Thread by @IEAKenya

𝐀𝐳𝐢𝐦𝐢𝐨 𝐦𝐚𝐧𝐢𝐟𝐞𝐬𝐭𝐨 𝐥𝐨𝐧𝐠 𝐨𝐧 𝐩𝐫𝐨𝐦𝐢𝐬𝐞, 𝐬𝐡𝐨𝐫𝐭 𝐨𝐧 𝐝𝐞𝐭𝐚𝐢𝐥, 𝐛𝐮𝐭 𝐠𝐨𝐨𝐝 𝐟𝐨𝐫 𝐝𝐞𝐯𝐨𝐥𝐮𝐭𝐢𝐨𝐧- an article by @LeoKemboi & @IEAKwame
#KenyaPublicSquare

#Cynicaldea @IEAKwame and @LeoKemboi aserts that an indispensable requirement for every coalition should do as opposed to the fancy stories it can tell.

In the language of conventional economics thinking, @IEAKwame & @LeoKemboi make the uncontroversial claim that political coalitions should compete on how they can provide public goods as a start & pursue policies that expand the production possibilities frontier for Kenya.

Public goods are those goods & services that can only emerge from government action and which are the basis for formation of a republic.

For 🇰🇪's case, these public goods would be security for private and freedoms of the person & her property, preventing from invasion & overall adherence to rule of law. It's on the basis of the satisfactory provision of these that a govt. is correctly considered an effective one.

Coming to the plan by Azimio coalition, it's a concern that is doesn't seem to show a strong recognition about the limits & effective roles of government, notes @IEAKwame and @LeoKemboi

#Justicesystem The plan contains commitments to personal safety of children, women & the health of justice system. However, @IEAKwame consider a deficiency to be overly preocupied with establishing projects, flagships, new funds & to perform distribution roles in all sectors...

Cont..regardless of their consequences for the provision of public goods.

This must concern voters because this extensive role of govt. as a "paternal uncle" & with the President as the social worker number one & the cabinet as the council headmen, is neither consistent with expansion of freedoms nor a pointer to a govt. that seeks 2 be effective...

Cont...at its critical roles.

Every student of economics would give credit to the drafters of the plan for the surfeit of quantitative targets in this plan.

This leads to the second finding, which is the curious quest to expand the share of agricultural contribution to the overall national income to 30% annually.

Not only is this an arbitrary quantitative target, its also interesting because it's squarely incompatible with the other impressive target of ensuring that manufacturing contributes another 30% to the GDP

The reason for this is that while agriculture's share of the GDP today is at 23%, the justified pursuit of strong growth in manufacturing as the source of new jobs would most probably have to be at the expense of agriculture @IEAKwame @LeoKemboi

The structural change that would transform 🇰🇪 from manufacturing level of 8% today to 30% is probably the goal to be achieved within half a generation but it can only happen with corresponding shrinkage in the proportion of agriculture.

This historical path has been followed by many countries including the #Asian Tigers with which Kenyan planners are enamoured, but no country achieves it by expanding the share of 🍈🍀as it implies the movement of capital & labour from small farms & into manufacturing enterprises

Manufacturing activity: The motives are sound because there's a desire to spread manufacturing activity in each county in order to provide employment & local govt. payments.

However, this chapter fails to account for the fact that the spatial distribution of manufacturing firms is not designed on a drafters board & there's no chance that govt. can guarantee the thriving manufacturing enterprises & distribute them to each county.

What the extensive experience shows is that this policy approach is bound to waste public resources in trying to incentivise firms to form in places that they have no preference for.

Instead, it shows that Azimio planners don't consider the simple idea that a provision of the public goods & water & safety infrastructure would be sufficient. The decision on investment should be left to the private sector.

Important instrument: Azimio's plan gets credit for recognising that tax policy is an important instrument that govts. may deploy to achieve welfare objectives.

That notwithstanding, the plan is replete with tax holidays & tax exemptions for nearly every enterprise that is mentioned.

Among those considered worthy of tax holidays are the enterprises owned by the youth which are accorded 7 years of tax free status.

Added to that are the SMEs which also receive a 3 year tax holiday & permanent tax exemptions for persons with disability, all these regardless of their income levels.

Taxation relief: The choice of product to provide taxation relief is interesting because this intended change would confer advantages to specific people & thereby violate good principles of coherent taxation which requires taxes to be stable & low.

Petroleum products may have the highest profile among consumption taxes in 🇰🇪 but they are not necessarily the most regressive.

Reducing petroleum taxes would mostly benefit urban travellers & those who consume these products, with the total benefits disproportionately affecting higher income people @IEAKwame @LeoKemboi

This summary of tax exemptions here & there for specific products & interest groups suggests that Azimio is unlikely to maintain its promise of tax reforms that create a stable & predictable tax regime that encourages fair business, investment & trade.

The most conspicuous part of this chapter is the failure to comment on either the #Fuel Price Stabilisation Fund or the price control regime for petroleum in Kenya

Impressive commitments: The conviction of the Azimio leader to devolution has been steadfast & this plan rings strongly & clearly with their aims.

In unequivocal terms, the coalition commits to transfer all outstanding functions to county govts. & to increase the shareable revenue due to #county governments to 35%.

Reinforcing these big claims is the intention to set up a neutral mechanism for disbursement of funds to both national & county governments.

Before the launch of the Azimio plan, its leadership stated that there shall be a regular cash transfer of Shs. 6,000 to each vulnerable household.

While the published document does not specify the number of house-holds that will qualify, the public discourse has been fixated with the number of 2 million.

The main argument is the overall affordability of this allocation, which would come to a nominal value Sh. 144 billion per annum.

Based on this number & the reasonable estimates of revenue collection expected for the financial year, it's clear that this amount is by itself not unaffordable. What is lacking is the clarity on the mechanism for executing it.

Estimates from @IEAKenya is that the rationale for cash tranfers as mechanism for social protection of vulnerable Kenyans is sensible & has solid empirical evidence from studies conducted in 🇰🇪

Affordability would depend on the numbers & the commitment to collapse all social protection systems under one banner.

And here, the coalitions gets itself entagled in a complex claim that it will continue, indeed expand, existing cash transfer schemes.

This would make the programme unaffordable & a corruption disaster in-waiting. The expansion of social protection through cash transfers in 🇰🇪's public sector is not possible without substantial reform & audit - @IEAKwame

This requires enormous political courage & Kenyans should hope that like the Azimio, all other coalitions understand that.

It's evident that the chapter that addresses the problem of debt management in 🇰🇪 is the most competently drafted chapter with astute awareness of the problem of public #debt & the dynamics that will drive it.

It is clear that solutions that are proposed are proportionate, clear-eyed & consistent with the view that the next admnistration in 🇰🇪 has a deep challenge here.

For instance, it demonstrates the uncommon knowledge that Kenya's #debt problem is not about its quantum, but also about its tenor, structure & profile.

There are no easy solutions, and it acknowledges that there's also a domestic #debt challenge and promises to establish a Debt Management Office with statutory backing - @IEAKwame & @LeoKemboi

In summary, our early assessment is that Azimio coalition got the reforms on #devolution and public debt completely right.

" We remain less confident that this govt would commit purely to the provision of public goods because some of the proposals demonstrate inability to separate pure state activity from those of other sectors - @IEAKwame & @LeoKemboi

Cont...There's enough governance to do without having to export organic beef.

@threadreaderapp unroll