Analysis: Bottom-up models have failed elsewhere, will UDA's succeed?

DP William Ruto receives a wheelbarrow from a supporter in Mathira, Nyeri County. [Kibata Kihu, Standard]

Despite claims that bottom-up economics will improve the lot of the poor and scatter dynasties to the four winds, the track record of the developmental model is not only historically unimpressive, the Kenya Kwanza version is inconsistent with what was envisioned.

The dismal evaluation of the model is summarised in a must-read article by Bishwapriya Sanyal titled, 'The myth of development from below'. According to the Professor, the bottom-up economic model was supposed to be an antidote to the traditional trickle-down economics that had failed to improve the lives of the poor. Unlike the trickle-down economics, the bottom-up model advocated investing in the poor to stimulate the economy from the bottom.

To execute their plan, proponents of bottom-up economics proposed a number of changes to existing developmental approach. They advocated a development strategy that supported small-scale projects that directly involved the urban and rural poor in income-generating schemes. To meet funding needs, proponents of the model supported channelling subsidised credit through NGOs to small groups comprising families that did not have any assets or a steady source of income.

The model expressly advocated for NGOs to steer the various schemes in order to shield the poor from exploitation by the political class. In the minds of the visionaries, NGOs were best placed to steer the schemes because they were not only deemed to be non-partisan, they had also distinguished themselves as reliable partners in serving the poor.

DP William Ruto launches Kenya Kwanza Alliance manifesto at Kasarani. [Elvis Ogina, Standard]

Despite the lofty ideals that birthed the model, according to Sanyal, the experiment did not live up to expectations after 25 years of experimentation for two reasons. Firstly, the NGO world proved to be just as political as the cartels the model was trying to replace in the first place. Secondly, products by SMEs failed to attract levels of demand to generate meaningful income for the poor. Disillusionment with the model was best summarised by Sanyal, who observed that, just as trickle-down theory was a myth, 25 years of experimenting with bottom-up economics had affirmed that development does not effervesce from the bottom either.

To be fair, not all was gloom and doom and the bottom-up experiments did have some limited successes such as the Grameen banking experiment in Bangladesh. These successes were however few and far in between, begging the question whether the Kenya Kwanza bottom-up economic experiment will fare any better.

In both idealism and format, the Kenya Kwanza brigade has faithfully adhered to the envisioned bottom-up economics script. Indeed, just like their pioneers, the Kenya Kwanza brigade justifies bottom-up economics on the need to remove political networks that have impoverished the poor by misusing the trickle-down economic model. Bottom-up economics is portrayed as the revolutionary model that will bust dynastic networks and uplift the welfare of long-suffering hustlers.

Again in the true spirit of bottom-up economics, Kenya Kwanza brigade proposes to channel development funds to small-scale projects that use resources that are accessible to urban and rural poor. In that regard, the Kenya Kwanza manifesto promises to support small-scale farmers by injecting funds to buy inputs such as animal feeds, seeds and fertilisers. Similarly in the manufacturing sector, the party proposes to focus on medium small and micro projects instead of large projects that require heavy capital outlays. 

United Democratic Alliance party offices in Nairobi. [Wilberforce Okwiri, Standard]

To streamline funding of the various economic units, the Kenya Kwanza manifesto recommends organising poor families into small groups to facilitate channelling of subsidised credit. To this end, Kenya Kwanza brigade proposes to channel affordable credit through saccos and yet to be created, tier three financial institutions.

While the Kenya Kwanza plan is closely aligned to the bottom-up model, it gives politicians a bigger role of steering the economy than envisioned. Consequently, not only does the model fail in its primary responsibility of shielding the poor from exploitation, the prospects of our undisciplined political class wangling their way into the banking system is both unsettling and a serious threat to the economy.

Moreover, by giving politicians a central role of allocating resources, the model inadvertently opens itself to capture by cartels. Ironically and despite all the hype, the revolutionary experiment becomes a disguised version of trickle-down economics that will only fatten bank accounts of wily politicians.

Another potential problem for bottom-up experiments is that local critics are already questioning the wisdom of investing scarce funds in 'wheelbarrow industries' at a time the world is investing in artificial intelligence and self-drive cars. Since this was one of the factors that undermined the pioneering bottom-up experiments, the Kenya Kwanza brigade should be quite concerned instead of dismissing the criticism as mere politics.