Friday, January 25, 2008

The Right Fix: Why a quick fix is bad for the kenyan economy

I think anyone without blinders on should be able to tell that this situation in Kenya is wreaking havoc on our economy. I read the article in the East African Standard yesterday that talked about over 5000 worker being laid off in Malindi alone because no tourists are coming to town with a lot of sadness.

This whole sad chapter in Kenyan history is hurting and will keep hurting a lot of people. I think very few people, no matter the social standing can go through this and not feel the pinch. I think the most significant impact will be felt by the people on the bottom of the social ladder. Those of us who live hand to mouth, from paycheck to paycheck for everything will be suffering very quickly as a result.

If i may digress a little, having lived in the US where you have to buy everything that goes on your table and pay for everything you consume, if you have no money, you can very quick go hungry and end up on the street. I have seen it and i really do believe that people have had to survive on ketchup (tomato sauce for us kenyans) because, well, living under the radar means you dont qualify for many of the benefits that Americans can get. So, maybe because many of us have shambas with some sukuma wiki, maize or cows for me or we still live in a country where you can ask you neighbour to borrow some sugar, flour or salt, people may survive (if you can call it that) for a little while. Obviously if you are one of those unfortunate souls living in Kibera, Mathare or any one of the numerous slums in Kenya, you dont have even that little imaginary cushion.

But, getting on, the poor will feel the immediate pinch of this whole incident, but the impact will be felt all the way to the top very quickly. I am not sure if insurance covers the burnt houses, the wrecked cars and the other destroyed property out there, but even if you are moderately well off you have got to feel the impact. I heard of a supposed government sympathiser who had all their dairy cows stolen, their crops burnt and their house burnt down. That stuff takes years and a lifetime for most of us to accumulate and loosing and or replacing it will not be fun. And, well even for the stinking filthy rich, those empty hotels will still have their mortgages or loan payments due and how long can you carry that burden. Or the guy who had his shop with was it 60 million shillings worth of stuff stolen or burnt. I know they may have money to replace much of it, but their suppliers will not really care about what happened. The money is still owed and the only alternative will probably be bankruptcy for many folk, if insurance doesnt kick in. (i hope it does)

So, with the violence still going on, and now Nakuru has finally erupted (and I really dont understand how it was able to keep going for so long) and it looks like the revenge killings have finally kicked off, the story for our economy can only get worse. More shops will be burnt, more trees and electricity/phone posts will come down, tourists will stay away, bananas from Kisii will go bad and flowers from Eldoret will continue to rot at the airport. So i think if we have lost close to One Billions shillings so far this month, I think we will probably loose a couple more before this is said and done with.

Which is why as I watch Koffi Annan start his work in Nairobi, i wonder what they are trying to achieve. There has been this great push for Raila and Kibaki to sit down as if when they sat down, some magical answer would come and we would live happily ever after. Well, remember 1992, 1997 and 2002 (to an extent). Agreements and compromises and power sharing deals between our politicians and are only temporary fixes that do not address the fundamental issues and are not going to helps us solve our long term problems.

I have done a little economic development in my time and a couple of things stand out. I am sure we have all heard how Kenya was so far ahead of Uganda, Rwanda or every other country in East and Central Africa in the 60s and 70s. Well, we have moved on since that time, but if you look around, although in many ways we are still the economic powerhouse of the region, their economies have by comparison come much further (even if they may be lagging behind Kenya for now). I hate it every time I hear how in the 60s we were at the same developmental state as Malaysia or South Korea and look at us now.

So, in the big picture, what would a solution right now mean for kenya, if the fundamental issues in this whole fiasco are not addressed.

If anyone was to ask me, the biggest issue at the very root of everything else is the ability of every Kenyan to elect or reject their leader and to not have that right usurped by anyone or anything. I rate that above every other ill we have going on including corruption, poverty, economic disparities, a broken judicial system, lack of opportunities and everything else you can think of. Many will disagree with me on that but i have a simple logic. No matter what ill you pick, the only tool that any individual kenyan has to make change is to reject one leader and pick another. If their is corruption, unless you take to public stonings, what more can an individual do. You cannot make laws, you cannot enforce laws, you cannot force a company to employ more people, or not to close down and fire people, you cannot force anyone fix that car that pollutes or to take out insurance on that old jalopy. BUT, our government can, and if they dont do it, whereas we cannot kick out a judge, we can kick out a president and his lackies. Whereas we cannot go into an employers premise and say you will start giving your workers protective equipment, the government can mandate that and punish them for failing. Even if you catch someone taking a bribe, you cannot take them to jail and force them to stay there for even 60 seconds, but your government can.

SO, if we have the ability to keep changing our government, be it every week, every month or every 5 years, we can keep doing it until our leaders do what is right and fair.

I must also issue this disclaimer. I know very well that the masses are not always right. Sometimes, there are tough choices that have to made that are totally unpopular, and that may sink a government, and the world is full of examples of leaders who choose to stay in power rather than do the right think. Honestly, that is one thing I dont have an answer to.

Honestly, we all know that if we take a quick fix now, or if Raila and Kibaki come to a settlement now, we will end up exactly here in 5 years during the next election. So, which investor, business or whatever you want to call it is going to put any real money in Kenya. We are loosing to Ethiopia, Uganda, Rwanda in so many little ways and yet we keep deluding our selves with "WE ARE KENYA" So what if you have the sharpest, best educated workforce. Dont you realize that so many of us have left for Uganda, Tanzania, Malawi, Botswana, South Africa etc that well, soon kenyan talent will be a big export. Honestly, while we are all busy patting ourselves on the backs, we need to remember the good old story of the Hare and the Tortoise. That tortoise (Uganda, Rwanda, Ethiopia, Tanzania) is going to cross the finish before us. Do you think the Ugandas will wait another 5 years for us to punish them and cut off their oil again while we fight each other. If they are awake, they are seriously looking for alternatives to not be caught napping again.

However, if we force our politicians to see that the peoples electoral voice rules, then finally, we have a chance to slowly get to the place where our elected officials realize that their allegiance is to the voter, then, even if it takes a little while, we will have shown not just each other, but the whole world that even though our crappy politicians may do some really stupid ignorant things, we as a people know what we want and we expect our politicians to deliver, to get rid of corruption, to make sure that our economy is growing, to make sure that our justice system works, to make sure that our infrastructure is sound.

And I challenge anyone to tell me that any investor out there will not want to come to kenya once we are firmly on that path.

No comments: