Former President Mwai Kibaki is among the few leaders in history to have led their countries to greater economic growth than he did as they increased gross domestic product (GDP) from -2 percent to a whopping 7 percent. Although he graduated from the London School of Economics and taught briefly at Makerere University, nobody can really say whose economics student Kibaki was.
As economists would say, Kibaki is in heaven now, a joke is often made about Harvard-educated economist John Kenneth Galbrath, who said that when economists die, St. Peter asks them what have you done on earth to improve gross national product to increase? If this is the question Kibaki will answer during his sentencing, then it will be easier for him to go to “heaven” where economists go. Now that he’s gone and never liked publicity, could we see the development of the Kibaki School of Government and Kibakinomics into a global brand?
Very few leaders can match the success of President Kibaki; His colleagues include Lee Kuan Yew of Singapore, Mahathir Mohamed of Malaysia, Muarmar Gadaffi of Libya and General Surhato of Indonesia. These people inherited ragged lands just to build world class economies and are all revered.
According to experts, Kibaki has achieved as president what he set out to do as finance minister in the 1970s. He had witnessed the birth of financial institutions such as Jimba, Rural and Urban, Consolidated Finance, Consolidated Bank, Home Savings and Mortgages, among others.
Just like alcohol and drugs, money is a controlled substance, and not many regulators actually wanted the laissez-faire approach that has witnessed the growth of Safaricom’s M-Pesa and Equity Group.
In terms of GDP, the government’s budget was just ATS 162 billion in 2002, soon doubling to ATS 300 billion and ATS 3 trillion during President Uhuru Kenyatta’s tenure. This remarkable growth leads us to ask which business school was Mwai Kibaki attributed to?
Some have called Kibaki a Keynesian, which is an oversimplification of this guru. This is from John Maynard Keynes who published The General Theory in 1936. Keynes based his argument on the “classical economists,” a name invented by Karl Marx to denote Ricardo and James Mill and their predecessors for the founders of the theory that culminated in Ricardian economics.
All of these people postulated that the government needs to do more than just create an enabling environment for business, it needs to subsidize and inject so much money into the economy. Therefore, Kibaki revived Kenya Cooperative Creameries, National Youth Service projects and provided capital injections to Kenya Commercial Bank, Kenya Pipeline, Kenya Airports Authority and Kenya Airways. This would have been interpreted as Keynesian, but more as a domain of Karl Marx, who said that government must be in the driver’s seat all the time. However, Kibaki found a role for government without directly managing institutions of economics, which is why he turned away from classical economics.
During the 2005 Kilifi draft constitution debacle, Kibaki was seen refusing to succumb to a large government and a high tax system. As such he can be classified as a student of Friedrich von Hayek, who was exactly the opposite of what Keynes was proposing. Von Hayek said wealth was actually generated in a situation where the government did not intervene in the economy other than creating a favorable environment.
This economist influenced two great world leaders of the time, Margaret Thatcher and Ronald Reagan, who led America as its growth trajectory reached a peak. These two brought what the Bretton Woods are propagating today – that governments must refrain from making money by owning corporations. As such, the World Bank proposed, among other things, the liberalization of the Kenyan economy, cost-sharing in hospitals and reforms.
Departing from Milton Friedman’s suggestion that there is no free lunch, Kibaki showed Kenyans that it is possible to have a situation where free primary education can be achieved. Against Bretton Woods’ advice, Kibaki expanded the civil service and lifted the World Bank’s hiring freeze. In fact, President Kenyatta has continued with the mantra of extending free education to secondary school.
However, there is an existing misunderstanding of Kibakinomics. It is believed that the government will always have money and it can give county governments up to 35 percent of the state budget. This will certainly not be the case and the infrastructural growth spurt started by Kibaki and Uhuru will soon be saturated. We’re about to have roads that will lead nowhere. We will see streets that nobody uses and even abandoned industrial areas. If you drive through Newark New Jersey, Bronx in New York and Fresno in California among many other places in the US, hopefully this will be the case in Kenya. When the time comes, Kibaki won’t be rolling in his grave.
We are about to see the decline of Kenya’s industry. This is mainly because young people under the age of 20 make up almost 65 percent of our population.