Some structural issues that impede Kenya’s Economic Growth
Economic development, just like biological metamorphosis or transformation, takes time. Economies as well, like individuals, are complex systems. Like the respiratory, digestive, circulatory and other systems of a human being, societies have distinct systems for transport, law enforcement, and judicial, national defense, legislative, fiscal, monetary and other systems that must operate correctly for the entire economy to function appropriately. This therefore means, as with an individual, the failure of one system can cascade failure or paralysis in other parts of the economy. These kinds of disasters have been witnessed in many parts of the world, and Kenya is no exception. In this article, I elucidate just five structural issues that impede Kenya’s economic growth and prescribe probable courses of treatment in the subsequent articles.
Poverty and it’s endemic trap
The World Bank, 2013 estimated that 44 per cent of Kenyans live below poverty line. This poverty is so extreme such that the poor do not have the ability – by themselves – to get out of the mess. (Jeffrey Sachs, 2005). This poverty is interrelated with other problems of under-development. When people are utterly destitute, they require their entire income, or more just to survive. Defining poverty as being deprived of money is not sufficient. Social indicators and indicators of risk and vulnerability are also diagnosed to obtain a clear picture of poverty. Over-crowding, unhygienic conditions, pollution, poor drainage and sanitation are manifestations of poverty in urban areas. Poor access to education, health services, hunger, lack of roads, power and communication lines define Kenya’s rural villages. No wonder, they are called rural!
Fiscal Trap
Government requires resources to pay for infrastructure on which economic growth depends. These resources are not available from the private economy and therefore government resorts to external borrowing. Three reasons cause this public sector financing deficit. First, the population itself is impoverished, so taxation both at National and County level is not feasible. Secondly, corruption and incapacitation in tax revenues streams has sky rocketed. Third, the government is already carrying a tremendous load of debt enough to last 3 generations, and must use its limited revenue to service the debt carried forward.
Retrogressive Cultural practices
Cultural or religious norms and values continue to reverse economic growth. Kenya’s internal social and cultural coherence, norms and values that govern interaction and contribution to economic development and the institutions in which they are embedded has evolved at a rate slower than other parts of the economy. Leaving half of the community without economic or political rights and without education undermines the population’s contribution to economic development.
Lack of innovation
Five decades now after independence, Kenya prime exports still remains agricultural products; Coffee, tea and Pyrethrum. All these are exported as raw materials and imported back as value added imports. Farmers continue to be robbed off the proceeds of their labor. There has been a wide gap between research and development. Innovation in Kenya has never really started. Inventors do not invent because they know they will not recoup those large, fixed costs of developing a new product. (Jeffery Sachs, 2005). Investment in research and development, leading to sales of patent-protected products to a large market, stands at the core of economic growth.
Governance Failures
Economic development requires national and county governments that are all in and oriented towards development. Governments must finance high priority infrastructure projects, and make the needed social services available to the population. A conducive environment must also be created for investment by private businesses. Government must ensure internal peace and safety for persons and property; maintain a judiciary that defines property rights and honest enforcement of contracts. When government fail in any of these tasks- infrastructural gaps and corruption levels impair economic activity, the economy is sure to fail.
About the Author
Rohin Onyango, M.A Economics (Policy and Management) - Ongoing, Kenyatta University, B. Economics and Statistics, University of Nairobi, is responsible for Africa Capacity Alliance's (ACA) overall M&E and learning needs and ensures the establishment and implementation of an effective and efficient system to monitor progress, successes and impacts of ACA’s project interventions.
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