After Kenya: Lessons on Home-grown Economy for Nigeria

Sam Amadi

We have not heard the last of the ongoing protests in Kenya against a new finance law enacted by the country’s legislature. The youths opposed the law because it will overtax the already impoverished Kenyans who are enduring high inflation and general economic distress. The president was very heady and even threatened to arrest the protesting youths. In the crackdown, the police shot dead more than 9 protesters. The youths became irate and destroyed property worth millions of dollars. The alarmed president has sued for peace, discarded the finance law, cut down presidential budgetary allocations, including those of the office of the first lady, and abolishing about 47 agencies to cut costs. But the youths are not appeased. They have asked the president to resign. The frightened and chastened president have been on twitter space to win hearts and minds. Protest continues and the Kenyan economy worsens with a negative rating because of its fiscal crisis and uncertainties.

But the crisis was unavoidable. The president did not need to be as mulish as he was. The dogmatism was unnecessary. Many put it to the pressure from the international financial institutions that have made Kenya a poster child of market-oriented reforms. It is true that Kenya suffers much fiscal instability and would need a lot of extra revenue to cope with dwindling revenue. But it needs not be reckless and insensitive in pushing through the bill. Kenya like Nigeria and the rest of the developing world are constantly barraged to implement market-oriented policies like removal of subsidies on essential products that further diminish the wellbeing of their already impoverished population. Like in the 1980s when trade deficit and fiscal instability pushed these countries to swallow the entire Structural Adjustment Programme of the International Monetary Fund (IMF) and the World Bank without adjusting them to the realities of their countries, today’s leaders in the distressed south are proceeding in error in focusing on tax and subsidy removal without considering the abysmal levels of human development and welfare in their countries.

Nigeria could have been in the same social turmoil as Kenya but for some different social dynamics. On social media, Nigerian youth have been praising and admiring Kenyans for their doggedness and effectiveness in forcing down the overconfident president and are wishing for another opportunity to prove their mettle. Arguably, Nigerians are suffering as much if not more than Kenyans. Nigerians could re-enact Kenya if socioeconomic realities remain this way and leaders fail to rise to responsible leadership. Nigerian leaders need to pay attention to the crisis in Kenya and learn how to head off such massive protests in Nigeria. To do so, they need to learn the lessons in the crisis. What are the lessons in the Kenyan crisis? I think about four such lessons.

Government is over, Governance has come:

The first lesson to learn from Kenya is that we have come to the end of government. We are now in the era of governance. That sounds like nonsensical. How can government be over when we are daily confronted with the intrusion of the behemoth? What is the difference between government and governance? But truly government is over. We are now in the era of governance. The difference may be subtle, but it is consequential. Government means hierarchy, force, and control. Governance means network, collaboration, and persuasion. The end of government is tied to the End of Power, as Moses Naim puts it in his book by the same title. According to the foreign policy expert, globalization and technological innovation have unsettled the traditional domination of power. From government house to boardroom to churches, power is no longer what it used to be. We are now in the state of powerlessness where political potentates can no longer how their ways. ‘Powerlessness’ in the sense of the end of the Weberian concept of state as the Leviathan who can do and undo, foists upon political authorities the imperative to engage humbly and constructively with citizens. To borrow, Amartya Sen’s phrase, states should be argumentative, not authoritarian, or even authoritative. Political authorities must come down from their high horses, engage citizens and compete for their hearts and minds.

The end of power goes with what Thomas Friedman in his book, The World is Flat, calls flatness. The flat world is a world where distance and disadvantages of economic divergences have been destroyed through information technology and social media such that everyone is empowered to plug and play. A necessary corollary to digital empowerment is that angry youths are superempowered to build mass movements to express their anger more effectively. The social media has enabled the mobilization of anger and made its expression damaging. States are now more vulnerable to social expression of discontent than before. End SAR and now Kenya Spring speak about the changed landscape of political power. You cannot disregard the voice of angry citizens because you are government. You must respond quick and smart otherwise you will lose credibility and risk global political and economic downgrades. Political regimes are now vulnerable to social sentiments and uncertainties. As Friedman notes in the earlier book, The Lexus and Olive Tree: Understanding Globalization, nations are now hooked on a straitjacket. In the past, killing 100 protesters will not undermine the political power of an African dictator. He will shrug it off and the news will not make it to any CNN. Today, killing two protesters will be a recurring news on CNN and BBC and will receive thousands of comments on social media platforms. In days the behemoth will quiver. The interconnectedness of the world and international financial institutions’ responsivity to viral narratives make today’s governments vulnerable to social strife.

