African Reserves

Kenya: The Economic Legacy of Uhuru Kenyatta – Big Promises, Low Deliveries

Uhuru Kenyatta and his deputy, William Ruto, ascended to the presidency of Kenya in March 2013. This followed a disputed poll which they won with a narrow majority of 50.3% of the votes cast.

They took office shortly after the enactment of Kenya’s progressive constitution in 2010. This gave them the unique responsibility of leading its implementation and entrenchment.

Article 43 of the new constitution covers economic and social rights. It entitles every citizen to the “highest attainable standard of health” and to access to reasonable standards of housing and sanitation. It also calls for access to adequate food of “acceptable” quality, clean and safe water, social security and education.

As Kenyatta and Ruto’s second terms draw to a close, it is important to establish the extent to which they have met these constitutional expectations.

During the second term of their presidency (2017-2022), the government of Uhuru and Ruto focused its economic strategy on key aspects of Kenya’s Vision 2030, known as the Big 4 Agenda.

The strategy was based on four pillars. These were food security, affordable housing, universal health care, manufacturing and job creation. Through it, the government has sought to implement projects and policies aimed at accelerating economic growth and transforming lives.

Despite these grand plans, in my view, the government’s economic performance has been mixed.

On the positive side, the outgoing government boasts of infrastructure projects in sectors such as roads and water. Examples include the completed Nairobi Express Way and over 2000 dams which are in various stages of construction.

These projects have the ability to improve lives. For example, better roads will reduce transport time to deliver produce to market, while completed dams will reduce the incidence of disease by improving access to clean water.

But there are also negatives. The country’s job creation performance has been weak, with unemployment rates deteriorating by 2.93 percentage points, from 2.81% in 2013 to 5.74% in 2021. jobs is explained by a not so robust economy. Between 2013 and 2021, Kenya’s economic growth (GDP) averaged 4.4% while tax revenue stagnated at around 14.8% of GDP.

The most important economic legacy of Uhuru and Ruto is runaway public debt, the growth of which has not kept pace with economic performance. In this article, I quickly review what I believe to be the highlights of the government’s economic performance since 2013.

Public debt

When Uhuru and Ruto took office in March 2013, Kenya’s public debt stood at about KSh1.8 trillion ($17.95 billion), of which about 45% was external. Nine years later (as of March 2022), the stock of government debt had increased by 343% to nearly KSh8 trillion (about $67 billion). Just over 50% is due to external borrowings.

Excessive reliance on loans has pushed the public debt-to-GDP ratio above 70%. This has raised questions as to whether the country has the financial capacity to meet present and future obligations (interest and principal) arising from the debt.

As expected, soaring public debt has put a lot of pressure on the Treasury. For the year 2022/23, the country is spending 53.8% of every shilling collected on debt servicing.

Heavy debt service expenditures have affected the social infrastructure sectors. Take health. Official data shows that public spending on health has barely increased since 2017. It fell from 2.8% of national public spending in 2017/2018 to a meager 3.7% in 2021/2022.

This means that the country has not been able to effectively address the constraints facing the sector. These include inadequate medical equipment and a shortage of skilled human resources. Both have reduced the quality of health care.

The corollary of poor quality health care is the country’s high disease burden. For example, annual cancer death rates increased between 2012 and 2018 by almost 16%. It is planned to develop further.

Manufacturing

In the manufacturing sector, the government has allocated about KSh 135 billion in the 2022/23 budget. This mainly targeted satellite industries in the textile, leather, agro-industry and construction sub-sectors.

Some gains have been made. However, poor infrastructure in the designated industrial zones has discouraged private sector participation and reduced potential positive effects.

In particular, energy infrastructure seems to be the waterloo of manufacturing in Kenya. Installed power generation capacity in Kenya was just 10,730 GWh in 2019, a change of around 20% from the 2013 level of 8,943 according to data from the International Energy Agency. .

This level of generation pales in comparison to recently industrialized economies such as South Korea (581,492) and emerging economies such as South Africa (252,639) and Malaysia (175,778).

Given its importance for industrialization, low electricity production is a brake on the take-off of the manufacturing sector. This could therefore set back Kenya’s transformation into a new middle-income industrialized economy offering a high quality life to its citizens.

Food safety

Years of failing economic policies, reliance on rain-fed agriculture and nomadic herding, low levels of mechanization in food production and insufficient emergency food reserves have combined to expose whole swaths of country to food shortages.

By including agriculture in the Big 4 Agenda, the Uhuru government has sought to reduce the severity of these effects. There have been achievements such as the expansion of farmers’ insurance coverage, the commissioning of national food reserves, the commissioning of grain dryers and the opening of incubation and agro research centers. -industrial.

Yet these achievements have had no visible impact: the current drought in the Horn of Africa region has raised fears of impending food shortages in which an estimated 3.5 to 4 million Kenyans could face a severe hunger, malnutrition and starvation.

Overall, food production has not performed very well over the period 2013-2022. For example, agricultural value added rose from 18.6% of GDP to 22.4%, a weak expansion over the nine-year period. This is despite efforts to support value addition in agriculture, such as processing fruit into juice.

The fight against corruption

As in most post-independence African countries, weak institutions and poor governance have plagued Kenya. Most Kenyans therefore hailed Uhuru’s statement on corruption as a threat to national security and his promise to tackle it.

Kenya has a well-established institutional framework to combat dishonesty in the management of public resources. Chapter 6 of the constitution imposes high standards of integrity on holders of public office and establishes an independent ethics and anti-corruption commission to “ensure compliance and enforcement”.

But Kenya still ranks among the worst in terms of perceptions of corruption. This suggests that the public sees the Ethics and Anti-Corruption Commission as a lame institution.

For example, there have even been accusations that the constitutional body has lent itself to partisan political interests since Uhuru’s anti-corruption campaign appears to be aimed at political rivals.

These accusations were recently credited by information leaks published in the Pandora Papers. The leaked information appeared to implicate the president’s family in hoarding fortunes in offshore tax havens. Although the report does not necessarily imply financial irregularities, the anti-corruption body has not, to my knowledge, investigated these allegations.

Nevertheless, the commission showed courage recently when a case it took to court led to the conviction of individuals involved in a maize purchase fraud worth nearly $3 million. dollars. However, many similar cases have been dragging on in the courts for a long time, while some have been dismissed.

Conclusion

As the country ushers in a new government, Kenyans are hopeful that the mistakes of the past 10 years can be avoided while building on the gains made. For example, will investment in infrastructure be leveraged to maximize welfare gains?

Odongo Kodongo, Associate Professor, Finance, University of the Witwatersrand