Open Discussions on Kenyan Potential Should Follow GDP Review
by Leonard Wanyama | Debates by various commentators have welcomed plans by the Kenya National Bureau of Statistics (KNBS) to update its calculation of value in the economy. The 'rebase' effort is expected to push Kenya into 'middle income' status by reflecting the nature of how our economy has changed. This is through capturing its most important sectors after considering transformations that have taken place over the past 10 to 15 years.
Middle income status is an exciting prospect because of the definite impact it will have on investment. It is expected that Foreign Direct Investment (FDI) will increase as investors capitalize on potential for growth in their businesses. Also, in examining the significance of important sectors, this initiative will enable policy remedies to be created because of availability in better statistical information.
Nonetheless, issues of existing socio-economic divides still remain. Kenyan public policy discourses have examined poverty in terms of current levels of deprivation due to a lack of access to basic services. The inquiry into disparities, as captured in the inequality debate, has highlighted the growing gap between rich and poor individuals, households or administrative levels that has resulted in practical responses like the Constituency Development Fund (CDF).
Organizations like the Society for International Development (SID), and the Institute for Economic Affairs (IEA) Kenya have spear headed these engagements in knowledge production that can be credited with constitutional innovations such as the Commission for Revenue Allocation (CRA) and its redistributive formula which has a firm research foundation from which to deal with development challenges affecting the ordinary citizens at the lowest level of administration.
Therefore, while it is thought the 'rebase' process will not provide direct benefits to individuals, it is critical that follow up discussions improve their wellbeing. This is especially because the knowledge cycle of existing deprivation and disparities should close with an understanding of present potential. If all the review of our Gross Domestic Product (GDP) does, is to tell us our economy is worth more than we thought; we should as well begin constructive discussions on how much more we can do with this increased value.
Discussing potential involves an examination of three aspects. The first factor is factor endowments. How do we tap our natural resources effectively in order to ensure sustainable development? This involves ensuring greater access and productivity to those who seek or already have possession of these resources.
The second is revenue. This requires proper collection, allocation and redistribution of funds as a facilitative measure to spur development. CDF is the most popular experience of such endeavor but others exist such as the Local Authorities Transfer Funds (LATF). Currently, county allocations by the CRA and its Equalization Fund is a similar redistributive process but under a different experience of decentralized government under devolution.
Lastly, the two previous points should seek to enable the third factor that is the creation of opportunities. Especially with regards to the purpose of devolved government, enhancing potential means the: development of new industry; encouragement of entrepreneurship; and stimulation of innovations in various activities. Through better regulatory and policy frameworks, both National and County Governments can boost the creation of more Small and Medium Enterprises (SME), thus, improving employment and economic growth.
Focusing on entrepreneurship and productivity, as elements of creating better opportunities, in discussions concerning potential requires greater concern for the informal economy. This sector is increasingly providing more jobs despite being perilous due to lack of social protection mechanisms or decent employment conditions.
Currently, a number of initiatives have picked up the issue. The SID is conducting research support to inter-county planning, budgeting and economic development programs for three counties in the Western region to ensure the harnessing of improved prospects for citizens. Other actors such as Strathmore University, have set up the Kenya Governors Strategic Execution Support (KEGOSES) project also known as UTAWALA whose Governors Resource Centre (GRC) in collaboration with the CRA; Office of the Controller of Budget (OCOB); the Council of Governors (COG); and the Transitional Authority (TA) that has a comprehensive program to conduct various activities in customizing knowledge and responding to specific policy needs of individual counties.
Interestingly, the private sector is not far behind in these initiatives as seen from increasing establishment of foundations within the banking sector and the involvement of development advisory sections of consulting firms such as Deloitte in developing 'mini-lateral' cooperation among counties. These partnerships are seeking to address common challenges and seize opportunities across the country. Many other organizations are taking part in their own individual capacities but more debate and cooperation is needed if Kenya is to achieve its dreams of prosperity. The 'rebase' discussions should therefore be looked at as the start of having potential for all.
Leonard Wanyama is Programme officer at Society for International Development