Sustainable, nature-based agriculture and clean energy can be the cornerstone of development that starts at community level. Having rain clouds is not the same as having rain.” This proverb reminds us that potential remains valueless unless harnessed.
Kenya’s Big Four priorities, as they are fondly referred to, are potent and ambitious, providing an opportunity for Kenya to drive transformational change. The Big Four are food security, manufacturing, health and housing, and they represent the pillars of the Kenya that we all strive for: a middle-income, industrialised nation with a climate resilient, inclusive economy, offering a high quality of life for its people.
What is the paradigm shift that is needed to make the Big Four a reality? There is much empirical proof of the potency of nature-based agriculture that uses clean energy. In Makueni County, Kenya, the use of minimum tillage, a nature-based ecological farming technique, on a one-and-a-half acre plot increased yields by over 300%. There were also the additional benefits of reduced labour and improved soil fertility. This is already in line with one of the Big Four – food security.
In Ijara sub-county, processing of the aloe plant, an indigenous drought-resistant crop, is not only restoring degraded land to ensure climate adaptation, but is resulting in viable enterprises that are recording a net present value of Ksh400,000. This is a formidable step towards positioning enterprises at the community level. This empowers local communities, helping them to deliver a better quality of life and to finance not only their food security but health and housing. That is the Big Four actualised in one go.
“If ten cents does not go out, it does not bring in one thousand dollars.” This common saying in Ghana sums up the principle behind risk-sharing mechanisms that Kenya should urgently embrace to finance the Big Four – the multiplier effect. This means that financing is not a social expenditure in “flagship” government-run projects, but an incentive for enterprises based on sustainable, clean energy-powered agro-industrialisation. Returns on this kind of industrialisation will not only be social, but economic, financial and environmental.
The vibrant Small and Medium Enterprise (SMEs) sector in Kenya, which forms 90% of the country’s private sector and employs the majority of Kenya’s skilled labour, provides fertile ground to establish and grow this enterprises-driven approach to the implementation of the Big Four. Government should focus on incentivising cooperatives and finance institutions to lend affordably to enterprises that are aligned with the catalytic sectors, rather than directly financing projects. The structure for such a move is already taking shape at community level.
It is clear that achieving the glorious promise of the Big Four calls for a paradigm shift away from the conventional approach, where importance is put on “budgets” and upfront financing – to leveraging on what Kenya already has: its people and the diversity of the skills, talents and ongoing work they represent. This is truly the paradigm shift that can see Kenya set an example in a way never seen before to the entire Africa to drive transformational change for people and planet.
The political discourse in the country today revolves around the Building Bridges Initiative (BBI), the 2022 General Election and who will succeed President Uhuru Kenyatta.
But a lot of these conversations need to focus on issues in the interests of Wanjiku. There seems to be selective discussion of the bill and even as we discuss its provisions, we need the broader picture of how a democracy functions. In 2010, we promulgated a Constitution that gave us a big step to a prosperous country.
What we forget is that the parliamentary system that was envisaged in the Bomas draft was subjected to a lot of give and take, but the step had to be made anyway. For instance, after the Narc 2002 victory and the end of Kanu rule, a few people who were close to power then, came out strongly against constitutional changes. Their claim – they had initially wanted to clip Moi’s power because they thought Moi would not leave.
To them, concentrated power was not good, only when Moi was the President. When it was in their hands, they argued it did not need to be changed. That was the situation and political players must have had a hard time settling for the 2010 Constitution, that devolved resources and functions. Despite the teething problems we’ve experienced in the last eight years, devolution has made a big difference in this country.
Only 65 per cent of resources will remain at the national level and timelines to fight corruption are poised to protect these resources from looters. Just like there were forces that did not want change of the Constitution in 2002, there seems to be a clique that does not want more devolved resources to the counties. One of my friends puts it succinctly – these forces want a big percentage of resources at the top because it would mean a bigger loot; they are fighting any institutionalised fight against graft because they want to get away with their loot.
But the crux of the matter here is the serious conversation we need to have about the 35 per cent, to be devolved to the counties and the structures set up to utilise the funds. At the country level, the five per cent that goes to the wards also needs to be a subject of discussion. Not just in terms of the development it will spur, but the structures that will mitigate corruption and cartels to these local levels.
Politicians cite successful Scandinavian countries and how their socio-economic and political systems work. Granted, we are not going to get there in a single leap, but we need to borrow the best practices as pathways to where we want to go.
One striking feature of democratic governance that has made a difference in these Scandinavian economies is the media. These countries have invested heavily in public service media, especially broadcast media. Today they are pushing for more funding of the media.
You see, plurality of media does not necessarily mean that the society is robustly informed. In fact, studies have established that commercial media in the hands of private businessmen are big on entertainment, sports and provide fewer opportunities for holding those in power accountable.
Therefore, even as we devolve more funds to the counties, we need to think of the media’s role in making power attend to the people within the dictates of the law. Discussions on how that will work at the county levels, need to focus on investments in county centric public service media.
