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The Kenyan economy can soar, but leaders hold it down

Last week I asked Kenyans to harbour some hope in their hearts for what this next decade might bring. I suggested that 2010 might turn out to be recorded in history as the year in which we turned the corner by finally attacking, and fatally wounding, the beast we call impunity. Maybe, just maybe, we are learning to stand up for ourselves and not consuming the garbage our leaders routinely feed us.

But that is not the only reason to be hopeful. Let me offer another this week: our economy.

This is perhaps not the wisest time for a columnist to be waxing lyrical about the state of business in Kenya. Latest official figures reveal that we grew by exactly zero per cent in the third quarter of 2009. Nothing, zilch, nada, sufuri. So why am I telling you to be optimistic?

Because this economy is tough, that’s why. Considering that it has been plundered by colonialists and looted by nationalists for as long as anyone can remember, it’s a miracle that it’s still here. Considering that this economy has been run incompetently for much of its existence, it’s amazing that we are ever in positive growth territory. But we are, and that’s the point. In the 1980s and 1990s, this country suffered the most absurd degradations caused by leaders; the country’s treasury was treated no better than a pirate’s private trove. Even so, the economy never failed to function. It may go into ICU from time to time, but it always comes out again ready to rock and roll.

An economy consists of millions of little producers and consumers, and in Kenya our millions are of the good type. Our producers are, generally speaking, spirited and ambitious; our consumers are, at all levels, aspirational and upwardly mobile. We embrace the idea of business; we build wealth, no matter how modest; and we honour the practice of entrepreneurship. Those are not minor matters, let me assure you.

Certainly at a regional level, we are the envy of many. Unlike most African countries, Kenya is not a one-trick pony. We do not rely on a single commodity (oil or copper or coffee) to keep us afloat. We have very significant manufacturing, transportation, tourism and trading sectors; we have robust banks with healthy balance sheets; and we have a communications sector that has literally been exploding. We export a wide range of things – even talent.

I spend much of my time with the business leaders of these myriad sectors, and you would be hard-pressed to find a single one who is not utterly optimistic about prospects for the medium and long term. Some reasons: Kenya is the dominant player in the Eastern Africa bloc, an economy of 120 million people and $60 billion income; Kenya is rapidly decentralising, creating local economic hubs in far-flung corners; Kenya has a a strong and growing core of very resilient consumers who eat out, drink beer, telephone incessantly and get their hair done with gusto, no matter how small their budgets. In 2010, many corporate leaders think Kenya is poised on the verge of take-off: we may stutter and splutter here and there, but we are set to soar. Soon.

The only reason we haven’t taken off thus far is simple: our economic fundamentals are strong, our leadership fundamentals are feeble. It is not difficult to ignite this economy: the first Kibaki administration proved that in 2003 when it did some simple things like reduce interest rates and provide a degree of fiscal and monetary stability. The inbuilt Kenyan economic engine does the rest. But it never lasts. Study the pattern of economic growth since independence: you will see a sharply undulating landscape of peaks and valleys. When leaders and government get out of the way and provide a stable policy background, we soar. When they play politics and do the dirty, we sink.

Yet I am hopeful that a time is coming soon when the economy will be the bride, and politicians the bridesmaids. Consider the history of the two huge economic success stories of recent times, China and India. For a long time, those countries were run at the whims of the politicians in charge. Then, once some brave visionaries and effective technocrats had provided a period of macroeconomic stability, the economy took centre-stage. Once the common people began to taste the fruits of economic progress, it was game, set and match to the economy. Today, no political leader in those countries can afford to stand in the way of rapid economic development.

Sometime soon, a politician with the right nous is going to work out that the most effective way to win hearts and minds and retain power is to ensure that economic gain is both rapid and widespread. And once the ordinary people of Kenya experience true development, no one will be able to send the horse back to the stable.

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