Why we need to go slow on pol­i­tics

Daily Nation (Kenya) - - OPINION - Dr Thuku is the man­ag­ing di­rec­tor & CEO of Fam­ily Bank Lim­ited. info@fam­ily­bank.co.ke

Pol­i­tics is who gets what, when and how, as was de­fined by Amer­i­can po­lit­i­cal sci­en­tist Harold Lass­well. Pol­i­tics is, there­fore, cen­tral to an econ­omy, as it de­ter­mines how re­sources are al­lo­cated. In Kenya, there is a widely held per­cep­tion that the leader one elects de­ter­mines the re­source al­lo­ca­tion within one’s lo­cal­ity. Pol­i­tics af­fects much more than one’s lo­cal­ity; it drives the econ­omy. How is that so?

The govern­ment is the for­mal de­ci­sion-mak­ing part of the state. Pol­i­tics of­ten takes place within the con­text of a govern­ment. The or­gan­i­sa­tion of power within a state is what re­sults in the for­mu­la­tion and en­force­ment of laws, pro­tec­tion against any threats and en­sur­ing eco­nomic sta­bil­ity. Elec­tions are an op­por­tu­nity for the cit­i­zenry to make a choice on how they want to be gov­erned.

Pol­i­tics in Kenya, like in other de­vel­op­ing coun­tries, seems to have a rip­ple ef­fect on the per­for­mance of the econ­omy. There is a pre­dictable pat­tern of eco­nomic per­for­mance dur­ing gen­eral elec­tion years. In 1992 the econ­omy shrank by 0.8 per cent and recorded growth of a pal­try 0.5 per cent in

2002. Un­der­stand­ably, the coun­try’s GDP growth slipped from 7.1 per cent in 2007 to 1.7 per cent in 2008 ow­ing to the post2007 elec­tion vi­o­lence. Au­gust may be ranked as the worst month for busi­nesses in the pri­vate sec­tor, with de­creased out­put and less money in cir­cu­la­tion. The Stan­bic’s Pur­chas­ing Man­agers In­dex (PMI) well cap­tures this re­al­ity by the no­tice­able drop from

48.1 in July to a low of

42 in Au­gust. The pe­riod was also char­ac­terised by high in­fla­tion rate, and height­ened po­lit­i­cal risk.

The bank­ing in­dus­try ex­pe­ri­enced low level of ac­tiv­ity as a re­sult of the wait-and-see stance adopted by many in­vestors. This, in turn, af­fected loan dis­burse­ments to fund eco­nomic ac­tiv­i­ties, bor­row­ers’ abil­ity to hon­our loan obli­ga­tions and ef­fec­tively, the prof­itabil­ity of banks. On a pos­i­tive note, how­ever, re­ceipts from Kenyans in the di­as­pora do not ap­pear to have been damp­ened by the po­lit­i­cal ac­tiv­ity. Re­mit­tances rose by four per cent to Sh92 bil­lion in June from Sh88.3 bil­lion in June last year.

There is a need to re­cal­i­brate the weight we at­tach to the po­lit­i­cal tem­per­a­ture vis-a-vis eco­nomic ac­tiv­ity. While elec­tions are a ne­ces­sity, there is need to re­duce the ef­fects of po­lit­i­cal ac­tiv­i­ties on busi­ness and eco­nomic per­for­mance. In do­ing so, we will not be re-in­vent­ing the wheel. Bel­gium, for ex­am­ple, had no govern­ment for 15 months in 2010-11, yet its econ­omy man­aged to out­per­form those of the UK, Ger­many, France, Italy, Spain, the Nether­lands, Fin­land, and Switzer­land in the last quar­ter of 2011. Whereas Bel­gian pol­i­tics got stuck in a grid­lock af­ter elec­tions where no sin­gle party re­ceived a def­i­nite man­date and ef­forts to form a coali­tion govern­ment failed; eco­nomic ac­tiv­ity con­tin­ued and the econ­omy grew. Ire­land went 63 days with­out a govern­ment and the econ­omy ex­panded by five per cent in the first half of the year. So did Spain last year, Ger­many in 2005 and the US in 2013.

Com­merce

How can we en­sure the busi­ness and com­merce con­tinue dur­ing and de­spite elec­tions? How can we in­su­late our econ­omy from the va­garies of the high tem­per­a­tures that char­ac­terise our po­lit­i­cal cam­paigns?

We need to strengthen sys­tems and struc­tures to soften the ef­fect of pol­i­tics on com­merce and the gen­eral op­er­a­tion of the econ­omy. Non-po­lit­i­cal en­ti­ties such as reg­u­la­tory bodies, ap­pointed ex­ec­u­tives and pub­lic ser­vants as well as se­cu­rity agents need to re­main well above the po­lit­i­cal shenani­gans of the day. Se­cu­rity is para­mount in or­der to re­as­sure the cit­i­zenry and the in­ter­na­tional com­mu­nity of a con­ducive busi­ness en­vi­ron­ment.

As ci­ti­zens, we must al­ways bear in mind that elec­tions will come and go, but Kenya needs to re­main in­tact and be be­queathed to fu­ture gen­er­a­tions. Elec­tions or not, money has to be made, roads have to be built, goods and re­sources must be dis­trib­uted, and peo­ple have to feed and be ed­u­cated, among other things, for our so­ci­ety to thrive. There is a need for proper sys­tems and gov­er­nance, which al­low us to con­duct busi­ness as usual even with­out a govern­ment to be en­trenched as part of our na­tional psy­che and DNA.

We need to evolve to a point where we do not op­er­ate in un­cer­tainty in elec­tion pe­ri­ods, but have a bullish at­ti­tude to spur this coun­try to even greater growth. May God con­tinue to shower our beau­ti­ful coun­try with bless­ings at all times.

DAVID THUKU We need to evolve to a point where we do not op­er­ate in un­cer­tainty in elec­tion pe­ri­ods, but have a bullish at­ti­tude to spur this coun­try to even greater growth.”

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