Business and Society

We need a change in power structures to realize the aspirations of the new constitution and human progress. A change in power relationships can result in new market institutions and new economic outcomes. The current power relationship was created by dependence due to a paternalistic and a deference approach; Africans were assumed not to know what’s best for them by colonialists. A continuation of this is the ethnic kingpins who decide on behalf of the community. Closely related are the economic elite (also ethnic tycoons) who through the ages have accumulated enough power to maintain their privileged status while offering handouts for loyalty and adoration.

In Africa, short of revolutions and civil wars, there has been little institutional change. Rwanda and Ghana only reshaped theirs after genocide and civil wars respectively. 

Ethnic violence pushed the drive for a new constitution that reshaped government structure but economic reforms in terms of liberalization and privatization don’t have similar support because it’s harder to agree on what is needed and the emphasis on politics foreshadows talk of economic freedom. Previous attempts at privatization have been mixed; transfer and sale of property has been mired by irregularities, transfer of shares to opaque offshore companies has not been uncommon. 

The little attempts to liberalize have created cartels and oligopolies because the policy interventions are intended to favor certain sectors or interest groups. The interventions have included low tariffs/zero rating, subsidies and preferred tenders. 

Unfortunately for Kenya, business leaders are no better. The business elites influence the competitiveness of the economy negatively by shaping underlying micro-economic environment. They signal to society consumerism - imports/trade deficit instead of investments. This distorts the sense of freedom whereby people come to believe having buying choices and many preferences equates to civic freedom.

Furthermore the private sector seems to take cues from the public sector; a confusing management and ownership structure in the private sector creates uncertainty, and a breeding ground for corruption and rent-seeking. This influences behavior and culture in many ways.