Confidence has brought Kenya where it is today

[nairoberry]

Commentaries


Confidence has brought Kenya where it is today
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By Musikari Kombo

Confidence is a critical ingredient in the management of countries — confidence that we can handle problems, confidence that the law will take its course and confidence that taxes will be used well.

In the 2005 Budget, my Finance colleague said: "The Budget has deliberately not factored in budgetary support from bilateral development partners. We will have to use our own scarce resources in the most efficient way".

It was the first time in independent Kenya’s history that a Finance minister was configuring the Budget without bilateral support. It may be the first also in the continent that a Finance minister had the courage to run a country without factoring in bilateral support.

He added: "… if bilateral partners provide budgetary support, I will use it to reduce Government domestic borrowing and to increase spending on core poverty programmes."

The minister was not pursuing egoistic nationalism. On the contrary, he was issuing a statement whose pragmatism reflected the direction Kenya was to take in the years ahead. What prompted the dramatic departure from donor dependency?

Two years earlier, Kenya had a successful Consultative Group meeting with development partners, 10 months after the Government came to power, the first such meeting in over decade. At a public meeting, donors pledged $4.1 billion (Sh274 billion) in development aid.

Previously, pledges of $100 million (Sh6.7 billion) occasioned front-page treatment in the media. In the 2004 Budget, the Minister for Finance was exuberant: "Institutions are considered world opinion setters", and the importance of development partners "to our development effort cannot be over emphasised".

Do not halt core poverty programmes

But in the year that followed, it became clear that the pledges were prey to all manner of conditions and a slight argument occasioned halting of aid. The disagreement this time was over corruption. We were very resolute — we had to go through the due process, investigate allegations, prosecute and punish the culprits.

Our friends did not think we were moving fast enough! While the country needs a clean, corruption-free Government, election promises had to be kept even as we investigated corruption. It did not make sense to halt core poverty programmes because allegations of impropriety had been made in the Press.

Unfortunately, it is core poverty programmes that attract the generosity of friends and which are stopped when donor relations sour. This is where internal capacity is critical. The confidence to look at internal capacity is the most profound development the Kenya Government has instituted.

It has forced us to empower the revenue collection agency and it has pursued its mandate vigorously. The Kenya Revenue Authority has reported increases in revenue of 20 per cent annually. This has enabled the country to fund programmes with a singularity rarely seen in the continent, a fact that was acknowledged in an Africa Peer Review Mechanism meeting of Heads of State and Governments.

While the connection between economic growth and an independent Budget has not been empirically established, the country’s economy has grown by 4.8 per cent, 5.6 per cent and 6.1 per cent in the past three years.

Programmes are not held hostage

Growth aside, we have implemented trend-setting programmes whose effectiveness has been phenomenal. Free primary education is a good example. When the Government introduced it, there was no donor to finance the cost. It was introduced on the premise that funding would be from local resources.

Assistance was received after the programme was already functional. More than 1.5 million children went to school for the first time, including an 80-year-old man who had had a lifelong dream of reading the Bible for himself.

The other example is the Constituency Development Fund. This is a programme where central Government monies are allocated to constituencies for projects that people and their elected representatives choose. Now, nearly $1.7 million (Sh119 million) is allocated to each of the 210 constituencies annually.

The implications have been staggering in the number of cattle dips, classrooms, health centres and feeder roads built and the transformation in local authorities for better services. These programmes have been implemented from a Budget that is funded more than 90 per cent with money from local revenue.

It does not mean we are receiving less aid than we did before. The fundamental issue is that the programmes are not held hostage to disagreements with donors. The delivery involves the people and has imbued confidence in the electorate to manage resources.

When leaders force their way into power, they start their days wondering how to stay in power. They are afraid someone stronger might force their way to power.

They do not make bold attempts to increase or collect taxes forcefully. But leaders who come to office democratically can take calculated risks because citizens are willing to bear the pain of experimentation. They trust the Government.

The writer is the Local Government minister. He spoke at the London School of Economics

[nairoberry]

I Found this artical and i thought it would be a good issue to discuss as a Kenyan and we as Africans. so only constructive comments.

