Give President William Ruto credit where credit is due. Amongst many things he sometimes gets accused of, being lacking in ideas is not one of them. His economic rhetoric can sometimes seem overly ambitious or forward-looking, but it is unusually substantive on the topic of transforming Kenya from a consumer economy into an economy based on production, investment and exports.
Speaking at the AmCham Business Summit in Nairobi, the President once again made trade, investment, industrialization, value-addition and international partnerships the centerpiece of Kenya’s economic discourse. Even the design of the Summit itself revolves around these issues, how to deepen two-way trade and investment flows between Kenya and the United States, and convert policy dialogue into commercial partnerships.
The problem is that speeches alone don’t deliver a country’s economic transformation. Economic transformation is delivered through implementation. And this, in my opinion, is where President Ruto will be judged. I would even argue that, history will look back on President Ruto as one of Kenya’s most innovative presidents when it comes to ideas and economic initiatives.
He has placed more items on the national agenda than most of his predecessors can claim. But whether he will be remembered as a transformational president will be determined by something far less flashy than presidential speeches at high-profile events: can his administration build the systems necessary to turn those ideas into results?
Therein lies the value of the Kibaki comparison. Ruto has the vision. Kibaki understood the machinery. When President Mwai Kibaki appeared before the press or cameras, he sometimes faced criticism for being distant or removed from the political theatre. He was never a great political showman. He understood something else about government though.
The President of Kenya does not wake up every morning and roll up his sleeves to personally implement government policy. Institutions do. Institutions staffed with competent people do.
If there was one area where Kibaki excelled it was assembling a strong economic management team and empowering technocrats to get on with the job. Kenyans did not see the Finance Cabinet Secretary dozens of times a week on television dashboards. But that team did pass the UMA, they did oversee large investments in infrastructure, they did stabilize the macroeconomy and they did implement key economic reforms.
The difference with President Ruto is night and day. Ruto is everywhere. He is travelling all over the country. He is meeting investors. Announcing programs. Speaking directly to exporters. Reiterating his economic vision at every available opportunity. All of that is good. And necessary. The presidency is visible. But with great visibility comes great responsibility.
With President Ruto talking about so many ambitious initiatives and projects, the presidency must also have systems in place to track whether those announcements are being implemented. Otherwise, the best plans and policies become just another broken promise in Kenya’s long history of unfulfilled intentions.
Kenya’s EPZs are a case in point. Kenya’s apparel industry was supposed to be one of those success stories. Established with the purpose of attracting foreign investors, creating jobs and helping Kenya plug into global manufacturing value chains, EPZs have created employment and earned Kenya export revenues.
By one government estimate shared recently during sector talks, there are currently 43 apparel firms operating under the EPZ program employing over 66,000 Kenyans. Kenya exported US$500 million worth of apparel to the United States last year alone. Impressive. But where are the Kenyan companies?
Industrial policy is often focused on attracting the multinational but is less focused on what happens after they arrive. Too often we think that if we can just get foreign factories to set up shop here, employment will surge, people will get jobs and everyone lives happily ever after. And while that is part of the equation, it is only part of the equation. investment.
Investors haven’t been forced to source locally; Kenya should create the conditions where local sourcing becomes a competitive necessity over time. That, right there, is smart economic policy. And this is where Kenya missed the second layer of the policy.
Every major investment announcement should come with a Kenyan value-chain strategy attached to it. If that investor comes to Kenya, government shouldn’t stop at asking: ‘How many jobs will you create?’ They should ask further: ‘What will you do to ensure Kenyan companies become suppliers to your business?’ ‘How many Kenyan firms will benefit from technology transfer?’ ‘How many Kenyan companies currently working as subcontractors can we expect to graduate to becoming direct suppliers?’ ‘What percentage of your inputs can realistically be locally sourced within five years? How about ten years?’ ‘How many Kenyan managers and technical specialists will you train?’ ‘How will you support Kenyan businesses to manufacture components, packaging, machinery or inputs used by your facility?’ ‘What commitments will put the Kenyan firm partnering with you on a clear path to graduate from being your supplier to becoming your competitor?’ This should be tracked annually.
Until key milestones are hit, these should form part of the conditions under which major incentives are granted. Kenya should stop thinking about investment announcements purely in terms of jobs. Jobs are good. But as the EPZ example shows us, jobs are not enough. A factory can employ 10,000 Kenyans. But if that factory imports all of its inputs, exports all of its outputs, pays little or no taxes because of tax exemptions, relies solely on Kenyan labour with no transfer of skills, technology or capital and keeps the brand, intellectual property, design, procurement, financing and consumer relationships abroad what exactly have we gained?
Speeches and policies are forgotten, and with that in mind, is how President Ruto can truly leave a legacy that matters. Not by what he says. But by leaving behind a Kenya that has figured out how to actually deliver on his promises.