Thursday, November 29, 2007

Raila’s economy doesn’t add up

They say facts should not get in the way of juicy political promises. That seems to be the case with Raila Odinga’s economic model for Kenya. He has promised to use 10% of the GDP on infrastructure, send 60% of the national revenue back to the Majimbo (Provinces) and increase government expenditure on social programs. On top of that he will not increase taxes and will pay government employees more. All this seems to work in the political world but cannot work in a real economy.

GDP is simply a sum of Consumer spending, Government expenditure, Investment, and Net Export. Kenya’s GDP is about $41.4 billion with government expenditure standing at about $5 billion. That makes government spending about 12% of the GDP. From this 12%, Raila wants to spend 10% on infrastructure. That leaves Raila with 2% of the GDP to spend on Health, Education, National Defense, and so on. I wonder how Raila will manage to split this 2% between free secondary education, universal healthcare and other social programs.

We must also ask ourselves how Raila’s ambitious economy will work when the central government will be left with 40% of national revenue after sending 60% to regional governments. The Raila administration will have to work with about $1.7 billion since our national revenue stands at about $4.7 billion.

In this season of promises, we have to take promises with a pinch of salt. It is imperative that we go through these promises with a fine comb check for practicality. It is vital that our leaders strike a balance between populism and pragmatism. I can promise you the moon; the problem is how I deliver it.

5 comments:

John said...

RAILACOMICS OR ECONOMICS???

Frank. said...

Your comments are very objective and well searched. I can't agree more. I'd want to read more comments from you.

Anonymous said...

stop hating,Raila is the only solution to Kenyans.its high time kenyans stopped being tribalistic and opened their eyes.

Anonymous said...

So you think Kibaki is any better..look what hez done to Kenya,yes the economy might have improved but the poor people are still languishing in poverty.its high time the old horse goes home.
we need change and it doesnt matter who brings it.Kenyans are thirsty for change.
The future is Orange

Burekabisa said...

Your perspective did not factor in stolen money that would otherwise be avoided in Raila's government. Think Anglo Fleacing billions, and goldenberg billions. What happended to Kibaki's zero tolerance on corruption?