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Economy of Kenya

Economy of Kenya
Pastoral Letter of the Kenya Catholic Bishops
8 June 1999

"Let justice flow like a stream, and righteousness like a river that never goes dry."[1]

Introduction

  1. We the Catholic Bishops of Kenya are deeply concerned about the current state of the economy. Our country is rich in both human and material resources. It has the potential for a vibrant economy in which every person should enjoy prosperity. Yet our country is beset with grinding poverty, massive unemployment, and a pervasive sense of hopelessness.

    The economic situation of Kenya is a major concern for us as a Church precisely because it affects the real concrete life of the people included in our pastoral and human care. These people are not abstract beings. They are subject to social and economic factors. How can one proclaim Christ in this Nation ignoring that it is becoming day after day one of the poorest in the region? How can one fail to take into account the anguished history of a nation where many people are constantly in the grip of famine, ethnic clashes, tribal tensions, political manipulation, and the violation of human rights?

    Since the Church is sincerely concerned with people as they are, then she should address the present economic situation.

  2. In this pastoral letter, we intend to reflect on the paradox of our unrealized economic potential, search for the causes, and sketch the outlines of an effective remedy. Although this pastoral letter is directed to members of the Catholic community, we hope that it will open a dialogue with all persons of good will who share our concerns. Only by working together can we hope to see our way to a solution.

  3. Kenya's Economic Potential

  4. Kenya's greatest economic resource is its people. Their traditions and values, both African and religious, are a great source of strength. Perhaps the deepest value is the sacredness of life lived in community. This value is expressed in relationships to God, to each other, to the deceased or the "living dead," to the unborn and to nature. This respect for the dignity of each and every human person is the anchor that ensures that the economy will be in the service of people rather than the other way around.

    African people also value productive work and have traditions of democratic organization of labour for the well being of the whole community. Traditions and practices of economic development and prosperity have been sustained by commerce and trade. Thousands of graduates from Universities and other Institutions of higher learning whose potential is not being fully utilized could be another source of economic growth.

  5. These indigenous values and basic biblical values complement one another. For example, a recurring theme among the biblical authors is concern for the powerless and the marginalized. This is typically expressed by concern for the widow, the orphan, the poor man, and the stranger. [2] In the ancient world, these were people without social status, without a protector, and subject to ruthless exploitation. Helping these marginalized people was a way of imitating the God whom the Israelites worshipped. In the twentieth century this value has been expressed by various bishops' conferences as "the preferential option for the poor."

    Biblical authors also express the ideal of sufficiency as opposed to acquisitiveness or greed. Thus, the Sage declares: "Give me neither poverty nor riches; feed me with the food that is needful for me...." [3]

    Jesus Christ warned his followers about the dangers of greed. He counselled against hoarding possessions.[4] He exhorted people to seek first the reign of God and God's justice.[5] He declared: "You cannot serve God and Money."[6]

    Jesus Christ emphasized love and care for others. He instructed his followers to be in solidarity with those in need. The hungry, thirsty, naked, sick, prisoners, children, poor, crippled, lame, blind, widows, and even enemies are his followers' responsibility and are to be helped as our brother and sister.[7]

  6. The social teaching of the Church is very clear. Pope Leo XIII highlighted the plight of the marginalised saying that "in any event, we see clearly, and all are agreed that the poor must be speedily and fittingly cared for since the great majority of them live wretched conditions." [8] The Fathers of the Church reaffirmed this concern when they said, the joys and the hopes, the griefs and anxieties of this age especially those who are poor are a concern for the Church. [9] The Church remains keenly aware and supportive of the many people in our midst that need moral, spiritual and material care among other requirements as stated in Pope Paul VI's Encyclical, "Today no one can be ignorant any longer of the fact that in whole continents countless men and women are ravished by hunger, countless numbers of children are undernourished, so that many of them die in infancy, while the physical growth and mental development of many others are retarded and as a result whole regions are condemned to the most depressing despondency." [10] Pope John II tells us to translate this motivating concern for the poor at all levels into concrete actions especially where fundamental human rights of the poor are overlooked and in particular the rights of freedom of economic initiative. [11]

    In our pastoral letter on social responsibility released in 1996, we pointed out to the Government that it was their failure to provide essential amenities that was one of the reasons for the mushrooming slums in our major urban centres.

