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Role key public institutions will play in improving economy in 2017

Agencies charged with making and implementing economic policy will be under sustained pressure to correct the mistakes of 2016 in 2017.

In what appears to be a paradox, though the economy grew at an average of 5.9 per cent according to the National Treasury, numerous companies lost their value at the Nairobi Securities Exchange as others chose to sack workers in the race to remain profitable. Banks and information technology and media companies were among those that have left the pressure of the difficult economic environment that characterised 2016 and that could be exacerbated given that Kenya is going into an election in August, next year.

In 2016, the government has also come under increased scrutiny as an employer, after various unions accused it of reneging on or failing to implement collective bargaining agreements, thus reducing the purchasing power of its employees. First it was the teachers. Now it is the doctors. And lecturers have also put public universities on notice.

But what role will key public institutions play to improve the economy in 2017.

1.The Presidency: President Uhuru Kenyatta and his deputy, Mr William Ruto, came to power in 2013 after campaigning to create a million jobs a year, tame corruption, support the youth through favourable procurement laws and grow the economy at average of 10 per cent annually. This year, they fell too short of that target, achieving a 5.9 per cent growth rate.

When he launched a Volkswagen assembly plant in Thika last week, President Kenyatta said it was proof that his government has been on course to create more jobs.

“It is evidence that we have put in place the right policies and are promoting the right environment for industry to grow, for business to grow, for jobs to grow,” he said ahead of the event.

Tax regimes, easier registration processes, infrastructure development and credit provided to the youth are some of the policies the presidency has cited as key to improve the economy.

Since 2013 though, the economy has grown at average of 5.5 per cent. Government officials have also argued the economy has created about 700,000 jobs a year, short of the million mark promised. In 2015, the Economic Survey 2016 showed that 841,600 new jobs were created. Of this, only 128,000 were formal jobs, meaning that the informal sector was still the largest employer.

Next year, being an election year with the President seeking to defend his seat, the presidency will not to do more to convince the public that it has done well on the economy. Historically, according to the National Bureau of Statistics, Kenya’s economy either stagnates or drops during election years. Will this be different? It is all in the hands of the Presidency and how the two leaders will guide the country.

 

2. Parliament: The debt ceiling passed by the National Assembly last week will stand for two years if the Senate endorses it. This means the government will not be allowed to borrow beyond six per cent this fiscal year and five per cent in 2018. The Rev Musyimi argued this should drop to four per cent of the GDP by 2020. Yet the National Assembly also admitted that it found the Treasury had been flouting these ceilings in the past.

“This House should enact a legislation to ensure that any external borrowing should be brought to Parliament for review and approval before the government finalises negating any loan agreements,” the Budget and Appropriations Committee recommended.

3. Ethics and Anti-Corruption Commission: This year, EACC said it had recovered Sh1.9 billion worth of assets acquired through corruption, recommended the prosecution of 202 people from 24 counties and was chasing after Sh5.5 billion more in corruption cases.

Now President Kenyatta has nominated retired Anglican Arhcbishop Eliud Wabukala to chair the troubled agency. Should he sail through, the public will be watching his every move in 2017.

4. The private sector: The government froze new employment in 2013, citing a high wage bill which had then reached Sh568 billion a year. Only essential sectors like security and health were exempted, meaning that the private sector has a bigger role to create jobs.

But the private sector is feeling the pinch. According to the Kenya Association of Manufacturers (KAM), scarce and expensive credit, high operating costs and cheap imports have made it difficult for them to compete.

“The money from government is not coming though as expected which is pushing companies to borrow money to finance their operations so there is an overall scale down of economic activity in the several sectors and the ripple effects are worrying,” said Ms Phyllis Wakiaga, CEO, of the Kenya Association of Manufacturers in an earlier interview with the Nation.

These issues needs to be fixed in 2017.

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