[Skyprince]

My Kenyan friend ( his name is Timothy ) mentioned to me about Kenya's 2030 plan. I believe this can be achieved with huge proportion of budget being spent on infrastructure ( building roads, ports, IT etc )-- and also education.. I was informed that Kenyan govnt provides many scholarship scheme for its citizens to study abroad.

Originally Posted by nairoberry

country’s economy has grown by 4.8 per cent, 5.6 per cent and 6.1 per cent in the past three years

Wow very constant growth ! By this rate the GDP could be doubled in 12 years or so

[Kenguy]

Originally Posted by Skyprince

My Kenyan friend ( his name is Timothy ) mentioned to me about Kenya's 2030 plan. I believe this can be achieved with huge proportion of budget being spent on infrastructure ( building roads, ports, IT etc )-- and also education.. I was informed that Kenyan govnt provides many scholarship scheme for its citizens to study abroad.

Wow very constant growth ! By this rate the GDP could be doubled in 12 years or so

Alot has happened over the last 5 years especially on the economic front and regarding democratic governance in Kenya. Kenya's vision 2030 development plan is largely modelled on those of the asian tigers programmes. I believe if it is followed through, it will dramatically change the country to a middle income state.

But what really impresses me is the change in attitude of Kenyans. Previously, Kenyans would sit back and look on as they watched their country deteriorate, they wouldn't complain when they drove on bad roads or as some big shot swindled the public coffers in some corrupt scam (some of which succeeded in bringing the economy down to its knees). Almost everyone had lost hope in the governance of the country and in the country itself to the extent that there was a mass exodus of professionals to the western nations and down south to SA,Botswana and Namibia. No one wanted to live in Kenya.

Then came the change of guard in 2002 that saw president Kibaki come to power on a platform of widespread reform. Suddenly, for the first time, the govermnment was held accountable for its actions by the citizens, helped in part by the new freedom of speech and liberal mass media. Kenyans now felt that they had a stake in the running of their country. This rebounded on the economy as a feel good effect took over. New economic policies were passed and the economy improved to levels not seen since shortly after independence. Kenyans now feel proud of their country and the progress its making.

[ernestombayo7]

Kenya Is on the right track.i hope whoever comes to power at the end of the year after elections will continue with the same spirit.While the opposition is busy politicking the economy is growing.With multinational companies investing in kenya at this pace i believe kenya will reach a 10% growth rate by 2011.

[kulani]

I have always been looking up to Kenya, i particularly like a lot of companies from Kenya that make africa proud including the airline itself, Kenya Airways.

[popa1980]

I think Kenyas growth is the most solid out of all the African nations. It isnt so closely linked to commodities such as Angola.

I pondered some time ago, what will be the first African country to hit 10% growth (excluding those recovering from wars or oil producers). My money is on Kenya.

[popa1980]

And dont forget the effect of an independent South Sudan which will be linked to Kenya by a new rail line.

[Kenguy]

Originally Posted by popa1980

And dont forget the effect of an independent South Sudan which will be linked to Kenya by a new rail line.

I also see a highway joining sudan to kenya in addition to the railway line. If all goes well, maybe an oil pipeline from S.Sudan to the Kenyan coast. The plan is to build a new port at Lamu to cater for both Ethiopia and Southern Sudan (Statistically, its a shorter distance to pump oil from southern Sudan to the Kenyan coast than it is to Port Sudan). Kenya's largest bank recently announced it intends to have about 10 additional branches in southern sudan in addition to those currently in Juba and Rumbek. And most materials for reconstruction will most likely be sourced from Kenya.

The total number of countries that will be directly use Kenya as a hub for trade in the near future will be seven (Ethiopia, Tanzania, Uganda, DRC, Rwanda, Burundi, Southern Sudan...and hopefully Somalia if they are ever peaceful). Kenya is now positioning itself as the regional business hub and I think this will have a positive effect on all the surrounding countries.

