Free «Kenya is One of Africa's Economic Engines» Essay Sample

Kenya is one of Africa's economic engines. It has major ports, a large labour force, and relatively wealthy urban centres. But the country is far from perfect. Like many countries in Africa it has severe economic limitations such as corruption that will be discussed in this essay. The situation in Kenya is not unique: many African countries rate very high on Transparency International’s list of the world’s most corrupt countries. Many experts agree that corruption is holding Africa back.

Before discussing corruption and its impact, it is important to provide some economic background. Kenya has a market-based economy with a very large agricultural sector. Its gross domestic product is around $30 billion. Like many undeveolped countires it is very dependent on agriculture and commodities and much less so on services. However, tourism is a more substantial part of its economy that many other countries in the region. Tourists are drawn to safaris and diving opportunities and bring in much needed foreign money. Debt is high. But generally the country has a hard working labour force and a great deal of resources. So taking into account all of this economic data, the question that must be asked is: why is Kenya not a rich country?

Throughout the continent of Africa corruption is rampant. In order to receive even the most basic services Africans must pay bribes. In order for companies such as Shell to do business in Nigeria (ranked 121 in the world by Transparency International) a huge amount of money must be paid out to local officials to “grease the wheels.” In hospitals, patients may have to put money in doctors’ consulting books in order to be treated. In schools, students may have to pay their teachers for passing grades. All of these situations are commonplace. Studies have shown that Africa loses $150 billion a year due to corruption and that products cost as much as 20 per cent more. It is impossible to measure how much more developed Kenya would be at this moment had not a culture of corruption existed there for so long.

Part of the reason for this situation is that Kenya is not truly democratic. There are many political problems there especially as witnessed by the post-electoral violence that occurred two years ago and which killed more than one thousand people. Democracy is key to economic development. As John Mukum Mbaku of the Cato Institute argues:

In countries with poorly constructed, inefficient, and non self-enforcing constitutional rules, opportunistic behavior (including rent seeking) are usually quite pervasive. In such countries, the rules that regulate socio-political interaction, have failed to adequately constrain the government. As a result, state intervention in private exchange is equally pervasive. Excessive regulation of economic activities creates many opportunities for rent seeking, including bureaucratic corruption.

Many public servants in Kenya may have power to allocate resources, but they make small salaries. It is very easy for them to make a lot of money on the side by taking payments from special interests. Plus, public servants may have poor relatives who they are also supporting. They may not simply take bribes out of selfishness, but possibly to help feed their extended families. Nevertheless, it is clear that more rules and guidelines are required for public servants in their dealings with the private sector. Enforcement of such rules is desperately required.

John Githongo argues that corruption usually begins at the top of a country’s leadership, and that in Kenya, for example, keeping together a disparate political coalition of ethnic groups and tribes requires lots of patronage. In order to stay in power the leader must provide something for everyone. This is especially true when a leader is not chosen by the people. Instead of being accountable to voters, the dictator or illegitimate leader must be accountable to the people who keep him power: among them, perhaps, the army, the businessmen, corrupt local leaders. Instead of providing proper services to African citizens, revenue is instead doled out to whomever the leader relies on. Also, because so many institutions are weak—especially the judiciary—there is no way to challenge the authority of the leader. Tackling corruption at the high level, Githongo says, is one of the key first steps to solving Kenya's corruption problem.

With a lack of democratic accountability comes a sclerotic and onerous official economy. Because starting a business in Kenya takes a very long time and requires innumerable bribes to many bureaucrats, many Kenyan businesspeople are reduced to operating in the black market. This has many bad consequences: for starters, it means the government has less tax revenue to provide services. It also means that it is hard to enforce contracts and attract any sort of foreign investments. These consequences lead to a vicious cycle.

