A must-have economic checklist for presidential candidates
It is the silly season again, when presidential aspirants barnstorm the country promising heaven.
Commendably, though, the economic plight of those at the bottom of the pyramid is the key driver.
But whichever economic ‘blueprint’ any of them ascribes to, there is one absolute reality—economic growth must be the main agenda. With strong economic growth, everything else falls in place.
There are several issues that must be in the economic blueprint of every presidential candidate.
The first is dealing with public debt, which has reached dangerous levels. The National Treasury has raised the alarm and the spectre of default looms large, a potential catastrophe. Government response has been to strong-arm businesses to produce ever more taxes. This has become counterproductive, and has reached diminishing marginal returns. The answer is in strong economic growth to generate more taxes.
The country must increase exports. It must move from the traditional exports such unprocessed coffee and tourism that seem susceptible to international shocks.
Strong exports motivate investors to put money in manufacturing facilities to increase production. The government must incentivise exporters to boost sales to the region, Europe, the US and China. The pressure that the shilling has been under especially in the last two years can only be reversed by a consistent flow of dollars into the country.
Only a strong export drive can assure the country of this.
Micro, small and medium scale enterprises (MSMEs) have for long received, at best, lip service from the government. MSMEs are a critical component of the economic growth infrastructure.
They are countrywide, and employ majority of Kenyans. They have a potential of generating huge economic energy. Further, a little capital injection into MSMEs has a huge impact on increase in their turnover, employment and production.
Any presidential candidate who wants to resolve the economic equation in short order—taxes, jobs, economic growth—must have a very well-thought-out, innovative and practical plan to boost this sector the minute he is sworn in. And this must go beyond slogans.
Expensive credit continues to hobble the economy. It is inexplicable that bank profits continue to head for the skies in an economy that is underwater. Something is not gelling. Businesses must get affordable and accessible credit across the board. If this happens, they will respond immediately.
This has to be done hand in hand with reforming the Credit Reference Bureau system, which has been a game changer in facilitating access to credit for millions of Kenyans. However, it has been badly misused, and used by lenders to terrorise and lock out borrowers. It needs drastic reform. A country cannot have majority of its borrowers blacklisted and fool itself it is going anywhere.
Also, for the government to facilitate a low-interest rate regime, it must tame its appetite for domestic borrowing. Currently, it is an aggressive player in borrowing money from the domestic market. This makes banks lazy, as lending to government becomes their default business. Their engagement with commercial enterprises becomes a sideshow. Treasury bills and bonds must offer no more than three per cent interest, while government intervention in the domestic market must be limited to tenures of a minimum of 15 years.
Immediately, banks and other financial intermediaries will be forced to go back to lending to commercial enterprises, which is their reason for existence anyway. Billions of shillings will become immediately available to businesspeople at sensible interest rates. This dynamic will start generating rising economic activity within a very short time.
Lastly, tame the Kenya Revenue Authority. The model the incoming president needs to adopt is that of Tanzanian President Suluhu Hassan, who proved that hostility towards businesses by tax authorities is a loser mentality. With one policy pronouncement drastically changing the way Tanzania taxman engages businesses, she transformed the whole economic environment. Businesses in Tanzania have responded enthusiastically.
All these are just a pronouncement away. All it requires is vision to pronounce and political will to implement. Kenya can be turned around in one short year.
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