    We said in that letter, "lack of essential services such as shelter and health centres are some of the main causes of the "rural exodus" to the big cities of our country in which slum dwellers live in sub-human conditions."[12]

  7. Ethical Norms

  8. Ethical norms for the economic life of a nation can be summarized from these Biblical and Church teachings as follows:

    1. The principles of economics must be based on love and solidarity with all people.
    2. The creation of wealth is for the common good. Wealth should be earned and not acquired through unjust means.
    3. Justice must be done by respecting the rights of all people.
    4. The rights of workers, must be respected and protected.
    5. The economic policies and practices must be aimed at overcoming marginalisation and powerlessness.
    6. Human rights must be respected, especially the right to life, employment, food, clothing, shelter, medical care, and basic education.
    7. All economic policies must be aimed at strengthening the family. At the minimum, they should never undermine the family.

    The World Council of Churches has shown similar concern for issues of political economy. They expressed the following three common convictions which support their ecumenical approach to development:

    • "that the development of peoples is an integral part of the gospel of salvation even when the processes involved are primarily secular";
    • "that the Churches have a special responsibility towards the poor and the oppressed."
    • "that development must be truly ecumenical in nature, comprehending the whole world and all its diversity."[13]
  9.  

  10. The bearers of these values, both African and religious, are an abundant human resource for building an economic system where widespread prosperity and peace will prevail.

  11. Education is the key to development. Thousands of unemployed graduates could have positive influence on our economic growth if used to their full potential. Kenya is also blessed with material resources, which can be the basis for economic prosperity. Geographical advantages include good access to the sea and a functioning seaport, which serves much of the region. The Nairobi International airport has become a major regional hub of air travel for Africa. Kenya's road network when useable is far more comprehensive than many of its neighbouring countries. Basic sewage, water, electrical and communications infrastructures are in place in a good number of urban centers.

  12. Kenya enjoys a number of natural advantages in certain productive economic areas. Two rainy seasons and an elevated plateau provide distinct agricultural advantages. The coffee and tea grown in Kenya are of such a quality that they attract premium price on international markets. Our scenery and rich wild life attract tourists in large numbers.

    Coupled with Kenya's human resources, these material resources offer potential for economic development and prosperity.

  13. The Current State of the Economy: Unrealized Potential

    Widespread Poverty
  14. Compared to the bright picture of Kenya's economic potential, the actual state of economy is discouraging in the extreme. We are faced with widespread poverty and increasing disparity of income and wealth. Some 60% of the population live below the poverty line, and about 22% of the country's labour force are unemployed. Between 1986 and 1995 10% of the population held 4.7% of the country's wealth while the poorest 20% held on 3.4% of the wealth. [14]

    Economic Growth
  15. In recent years, economic growth has been stagnant at best. Between 1975 and 1989 annual economic growth averaged just over 5%, but it averaged only 2.3% between 1990 and 1997. In the same time periods per capita gross national product declined from an annual average of US$347 to US$315. [15]

    Net annual foreign investment declined from an average of about US$25.6 million per year to an average of about US$ 14 million per year, [16] Moreover, aid donations from developed countries are shifting to other neighbouring countries, which are perceived to be managing their economies with greater honesty and responsibility.

    In the 1997/1998 financial year Kenya's internal debt had risen to US$ 25 billion and its external debt to US$ 7.5 billion. Due in part to interest rates about 20%, debt service consumed 32% of total government expenditures. [17]

    Even though worldwide tourism is growing rapidly, earnings from tourism fell from Kshs. 25 billion to Kshs. 22 billion in 1997 pushing many workers out of employment. Unfortunately, increased crime in the country has seriously tarnished the image of the country in the world. [18]

  16. The Family
  17. "The family has vital and organic links with society, since it is its foundation and nourishes it continually through its role of service to life: it is from the family that citizens come to birth and it is within the family that they find the first school of the social virtues that are the animating principle of the existence and development of society itself." [19] The scenario in Kenya today depicts a crumbling family threatened by societal ills like unsound land policies, land grabbing, insecurity, abject poverty, domestic violence drug abuse and HIV/AIDS which have led to many uncared for orphans. This situation has worsened the already weak economic position of many vulnerable families.

    The breakdown of the family and eviction from homes and lands swell the number of the homeless, especially street children. There is heavy presence of street children in Nairobi alone. There is massive use of drugs among them. To survive they live and operate in gangs. Voluntary organizations are caring for street children in Nairobi. However, this is done without help from the government and without adequate coordination.

