Kenya’s economic growth is not organic; it is a byproduct of China

Listening to the wave of optimism sweeping through the African continent, one may think we have reached the end of the tunnel.
Last week, the World Bank predicted that the EAC region was set to grow by an average of five per cent over the next year. And who would blame the general public for believing the optimism, adjusted inflation figures that distort real living standards, an expansionary monetary policy, upward corrections in all the major financial markets, and a booming property industry are all positive signals for a change in our fortunes.
But this veil, displaying a new chapter in our economic history only serves to hide a distortion that is perpetuated by ill informed institutional leaders.
The economic gap that exists today between the rich world and Africa is alarming and has only been made more so to me, by the measures developed nations are taking to fix their deficits.
Fiscal consolidation, austerity measures, spending cuts, public wage freezes quantitative easing, tax increases, and double dip recession — these are the economic jargons that are setting the tone for dealing with a post recession world.
The question is what is the big deal?
Unemployment in the rich nations is only 10 per cent, inflation two to three per cent, zero interest rates, there is regulatory reform that is set to pave way for a more efficient rich world.
All this can only be good. But this is where the distortion lies. I recently came to learn that 2.2 million Kenyan citizens make NHIF contributions.
Now, assuming that these are compulsory deductions, it means that only 2.2 million out of a possible 20 million people are legally employed and making enough to make this contribution.
We are miles behind and instead of jolting our economic machine into action so we can move at an electrifying pace into the 21st century; we are content to paint a false picture of economic progress.
Unemployment is at 80 per cent, there are companies in this world, some unheard of that produce more than our national GDP.
Before the powers that be adjusted the way we calculate inflation, we averaged 15 – 20 per cent annually. This picture is not so rosy.
But let us cover ourselves in the veil of positive change for a second and look at why Africa is drawing so much attention.
China, wants more soft power by expanding her political support base on the international scene mainly through the General assembly.
She is hungry for natural resources to feed her double digit growth economy, and she wants to develop a market to export goods from her export led economy for the next 30 to 60 years.
Do not be surprised if after twenty something years, every consumable from undergarments to cars are made in China or even better made in Kenya by a Chinese company.
The point here is our growth is not organic, it is a byproduct of China’s involvement in our economy.
World markets have become saturated and Africa seems like a new place to go.
Returns from highly developed financial markets such as the UK, Japan, US and the Euro Zone are low because their respective governments are busy restructuring, banks have turned off their credit taps, individuals are reducing their debt obligations and companies are hoarding cash.
So it makes sense that Africa has gained some interest from our friends abroad but ironic that they are coming in droves, welcomed by us when we once labeled them neo cons.
I am not saying we are the subject of some post financial crises neo economic exploitation or we should turn our backs on the Middle Kingdom by all means.
Jambo, Karibu Kenya but take a moment and ponder.
Do we have deep fundamental economic issues?
Is all the urban infrastructural activity a good sign?
Are we employing the right economic tools?
Are we employing the right economic tools or structurally adjusting ourselves to fit in the rest of the puzzle that we call the World Economy?
My answer is whatever the case may be; if developed nations are ringing the alarm bell at 10 per cent unemployment and we are employing the same the economic practices that they do, then we should be running around in panic, or at least we should have been for the last 50 years.
I am not advocating a radical Keynesian intervention here, neither am I proposing austerity.
A holistic revision of our economic fundamentals is required and not through development economics theorized by World Bank experts but by Kenyans, by Africans, — an organic, home grown solution that will galvanize the African populace into action.
Economic aid is not going to have a miraculous multiplier effect that will eradicate poverty.
Focusing on Millennium Development Goals which at current rates seem almost unattainable will only misallocate and divert a pool of useful resources.
Red carpet treatment for China and other members of the BRIC fraternity will only make it more challenging to sustainably benefit from our own output in the future.
Paradoxically, all this attention makes this the time to set our own standards.
A high demographic dividend, abundant supply of raw materials like oil, a marginally growing middle class, the information age, a bleak future for the rich world, the list is endless.
The African Union should engage in some transformational paradigm shifting reassessment of the future.
Achieve this now and we cease to be peripheral but at the very heart of this evolving puzzle called the global economy