The massive resources going to our counties, the presence of an executive and legislative arms of governance urgently call for a publicly funded independent media, or a model that would incentivise commercial media, to invest in county specific watchdog role that would not only hold the leadership
accountable, but also voice the local voices and development issues.
Tough US sanctions on Iran over the last few years have resulted in Kenya missing out on a key export market for its tea.
Trade between the two countries has also been greatly affected.
Iran Ambassador to Kenya Jafar Barmaki said the Persian country used to absorb about 20 percent of Kenya’s tea, but in the last few years, this has fallen to below 10 percent.
“Unfortunately, due to sanctions put in place by the US and not the UN, Kenyan products have limitations to get to the Iranian market and vice versa,” he told Financial Standard in a recent interview.
Tea is one of Kenya’s top three foreign exchange-earners, contributing about four percent of gross domestic product (GDP). As of 2019, the value of Kenyan tea exports stood at Sh118 billion.
The tea-loving Iran produces little of the beverage, but Kenya has lost out to countries such as India and Sri Lanka as a source market.
Statistics from the Tea Directorate show that in September 2020, for example, tea exports to Iran fell 55 percent compared to a similar period in 2019.
The sanctions make the exchange of money difficult, with banks scared of handling money from Iran for fear of US reprisal. Barmaki said this makes it difficult for Kenyan businesses to get their payments when they export. Iranian businesses face similar challenges.
“When a Kenyan businessman imports tea to Iran, how can he get back the money when there are no banking relations between the two countries due to the sanctions by the US? This is the issue that has reduced exports of Kenyan tea to the Iranian market,” he said.
Still, the balance of trade between Kenyan and Iran is in favor of the Middle Eastern country that is diversifying from an oil-based economy to a knowledge-based one.
The value of Kenyan exports to Iran stood at Sh2.12 billion in 2019 compared to imports valued at Sh6 billion.
However, imports from Iran have greatly fallen in the last three years. In 2017, for instance, imports stood at Sh13.2 billion but have since more than halved to Sh6 billion, official government data shows.
The wealthy had also developed an appetite for Iran’s famed Persian carpets. Barmaki said this market has also been hit hard, and asked the Kenyan government to do more to reduce bottlenecks for businesses.
“The Kenyan party needs to do something to secure and revive what they have lost in market share,” said the envoy.
He noted that several Iranian companies had shown interest in investing in different fields like pharmaceuticals, medical equipment, agriculture value addition, renewable energy, and gas and oil. “They need the infrastructure first of all in building banking system relations … There’s a list of more than 15 companies ready to invest and create employment,” said Barmaki.
The diplomat said the trade potential between the two countries remains high, and Kenya could sell tea, coffee, and horticulture to the country.
Iran has also approached the Kenyan government for permission to launch direct flights between Nairobi and Tehran to deepen trade ties.
This would see more products and Iranian businesses trooping to Kenya.
“We are waiting for the Kenyan government to give the go-ahead,” he said.
“We are also encouraging people to come to Kenya as tourists’ direct flights can have better access and can come (in higher numbers) than before.”
Barmaki added that there is a need to have more business owners from both countries travel and explore to balance out trade volumes.
Kenya and Iran are marking 50 years of relations, with Barmaki saying Kenya plays a key role in their African foreign policy on infrastructure, human resources, and the open sea.
Last month, Iran unveiled a large-scale innovation hub in Kenya. The Iran House of Innovation and Technology is expected to help develop and export ‘knowledge products’.
This will see Iranian firms share technology information acquired over the years in fields such as pharmaceuticals, manufacturing, biotechnology, and nanotechnology.
The ambassador said a team of experts would review new ideas generated at the hub, and if any has the potential to be commercialized, it would receive support. “If the idea doesn’t have the potential to be commercialized, then we have expert teams help to come up with another idea which is close to the original one,” he said.
The hub’s support includes access to the internet, work spaces, and experts.
Iran is also working on a project that will see three Kenyan universities offer a master’s of science degree in nanotechnology.
According to Barmaki, Iran’s knowledge-based economy is now worth $12 billion (Sh1.3 trillion) annually, and the country now wants to share its experiences with Kenya. “About seven years ago we started diversifying our economy. We changed several things but first prepared a new environment for knowledge-based companies, which were then supported by government in different areas like funding some of the ideas,” he said.
Somalia’s Federal Government has officially lifted the ban on the importation of khat (miraa) from Kenya.
However, it has imposed certain conditions for the commodity to be admitted on its territory.
Somalia’s Finance Minister, Dr. Abdirahman Dualeh Beileh, told a press conference on Monday evening that traders will now be allowed to import miraa, but businesses must follow proper procedure.
“Traders must import khat into the country by legal means,” Dr. Beileh.
“I hereby declare that nobody is barred from importing khat and [it] can be brought through any entry point if proper regulations are followed,” he added.
Miraa (khat) is a brain stimulant, widely chewed in Somalia as a pastime.
Dr. Beileh urged traders to obtain the correct import licenses from the government and pay the appropriate duties.
