BBC speaks with Mentoria Economics chief economist Ken Gichinga on the risks that the coronavirus pandemic poses to the Kenyan economy.

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KTN speaks with Mentoria Economics chief economist Ken Gichinga on the stimulus measures that the Kenyan economy can take to mitigate the effects of the Coronavirus Pandemic.

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Over the last two decades, the levels of trade and investment between China and Africa have increased significantly. According to Chinese government figures, China’s total import and export volume with Africa exceeded $204 billion last year. China is also engaged in major investment and infrastructure projects on the African continent. And, last September, Chinese President Xi Jinping announced another $60 billion in support.

For a more in-depth discussion, tonight’s panel includes David Shinn, a former US Ambassador to Ethiopia and Burkina Faso; Ken Gichinga, managing director and chief economist at Mentoria Economics; Sanusha Naidu, a foreign policy analyst at the Institute for Global Dialogue and Victor Gao, vice president at the Center for China and Globalization.

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KTN speaks with Mentoria Economics chief economist Ken Gichinga on the woes Kenyan maize farmers have been facing.

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Something in the Kenyan psyche snapped after the government’s decision to effect Value Added Tax on petroleum products among other levies despite earlier assurances by MPs that the proposals would be postponed for two more years.

The feeling of being blindsided triggered a nasty public debate about the economic destination of Kenya, a debate that reached its climax during the controversial parliamentary vote on the Finance Bill, 2018.

Judging by the public mood, the debate has now evolved into a broader national conversation about the general direction of Kenya’s economy.

It well might be that time has come for the country to develop a new sessional paper that will seek to define the structural flaw in Kenya’s economic model and subsequently propose remedies.

ECONOMY

The problem statement is clear: Kenya’s economy has been oriented towards consumption and now needs to be steered towards production.

Statistics support this shocking reality: 85 percent of commercial bank loan accounts are classified under “personal and household consumption” while only one percent of loan accounts are attributed to agriculture — the backbone of the economy.

Admittedly, weaning off an economy from its addiction to consumption and directing it towards production is a Herculean task that will take years.

A meaningful first step needs to take into consideration what economists refer to as the four factors of production: land, labour, capital and the entrepreneur.

A responsible land management policy needs to be at the heart of Kenya’s economic revival.

Indeed, the vast acreage of idle fertile land is proof of how far we have veered away from the path of true progress.

LAND RECORDS

This is in stark contrast to a country such as Israel which is 27 times smaller than Kenya and is largely arid, but still outperforms our country in terms of productivity.

The same can be said about Ireland, a small nation of about five million people but has the productive capacity to feed 50 million people!

It is encouraging that the Kenyan government has begun the digitisation of land records. The benefits of this initiative will be felt across multiple fronts.

For one, it will reduce ownership disputes and allow more energy to be channelled towards production in the real economy.

Digitisation also facilitates efficient land valuations and administration of rates, a big revenue earner for both county and national governments.

Land value tax is often considered perfect because it is non-distortionary and raises enough revenue.

CREDIT

Upon creating an efficient process of collecting land rates, the government will have enough finances to execute its mandate without having to borrow.

Commercial banks will have no business lending to the government and will focus their strategy towards lending to the real economy at lower interest rates.

The business community will thrive from having cheaper access to credit and we shall witness the rise of capital formation, the second factor of production.

The butcher will buy more freezers and the baker will afford more ovens and the overall economy will produce more.

The necessary outcome of a thriving business environment will be the rapid expansion of enterprises, which will absorb the youthful labour force — essentially the third factor of production. This will address youth unemployment.

As more young people get absorbed into the growing businesses, they will acquire vital skills and exposure.

Many will eventually find a calling to innovatively apply those skills and experiences into launching their own ventures.

By addressing these four factors of production in a well-crafted sessional paper, Kenya will be ready for a genuine economic take-off.

– This article first appeared on the Daily Nation website.

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Obviously, many in the room were oblivious to the truth and sagacity hidden in this song. Putting it simply, our youth today have been equipped with the technical capabilities to build grand ambitions but remain largely untutored on matters of character. And because of this, the need for mentorship is more urgent than ever.

A recent report by the British Council revealed that young Kenyans want quality education, fair access to career opportunities and a more visible role in public life. These three requests seem reasonable and the hope is that the relevant stakeholders will act on them expeditiously. Of the three demands, it is access to quality education that has the greatest impact in providing an authentic path to prosperity for the youth.

It is indeed gratifying to see that, despite the cultural nuances that glorify corrupt forms of wealth acquisition, Kenyan youth still believe that a good education is a key ingredient to attaining their final goal, which is simply to lead a prosperous and happy life. The famous Russian writer, Leo Tolstoy brilliantly observed in his classic novel, War and Peace, that “one must believe in the possibility of happiness in order to be happy…. while one has life, one must live and be happy!”

Perhaps the greatest source of discontentment facing our youth today is the spectacular disconnect between the academic journey presented in our education institutions and the harsh realities faced in the real world. In his book, “A Guide for the Perplexed “, E F Schumacher argues that often the education provided in schools and universities equip us with incomplete maps of life and knowledge which lack many of the things that students care about.

In a sense, this is the same feeling that many young graduates feel when they begin their working lives in the real world. They question the relevance of much of the content that they were taught, and they often feel drastically underprepared to navigate the challenges that real life throws in their direction.

So how can young people overcome this significant challenge?
First and foremost, we need to clarify that there are two levels of education which are fundamentally important. The first level is the conventional type of education which aims to develop the scholastic aptitude skills of the learner in preparation for a profession. The objective here is to produce more doctors, accountants and engineers which every country certainly needs for economic progress. In this respect, Kenya does well in comparison with its peers in the region.

However, the second level of education is more concerned in cultivating a virtuous individual who is not only capable of both critical thinking and creativity, but who also has a life-long love for learning. It is in this area that our education system falls terribly short. Luckily, this was never a real problem in the past because the family could always be counted upon to impart wisdom on the young minds. Sadly though, the demands of modern life have placed a great strain on the family thus weakening its ability to perform such functions.

Fathers and mothers have lost the idea that the highest aspiration they might have for their children is for them to be wise—-as priests, prophets or philosophers are wise. Specialized competence and success are all that they can imagine.

– Allan Bloom

It therefore seems that mentors are the last frontier of hope for our youth. These are the men and women in our everyday lives who are committed to living a heroic life. From them, the youth can draw rich experiences which can assist them to discover their true north. There is also much to be learnt from the great written works such as Cicero’s ancient treatise, On Friendship, which emphasized the importance of virtue in friendship and how true friendship cannot exist without it. Perhaps it truly is time that our youth stopped obsessing about the big things and start making plans for the small things.

Ken Gichinga is the Chief Economist at Mentoria Consulting;

kgichinga@gmail.com

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Kenyan authorities will investigate 10 financial institutions suspected of handling funds that were stolen from the government’s National Youth Service. Dozens of senior officials and business people have been taken into custody and face charges related to the theft of nearly $100 M from the agency. The Daily Nation newspaper has named nine commercial banks and a financial co-op as the institutions the police and central bank investigators are focusing on. The list of lenders included Kenya’s biggest bank by assets, KCB Group, and Standard Chartered’s Kenyan unit.

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KTN’s Yvonne Okwara speaks with economist Ken Gichinga and urban planner Alfred Omenya on ways of fixing Nairobi County.

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