  18. Ecosystem

     

  19. Environmental problems abound. Pollution of air, surface water, and ground water proceeds almost unchecked at an alarming pace. Deforestation in areas such as Mt. Kenya, Mt. Elgon, and Karura is especially severe and urgent problem. Sacred forestlands are being turned to drug "plantations". Unless arrested immediately, it could take centuries to restore the ecosystem. In addition, our natural water catchment areas are being steadily destroyed.

    In short, Kenya is in the midst of a serious economic and environmental crisis. It is crucial that we identify the causes of these crisis and strongly propose action to correct the situation. The time is now.

  20. Causes of Kenya's Economic Crisis

    Instability and Manipulation of Finances
  21. Why is a country so rich in human and material resources in such a poor economic condition? Some of the causes are global, such as the instability and manipulation of world finances. Unfair trade practices adversely affect the prices Kenyans receive for primary products and pay for imports.

    It is common knowledge that International Monetary Fund and World Bank have withheld aid to Kenya citing corruption and lack of accountability and transparency.

    Corruption and Dishonesty
  22. We cannot ignore the advice of Holy Father Pope John Paul II when he says that “Africa's economic problems are compounded by dishonesty or corrupt government leaders, who in connivance with domestic or foreign private interests divert national resources for their own profit and transfer funds to private account in foreign banks."[20]

    This is true of Kenya where embezzlement of public funds undermines economic activities. Failure or refusal of large companies to pay their taxes places an undue burden on those who comply with the law, deprives many of needed public services, and makes it difficult to balance the Governmental budget or to repay the debt.

    It is nearly impossible to win a lawsuit or to emerge the successful bidder on a project, whether public or private, without offering a bribe. Paying of bribes is almost as bad as taking them. Those who pay bribes facilitate and perpetuate an already dysfunctional system.

  23. "God father" Syndrome
  24. The practice of securing employment on the basis of whom one knows rather than on the basis of one's ability to perform a job, leads to an increasingly unproductive workforce and bloated bureaucracies.

    Mismanagement of resources
  25. Waste of public funds on useless projects, and misplaced priorities compound the problem. An example of this was the inflationary crisis of 1993 produced by the irresponsible printing of money to illegally pay for the electoral campaign. Since then, the process of controlling inflation has been at considerable cost to other aspects of the economy. The massive mop-up of previously printed currency was undertaken through the sale of treasury bills, which, in turn, left the Government carrying an enormous debt. Currently, the servicing of this debt consumes a high percentage of Government expenditures, and consequently high interest rates divert investments from the productive sector of the economy.

    The acquisition of unsecured loans by well-placed persons is a cause for major alarm. What is happening to some of the major banks like NBK, KCB as reported in the mass media recently is a case in point. This may lead to panic withdrawal of cash from banks, hence resulting into the collapse of state run banks. It is important to note that in granting loans one makes sure of the responsibility and forthrightness of the beneficiaries. [21]

    Deliberate ambiguity and uncertainty about land ownership combined with bribery leads to speculation, profiteering, and displacement of people from their homes and businesses.

    All this is complicated by a pervasive secrecy in Government circles. Although the stated reasons for secrecy are the freedom to develop policies without outside interference or the protection of national security, over and over again it turns out that secrecy is a cover-up of conflicts of interest if not for outright fraud and deception of the public. This lack of a free flow of economic information undermines the health of the economy as a whole.

    Ethnic, regional, and tribal conflicts consume energies which otherwise could be put to productive purposes. People have no security in owning property or businesses outside their own ethnic areas. This has a negative impact on economic growth in the country.

    Unchecked emissions from manufacturing processes, machinery, and vehicles pollute our air and water and, in general, degrade the environment. The cost of clean up is born by the public at large rather than the polluters themselves. Unsafe and dangerous working conditions lead to widespread illness, injury, and death. Although these practices bring enormous profits to a select few, they effectively undermine the economy and lead to misery for millions of our fellow citizens.

