposal has been opposed. Not only is civil society crucial to hold the Kenyan government, business and society to account, it also provides jobs, skills and leadership experience.

Kenya’s ambition of becoming a middle-income country by 2030 is not as “far-fetched” as suggested by the World Bank, provided the country implements the required political, economic and cultural reforms, including bringing meritocracy into the political, economic and cultural system.

*This article appeared in The Guardian and can be read on their website by clicking here

William Gumede is Associate Professor, School of Governance at the University of the Witwatersrand. He is Executive Chairperson of Democracy Works Foundation and former Deputy Editor of The Sowetan newspaper.

During the anti-apartheid struggle, Gumede held several leadership positions in South African student, civics and trade union movements. He was a political violence mediator and area coordinator for the National Peace Committee during the multiparty negotiations for a democratic South Africa and was seconded to South Africa’s Truth and Reconciliation Commission. He is the author of several number 1 bestsellers. His more recent books include: Restless Nation: Making Sense of Troubled Times (Tafelberg); and South Africa in BRICS – Salvation or Ruination (Tafelberg).

To read publications by William Gumede on our website please click here.

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