"CEOs can't wait to read Sunny Bindra's articles every week."

Kenya: the poor country that spends lavishly

Meet John: he is a sensible sort of chap, but he’s going through a rough patch economically. His finances are in disarray, and he cannot currently meet his obligations. What does John do? For one thing, he makes sure that his spending goes down to an absolute minimum. This means focusing on the absolute basics: food and shelter for his family. No more luxuries for a while: no eating out, no entertaining, no trips to the cinema, no holidays. John also makes sure that he increases his sources of income: he does more overtime at work, and his wife takes up a part-time job. After six months of this austere regime, John manages to repay the bulk of his most pressing debts. After a year, he’s back in the black, and can think of having a good time again.

Now meet Jack. He’s also in some economic difficulty, just like his friend John. But his way of getting out of it is rather different. Jack is a gourmand; he’s addicted to the good life. For him, fancy food and drink are not luxuries; they are indispensable necessities. Jack cannot possibly be seen in anything other than the finest clothes. He must be seen to be entertaining all his high-society friends. The thought of austerity is alien to Jack. So he carries on as before. He parties away, keeps buying fancy gifts for his friends, keeps indulging himself. To finance this, he seduces investors to support his many ill-fated ventures, and pleads with friends to give him loans. Within a year, Jack is in the bankruptcy court, teetering under a mountain of debt, and with a heart condition to boot.

Sensible John is like you and me. Amazingly, the Kenya government behaves more like Jack-the-Lad. The fact that we are poor appears never to register on successive governments. The idea of austerity is apparently unthinkable. The thought that we might just focus our spending only on productive investments is a non-starter.

Let us start with a fact that may need repeating: we are a poor country, full stop. If the world economy were a football game, we would be in the fourth division. We have had nearly 40 years of independence, but have managed to make next to no impact on the average Kenyan’s real income. More than half our people live below an absolute poverty line. We have just one doctor per 10,000 people. Less than 1 per cent of our children in the eligible age group receive university education.

None of this is news. We have heard it ad nauseam for years. I only repeat it here because I sometimes wonder whether I really live in the country just described at all. Because there is also another Kenya: one that never seems to have encountered any poverty or hard times. In this Kenya, life is like always being in one of Jack’s lavish parties; it’s a blast!

In this Kenya, much fulsome spending is possible. Ministers, for example, must be provided with not one, but three or four luxury vehicles. Such is the level of civic wealth in this Kenya, that all 73 councillors of its capital city absolutely must attend the funeral of a departed vice-president, or a municipal sports festival, and be given handsome allowances to do so. This is a Kenya in which conference delegates can stand up and argue, without batting an eyelid, that KSh 3,200 per day is not enough to cater for their basic needs (such as brushing their teeth or washing their underwear).

What a wonderful Kenya this must be, to afford such wonders! In this fabled land, government bigwigs spend millions on furnishing their homes. They get roads built right up to their gates. They travel frequently to see the world and do so in style, armed with excellent allowances. When the big crooks of this country sit down to steal, they talk in billions, confident that none of them will ever see the inside of a jail cell for an economic crime. And the taxpayers who pay for it all just sit back and smile benevolently, allowing their leaders their breathtaking lifestyles. Oh, to be a leader in this land of milk and honey!

Back to reality. There aren’t really two Kenyas; there’s just one. All of these excesses are being squeezed out of one of the world’s poorest economies. How can this be happening? I am convinced that although many of our leaders come from humble beginnings, their induction into the world of wealth and opulence transforms them. The more they become used to having everything paid for – first-class travel, grand fittings and furniture, sumptuous limousines, extravagant entertainment allowances – the more detached they become from the harsh reality that is Kenya. When you never have to pay for anything yourself, life becomes one long gravy train. It must be very difficult to ‘see’ anything real any more when your daily life has only three settings: your elegant suburban mansion; your air-conditioned, curtained limousine; and your genteel, luxurious office. All paid for, and not a bill to worry about.

How else to explain the transformation of our current crop of leaders? Kenyans can remember when many of them were impoverished-looking activists, bellowing in righteous rage against the extravagances of the previous regime, whilst running helter-skelter in clouds of tear gas. Now here they are, nicely suited, stylishly booted and talking the language of justification. We hear them justify many things these days: why cowboy contractors, once their sworn enemies, had to be paid in the end; why all sorts of allowances are a very good thing indeed; and why all the trappings of luxury are merely commensurate with their new positions. They have been internalised by the ‘other’ Kenya, the one that can afford all this. They have waved the real world goodbye.

One of the things you will hear them say is that all the extravagance is ‘within budget’. How is this budget financed, you may ask? There lies the nub of the matter. The government’s strategy is that of Jack-the-Lad: keep spending, no need for any austerity at all. Friends and partners will foot the bill. In macroeconomic terms, this translates into the following: we will keep spending beyond our means, but will rely on Official Development Assistance (ODA, or donor support) and Foreign Direct Investment (FDI, or investment by foreign private corporations) to bridge the gap. And, as many commentators have pointed out, we will need near-miraculous levels of ODA and FDI to make it.
In the meantime, all those foreign ‘friends and relatives’ are watching. They see all the spending on utterly frivolous and unproductive consumption. They note how talk of improving governance and zero-tolerance of corruption is, thus far, just empty drum beating. Like Jack’s friends, they may choose to keep their money firmly in their pockets.

And then, ladies and gentlemen of the ‘real’ Kenya, we are cooked.

Buy Sunny Bindra's book
here »

Share or comment on this article

More Like This