Muia: Vision 2030 dream is realisable in the long-term

Vision 2030 Director General Dr Julius Mula (PHOTO: FILE)

NAIROBI, KENYA: It is understood that when some officials at the World Bank heard that the latest Purchasing Manager’s Index (PMI) by the Stanbic Bank of Kenya, had hit a record low of 34.4, they wondered if Kenya had plunged into a recession.

The PMI is one of the reliable barometers for the health of the country’s private sector, relied upon by key financial institutions such as the World Bank.

However, a 34.4 reading signalled the sharpest deterioration in the activities of the private sector in Kenya since the inception of the survey in January 2014.

The activities surveyed included output, new orders, employment and stock purchases.

 This, again, according to the World Bank officials, was a reading that even Greece never recorded when it slid into recession.

The authors of the PMI survey pinned the poor performance of the economy on the prolonged electioneering period which seems to have scared away investors.

Kenya, of course, is not in a recession.

Slower rate

It’s gross domestic product (GDP) or sum total of all finished goods and services consumed in an economy in a given time, at least in the first six months of 2017, has not been contracting.

Instead, GDP in the first two quarters has been growing, albeit at a slower rate.

But things have been tough for businesses and households.

There is a feeling of despondency among most Kenyans.

But one man sees it differently because, in a way, this is not about the growth of the economy in the short-run, but the country’s growth in the long-run.

He is Dr Julius Muia, a man charged with ensuring that policymakers keep their eyes on the ultimate prize - a double-digit growth by 2030.

You can also say the Director General of Vision 2030 Delivery Secretariat is paid to only be optimistic.

True, he says, the economy has tended to oscillate downwards in the five-year cycle of the elections.

However, insists the former Chief Operating Officer at HF Group, the dip has since been less pronounced.

The dip was significant after the 2007/08 elections when the country plunged into post-poll chaos that leftover 1,000 lives lost and property worth billions destroyed.

In 2008, the country’s GDP grew by 1.5 per cent -  from a high of seven per cent in 2007.

In 2012, it grew by 4.5 per cent, a little faster than in 2011 when the economy grew by 4.4 per cent.

In 2013, just after the elections, the economy grew by 5.9 per cent. And Dr Muia is confident the after-shocks of the October 26 repeat presidential elections are going to be even less deleterious in 2017.

The Kenya National Bureau of Statistics will release the growth numbers for 2017 next year.

“Unless something happens which is outside the norm, the dip in 2017/18 will even be smaller,” says Dr Muia, noting that this will then set the stage for turning the country into a newly industrialising, middle-income country.

Current GDP

Yet to achieve that, the country will have to complete all its projects under the ambitious Lamu Port-South Sudan-Ethiopia-Transport Corridor.

It will have to pump about $35 billion (Sh3.6 trillion) into the economy through the construction of various infrastructural projects including sea-ports, airports, a labyrinthine of roads, crude oil pipeline, and electric supply lines.  

This is about half of the country’s current GDP.

It is a feat that can be achieved in a sound macroeconomic and political environment.

Sometimes, the country has never managed to go past a five per cent growth.

Dr Muia has attributed the five per cent growth trap to a combination of local and global headwinds.

“The environment in which we have found ourselves in is one which globally has not been conducive to high growth rates,” said Muia, attributing this to the 2008 global financial crisis.

Of course, some might disagree with this assertion. Right next-door is evidence of countries which have posted impressive growth numbers in the so-called tumultuous global financial market.

Ethiopia and Tanzania come to mind, though it can be argued that they were less integrated to the global financial structure compared to Kenya. He also cites security threats such as those posed by Al Shabaab, a terror group in Somalia linked to Al Qaeda, to have played a part in dissuading investors from sinking their money in the country.

But divorcing politics from the economy will also unlock the growth potential of the country.

“The politics of the country has an influence on the performance of the economy,” said the alumnus of the University Of Nairobi School Of Business.  

 “Progressively, there is some divorcing of the economy from the politics,” he explained, noting that he has been keeping track of the numbers.

However, by the time of going to press the Opposition, led by former Prime Minister Raila Odinga, has called on its supporters to boycott products of three companies they said were supporting the Jubilee administration.

Political structures

It is also likely that police could be engaging the youths in running battle after the Opposition called on their supporters to protest.

This might again scare businesses, suppressing consumption further down.

However, Dr Muia still beams with confidence. “Being a young nation, we are still in the area of trying to form our political kind of structures, just to make sure our politics are ideology-based,” he told Financial Standard.

The former partner at audit firm PWC reckoned that anchoring the country’s politics on national values and ethics will greatly help Kenya’s political environment, making politics less detrimental to the economy.

“If you look at our politics, a large part of the wrong politics that is sometimes experienced is ethical. What is the truth in what politicians say?”

Amending the Constitution, as some experts led by Ambassador Francis Muthaura, had suggested is also in the cards.

This would ensure that politics does not always turn into a do-or-die game.

Nonetheless, he is convinced the country will get into the double-digit growth as envisaged in Vision 2030.

“I am persuaded to believe that before the fullness of time, we are likely to see a double-digit growth,” said Muia, noting that such a time is when the environment turns positive and there is not a lot of critical headwinds to deal.

And to those who might question the relevance of Vision 2030, this is what he has to say.

“If it was not for Vision 2030, even the trap of five per cent would have been lower. We would be trapped at below two per cent, if any growth at all,” he said.