[Skyprince]

Originally Posted by Kenguy

I also see a highway joining sudan to kenya in addition to the railway line. If all goes well, maybe an oil pipeline from S.Sudan to the Kenyan coast. The plan is to build a new port at Lamu to cater for both Ethiopia and Southern Sudan (Statistically, its a shorter distance to pump oil from southern Sudan to the Kenyan coast than it is to Port Sudan). Kenya's largest bank recently announced it intends to have about 10 additional branches in southern sudan in addition to those currently in Juba and Rumbek. And most materials for reconstruction will most likely be sourced from Kenya.

The total number of countries that will be directly use Kenya as a hub for trade in the near future will be seven (Ethiopia, Tanzania, Uganda, DRC, Rwanda, Burundi, Southern Sudan...and hopefully Somalia if they are ever peaceful). Kenya is now positioning itself as the regional business hub and I think this will have a positive effect on all the surrounding countries.

That's exactly what I want to point out. Nairobi's Jomo Kenyatta Int'l Airport is well-positioned in the middle of southern half of Africa to serve like a focal point of goods and passenger transhipments. Mmm... how about a giant glossy futuristic new terminal for Nairobi ? And cheap but efficient express rail connection to downtown ?

[Kenguy]

Originally Posted by Skyprince

That's exactly what I want to point out. Nairobi's Jomo Kenyatta Int'l Airport is well-positioned in the middle of southern half of Africa to serve like a focal point of goods and passenger transhipments. Mmm... how about a giant glossy futuristic new terminal for Nairobi ? And cheap but efficient express rail connection to downtown ?

They are already expanding the JKIA. I guess it will be glossy but most important is that it will now be one of Africa's largest airports and the largest airport in East and Central Africa. Its already a hub for the region. I hope the rail link will be added in the near future.

[popa1980]

When South Sudan gets rid of the North, they will certainly be keen to use Mombassa as a port. An oil pipeline, simiar to that going from Chad-Cameroon, will probably be needed some time too.

And all the exports to South Sudans new middle-class, and agricultural imports from what remains one of the largest untapped agricultural lands on the planet. South Sudan alone should add 1 or 2% points to economic growth.
Kenyan firms will be bidding for the construction of South Sudans new capital too.

The economic benefits are many. I just hope that power generation is increased in line with the increased demand from economic growth.

[popa1980]

Sorry, I forgot to add the efforts of the EAC to create a tarrif-free trade. The three countries together must have a population of 80million. Kenya is the most industralised so will gain a lot from exports.

[Artemis]

offtopic

[nairoberry]

Sh1bn allocated to fibre optic cable project

Story by JUSTUS ONDARI
Publication Date: 6/15/2007
The Government yesterday showed its resolve to go ahead with its fibre optic project ahead of the regional initiative by factoring in Sh1 billion for The East Africa Marine System (TEAMS) project.

The project could get Kenyans hooked onto the international fibre system mid next year.

TEAMS is different from the first initiative, the Eastern Africa Submarine Cable Systems (EASSy) project that has been held up because of negotiations over its ownership and funding.

This is an initiative of various telecom companies in eastern and southern Africa though some governments have been working through the New Partnership for African Development (NEPAD) attempting to supervise its construction and management.

Kenyan investors

The 9,900 kilometre cable is to run from South Africa to Sudan. Worried that the project was taking too long, Kenya opted to team up with the United Arab Emirates telecommunications company Etisalat, and set up the TEAMS project.

Mr Kimunya’s move is a a big shift from last year’s financial estimates which were an anti-climax.

In the budget, Mr Kimunya removed VAT charged on computer equipment and parts, and accessories despite promising to facilitate faster growth of the sector to create employment opportunities for the youth.

The minister had also earlier promised that the Government would facilitate training, ICT research and development and promote value addition services including incubators and telecentres among others.

In his speech, Mr Kimunya said: “The country needs to do a lot more to reap the full benefits of ICT, which include reduced costs, increased productivity and increased employment.”

This was meant to be achieved through the ‘Framework for Improved ICT’, which involves continuing to create an enabling environment for private sector participation, through further liberalisation of the sector and by investing heavily in e-governmentment.