    We cannot ignore the advice of Holy Father Pope John Paul II when he says that “Africa's economic problems are compounded by dishonesty or corrupt government leaders, who in connivance with domestic or foreign private interests divert national resources for their own profit and transfer funds to private account in foreign banks."[22]

    Steps to the Realization of Kenya's Economic Potential

    What can be done to correct this situation?
  26. It will require the concerted efforts of individuals and organizations in all sectors of the economy. The following are some guidelines for action;

    1. First and foremost, we must have recourse to prayer. Those who benefit from the system of corruption, greed, and mismanagement and those who remain silent about the terrible economic injustices around us MUST CHANGE.

      All of us must earnestly beg God for the grace of conversion - a change in our way of thinking and acting. We need to move from an economy of scarcity to an economy of abundance and sharing. We need to set aside the narrow self-interest of individuals or groups for genuine concern for the common good. We must learn to respect the dignity of each person, which involves a commitment to human and civil rights. Finally, as we have said in the past, we call upon all those with funds in foreign banks to return them to Kenya.

    2. Immediate attention must be paid to effectively deal with recurring situations of drought and famine. The Government must put in place sound policies that will support food production, distribution and ensure sustainable food security for the future.

      Special attention must be given to the needs of the rural poor. The Government must set up a system of grants and low interest loans; protect people from land grabbing; ensure reasonable costs for seeds and fertilizers; and immediate payment at a fair price for products.

    3. We must foster communitarian social structures such as cooperatives, tenants' associations' credit unions, labour unions, and voluntary associations which work for the common good. These organizations must be free from political control and manipulation.

      Such organizations have the merit of protecting weak individuals from exploitation by the powerful. Also, when people have a stake in an organization they are more likely to exercise their community responsibilities.

    4. Wage increments need to be realistic. A family cannot live on Kshs. 2,140.00[23] in the present Kenya. Unsafe working conditions must be changed and there must be just compensation for those who sustain serious injuries. Living conditions must be improved especially for the low-income earners. The concept of one-person one job should be the ideal situation.

      Wages and working conditions of civil servants - teachers, doctors, nurses, police officers, and others - must be reviewed as well. They deserve not only just wages but also the right to participate in the discussion of and solution to their problems.

    5. The pursuit of democratic decision making processes at every level of society remains a vital tenet. This is as true for election of class prefects in a school or directors of housing cooperative as it is for election of public officials. Decisions, which affect all, should be made only after broad consultation and attempts to achieve consensus. Within constitutional limits each person should have an equal voice and vote. Without economic democracy there can be no sustained economic growth and development. As a necessary condition, democratic decision making must permeate our society. In business democratic principles are a prerequisite for sound economic growth.

    6. We must foster non-violent conflict resolution as an alternative to costly and unproductive lawsuits. We must learn and disseminate skills of mediation, arbitration, and reconciliation that go beyond punishment to social healing. Fortunately, we have African models of reconciliation to learn from and build upon.

    7. The private sector economic initiatives especially Kenya's informal or "Jua Kali" sector which has shown remarkable robustness in recent years must be fostered. Much of what is best about Kenyan's economic activity is represented by the inventiveness and hard work of the 'Jua Kali' sector. Activities in this sector include self-employed market buying and selling, processing of agricultural produce, and small-scale repairs and manufacturing. This sector accounts for 60% of non-agricultural employment in the Kenyan economy; is of immense significance for the welfare of the poor; and has attracted the interest of the donor community. Some of the 60% of self-employed persons operate their businesses in 'kiosks'. The frequent demolition of these 'kiosks' by city 'askaris' is demoralising. A lasting peaceful solution should be sought instead of frequent demolitions, which lead to loss of property.

      In Nairobi and elsewhere 'Jua Kali' workers have been plagued by the insecurity of land tenure. The current disease of land grabbing and unclear land ownership means that 'Jua Kali' workers find difficulty in obtaining secure workspace. Without this, they cannot apply for electricity, telephone lines, etc. This, in turn, prevents expansion and places obstacles to obtaining access to loans.

    8. High interest rates and banking regulations which favour the well to do place a further burden on this sector. It is of the utmost importance that Government agencies live up to the supportive statements they have made regarding this 'Jua Kali' sector.

  27. Promotion of Positive Political Will

  28. For Kenya to realise her economic potential there is need for a political will to change unjust policies and practices. If this political will is lacking, the country will disintegrate into lawlessness and chaos. There should be openness and accountability at all levels.

    1. Cases of bribery and fraud among Government officials should be vigorously prosecuted. A time has come for Kenyan to refuse to pay such officials. We must support one another in this by serving as witnesses to report requests for bribes. We must document requests for public services and consequent delay or refusal to perform these services because of our refusal to pay bribes.