What is the solution? One thing that appears to be quite clear is that aid to Africa has not been very good value for money. Billions of dollars have been sent to the continent, but much of it has been stolen by corrupt officials. In a way, Western taxpayers subsidized the summer homes on the French Riviera that the Congolese President, Mobutu Sese Seko, once owned. The same is largely true of Kenay. This is not acceptable. Indeed, Adam Lerrick argues that

As the world contemplates an unprecedented transfer of taxpayer funds to faraway places, good governance on the receiving end must be convincingly demonstrated over time. In the interim, rich nations must underwrite more aid but in a meaningful manner: Grants that address the most basic needs of the poor, paid out only for performance; endowments that do not lend or spend but protect resources and draw upon income to leverage funds in the capital markets. It is naïve to send aid to Africa without strict supervisory strings attached.

This may well be the most important thing to keep in mind when considering the Africa corruption question. We must be very sure where money goes.

With the economic troubles of recent years will Kenya get even worse? A global recession took place in the late 2000s, resulting in a big drop in international trade, rising unemployment and falling commodity prices. Many economists believe the crisis began because of a big asset boom in the United States. Banks and other lenders gave away many loans at very low interest rates to people who simply who could not afford to pay back the money. In the beginning this led to a huge boom in housing prices because there were so many buyers in the housing market and there was a high demand and a somewhat low supply. However, eventually what happened was that people began to default on their mortgage payments. During the boom years many complicated financial products involving mortgages were bought and sold by banks and it was difficult to know how many of these "toxic mortgages" were actually on a bank's balance sheet. This led to a big crash and a bailout. By the turn of the new year, there was a new American government, led by Barack Obama, the first African-American president of the United States, and a basic sense of stability had been restored. Talk turned to how the system could be rebuilt and restructured most successful. Africa’s economies are not very developed and don’t rely on banking sectors or financial services very much. In that respect, they have not been hit too hard. But they do rely on commodity prices which at the beginning of the crisis went down. Now these prices are going up again. This is also a problem for the Kenyan economy. It appears that the recession did not have a huge impact on African economies because they are so disconnected from the world economy.

Another big problem facing the Kenyan economy is HIV/AIDS. As the most heavily infected region in the world, Sub-Saharan Africa is ground zero for HIV detection. The lessons coming out of this calamitous situation are very important not only to prolonging and improving the lives of HIV-infected people in Africa but for others around the world. Those countries in Africa that have managed to control their epidemics—for example Senegal and Uganda—have done this through intensive prevention campaigns. Public education has gone hand in hand with Voluntary Counselling & Testing (VCT). The rise of rapid testing and the ease of the provision of such testing has increased the rate of early testing from abysmal numbers only a few years ago. Kenya is doing OK on this front but needs to do more. By making HIV everyone’s problem through public education, successful African governments have been able to increase their rates of early detection and begin to reduce the social stigma which can attach to HIV-testing or even public discussion of the issues. In the midst of this crisis, what is often overlooked, however, is that women are hardest hit by HIV. They truly are a vulnerable community. Many of these societies do not support women’s rights and generally treat women poorly. Women are also rarely the breadwinners in families and have little access to income or capital in order to be in control of their destiny. Their husbands or male partners pass on the disease to them especially if they work in a transitory employment.

It is plain through the course of research that there are significant disparities between the treatment of men and women with regards to HIV. Condom use and testing are key factors to explore. A recent documentary features Senator Barack Obama (as he then was) traveling in Kenya and urging people to get tested as soon and as frequently as possible. Ever the role model, he and his wife then submitted themselves to a test. It would be interesting to explore how such high profile events help the lives of such a vulnerable group as HIV infected African women. The problem is that AIDS affects those in the prime of their lives and these people are vital in creating and sustaining a dynamic economy. Without them no economy will last. Kenya has been sorely tested by this crisis and will continue to be so.

Whatever approach global leaders choose to take in helping Kenya with its economic problem, it is very likely to take a long time to affect any sort of change. Corruption in many African countries is so entrenched that it will take years to make incremental improvements. It will take a long time to defeat and a long time to build mature economies. This is a terrible shame because so much of Africa has huge amounts of natural resources and talented and energetic populations. Kenya could be the brightest star. But with corrupt leaders its people will continue to suffer.


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