History is not made according to my liking

How can inequality be resolved, or at least, ‘mitigated’? The Minister of Economic Planning, Hon. Peter Anyang Nyong’o, shares his thoughts on this and other disquieting subjects…

Interview by Ian Gatere

Partner News (PN): The Economic Recovery Strategy (ERS) states that Kenya needs 6-7% economic growth to impact on poverty. Right now we are at around 3%. What rate would you be satisfied with?

Hon. Nyongo: 10%. If Tanzania is growing at 10%, Mozambique, why can’t we? All that really matters is predictability in government decisions. (For example), we have a lousy procurement system. It’s being sorted out in parliament but I don’t think having good laws is enough. Beyond good laws comes the quality of individuals who run government. You must have people who are honest, knowledgeable, competent, reliable, who respect the rule of law. There must be synergy in government, long-term view of development, separation between personal interest and public service. That is the biggest problem we have.

PN: The ERS in its section on inequality emphasized ‘baking’ a larger national cake, but ‘sharing’ of the national cake was not emphasized to the same degree.

Hon. Nyongo: One of the reasons we didn’t emphasize sharing of the national cake as much is because the idea of sharing the national cake is inherent in the social welfare programs. You cannot run comprehensive primary school system, comprehensive social health insurance scheme if you do not create wealth. So when people think of sharing the national cake they think that you bake it and then you tell how much each individual will get in terms of shillings. That’s not the point. The point is that you bake a national cake so that the government can be able to provide services to the people, to live a life worth living.

PN: So free primary education and health insurance are two main planks in ‘sharing’: any others?

Hon. Nyongo: Building infrastructure is a social good. When government builds a road to Kisumu, or is lighting the streets of Nairobi, it’s for everybody. It’s a social good.

PN: Civil Society Organizations (CSOs) presented a paper to World Bank saying if growth was to occur in the current Kenyan structure, inequality would increase. Do you feel this is an accurate assessment?

Hon. Nyongo: There is a very gross misunderstanding of capitalist development. I don’t remember anywhere in history where capitalism has developed without inequalities…

PN: …and we are a capitalist nation?

Hon. Nyongo: Yes. The role of government is to mitigate inequalities. How: through taxes. Kenya Breweries pays KSHS. 13 billion. BAT KSHS. 5 billion. Safaricom something like KSHS. 6 billion in tax every year. That 24 billion (total) is used by the government not necessarily to abolish inequality (but) to provide service. That is how capitalist society works. If somebody in the NGO (world) comes and says if growth takes place in this country given the structure of society it’s not going to do good they are basically talking nonsense.

PN: They probably feel our capitalist society is a bit too harsh…

Hon. Nyongo: That is a moral issue. Too harsh, too nice, too beautiful, those are moral issues. They are not economic issues. They are subjects to discuss in a Church. As far as I am concerned, if you are discussing purely how to manage an economy, we have to discuss exactly what is the structure of that economy? What are the real issues at stake? I have my own moral standards which I hold to dearly. I know that at a purely moral level I don’t like capitalism. But history is not made according to my liking. The objective conditions under which I live are not chosen by me! They are chosen by a system which has been there independent of me. My responsibility is to understand that system and manage it as best as I can in the interest of the human beings that live therein. If I begin managing it in a romantic way, I will not go anywhere.

PN: You talked of the quality of government. Now as we all know in Kenya, when money is raised it goes towards improving salaries of the political elite and not towards poverty alleviation

Hon. Nyongo: That’s only part of the story. If you ask me, where government revenue is wasted most is in procurement and the management of services. The amount of vehicles that are bought, used for two years and (left) standing in garages and yards because (of) a spare part, then finally disposed at some funny auction. There is a lot, again, populist thinking out there that too much money is used in salaries. Government ministers are taxed, I can show you my salary slip (actually stands up and shows it), it’s taxed here! It’s not for salaries that we are here.

PN: Do you feel the disparity between the highest and lowest paid in civil service is too high at 1:118?

Hon. Nyongo: It’s too much. But we are not going to deal with (it) if we enter this populist binge of complaining some people are earning too high. We are going to deal with it by saying some people are earning to low. If you look at the government wage bill the bulk goes to the lower bit because they are many. The people at the top are very few. What we need to do is reduce the gap between the highest and lowest paid, and this is what is happening in (increment of) police salaries –and make sure that those who are the top stay stable.

PN: There was a report in the Standard newspaper that 70% of the income quoted in the stock exchange is controlled by foreign hands. Do you feel this contributes to inequality in Kenya?

Hon. Nyongo: In a globalized world where we are also interested in exporting our coffee to Britain and our horticulture to the EU, this xenophobia of who owns what in the stock exchange is not really necessary. What you need to do is to encourage our domestic industries. We have assets here we don’t want to use and yet we complain of foreigners controlling our stock markets.

PN: Any last words on inequality and the economy?

Hon. Nyongo: The future is bright by the way. If you read business sections (in the media) the business community is smiling all the way to the bank. Kenya is like Italy these days. Politics may be in a mess but the economy is marching