Welcome to Kenya, the land of rent seekers

By XN Iraki

What do Triton, Goldenberg and Anglo-Leasing have in common? You may quickly suggest they are all scandals. That is half the answer.

In all these cases, someone is trying to make money by doing nothing, while economists try to be sophisticated, sometimes unnecessarily.

They prefer to label the men behind the scandals not as corrupt, but as rent seekers.

Why is rent seeking such a popular sport in Kenya? Is there something that can be done?

First, our political system is prone to abuse. In the latest case, the Triton boss dined and wined with top political leaders. The same leaders are supposed to watch over his business deals and ensure he follows the law.

Most rent seekers have come to master Kenya’s political landscape. They know who really pulls the strings and they have mastered the Kenyan political leaders’ psyche and aspirations.

Don’t you find the level of political silence over Triton a little too discomfiting? Is it surprising that most of scams usually take place immediately before or after the general elections?

Traits

This is not coincidental, after all politicians are themselves rent seekers. Salary increments without commensurate increase in productivity is pure rent seeking.

Teachers have quickly learnt the art of agitating for a salary increase while they are against signing performance contracts.

Observers have pointed out that elections are fought so hard, not because of love for the country, but the rent seeking opportunities power opens up. Rent seekers thrive during periods of transition, particularly elections, when they exploit the vacuum to manipulate the system to their advantage.

When politicians and the whole country is engrossed to the point of being drunk with politics, rent seekers are strategising. That is why when they strike everyone is caught napping.

Rent seekers know where the money is. They often have first-hand information on the goings-on in the political and economic fronts. It is such information that makes them so lethal.

Systems

The transition becomes more fertile for rent seekers when the legal system is not water tight, when they know they can delay cases till anger subsides.

Why else has Goldenberg dragged on and on? Rent seekers love court cases. They would love the courts to sanitise their questionable deals.

Rent seeking thrives better in countries where the shift from command system to market system is not complete, where grey areas exist without regulations. That is one of the reasons Russia suddenly produced some extremely rich oligarchs. Rumours suggest only seven of them control the Russian economy.

Rent seekers’ other secret weapon is mastering the supply chain. They know where the bottlenecks are and how to extract rent. For example, if maize is being imported into the country, they know at what points money can be made easiest. When you hear politicians arguing over bulk handling, iko kitu!

Some observers have boldly asked why non-indigenous Kenyans are more prone to big time rent seeking, at least from media reports. The Triton Boss and Goldenberg architect have something in common. Some have counter argued that they are just fronts in the rent seeking game.

It is unlikely that these men acted alone, without the knowledge of highly placed people in the political system. It might be that successful rent seeking is teamwork.

What is more curious is that in the West, the leading entrepreneurs are often non-indigenous, often immigrants. Check the Forbes list. In their newly adopted homes in the west, they use their creativity to become entrepreneurs. In Kenya, they find it is much easier to become rent seekers. The political and legal system is not entrepreneur friendly.

Culture

Our culture supports rent seeking. In Western countries, people who make real money without rent seeking without value addition are ostracised. Here they are heroes, guests in church functions. Such culture spawns a race on who can be the best rent seeker. After all you can use the money to buy goodwill from everyone.

Our culture has no time for value addition. People prefer handouts, getting money for doing nothing. Political rent seekers take advantage of this during general elections. The elected officials who win through rent seeking are expected to control it at the highest levels. No wonder rent seeking is thriving.

It has also been suggested that the education we acquire teaches us the virtues of good life, but not how to earn the good life. Living a good life without the means to support it is the hallmark of rent seekers.

Leading rent seekers are either highly educated or pseudo-educated. Few, if any, serious rent seekers are illiterate. Others have argued almost to the point of conviction that rent seeking is one of the leading industries in Kenya. At the grassroots it is well and alive. The practitioners go by such fancy titles as conmen, brokers, and middlemen. Even the church has not been spared.

What do the 50,000 plus churches do? Their leaders are just interested in rent seeking, getting money from their flock without doing anything.

What can be done? Is rent seeking here to stay? We need to break the vicious cycle of rent seeking, from the highest level of the Government to grassroots. We all want economic growth. But growth cannot take place when only a few people work, when working hard is considered stupid, when working smart is preferred to working hard.

Pragmatists

Vision 2030 and other policy documents envisage a nation without rent seekers. We should not be idealists, there will always be rent seekers, but progressive nations never allow them to be the dominant force in the economy.

The new constitution order is one exit strategy for now. The general principles of the new laws should reward and encourage responsibility and entrepreneurship. Your American friend will surprise you by refusing your treat in a hotel. The culture of self-reliance is ingrained from childhood. Entrepreneurship should be made a compulsory course in primary schools. After all, we learn how to use and squander money long before we learn to earn it.

The writer is a lecturer at the University of Nairobi School of Business. [email protected]