Sunday, 3 April 2016

State Of The Nation: The Achievements & Challenges In Physical Infrastructure, Devolution & Investment.

The talk of this ending week has certainly been the State Of The Nation address by President Uhuru Kenyatta which was preceded by other similar events in which the Cabinet Secretaries and the Deputy President gave conclusive and comprehensive reports on what the ministries have achieved, the challenges that they have encountered and most importantly what they intend to achieve in the next two years. 

The State Of The Nation address was perspicuous albeit the incidences and instances of whistle blowing by a section of the opposition Members of Parliament. This unfortunate event shifted the focus of the initial and intended objective of the speech which was to highlight the achievements that have been made by the Jubilee administration and the goals to be realized in the next few months going into the electioneering period.

One of the remarkable and memorable parts of the speech was the echoing of the Nationalist Covenant that was patriotically drafted and adroitly crafted by the Founding Fathers of the Republic of Kenya. Under this, they envisaged a united country irrespective of one’s ethnic orientation, ready to quash the three enemies of poverty, disease and ignorance. The eradication of these three challenges is pegged on the implementation and operationalization of efficient socio-economic policies.

Fast-forward, President Kenyatta largely focused on the positives among them the resilience of the Kenyan economy, the controlled level of inflation, the improved level of the foreign  exchange reserves among others. At this juncture, I wish to note that in the recent launch of the 13th edition of the Kenya Economic Update, it was revealed that Kenya is the most resilient economy in Sub-Saharan Africa. This can be attributed to the effective macroeconomic policy frameworks that have been formulated to address both the endogenous and exogenous economic shocks that may afflict the economy. 

In his address to the nation, Mr. Kenyatta made a bold reference to the report by the World Bank on the ease of doing business which indicates that Kenya is the third most improved country in the world as far as conducting business is concerned. In addition, it was captured in the speech that Nairobi was named as the most attractive destination in Africa for the Foreign Direct Investments. Further documentation was made with regards to Kenya being among the seven most promising emerging markets in the world and the only state from Africa.
This is positive news in view of the anticipated economic growth trajectory and the subsequent structural transformation. However, there is much to worry going by some of the latest reports that have been issued by the World Bank. In the final days of the month of March 2016, the World Bank published a report on the state of the Foreign Direct Investments (FDIs) in Kenya. The general focus of the report was on why foreign investors are preferring Uganda and Tanzania to Kenya. The report conclusively states that this can solely and squarely be attributed to the accretion of the rate of corruption in the country.

This report had three main aspects: firstly, the level of FDI in Kenya is relatively lower when compared to Uganda and Tanzania. Secondly, Kenya’s FDI inflows have fallen below the pre-1980s levels and thirdly, the FDI for manufacturing in Kenya is way too low to stimulate a rapid growth of the manufacturing sector in the economy. Furthermore, the report notes that the manufacturing FDI is lower in comparison with countries such as Ghana and the ilk whose economies are nearly of the same size as Kenya’s. The current administration has to initiate measures that are to lead to highly significant inflows of the FDIs and more specifically the FDIs for the manufacturing sector which is fundamental in the achievement of Vision 2030.

Going by the address, it feels good to note that the government continues to prioritize investment in infrastructure as a catalyst for robust economic growth. The progress of the Standard Gauge Railway (SGR) cannot be whisked away. It’s construction is six months ahead of schedule and it is expected that the stretch between Mombasa and Nairobi will be fully operational by June 2017. This particular infrastructural project has already created 27000 jobs both directly and indirectly. Upon its completion, the SGR is expected to generate an additional 1.5% rate of economic growth. 

On the construction of the roads, the current administration has adopted a three-pronged approach: the first one entails the completion of the road networks that were initiated by the Kibaki-Raila Grand Coalition administration. The other approach entails the opening of new major national trunk routes and the final approach involves the implementation of the Roads Annuity Programme which focuses on constructing low volume tarmac roads especially in the rural areas. In the address, the president noted that for fifty years from 1963 to 2013, only 11000kms of roads were tarmacked and that the current regime has completed about 3000kms of tarmac roads for the last three years. This translates to an average of 1000kms per year and by 2017 it is prospected that an additional 2000km would have been completed.

Other notable infrastructural developments that have been carried out by the Jubilee administration include the expansion of the Port of Mombasa and the Jomo Kenyatta International Airport. In 2013, the Port of Mombasa was the eighth busiest airport in Africa with a capacity to handle 890000 twenty foot containers. As at February 2016, the Port of Mombasa was ranked as the fourth busiest in Africa with its handling capacity having expanded to 1.6 million. 

The Jomo Kenyatta International Airport has been expanded. The air terminal 2 has already been completed with terminals 1A and 1E expected to be completed by May 2016. This is expected to increase the passenger handling capacity by an additional 5.1 million new passengers bringing the total number of passengers to 7.5 million per year. 

However, in my opinion, the president ought to have given the progress that is being made as far as the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor is concerned. This is a key project in enhancing medium-term and long-term economic growth of the country. Also the president ought to have given explanation as to why the government has annulled the Greenfield Airfield Project which was a key project in the Vision 2030 economic plan. This was a Kshs.56 billion  project and its termination would imply that an extra Kshs.20 billion in costs might be incurred in the process of compensating the contractor on site. This is a failure on the part of this administration. Special attention needs to be paid to the quality of the tarmac roads that are constructed. Above board technology should be used to reduce on the cases of the roads being dilapidated as soon as they are completed.

On infrastructural development in the energy sector, significant strides have been made. In 2015 634MW of new power were injected to the national grid system bringing the total amount to 2282MW. As a result of this 1.2 million Kenyans have been connected to electricity. But this expansion of the energy infrastructure needs to be met with a lot of efficiency. This means that incidences of power outages need to be significantly reduced especially in the rural areas. Street lighting projects have been embraced by the current administration. By mid-2016, about 26000 new street lights would have been erected across five counties. This is a fundamental infrastructural step towards a 24-hour economy which needs to be facilitated by other basics to achieve it.

On devolution, the president noted that his regime has remitted Kshs.1trillion in revenues to the county governments which translates into a 30% remission rate in each fiscal year which is above the constitutional threshold of 15%. The president faulted the governors for the opulent lifestyles that they have adopted and these have created avenues for corruption to thrive. But the Jubilee administration needs to reduce the bureaucratic process that is involved in the transfer of funds from the national government to the county governments. These red tapes have slackened service delivery particularly in the health dockets of the respective counties leading to frequent industrial unrests. In order to tame devolved corruption, the administration should facilitate legislation that devolves effectively the functions of the anti-corruption institutions.

Generally, the economy grew by 5.6% in 2015 and it is expected that by 2017 the growth rate will be 6% which I highly doubt about considering that the political temperatures are expected to rise. A look into the second Medium-Term Plan(MTP) covering 2013 to 2018 shows that the country’s economy is lagging behind the set targets. This isn’t some sort of reckless fabrication because reference can be made to the MTPs. This latency implies that either the policy makers set overambitious targets or the macroeconomic environment is highly punctured, in relative terms, by the external shocks. To ensure that the economy grows rapidly and robustly, corruption that is extant needs to be weeded out. Budgetary accountability and prudence  must be embraced  especially in collection of revenue and in carrying out the spending.

No comments:

Post a Comment