On Saturday December 12, 2002, I was part of the Sea of Humanity that took over all of Eastlands from the airport, the Central Business District and Uhuru Park. There was an aura of change among the country’s top leaders.
The current president was the ruling party’s presidential candidate. The opposition captain had been injured in a road accident days earlier and flown to the UK for specialist treatment. And he was going home for the ballot that would put an end to the 40 years of the independence party. At that time, no one was very worried that the captain would be injured because around him was a strong team.
The highlight of the day was a chaotic rally at Uhuru Park late in the evening. The significance of my discussion today comes from the speech of the then Vice-Captain, the late Michael Kijana Wamalwa.
In his wisdom, he captured the essence of the moment with these words: “For a great leader to realize his greatness, he must stand on the shoulders of other great leaders.”
This statement summarizes how an economic system works. The economic growth we measure as gross domestic product (GDP) is a sum total of several independent variables interacting under the guidance of the country’s top leaders.
Extractive political institutions destroy the genius of economic forces to organize national endowments, talents and the reward system to generate desired economic outcomes.
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In the eyes of the late Wamalwa, for an economy to equitably redistribute national wealth, politicians and politicians must focus not only on the parts of the economy, but also on their interactions as a whole. Under the current regime, large infrastructure projects have been highlighted as the pillars of President Uhuru Kenyatta’s legacy. Unfortunately, a legacy is not something you can plan for, but the result of several day-to-day activities that take place in all sections and departments of government.
Empirical evidence on economic development identifies investments in physical capital, human capital, technological progress, natural resources and property rights, and political stability as engines of economic growth. On the other hand, government consumer spending, political and social instability, trade barriers and socialism reduce economic growth. If these are the engines and the obstacles to growth, how can we assess the concern of legacy projects?
All sectors matter individually and collectively. Investments in physical capital include machines, tools and buildings that improve the productivity of workers. It is unacceptable that the economy is heavily dependent on subsistence agriculture using agrarian-era equipment. This implies that the country has failed to take advantage of modern production capacities to exploit its workforce.
Human capital refers to the combination of education, health and other non-physical assets of the country’s workers to improve their productivity. Relevant education that has an impact on economic growth is both formal and informal. Formal education is measured by public expenditure to finance educational institutions and the time students spend in formal education. There is a positive relationship between the number of years students spend in school and a country’s economic growth.
Informal education is viewed from the skills acquired by a country’s workforce in the workplace. According to the World Bank, Kenya’s education expenditure as a share of GDP was 3.93% in 1971, 7.3% in 2005 and 5.3% in 2018. Although this percentage is higher than the average for l In sub-Saharan Africa, the return on investment is lost with higher levels of unemployment or underemployment.
The economy is heavily dependent on imports and mainly informal that it does not take advantage of the economic benefits of informal education. On health, Kenya spent 5.17% of its GDP in 2018, compared to a global average of 9.85%. This would imply that in addition to the national disease burden, the productivity of Kenya’s workforce would be significantly compromised due to health-related complications.
The genius of technological progress is the return on investment in education and health. The knowledge acquired aims to stimulate innovation and creativity of the population. Public spending on research and development is an important element in measuring a country’s capacity to create and innovate.
Unfortunately, our public spending on research and development has remained below 0.8%, compared to an average of around 4% for South Korea, one of the world’s largest investors in this variable. Technology turns resources into improved end products. While there is no doubt that Kenya is well endowed with many creative minds, our political institutions and national leaders have failed miserably to harness, coordinate, protect and commercialize these innovations.
The government has an obligation to create an enabling environment to allow the most talented to flourish. Unfortunately, our political leaders promote cronyism, mediocrity and a toxic business environment through punitive tax regimes and poorly thought out macroeconomic policies. In any case, it is economical to talk about huge infrastructure investments if they are not designed and built by our own engineers and designers, and the majority of the supplies do not come from the economy.
Regarding natural resources, we have not been endowed with non-renewable resources. But we have a lot of renewable resources. The world has made a significant shift to green growth and circular business models. This calls on our decision makers to make a deliberate effort to integrate green energy into our construction technologies. It demands that green energy be our main source at the industrial and domestic levels. Our waste management system must be transformed into pioneering industries of the 21st century. Relevant green technologies for waste management already exist.
On the last question of property rights and political stability, we probably get three out of 10 at best. It is an open secret that it is difficult to trust the authenticity of government documents on properties. Nor are citizens ashamed to copy and commercialize the innovations of others without rights. An economy whose leaders cannot ensure the sanctity of property rights nor guarantee the protection of the innovations of its citizens is doomed ab initio. No investor or creator will want to put all their energy and soul into such a system.
With the hindsight of models of efficient economic structures, the late Michael Kijana Wamalwa had this in mind: that for the king to be great, then he must surround himself with fine and polite men and women in their own domains of expertise. This model of leadership abhors sycophancy and mediocrity not only in the politics of the day, but also in the management of the economy.