Vague middle class could explain failed leadership, poor economy

Kilimani residential and office blocks.[Jenipher Wahie,Standard]

Over the past few weeks, there have been clips circulating on social media arguing for a case to limit the right to vote only to persons who pay income tax. In another case, somebody argued that the middle class constituency has betrayed their country the most. This is because this constituency of voters is presumed to include a group of fairly well informed and exposed people. Nonetheless, this class has failed to shape the political agenda, debate and opinion like in other developed countries.

The proponents of these views argue that only a person who understands the pain of taxation should be trusted to make an informed choice of the political leaders to entrust with our socio-economic welfare. The middle class is accused of turning a blind eye to their solemn civic responsibility to hold political leaders and public officials to account for their taxes despite being adequately informed.  

Instead, they opt to seek private services in education, security, health and public transport among others over and above the huge tax burden they bear. Where they cannot buy private services like infrastructure, property transfers and registration services, among others, they seek to pay ‘rent’ (bribes) to public officials to access those services or suffer in silence.

Voter Vs tax disparities

These views have a foundational basis on the disparity between registered voters in the country and statistics of tax returns with the Kenya Revenue Authority (KRA). As per 2017 elections, the Independent Electoral and Boundaries Commission (IEBC) database, at least 19.61 million Kenyans had registered as voters.

KRA returns of June 2021 indicate only 5.5 million tax payers filed returns. If we factor in corporate tax filings that do not constitute a voting constituency, then the actual voters complying with their income tax obligations will be much smaller.

Indirect taxes like Value Added Tax are not easily noticeable to trigger response except when they hit basic consumables like bread, milk and cooking gas.       

While these arguments may pass like the usual social media rants peculiar with Kenyans, they raise serious economic questions that have troubled economists and political scientists for over five decades.

Ever since Barrington Moore’s famous quote “no bourgeoisie, no democracy” in his book Social Origins of Dictatorship and Democracy in 1966, economists have sought answers into the role of the middle class in the democratic process of any nation.

However, there have been questions that crowd this argument. One, who constitutes the middle class? Two, what parameters can best describe the middle class? Three, could there be other factors beyond their middle class status that influence their political choices?

In economic literature, it is without a doubt that political institutions have a deterministic influence and impact on the effectiveness and efficiency of economic institutions.

Equally, there is overwhelming empirical evidence that the efficiency of government, institutions, political and administrative systems are important non-economic determinants of growth. This implies that the outcomes of the political and electoral process ultimately get to determine our socio-economic welfare both in the medium and long term.

Over the past decade, several studies have been done to examine the role of the African middle class in the democratisaton process of the region. A fair share of these studies have focused on Kenya.

These include Dennis Kiogora (2018), Cheeseman (2008 & 2015), Burbidge (2014), Cheeseman, Lynch and Willis (2014), Mueller (2008), Neubert (2016), and Neubert and Stoll (2015). Nancy Birdsall (2015) views the middle class as a moderating force in the economic management by government.

Therefore, a strong middle class can demand a government free of insider rents and privilege, regulate natural monopolies, agitate for fair tax systems, basic infrastructure, security systems and other collective public goods and services.

However, for this middle class to be effective, it must be sufficiently above the simple poverty line and be reasonably economically secure. Wierman (2015) argues that an expanding middle class supports economic growth, democratisation and socio-cultural change.

While the foregoing suggests the middle class can play an important role in nurturing a healthy democratic governance system, what constitutes and the size of the middle class remains unclear.

The Kenya National Bureau of Statistics (KNBS) defines the middle class as households earning between Sh23,670 and Sh199,999 per month as from 2018. The African Development Bank (AfDB) defines it as households that spent an average of between Sh218 and Sh2,180 per day.

The actual size of the middle class is not clear and the actual parameters to define it still ambiguous. The AfDB estimates the middles class at 44.9 per cent of the population.

However, the KRA and KNBS data as at December 2020 seem to suggest that only a paltry 84,907 of the estimated 2.92 million Kenyans in the formal sector earned at least Sh100,000 per month. This data may suggest 44.9 per cent as an exaggeration of the actual size of Kenya’s middle class.

Economists often use the household income as the main indicator of middle class. However, some studies have argued for an extension of parameters to include education, economic assets and employment or occupational status. Thus, this definition shall include business and professional people, bureaucrats, some farmers and skilled workers sharing certain common characteristics.

Evidence of the fading or overrated middle class in Kenya seems to be corroborated by trends in the performance of the retail real estate sector. Long before the onset of the Covid-19 pandemic in March 2020, several real estate tracking surveys pointed to a clear decline in occupancy and rent rates of prime shopping malls presumed to serve largely the middle class. Thus, this could give us pointers as to why the middle class would be missing in action in the political scene contrary to expectations.

Implications

Evidence adduced by several studies on the role of middle class in the democratic process suggests a conflicted voter constituency. While they may be inclined to democratic attitudes, the class intersection with ethnicity and political salience demeans their influence. From intuition, there would be other inferences we could make of the Kenya’s middle class.

One, this could imply that the data estimates are misleading of the true size of the middle class in the country. Alternatively, this could imply that our middle class is not significantly secure enough above the poverty line to exercise their freedom of choice effectively.

Two, it could suggest that their levels of income, education and employment status do not free them from the chains of ethnicity and socio-cultural prejudices exploited by tribal political elites.

That may explain why there are no noticeable voting patterns across economic classes six decades into our independence. That provides fodder for economic dwarfs to mobilise along ethnic lines to gain political power, privatise State resources and collateralise their communities.

Finally, it could imply that the middle class is part of the systemic problem that benefits from the corrupt food chain and/or privatisation of public resources.

Thus, they would not feel the pain when political and public officials plunder their taxes. Also they would lack the moral authority to organise and mobilise to demand accountability of taxes.

It is baffling and defies any economic logic, rationality or basic common sense as to why a significant majority of educated, informed and exposed populace would be drooling at crumbs from their elected political leaders.

Otherwise, Sh50 notes wouldn’t be trending during every election cycle.

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