Kenya will finance 40 per cent of the project, Etisalat 20 per cent, and still to be identified private Kenyan investors, the remaining 40 per cent.

The Government has said that the laying of the cable between Kenya’s Indian Ocean port of Mombasa and Fujairah in the United Arab Emirates will have Kenyans connected by March 2008.

[kulani]

Yes, Kenya's decision to go it alone and put the fibre infrastructure it needs is a very encouraging sign of economic independence in East Africa. The sort that makes one really proud of Kenya.

Not to say that pan-african projects like Eassy should not be supported, but the wrangling that has been holding Eassy back and some shareholders wanting to hi-jack Eassy and change the terms of access to this crucial resource has meant that the Kenyans have looked at altervatives that will work better for East Africa which still remains the only region that is not linked by a sub-marine fibre cable and has to rely on the more expensive yet slow satellite connections. Kenya by the way has one of the most sophisticated markets for internet services and i learned that Google is setting up its African office in Nairobi.

[Kenguy]

Originally Posted by kulani

Yes, Kenya's decision to go it alone and put the fibre infrastructure it needs is a very encouraging sign of economic independence in East Africa. The sort that makes one really proud of Kenya.

Not to say that pan-african projects like Eassy should not be supported, but the wrangling that has been holding Eassy back and some shareholders wanting to hi-jack Eassy and change the terms of access to this crucial resource has meant that the Kenyans have looked at altervatives that will work better for East Africa which still remains the only region that is not linked by a sub-marine fibre cable and has to rely on the more expensive yet slow satellite connections. Kenya by the way has one of the most sophisticated markets for internet services and i learned that Google is setting up its African office in Nairobi.

Thanks for the compliment Kulani. I didnt know about google. Do you have some more info on it?

[nairoberry]

Originally Posted by kulani

Yes, Kenya's decision to go it alone and put the fibre infrastructure it needs is a very encouraging sign of economic independence in East Africa. The sort that makes one really proud of Kenya.

Not to say that pan-african projects like Eassy should not be supported, but the wrangling that has been holding Eassy back and some shareholders wanting to hi-jack Eassy and change the terms of access to this crucial resource has meant that the Kenyans have looked at altervatives that will work better for East Africa which still remains the only region that is not linked by a sub-marine fibre cable and has to rely on the more expensive yet slow satellite connections. Kenya by the way has one of the most sophisticated markets for internet services and i learned that Google is setting up its African office in Nairobi.

thanx, i hope it will materialize soon

[Skyprince]

Very brilliant and soo futuristic KLM has already made JKIA as its African hub.

With progressive leadership of Mr. Kibaki, I believe that Kenya will become advanced soon. IMO Kenya must have its share of some of the world's tallest, world's longest, world's most futuristic infrastructure --- probably you might think this is a kinda waste of money but this is the most effective way to instill pride to the citizens and to put a country on the world map. The return will be so huge and can be used to support various internal/domestic projects

Anyway i'm not an economist but that's what I discussed with my Kenyan friend Mr Timothy today

[Kenguy]

Originally Posted by Skyprince

Very brilliant and soo futuristic KLM has already made JKIA as its African hub.

With progressive leadership of Mr. Kibaki, I believe that Kenya will become advanced soon. IMO Kenya must have its share of some of the world's tallest, world's longest, world's most futuristic infrastructure --- probably you might think this is a kinda waste of money but this is the most effective way to instill pride to the citizens and to put a country on the world map. The return will be so huge and can be used to support various internal/domestic projects

Anyway i'm not an economist but that's what I discussed with my Kenyan friend Mr Timothy today

I guess having big infrastructure projects does boost the national morale but you must attain a certain level of development before you engage in grand projects. Malaysia's projects eg, the Petronas towers put the country in the spotlight, but this was after about 2-3 decades of consistent national economic growth and transformation of the country into a middle income state. Kenya is just recovering from decades of misrule/mismanagement. Once the primary problems of the country have been solved, maybe some of the worlds largest projects may be built here. (but that is still a long way from happening).