The balance of power has largely tilted away from governments and towards citizens and non-governmental groups. The reality is that governments have become weaker as citizens and groups have gained power relative to government because of the disruptions of technology and social media. We now live with the reality that governments across the world find it difficult to overcome terrorists, even the most rudimentary like Boko Haram, because of the growing asymmetricity of conflicts. This is more so for African governments further assailed by growing illegitimacy. It is highly pretentious for these governments to act as if they are all-powerful. It is patently foolish for them to implement harsh and disfavoured reform policies in their countries without striving for stronger coalition with civic leaders. The era of strong men and strong governments of the SAP reforms are no longer with us. We are in an era of governance, not government, where smart power through credible and smart communication is replacing hard power. Ruto would have done better if he engaged in twitter spaces with his citizens as he is doing now before taking the bill to parliament. The result would have been different if he had paused and engaged with twitter spaces with the youths of Kenya when the bill elicited massive protests. That singular gesture would have prevented the current carnage and portents of fiscal collapse.

Beware of Ideology Masked as Economics:

President Ruto pushed the finance bill because he was told Kenya had no alternative than to push through fiscal severity despite the resentment and suffering of the people. It is called in the industry of policy reform ‘shock therapy’. It sounds familiar. In the days of East Europe’s transition to western oriented market economy there was a lot of talks about shock therapy and what some have called the ‘dictatorship of no alternative’. It was Margreth Thatcher, another strong leader who arguably damaged the economic fortunes of his country through a mindless pro-market fundamentalism that resulted in destruction of the social protection system of the Post-war era, who minted the phrase “There is No Alternative (TINA)’. But there is always an alternative as Professor Aluko reminded General Babangida in the days of SAP debate.

African leaders need a crash course on managing economic development in the age of deceptive economic ideology. They need to wise up as Asian leaders who pragmatically steered their economies outside the straitjacket of the American Business Model, alias ‘Washington Consensus’. IMF and the World Bank did not advise Ruto to begin his quest for fiscal stability by first cutting down on costs of government so as to generate public trust before cutting through livelihood. They did not remind him that the Office of the First Lady is actually dispensable in the face of worsening fiscal crisis. By raising tax and eliminating critical subsidies are always the low-hanging fruits.

We cannot make light the fiscal crisis that countries across are going through. The crisis requires drastic and difficult actions. But beyond ideology, the first to fall should not social welfare. It should be the last and only after the government have eliminated the waste that is associated with elitism and patrimonial politics. We can solve the crisis through a more effective strategy that does not involve the destructive dynamics of market fundamentalism. East Asian economies succeeded not because they embraced the whole doctrine of free market. They succeeded because they avoided ideology and embraced pragmatism. China has a long history of false steps, even up to the period of Mao Zedong and the cultural revolution. The Great Leap Forward set China back, especially with the collectivization of agriculture, resulting in mass death and failed industrialization. Deng Xiaoping changed the game. He initiated a gradual, programmatic and sensible reform that started with returning the land to dispossessed peasants with guaranteed tenure to encourage irrigation, higher seedlings and extension services. Xiaoping tracked the benefit of increased productivity in agriculture into gradual industrialization. At a point he started to open China to western technology and capital, but in a controlled and strategic manner using special economic zones.

China abhorred the rigid ideologies of communism and the laisse faire theory of neoliberalism and embraced pragmatism. This approach is exemplified by the famous saying of Deng Xiaoping that it does not matter whether my cat is red or white if it catches rat.   China followed the example of Japan and South Korea where pragmatic leaders like General Park wisely implemented transformative reform of agriculture and deliberate but systematic protection and nurturing of infant industry to transition their countries to industrial economies. In these countries, pragmatic leaders enhanced efficiency not by surrendering to the free trade, but rather using export discipline to improve productivity. The secret of the success of the East Asian countries is the pragmatic insight that what will ensure industrialization is to protect and nurture infant industry through export discipline. Export promotion worked where import substitution failed in Africa.

China and the rest recognized the pitfall of crony capitalism. When they raise tariff to protect infant industries, they forced those industries to perform according to export benchmarks. Those who failed lost the fiscal and policy support. By so doing they chose winners and losses, not through political patronage, but through the discipline of international trade. This is the model of a development state; a government, as Stephen Cohen and J Bradford DeLong in their book, Concrete Economics: The Hamilton Approach to Economic Growth and Policy, “that signalled the direction, cleared the way, set up the path, and – when needed- provided the means”.

Nigerian, nay African, leaders need to embrace pragmatism not fundamentalism in economic policymaking. The plumbline should be whether the policies would not undermine household income and further destroy the long-term productivity of the economy by eroding the human and social capital necessary for transformative economic development. The lesson from Kenya is that it pays more to listen to the people than to the bureaucrats in Washington institutions with no skins in the game of economic survival in Africa.