Two things distinguish Greece from probably the rest
of the world. Number one it is the cradle of modern democracy and two, it
produced great Philosophers such as Plato, Socrates and Aristotle. That was many
centuries back. How about today? It is simply the sick man of Europe (financially)
requiring bail out.
On August 5, 2010, three academics Costas Meghir, Yale
University, University College London and IFS, Dimitri Vayanos, London School
of Economics, Nikos Vettas, Athens University of Economics and Business,
authored an article titled “The Economic Crisis in Greece: A time of Reform and
Opportunity.” This is found at www.greekeconomistforreform.com
I recommend it for reading by policy Architects,
Practitioners, Academics, Parliamentarians, and Economists Social Scientist etc.
It gives a very good background of why Greece is in the state it is today,
requiring a bail out by European Union, European Central Bank and the IMF. It
also speaks to issues of corruption regulations and retirement pension
challenges, that Kenyans can and must relate with.
According to the article by 2009 Greek’s Government
debt as a percentage of Gross Domestic Product (GDP) was 115.1%. Fast forward,
to 2015 it is now at 175%. In a nutshell, Greece has had unsustainable consumption
pattern and a general lack of competitive, investment climate entrepreneurial
environment and a serious tax evasion culture.
Where does Kenya fit in into
this scenario?
Whereas Greek has had its European brethren as a fall
back, Kenya has none. However against the background of the 2010 Constitution we
have created a never ending demand for consumption and little investment in the
fundamentals of productive infrastructure.
With our 2010 constitution, we created a plethora of
money guzzlers in form of Constitutional commissions and independent offices,
very elaborate legislative system and extremely liberal Bill of Rights. Almost
six years into the new Constitution we have began to witness dangerous
tendencies for insatiable spending without concurrency in income generation.
The above is being informed by budget deficits and
hence debts (borrowing externally and locally) as reflected by a total of
KShs.570.2 Billion, representing 28.49% of the total 2015/16 Budget. What is
the consequence of this? We have gone into a spending spree, in a similar fashion
that prevailed in Greece from 1980 through the last 35 years period. In Kenya,
the speed at which everybody wants to spend and especially the elected (legislative)
leaders and now the Governors’ Pesa Mashinani as advocated by Country
Governments and Okoa Kenya Movement is alarming. Everyone is competing with
each other in the scramble for consumption. Unfortunately if we do not reflect
on the end game of this maniac demand for spending without addressing the real source
of income, as a Country, we are headed for a painful lesson indeed, if not a
catastrophe.
A close examination of the 2015/2016 financial
projections by the National Treasury, our external borrowing is KShs.340.5
billion which is equivalent to the 16.98% and a further domestic borrowing
KShs.229.76 or 11.47% of KShs.2,001.6 Trillion Budget respectively. Our Recurrent
Expenditure is projected at 39.18% vis-à-vis 35.79% of the Development
expenditure, with the Country Budget Allocation at KShs.264.2 Billion or 13.20%
of the financial projections 2015/16. Significant to note is that interest
payment on previous debts and pension amounts to KShs.185.3 or 9.26%.
The total amount from ordinary revenue (tax) is only KShs.1,254.9
Trillion representing a total of 62.7% of the macro Budget. This scenario must
be watched very carefully because, if our generation of domestic revenue is not
accelerated, it will set ourselves on a borrowing mission, which is predictable,
and sooner than later Kenya will be in a worse scenario than Greece!
The grave consequence will mean turning to expensive
multilateral borrowing from external institutions i.e. as IMF and World Bank,
(it’s an American Bank according to John Perkins, the author of “The Secret
History of the American Empire”). This will be coupled with further bilateral borrowing
with conditionalities whose social and economic disorder will herald a period
of upheavals and stagnation.
National Conversation 2018
Despite the promulgation of 2010 National
Constitution, there are apparently many thorny issues that need addressing
moving forward. I suggest a National Conversation to take place from June through
September 30, 2018 to be Chaired by the elected President, Co-Chaired by the
leader of the opposition and the Chairman of Council of Governors while the
Speakers of the Parliament will be the Co-Secretaries.
Why in 2018? This is because as of now, we don’t know who
those leaders will be but we are certain of Kenya’s Agenda. This will insulate
the Conversation from political intrigues of today and 2017 general elections.
However, in 2016/2017/2018, we must allocate a budgetary
provision for the expense for the National Conversations. It must not be funded
by either the NGO’s or the so called Foreign Donors but by Kenyans themselves.
Why? It is our Agenda for which we must be willing to sacrifice.
Finally, it is my belief Kenya is perhaps a thousand
times potentially more prosperous than Greece. We have the capability to be not
a dot in the World Map but a great Nation. The conversation will define that
which we want for the next 50 years and beyond. To achieve this, both Kenyans
and its leadership must take a mental flight and chart a course into the future
devoid of pettiness.
Karanja KABAGE
ADVOCATE,
HIGH COURT OF KENYA
June
23, 2015
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