Violent demos dim hope for economic recovery before Ruto's first term ends

No one can quantify the economic losses that the country continues to suffer as a result of the violent protests. These include human capital laid to waste by bullets during demonstrations, opportunity costs for closing major urban areas, negative impacts on productivity, direct looting or burning of businesses and public infrastructure.

One thing that is emerging is that it is not possible to undertake any peaceful protests in the current political and social environment. For instance, on the question of hired goons infiltrating peaceful demonstrations, both the State and Opposition have leaders in their ranks who have a history of such dirty tactics. So it may not be entirely factual to assign full blame to the State alone.

That notwithstanding, the burden squarely shifts on President William Ruto and his administration to provide a credible action plan to solve the economic grievances that the citizens, particularly the Gen Zs, are raising.

Unfortunately, time is running out for the President before he faces the people on the ballot in 2027. Let no one lie to the Kenya Kwanza (KK) elites, the ground is hostile across all the major voting blocs, including the President’s own backyard. The sting of poor fiscal and macroeconomic policy choices has spared no one, except those in the feeding trough.

This brings us to the difficult question of the day: What must the President do now to get Gen Zs and their supporting silent majority off the streets and bring relief to the growing economic tensions in the country?

Economist Mathew Mitchell of Mercatus Centre, George Mason University, in a testimony before the House Committee on Education and the Workforce, of the US House of Representatives, on February 1, 2012, argues that economists' understanding of how a government can revive an ailing economy is quite limited. This is partly because the instruments available to economists are blunt and partly because the hypothetical model economy used for econometric modelling differs significantly from the real economy in that governments and people conduct their economic activities.

Sick economy

However, that does not mean that economists do not know anything about what a government can do to revive a sick economy. Economic literature has evidence on the drivers of prosperity and policy interventions that a government can undertake to create an environment that is conducive to economic growth.

For example, economists agree that free trade and economic freedom that guarantees property rights, fair trade without interference of violence, theft and fraud cause growth and prosperity. On these parameters, it is quite unfortunate that the Kenyan economic system has been built not on fair trade, but on political patronage, tender-preneurship, violence over deals, employee theft and business fraud, across both public and private sectors.

On the other side of the continuum, there are disagreements among economists on the ability of direct government intervention to create jobs in an economy. Some economists believe that government interventions can restore growth and create jobs, while others believe this is a distortion to fair trade that only makes things worse, leading to further stagnation and massive unemployment.

There are valid reasons for economists to disagree with this parameter. Mathew Mitchell opines that in the real world, policymakers will not allow macroeconomists to conduct controlled experiments with the economy. Besides, it is not possible to control other factors that may affect the economy, including monetary policy, trade patterns, natural disasters and credit conditions. Nonetheless, advocates for government interventions through stimulus economic packages to revive a sick economy argue that if well-timed, targeted and temporary, it can work.

Given, to get informed, a vibrant and seemingly hopeless young populace from the streets won’t be a walk in the park. The President publicly lamented why he has to bear the collective anger of a generation and push back against his policies, unlike his predecessors. A quick answer to this rhetorical question is in the Bible, 1 Chronicles 12:32. Here, the Holy Scripture talks of the men of the tribe of Issachar, who understood the times, to know what Israel ought to do.  

This column made its debut back in 2018 with a twin objective to dissect what economic policies mean to ordinary people and use credible evidence to speak back to public policies.

To my ardent readers, the economic quagmire that we are in has been foreseeable. Truth be told, while there are historical trends to this, defective economic policies by the Uhuru Kenyatta and now Ruto administrations have brought the economy to where it is today.

The onus is now on Ruto to rewire the economy into some sense of functionality and inspire confidence for the rest of the economic actors to get their hands on the deck and kickstart what shall be a long and painful recovery path.

The action points will be personal to the President as the leaders of the nation, and collective to the rest of us as responsible citizens.

As demonstrable from economic literature, there can be no guarantees that my propositions will work. However, they are considered reflections based on my trials of official data and policy tracking.

One, like the sons of Issachar, President Ruto must recognise that his style of politics, marked by deceitful promises, empty rhetoric, and the so-called broad-based government with Raila Odinga, sacrifices public interest and has not only lost relevance but has also been overtaken by shifting generational demands and changing times.

Two, if there is any national conclave that is needed, it is not a political one. What the country needs is an economic dialogue among policy makers, industry/business leaders, economic think tanks/advocacy groups, and eminent patriotic personalities that chart a simple, realistic and actionable work plan to reset our economic order from theft and fraud, into fair trade.

National wealth

Three, the public anger that President Ruto mistakenly assumes is directed towards him or his presidency is a manifestation of a socio-economic revolution against hoarding of national wealth, employment and economic opportunities among the political and bureaucratic elites. When children of the poor masses decide, living or dying means the same thing in this country, then those who plunder and hoard public resources must be afraid.

Economic history is replete with a lot of evidence on these things. What those in power fail to realise is that it is no longer tenable to continue bleeding public coffers for personalaggrandisementt without upsetting the underlying socio-economic order. Each economy has its elasticity limits, beyond which it can only rupture.

Finally, the Kenya Kwanza economic philosophy has yielded more revenues, without corresponding effective and efficient public expenditure programs and accountability frameworks. For example, the Housing Levy disenfranchises household incomes and thus consumption, only for money to accumulate in a fund because the housing programme itself cannot absorb the money and inject it back into circulation.

Similarly, the Hustler's transformative narrative fizzled out. It has become apparent that this was simply a State-run ‘fuliza’ that lacked scalability and tangible economic value drivers. It is finally haemorrhaging in loan defaults.

In its place, what the economy needs are well-targeted tax incentives, grants and subsidies for businesses and investors, with concomitant guarantees from the private sector to create employment, internships and skills development opportunities for our young people.

In addition, instead of distributing political handouts through phoney empowerment programmes, why not have well-structured ‘Kazi Mtaani’ interventions on the scale of the thKibaki era initiative? Is it not sickening and the height of mediocrity when MPs think it is cool to take over the role of distributing internship and contract letters from the Teachers Service Commission?