Kenya, Like Burundi, Has Poor People and a Small Economy
By Kwame Owino
In his speech at the beginning of this week, President Kenyatta made some arguments that got Kenyans thinking about the affordability, numbers and applicable principles of public budgeting.
The variety of responses to the speech and interpretations of it made it clear that the view Kenyans of this country is very different from reality.
It may not be polite to say, but it has become clearer that few Kenyans understand the place of this country in regional and international development.
So I will dwell on common misconceptions that inform debate about the economy and Kenya's place in the world.
First, many Kenyans seem unaware of either the size of their country's economy or of its place relative to other countries. The clouded view is that this country has an enormous economy relative to our neighbours and is therefore indispensable to the world.
"NOT A MAJOR ECONOMY"
The truth is that compared to the world, Kenya has a substantial population and geographical size, which place it among the top 25 per cent in the world. However, Kenya is not only a small economy but also a nation of poor people.
Consider that the total income produced in Kenya last year is slightly above US$50billion. Again, while it is the result of inspired work by all Kenyans, it is a very small income for a country of 43 million people.
So, as far as an economy grows, Kenya may have lots of potential but is not a major economy because it did not contribute even one per cent of world output in 2014.
Based on the new method of national accounting, Kenyans assume that the country has entered middle-income status. Thus, many responded to the Sunday speech by asking how a nation of middle-income status is unable to increase basic pay for teachers.
They seem oblivious to the fact that the phrase "middle-income status" does not mean "middle-income" literally.
A quick arrangement of all countries' GDP shows that to get to actual middle-income status would require an average national income of at least US$5000 per person. This would require an economy four times as large as exists in Kenya today.
Thus, Kenyans ought to understand that the conventional use of the term "middle-income" implying an annual income of more than US$ 1000 per person is merely symbolic and mathematically incorrect. Truth be stated, Kenya is not a middle-income country yet and we have work to do.
OUR ECONOMIC PEERS
Because of a misunderstanding of the real scale of Kenya's economy, some citizens, who consider themselves more patriotic, routinely speak disparagingly of Kenya's neighbours.
After the speech by the President, some of these posh and serious patriots took offense that the president dared compare their beloved and super-successful economy to Burundi, Uganda, and Tanzania. The uninformed refrain was "How can we be compared to Uganda and Burundi?"
This crassness betrays the false belief that Kenya is much more sophisticated than the region and ought to be compared to countries such as South Africa, Taiwan and Malaysia, informed by the false narrative that we were at comparable levels a generation ago.
To state it plainly, our neighbour Burundi may have poor growth prospects based on very undemocratic leadership, but it is a more sensible comparator because Kenya's economic structure is far closer to Burundi than to South Africa or Brazil.
To state it simply, Burundians are more likely to catch up with Kenyans in economic development than we are to catch up with either South Africa or Brazil.
Whether by deliberate reflection or by chance, the President was not mistaken to compare pay in Kenya to these countries. Brazil and South Africa are not our economic peers. Burundi, Rwanda and Uganda are.
REGIONAL LAGGARD
In Kenya, total tax revenue and public spending are very high relative to income levels. Despite this, Kenyan citizens do not enjoy better public services, or exhibit higher life expectancy or literacy than their regional peers.
For instance, the East African Community (EAC) publishes a regular report on facts and figures in the region. It shows that in 2013, Kenya had the lowest literacy rate of 62 per cent of all adults among the five members. This confirms that Kenyan is not so far ahead that it can assume leadership in the EAC.
Kenyan society is the regional laggard in the literacy of adults despite being the highest spender on education. We should be as modest as our national income is.
The message of the Sunday speech is that we are small and poor, and we shouldn't exaggerate our economic position. We shouldn't have our noses in the air because neither our economy nor our growth rates are superior.
A great country is built on a national narrative based only on facts.
Kwame Owino is the Chief Executive Officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame
In his speech at the beginning of this week, President Kenyatta made some arguments that got Kenyans thinking about the affordability, numbers and applicable principles of public budgeting.
The variety of responses to the speech and interpretations of it made it clear that the view Kenyans of this country is very different from reality.
It may not be polite to say, but it has become clearer that few Kenyans understand the place of this country in regional and international development.
So I will dwell on common misconceptions that inform debate about the economy and Kenya's place in the world.
First, many Kenyans seem unaware of either the size of their country's economy or of its place relative to other countries. The clouded view is that this country has an enormous economy relative to our neighbours and is therefore indispensable to the world.
"NOT A MAJOR ECONOMY"
The truth is that compared to the world, Kenya has a substantial population and geographical size, which place it among the top 25 per cent in the world. However, Kenya is not only a small economy but also a nation of poor people.
Consider that the total income produced in Kenya last year is slightly above US$50billion. Again, while it is the result of inspired work by all Kenyans, it is a very small income for a country of 43 million people.
So, as far as an economy grows, Kenya may have lots of potential but is not a major economy because it did not contribute even one per cent of world output in 2014.
Based on the new method of national accounting, Kenyans assume that the country has entered middle-income status. Thus, many responded to the Sunday speech by asking how a nation of middle-income status is unable to increase basic pay for teachers.
They seem oblivious to the fact that the phrase "middle-income status" does not mean "middle-income" literally.
A quick arrangement of all countries' GDP shows that to get to actual middle-income status would require an average national income of at least US$5000 per person. This would require an economy four times as large as exists in Kenya today.
Thus, Kenyans ought to understand that the conventional use of the term "middle-income" implying an annual income of more than US$ 1000 per person is merely symbolic and mathematically incorrect. Truth be stated, Kenya is not a middle-income country yet and we have work to do.
OUR ECONOMIC PEERS
Because of a misunderstanding of the real scale of Kenya's economy, some citizens, who consider themselves more patriotic, routinely speak disparagingly of Kenya's neighbours.
After the speech by the President, some of these posh and serious patriots took offense that the president dared compare their beloved and super-successful economy to Burundi, Uganda, and Tanzania. The uninformed refrain was "How can we be compared to Uganda and Burundi?"
This crassness betrays the false belief that Kenya is much more sophisticated than the region and ought to be compared to countries such as South Africa, Taiwan and Malaysia, informed by the false narrative that we were at comparable levels a generation ago.
To state it plainly, our neighbour Burundi may have poor growth prospects based on very undemocratic leadership, but it is a more sensible comparator because Kenya's economic structure is far closer to Burundi than to South Africa or Brazil.
To state it simply, Burundians are more likely to catch up with Kenyans in economic development than we are to catch up with either South Africa or Brazil.
Whether by deliberate reflection or by chance, the President was not mistaken to compare pay in Kenya to these countries. Brazil and South Africa are not our economic peers. Burundi, Rwanda and Uganda are.
REGIONAL LAGGARD
In Kenya, total tax revenue and public spending are very high relative to income levels. Despite this, Kenyan citizens do not enjoy better public services, or exhibit higher life expectancy or literacy than their regional peers.
For instance, the East African Community (EAC) publishes a regular report on facts and figures in the region. It shows that in 2013, Kenya had the lowest literacy rate of 62 per cent of all adults among the five members. This confirms that Kenyan is not so far ahead that it can assume leadership in the EAC.
Kenyan society is the regional laggard in the literacy of adults despite being the highest spender on education. We should be as modest as our national income is.
The message of the Sunday speech is that we are small and poor, and we shouldn't exaggerate our economic position. We shouldn't have our noses in the air because neither our economy nor our growth rates are superior.
A great country is built on a national narrative based only on facts.
Kwame Owino is the Chief Executive Officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame
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