By James Osiema Opiyo
The ascendancy of Kenya to become a regional economic powerhouse can be linked back to the administration of the late President Mwai Kibaki, Kenya’s third president. The Kenyan economic renaissance began in the early 2003 and lasted for about 10 years albeit with some turbulence and headwinds that slowed down the velocity of progress.
Some of Kibaki’s key accomplishments included the launch of Kenya Vision 2030, free primary education, promulgation of Kenya’s 2010 Constitution and creation of conducive environment for free market competition.
Free market competition, for example, provided an environment where banks were free to compete to lower the cost of capital, provided opportunity to privatize parastatals like KenGen, Safaricom, Kenya Reinsurance, Mumia Sugar Company and others. This privatization provided extra revenue for the government to use in meeting its expenditure obligations. President Kibaki also expanded the tax base by creating an environment that was attractive to investments in industries and infrastructure.
Kibaki will be remembered for efficiently delivering on mega infrastructure projects and streamlining development, including investments on modern ports, roads network, just to mention a few. These investments and prudent fiscal policy measures helped stimulate the Kenyan economy.
Notably, Kenya’s annual GDP was a meager US $13 billion in 2002 when he won the presidential election, and grew to over US $60 billion by the time he left office at the end of 2012.
Additionally, market capitalization of domestic companies at the Nairobi Securities Exchange (NSE) rose from US$1 billion in 2002 to about US$15 billion by the time Kibaki left office.
President Kibaki could not have led Kenya to high levels of economic progress without engaging a formidable team of cabinet members and advisors. Key among them was Prof. Peter Anyang’ Nyong’o who was the Minister for Planning and National Development between 2003 and 2005.
Prof. Nyong’o was instrumental in crafting economic planning policies that shaped up the direction of Kenya’s progress during the Kibaki regime. A scholar of high repute, he is a product of the prestigious University of Chicago where, incidentally, renowned economist and statistician, Milton Friedman, was a professor – Milton Friedman received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy.
Besides Prof. Nyong’o, other heavyweights anchored the Kibaki administration were Kalonzo Musyoka in Foreign Affairs before becoming Kenya’s Vice President during Kibaki’s second term in office, Azimio leader Raila Amolo Odinga, an engineer who oversaw infrastructure development projects during Kibaki’s first term in office before becoming Kenya’s Prime Minister during Kibaki’s second term.
Mr. Odinga later served the African continent as African Union (AU) Special Envoy for Infrastructure Development. There was also the late John Michuki who oversaw the transport docket where he transformed the matatu sector, the late Prof. George Saitoti held the education docket as Dr. Mukhisa Kituyi headed the trade docket, and later served as the Secretary General of The United Nations Conference on Trade and Development (UNCTAD).
On the legal front, Kibaki was counseled by former Attorney General Amos Wako who oversaw the birth of the 2010 Constitution before being succeeded by Prof. Githu Muigai.
While there was optimism for Kenyans (Kibaki cabinet delivered economic progress) he could have emerged with superior results if there were no challenges. President Kibaki was smart enough to realize that assembling a competent team of cabinet members and advisors was a key prerequisite to delivering his economic transformation promise to Kenyans. But amidst the growth, he faced challenges.
One of the major impediments that limited economic progress during Kibaki’s era was the 2007/08 political instability. The post-election violence resulted in more than 1,000 innocent people losing their lives, over 350,000 innocent people internally displaced, and widespread destruction of properties.
Kenya’s economy was growing at a rate of 7%, but the growth gained would shrink to less than 2% growth rate thanks to the deadly violence.
Many scandals
Corruption too continues to be a setback to Kenya’s economic progress. There were many scandals during the Kibaki regime. One of them was the Anglo Leasing fraud which happened in the early years of Kibaki administration, which involved procurement of security equipment and contracts being awarded to phantom firms.
It is estimated that the scandal cost the country as much as US $1 billion at the time. Then there were the Maize scandal and Grand Regency Hotel scandal that also pilfered billions of shillings of taxpayer money.
There have been even more multibillion scandals that happened in the post-Kibaki administration. Some of them include the Eurobond scandal, Covid-19 Kemsa scandal, Huduma Namba scandal, Kimwarer and Arror scandal, Police Uniform scandal, NYS scandal… If we add the costs of all publicly known scandals over time, the revelation would be that the Kenyan economy has lost trillions of shillings to corruption in a relatively short period of time.
In February 2021, the media reported that former President Uhuru Kenyatta claimed that Kenya was losing about Sh2 billion per day to corruption. This is equivalent to losing Sh730 billion annually.
With Kenya’s financial year 2023/24 budget at Sh3.7 trillion, it means that corruption consumes almost 20% of the country’s annual budget. This is a huge burden to the Kenyan economy that, sort of, limits service delivery to the people.
As a matter of policy action, fighting corruption should be on top of the government priority list for if corruption is eliminated from the society, close to 1 trillion shillings will be recovered annually, an amount of money that can be used to fund government projects that benefit all Kenyans and not just a few individuals and or corruption cartels.
The writer is an economist and strategy consultant based in the United States. He holds degrees in economics and finance, supplemented by post-graduate Executive Education from Northwestern University and Harvard Business School. Email: james.opiyo@gmail.com
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