Recently the salary commission released the salaries of incoming president, mps, governor etc Most people thought the cuts weren't deep enough - obviously! But the more important question is why the commissions, IEBC and other institutions don't exercise their power. They have the moral authority to counter vested/entrenched interests, so why don't they do it.
Kenya's obsession with (elective) politics and not the decision-making machinery has given politicians too much power over all areas. The people heading commissions should equally have personal power that can counter politics. They (heads of commissions) too should be political i.e. deal with social relationships, exercise authority and protect the interests of the general public.
Kenya Policy
Exploring the impact of Kenyan politics, economics and culture on individual freedom and liberty.
Monday, February 11, 2013
Thursday, January 31, 2013
Market Incentives
Attempts
by Nongovernmental organizations and government to build social capital by way
of trade associations, solidarity networks, and groups (micro-credit requires
group membership) have failed because the legal enforcement mechanisms are
still lacking, and the success of these groups is dependent on adequate
information about creditworthiness that so far can only be captured by
unreliable informal channels.
The
incentive for opportunism is too high even within groups because the sanctions
are few; being socially ostracized in a place where few records exist and
people don’t set up permanent roots in urban areas is not as traumatizing. As
Thomas Hobbes warned in Leviathan, the absence of an enforcer implies a
free-for-all: everybody knows that everybody else can behave in an
opportunistic fashion, therefore everybody behaves opportunistically.
Data collection is not determined within the
country. It is very often determined by outside donors who provide specific
funding for a particular project, which they use to prove their policies
outside the country. Therefore since data is not collected for the state
itself, the data doesn't foster debate on policy quality or whether the
government is meeting its plans including millennium goals or Vision
2030.
Creating public records could create trust by
creating a system that is accountable. For
example, both government and Nongovernmental organizations could establish
local units that hire local people to man them. Data collection could be
regularly done on all basic factors like health, age, school attendance,
security enforcement, income generating activities and the data should be made
available locally in whatever manner is palatable to the locals. The devolved
government would rely on such data to budget and plan, and the business and
civil community can use the same information to add value.
Thursday, January 17, 2013
A case for conglomerates
The efficient functioning of markets requires that
some organization enforce contracts and property rights. To be credible, the
organization that enforces contract and property rights must have the power to
force people to adhere to its decisions. Large companies due to a larger
bargaining power are better placed to enforce contract performance, but this
means businesses need large amounts of capital to start or expand which
dissuades nascent businesses.
There is in fact logic to Kenya’s way of organizing
firms. It makes sense for businesses to sprawl across many sectors (e.g. Bidco,
Haco/Tiger) because the Kenyan state is weak. Infrastructure is so awful that
firms often construct premises in highly over-crowded and expensive areas.
Courts are slow and often corrupt, so contracts are hard to enforce and banks
and businesspeople are inclined to stick with companies they know and trust.
Moreover, established business houses can use their muscle to expand into new
areas, sometimes at the expense of newcomers.
Fewer new firms ever grow big and those that do so
have tended to be good at working the political machine.
In OECD economies a large share of funds is sourced
from institutions; in Kenya only a small percentage is. Instead capitalism is skewed
towards the government and a select clique of business people and families.
Government looms large. Government-backed firms dominate energy, agriculture
and finance/banking. A vast number of other public-sector entities, like the
ports and railways are decrepit, and often create bottlenecks.
This makes the case for large firms in Kenya -
mergers and some form consolidation in many sectors would improve efficiency.
Friday, January 11, 2013
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.
Wednesday, January 2, 2013
Kenya's version of Institutional independence
In the early 90s with the clamor for multiparty
system, donor aid stopped, Moi government acquiesced to pressure. Parliament and senior civil servants got some autonomy. However, while
in principle it was an improvement, it was susceptible to political
manipulation and it created distortions in public sector pay. Members of
parliament and ministers’ salaries were de-linked from civil service and have
enjoyed the largest pay increase.
With the reforms, parliament was empowered at
the expense of other institutions. The result is a parliament that is not accountable
though directly elected, members can vote down any law without risking any
party censure, and defect without needing to seek mandate. Consequently,
parliament has failed to capture the public’s imagination.
Equally, public
servants with political influence – such as top civil servants, the judiciary,
and officials in charge of special commissions and semi-autonomous agencies – were
granted large selective increases, while the bulk of employees continue to
receive modest remuneration. These bodies are insulated from societal influence
by virtue of their status and mandate, but it also limits the oversight and
accountability functions that should be done by the legislature and civil
society. A quid pro quo between the various institutions that are meant to
monitor each other exists, judges are called to head commissions and inquiries
with ample pay, senior civil servants liaise with ministers, agencies like anti-corruption unit and human rights watch are headed by
lawyers sourced from civil society.
Office holders started
differentiating themselves from the rest of society with entitlements and
special privileges, e.g. elected officials fly first class on
public funds, they’ve sought to increase their per diems to $1,000 per day
while traveling and when asked to pay tax on the allowances they pillage
government funds to offset the tax bill with the tacit approval of tax
commissioner.
Institutional independence without underlying standards and managed expectations only perpetuates impunity.
Tuesday, December 18, 2012
Leadership
Behavior defines culture and what
the leadership of a country values affects the way they behave and subsequently
the entire nation. Citizens for their part, shape their behavior to match what is acceptable
and what’s not acceptable according to behavior of the institutional
leadership.
Kenyan political leadership evolved first as traditional and paternalistic
led by the first president -Kenyatta - who due to circumstances, having being
jailed and in his seventies was considered to be the father of the nation. Moi
administration that followed was more concerned with maintaining the status quo
and managing instead of leadership or mobilizing resources. Moi and
Kenyatta both emphasized personalized power and the deference to elders, which probably conditioned the patriarchal style after
independence. With colonization, Kenyans learnt of the monarchy and aristocracy
and imitated these forms of leadership whereby they handpicked persons to
leadership, created and surrounded themselves with a class of ostentatious
consumers, and treated any opposition as treason.This has shaped the leadership quagmire in Kenya, be it political or otherwise.
Most African cultures
emphasized belonging, connectedness and community participation; it was always
assumed individuals can expect their relatives, clan, or other group to look
after them in exchange for unquestioning loyalty. This features aren’t unique
to Africans, all cultures pre-modernization were collectivist, with time and
evolutionary forces, societies become more individualize to match with modern
institutions which demand and reward individual responsibility.
Already Kenya
is transitioning, and while communitarian features still persist due to
poverty, the well off members of society practice individualism while still
seeking the adoration and deference from their less off members.
Why
don’t our economic elites and companies invest in public goods where they
operate e.g. put time and resources into local schools and colleges, and engage
in civic organizations? This engagement would establish ties based on
performance and activity setting an example of meritocracy instead of adoration
and deference for merely being wealth.
Kenya desperately needs to identify and assert positive values
and traditions – those that make a nation of people where the public has a hope
for the future, and in which the people know right from wrong and know there
are serious consequences for violations. Society needs figures of authority,
firmness, consistency and certainty, a national identity, and a plan. Being
purposeful is not incompatible with democracy.
I have meandered a bit, but generally my argument is that we have a leadership void that can be explained by our culture which was in turn shaped by history. Secondly, the leadership gaps are by design i.e. there are vested interests in keeping the status quo. Thus we need a strong leader to change the structures.
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