Somalia had stopped the importation of khat when international flights were suspended last year due to fear of the spread of Covid-19. But, when international air travels resumed, khat importation from Kenya was still restricted and khat from Ethiopia, a slightly different variety, was allowed in the country.
The continued restrictions were attributed to a spat between Kenya and Somalia dating as far back as 2016 when then Meru Governor Peter Munya, now Kenya’s Agriculture Cabinet Secretary, caused a stir by visiting the breakaway Somaliland and offering to have them recognized if they allowed miraa from Kenya into its markets.
Somalia responded by accusing Mr. Munya of “attempting to break up our country.” The ban was, however, lifted following discussions at the diplomatic level. However, the continual border spat between the two countries has seen increased tension between Somalia and Kenya.
Kenya’s economy is expected to expand this year as activity resumes following Covid-19 lockdowns, boosting tax revenue and government spending.
East Africa’s largest economy is projected to grow by 6.4% this year and slow to 5.5% in 2022, with scheduled elections seen dampening activity, Treasury said in a report on its website. The economy is estimated to have expanded 0.6% last year.
“There has been an improvement in economic activity in the third and fourth quarters of 2020, albeit at a slow pace, following the reopening of the economic, but pickup is weak,” according to the Treasury’s budget policy statement. The economy contracted by 5.7% in the second quarter of 2020, after growing 4.9% in the previous three months.
The finance ministry expects government spending to rise by 3.2% to 2.968 trillion shillings ($27 billion) in the fiscal year starting in July.
The fiscal deficit is seen at 7.5% of GDP, narrowing from an estimated 9% in the current fiscal year.
The financing gap in the coming year will be plugged by net external financing of 345.5 billion shillings, or 2.8% of GDP, and net domestic borrowing of 592.2 billion shillings, equivalent to 4.7% GDP.
While the economic shock from the Covid-19 pandemic has worsened Kenya’s debt indicators, the government is optimistic that the economy will recover and the debt position will improve.
“Kenya faces a fiscal risk as the shilling continues to depreciate due to the fact that 51% of the debt is held in external currencies. This has led to an increase in debt service budget in local currency and also an increase on the stock of debt without inflows.”
Lending to the private sector grew by 8.1% in the 12 months to November, it said.
Kenyans abroad sent home a record Sh331 billion ($3.04billion) in 2020, which is a 9 percent increase compared to 2019, in the midst of a ravaging Coronavirus pandemic.
Central Bank of Kenya (CBK) data shows that Diaspora remittances defied COVID-19 shocks to increase by Sh27 billion from Sh304 billion in the 12 months to November 2019 compared to Sh331 billion, same period last year.
“Kenyans in the Diaspora defied COVID-19 shocks to send in the 12 months to November 2020 totaled $3.045 billion (Sh331.9 billion), compared to $2.790 billion (Sh304.1 billion) in the 12 months to November 2019,” said CBK.
This despite World Bank’s earlier projection that remittances will fall 23 percent, by braving the shocks, the Diaspora remained the lone standing pillar as tourism fell while exports collapsed drastically.
Remittances came to the rescue of families whose incomes had dried up due to job losses.
“What happened is that developed nations where most Kenyans are such as the US and UK have social support systems such as cash transfers that cushioned them,” said Nairobi based economist and businessman Robert Shaw.
Shaw said that Kenyans abroad saw themselves as crucial in helping their loved ones through the pandemic.
The pandemic rendered an estimated 5 million Kenyans jobless according to a recent survey by the Kenya Private Sector Alliance (KEPSA).
Several companies went into receivership while many downsized. Some were completely shut. Small businesses were the most affected as consumers cut back on discretionary spending.
During that period, however, Kenyans in the Middle East countries, Asia and Eastern Europe were forced to return home after their jobs ended, with some of them seeking government help to come home.
Nearly 25 percent of the diaspora remittances came from the US, followed by Britain and other countries which tend to give visas to highly skilled immigrants thus partly explaining the resilience of diaspora inflows.
The resilience of remittances has led the government to mull over a diaspora investment vehicle, such as bonds, to help in infrastructure projects in the country.
Kenya has been ranked third in World Bank Africa diaspora remittance inflows. Kenya is the only country in Sub-Saharan Africa where remittance inflows have so far been countercyclical to the COVID-19 pandemic disruptions.
The World however warns that 2021 may see remittances fall. Nigeria is Africa’s largest recipient of remittances followed by Ghana then Kenya and Senegal.
South Sudan however leads Africa when it comes to remittances inflows as a percentage of GDP at 35 percent, followed by Lesotho (20.6 percent), the Gambia (14.9 percent), then Cape Verde (12.0 percent), and Comoros (10.8 percent).
Other key recipients of remittances include El Salvador, Eritrea, Ethiopia, Gambia, Ghana, Guatemala, Guinea, Haiti, Iraq, Jordan, India, Indonesia, Honduras, and Kenya.
The inflows helped to support the shilling which analysts said could have faced even more vicious shocks had remittances dropped.