Leaders' words unhelpful if they do not address citizens' worries

President William Ruto during State of the Nation Address, Parliament, Nairobi. [PCS]

For economy watchers, two events of interest happened last week. The first, less public, one was a fascinating economic forum hosted by NCBA on November 7. The second, more public, one was Thursday's State of the Nation address by President William Ruto.

Of course, there were others, such as Thursday's launch of the Pan African Institute and Friday's "Transforming a Nation" conference, but Kenya is the sort of place where we are process masters at hosting all manner of MICE (meetings, incentives, conferences and exhibitions) without actually mining the content of these events into nation-building knowledge.

This isn't to say we heard nothing on the last two. Mainstream and social media were quick to highlight South African EFF Party Leader Julius Malema's "futile search" for the Ruto of 2022 at the Pan African event, as well as Azimio leader Raila Odinga's Friday dismissal of Ruto's speech as addressed to people living on the moon.

Malema visit

One missing nuance was the link between Malema's clear disdain for African leaders "kowtowing to foreigners" (read the West), and our Government Spokesperson's Friday submission that "look East, West, everywhere" is the nuts and bolts of our hyperactive "spray and pray" (or, splay and play) foreign policy agenda.

It comes as no surprise to hear the quip that Kenya is not a (yet) country, it's (only) a business.

What did we learn about Kenya Kwanza's agenda from the first two events? Following the economic forum online, we heard that the administration's immediate focus is on recovering the economy.

Agriculture has been identified as the low-hanging fruit, the place for quick wins. But we are in some serious debt distress. So taxes are another low-hanging fruit. For now, let's tax industry and services to the hilt. But it's cool because untaxed agriculture will recover the economy. But we know our tax code is all messed up. The national tax policy was approved by the Cabinet but it still needs work (it's already sitting in Parliament).

Our industry, especially manufacturing, is super-uncompetitive, and our services and banking must cut business with and lending to government and switch back to the consumers/markets we are hunting down with taxes and fees.

This might be a harsh takeaway from this impressive forum. There is some ambitious government thinking on agricultural transformation, and we are in a debt trap that the IMF is pulling us out of. We must get back to production, then productivity, for competitiveness as we move up the value chain as Vision 2030 loudly proclaims.

Low-hanging fruits

Tourism, with its huge backward and forward linkages, is another low-hanging fruit. We don't have the capital to grow more inclusively, yet we must find higher-value work for our high-cost labour. The shilling's external value was misaligned, though it is always more grating when we also hear this tradable vs non-tradable stuff from the current Treasury CS and CBK governor who respectively served time as CBK governor and Treasury PS when the previous administration embarked on its mega-investment debt binge.

The forum offered a discourse on the cost of living, focusing on government interventions to address food (and food imports) as a major cost driver. More time might have been devoted to discussing social protection for the poor, as well as the Hustler Fund as an income shock stabiliser. What we missed was a discussion on how to address the cost of government, as well as the cost of doing business, including a cost of credit driven by the cost of government.

On the SONA, Azimio missed an opportunity. Instead of boycotting the address, or dismissing it after the fact, the leaders should have given their alternative viewpoint, which might have been launched strategically a day before the main event. Endless naysaying is one thing, but offering a different picture requires real work, and our politics is all about playful sound and fury. We are left with a 12-point response from our Catholic bishops plus citizen clips on social media.

The 12 points? High cost of living. Over-taxation. Unemployment. Education system challenges. Protecting the dignity of Kenyans. Bipartisan talks. Insecurity. Freedom of speech. Corruption. Health and NHIF. Environmental conservation. Hope for Kenyans. That this statement came after the address suggests that President Ruto may be missing the point. No amount of fine words, regardless of style, will address the real substance of the everyday Kenyan's concerns.

Takeaways

Beyond what one MP described as "a good speech on inputs and processes, but not results", an important takeaway was a first "Kenya, we have a problem" admission. It's taken President Ruto 422 days to say what late President Kibaki said on Day One. Hopefully, the blame games from the past and fantastical promises about the future are now over, and it's time to fix the present.

Although we still do not have an official plan beyond the campaign manifesto, Kenya Kwanza aims to "simultaneously generate effective solutions to immediate problems, provide a credible pathway to stability in the medium-term and undertake long-term structural transformation of the economy". As I have previously said, "bottom-up" is a long game, it won't happen tomorrow.

As with the economic forum, I was looking for something on the cost of living. Accepting that it is a reality experienced in households and not an abstract phenomenon, the President was quick to go back to the cost of food (agricultural production, fertilisers, farmers, maize). But we didn't hear about energy prices, another big cost of living driver.

Of course, world fuel prices are out of our control, but the government's fuel costs on account of excessive motorcades and extensive local travel for "devolved cabinet meetings" can be reduced. The closest we got to hearing anything on the cost of government spending was an admission that "we had been living large and way beyond our means" and "the time has come to retire the false comforts and illusory benefits of wasteful expenditure" before calling for "hard decisions and painful choices".

Government spending

We do not seem to see the cost of government spending as a cost of living problem because the nature of our fiscal behaviour is that the more we raise in taxes, the greater the temptation to spend. In reverse, the way to cut spending is to cut taxes, a "starving the beast" strategy. This is wrong-headed, and we must find a cost-effective solution to the way government works.

Let's make this the theme of the 2023/24 Supplementary Budget Estimates, and eliminate every single programme we do not immediately need. Isn't the Azimio coalition demanding that we slash Sh500 billion from the budget, as an immediate cost-of-living solution?

On the cost of doing business, the highlight seemed to be the Hustler Fund as a low-cost credit solution, although the numbers bandied about raised eyebrows. We are already struggling to find the 13,000-plus digitised government services on e-citizen.

Two events occurred this past week; one for the business/private sector, the other in Parliament. Both are important, but both were missing substance. Fix the cost of government, the cost of doing business and then get out of the way. That's how we get to sing "freedom has come", when it's there, not before.

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