Focus on devolution may undermine country competitiveness

When Kenya inaugurated a new constitution in 2010, I argued that the leadership might focus on devolution at the expense of the country’s competitiveness. As they say, ultimately, only time tells. I believe time has proven that I was right.

Barely 10 years after the advent of county governments, our inward focus has blurred any hope for replicating the example of the Newly Industrialized Countries (NICs) of Asia, which redirected their countries toward export orientation to grow their economies.

Kenya has effectively re-oriented its consciousness towards devolution and divorced herself from participating in the global market. Our leadership wants resources at the county, not to grow future revenue sources but to spend. In the financial year 2018/2019, most counties spent more than 65 per cent in recurrent expenditure and less than 25 per cent in development expenditure.

Much of the recurrent expenditure goes to the bloated staff complement employed through the cronyism of senators, members of Parliament (MPs), members of county assembly (MCAs) and governors. 

During the first nine months of 2018/2019 financial year, county executives and MCAs from the 47 counties spent Sh14.88 billion on travelling, mostly to lounge in high-end hotels around the world. No wonder Kenyans say their leaders have gone to “bed mark” instead of to “benchmark.”

As reports from the Office of the Auditor-General shows every year, county bureaucrats and leadership also steal a lot of the devolved resources. The money ends up in Nairobi where it is pumped into investments such as hotels and real estate. Some of it is also spirited abroad.

Revenue debate

The fight in the Senate about revenue allocation therefore isn’t about the citizens but an opportunity to raise funds for the 2022 electioneering. It is a season of high corruption in both national and county governments.

Their preoccupation with how much resources is going to their respective counties has taken the energy to think and change the skewed spending that Parliament approves.

There is no economy that has ever flourished on the basis of consumption only. Right thinking leaders often prioritise creation of an enabling environment and supporting revenue creation opportunities.

Among the 47 counties there are few outliers like Kitui, Makueni and West Pokot, which stand out in trying to tackle the greatest youth problem in Kenya – unemployment. Kitui County for example, has managed to demonstrate that with proper leadership, it is possible to create opportunity at local level and grow outward.

Governor Charity Ngilu, made the decision to use Sh168 million to establish the now famous Kitui County Textile Center (Kicotec).

With such a small amount, a new textile industry has emerged employing 600 workers. Yet the amount was barely enough to buy various sewing machines, build the structures and train the recruited staff.

Contrast the Sh168 million spent on the establishment of Kicotec with the Sh14.88 billion spent as travel and accommodation expense for MCA on foreign travel in nine months. By extrapolation, if Sh168 million produced 600 jobs, Sh14.88 billion would have produced 24.8 million jobs, that is, virtually a job for every youth that is looking for one.

Some counties would have produced the plastic shoes that are imported in their abundance, while others would have produced office stationery. Indeed, there are as many low-end manufacturing opportunities as there are counties.

Some of the other products that should be manufactured locally include: detergents, beauty products with local fragrances, hospital supplies, pharmaceutical and many more. Each of these will have its own multiplier effect.

The same amount could be used in agricultural value addition, production of more foods to meet local demands (for example, wheat production to reduce import bill – Kenya imports 2.4 million tones or more than 90 per cent of what it consumes in wheat). The percentage is even higher for fish and rice.

My point here is that with the travel and lodging budget, we could have easily met what is required to ensure food security and improve our faltering manufacturing sector. More importantly, with prudent and innovative investment, we would achieve Agenda Four and part of the vision 2030.

Manufacturing culture

Indeed, if we get into the culture of manufacturing, we would get better at it and begin to be competitive. That is how we can compete on exports. It is through exports that the country can rapidly grow just like the NICs.  I

In any case, some countries, as they move up the ladder of development, lose competitiveness in low-end manufacturing. For example, much of the low-end manufacturing in China has moved to either Vietnam or India. There isn’t any reason other than leadership why Kenya should not join the league of these emerging manufacturing nations to compete.

Every enterprise in the world started small and grew. Kicotec will eventually go through a learning curve to become a formidable textile organisation and so will many of the new enterprises I am proposing here. We must attempt to create such enterprises if we hope to get on the learning curve. Like buying a lottery ticket, you cannot win unless you have the ticket.

The same goes taking the risk to set up enterprises that create jobs and wealth. If they grow, then there will be hope for future success but at the moment our hope is premised on wrong assumptions – that we spend to attract investors – yet the operating environment is a nightmare to say the least.

We should be ashamed that we have rivers, lakes (in fact some Rift Valley lakes have expanded to double their size barely 10 years ago) and oceans but we import fish, we have land and labour but we import food, we have a young population educated in the arts and sciences but we import cheap plastics.

We have demonstrated that we can competitively produce textile but we yarn for mitumba. Although we can manufacture drugs, we import 95 per cent of our drug needs when poorer countries like Bangladesh produce 97 per cent of the requirement of drugs. We can manufacture basic things like soap but we still import hygiene products.

The pause on globalisation created by Covid-19 has given us a chance to rekindle manufacturing, create jobs and wealth. Above all we must stop squabbling over small money and do what it takes to generate revenue in every county in the country. The question in everyone’s mind should be: How can we bake a bigger cake?

Virtually every country in the world has some kind of smaller administrative units that have different funding mechanisms but we do not always hear of any disagreements as we do here in Kenya.

The difference is that most of these countries’ devolved systems create local wealth and debates are based on issues not emotional harangues that pander to the ethnic sentiment.

In most other countries, allocations from national governments are largely done based on facts and data as analysed by competent technocrats, of whom this country does not have a shortage. 

Indeed the Commission on Revenue Allocation (CRA) is full of such experts and it is precisely so that it can incorporate data in national revenue allocation that the commission was established by the 2010 constitution.

It is a pity that we cannot listen to what such experts are saying and that we do not value research-based decision-making.

If we cannot trust each other on facts generated by technocrats, then we may as well introduce the law of the jungle.