This article will examine Kenya’s underdevelopment through the lens of two economic theories. Firstly, it will examine Stefan Dercon’s ‘Elite Bargain’ theory, which posits that the key economic outcomes of any country are determined by the strategic, implicit agreements of a small group of influential leaders rather than by broad public consensus.
In his book "Gambling on development", he argues development happens when these elites agree to shift focus from narrow grabbing to long-term development. It is a gamble because the elites must sacrifice short-term gains for an unpredictable future.
The second theory of economic development is that of ‘inclusive institutions’, as set out by Daron Acemoglu and James A. Robinson. They posit that development depends on the institutions that societies choose. Inclusive institutions include open markets, impartial law, and secure property rights. In contrast, extractive institutions concentrate power and resources in the hands of a select few.
The underdevelopment of Kenya is often blamed on poor leadership and colonial history. These explanations are comforting as they are familiar. But as the African proverb reminds us, no tree can grow without the roots that feed it. To understand why Kenya produces leaves but little fruit, we must examine the roots of our political economy, not just the branches.
Kenya is not a poor country. It is a paradox. We grow at five to six per cent annually, yet jobs are scarce. We build highways, yet factories remain few. We educate millions, yet export labour instead of products. Like the biblical fig tree that Jesus cursed, we have leaves of promise but no fruit of prosperity. The problem lies in the structure, not the effort. Specifically, it is the way in which our elites bargain for power, and the institutions that result from this bargaining process.
Kenya’s ruling elite always made a silent but powerful agreement: politics would be about sharing the state, not transforming it. Each election cycle is a renegotiation of who gets access to land, contracts, jobs, and public resources. Priority has never been national productivity, but elite stability. As the Swahili proverb goes, “Wenye shibe hawajui njaa” — the satisfied do not understand hunger.
Elite bargains are designed to keep those at the table satisfied, even if millions outside the room remain hungry. This explains why Kenya has enjoyed peace compared to many neighbours, yet lags behind developmental states. Peace was purchased through rent-sharing, not institution-building.
Inclusive institutions theory teaches that nations prosper when political and economic institutions allow broad participation, protect property rights, and reward innovation. Kenya appears to tick these boxes on paper. We have elections, courts, markets, and devolution. But in practice, these institutions operate selectively. Elections are competitive, but the end is a case of winner-take-all. Courts are independent, but enforcement is uneven.
Markets are open, but captured by cartels. Devolution empowers counties, yet often decentralises corruption. The result is what one might call “inclusive language with extractive behaviour.” A small group thrives while the majority hustle. Small traders are taxed aggressively while monopolies enjoy waivers. Farmers produce, middlemen profit. Youth innovate, but capital remains elusive. Like the biblical parable of the talents, those who already have are given more, while those with little struggle to even keep what they have.
Contrast this with developmental states. South Korea, in the 1960s, was poorer than Kenya. Its elites struck a different bargain. Political power was centralised, yes, but conditional on performance. Chaebols were supported, but only if they exported and created jobs.
Failure meant collapse, not bailout. Singapore’s Lee Kuan Yew famously jailed corrupt ministers, not to impress donors, but to signal to elites that rent-seeking threatened the nation. China and Vietnam reformed selectively: land rights for farmers, export zones for manufacturers, discipline for officials. They did not democratise everything at once, but they made growth the central elite bargain. Kenya’s elite bargain, by contrast, rewards consumption over production.
Real estate booms, imports surge, public debt grows, and agriculture stagnates. We celebrate malls but ignore mills. We reward political loyalty more than economic competence. As the Luo proverb says, “Ok okawo piny to ok okawo chuny” — you may conquer land, but not hearts. Development requires winning hearts through opportunity, not pacifying them with handouts.
The solution is not moral lectures, but incentive change. Kenya does not need angels in politics; it needs rules that make even sinners behave well. Elite bargains must be re-engineered so that political survival depends on economic performance, not ethnic arithmetic. Leaders should fear unemployment statistics more than opinion polls. Leaders should be ranked publicly on job creation, revenue growth, and service delivery. Shame, when institutionalised, can be a powerful tool.
Institutions must also be built selectively but seriously. Secure land registries would unlock rural capital. Efficient commercial courts would revive investor confidence. A competition authority with real teeth would dismantle cartels. Tax policy should reward growth, not punish formality. Rwanda did not eliminate corruption by sermons; it did so by making corruption irrational.
Opportunities must be de-ethnicised. National service, merit-based hiring, transparent procurement dashboards and digital public services can undermine patronage quietly and without provoking a cultural war. As Amos 5:24 in the Bible reminds us, ‘Let justice roll on like a river, righteousness like a never-failing stream.’ In economic terms, justice is not equal outcomes, but fair chances.
We can either continue to recycle leaders, scandals and promises, or we can renegotiate the elite bargain that defines our destiny. Underdevelopment is not our fate, but our choice — made repeatedly at every election, in every budget and with every compromise. As the African proverb warns, ‘The best time to plant a tree was twenty years ago. The second-best time is now.’