    2. Top Government officials in or top administrative positions should disclose all the personal and business interests which could affect their decisions. In cases of conflict of interest, legislators should abstain from voting; judges excuse themselves; and administrators should fully disclose the rationale for their decisions subject to review by higher authority before the decision is effective. Once again, the media must function as an effective watchdog for the public at large.

    3. The recruitment and retention of public officials should be on the basis of merit and performance. This will involve streamlining of the bureaucracy even to the point of eliminating and consolidating departmental functions. Any vestiges of patronage and featherbedding must be eliminated. This means the adoption of modern human resource policies including public advertising of vacant positions, nondiscriminatory hiring procedures, and regular performance reviews.

    4. We must insist upon truly competitive bids for Government contracts free of any hint of bribery. Procedures for submitting and opening bids must be scrupulously observed. Otherwise, Government projects cost far more than fair market rates, a few make enormous profits, and the burden of the additional cost falls upon the public at large. The yearly reports of the Auditor General MUST be taken seriously. It is time these reports including those of Parliamentary Accounts Committee are looked at and recommendations adhered to.

  29.  

  30. It is the role of the Government to protect local industries from collapsing. The massive importation of second-hand clothes has led to the collapse of the textile industries like KICOMI, RIVATEX, etc. The local sugar industries in Western Kenya are either producing below capacity or are on the verge of collapse because of the importation of cheap sugar by politically connected persons. "We need to buy Kenya."

  31. It is essential that our Government works to support and strengthen international covenants on human rights and environmental protection. Without vigorous enforcement of such covenants, manufacturers in other countries where workers are exploited and pollution left unchecked, can undercut employers who provide a just wage and healthy working conditions. The result is the loss of sales and jobs due to an uneven playing field.

  32. Finally, we must devise mechanisms to involve all the people in the reform of the constitution. We repeat what we have already said, our constitution is supposed to be written for the good of the Kenyan people by involving them. We must demand that the constitution require justice, openness, and honesty from the Government and public officials. It must provide for division of powers between the executive, legislative, and judicial branches, including an independent judiciary . It must also place all officials under the law, including the president. No one must be above the law.

  33. Conclusion

  34. We offer these reflections to our flock, men and women of good will. We invite you to reflect and act in a way that will help revive our economy. One thing is clear, all segments of our society must take a forceful action to save Kenya from economic disaster with its consequences of untold misery. First of all we call upon all of our parishes and institutions to take the steps that we have recommended in dealing with our people.

  35. Secondly, we call upon other Christian Churches and representatives of other religious traditions to encourage the reforms which are necessary to save our economy. Labour unions, business associations, agricultural organizations, the communications media, and non-profit making organizations have a vital role to play in this cooperative effort.

  36. Let us close on a more hopeful note. Other countries have recovered from far worse economic conditions. One only has to recall the plight of Japan and Germany at the end of the Second World War. True, they were assisted by massive infusions of capital, especially from the United States of America. However, other nations have received billions of dollars in economic aid over the years and still have descended into economic chaos and social upheaval. An ethic of productive work and the basic honesty of their public officials was key to the success of those countries which recovered.

    We earnestly pray that with God's help our beloved nation will call upon its deepest values and best traditions and rise to the occasion. If the economy is revived, then we can agree with the words of our national anthem: "Let all with one accord, in common bond united, build this nation together and the glory of Kenya. The fruit of our labour fill every heart with thanksgiving,".

    Signed:
    Rt. Rev. John Njue - Chairman Embu
    Rt. Rev. Cornelius K. Arap Korir - Vice Chairman Eldoret
    Most Rev. John Njenga Mombasa
    Most Rev. Nicodemus Kirima Nyeri
    Most Rev. Zacchaeus Okoth Kisumu
    Most Rev. R. S. Ndingi Mwana 'a Nzeki Nairobi
    Rt. Rev. Philip Sulumeti Kakamega
    Rt. Rev. Urbanus Kioko Machakos
    Rt. Rev. Silas Njiru Meru
    Rt. Rev. John Mahon Lodwar
    Rt. Rev. Colin Davies Ngong
    Rt. Rev. Ambrose Ravasi Marsabit
    Rt. Rev. Peter Kairo Nakuru
    Rt. Rev. Paul Darmanin Garissa
    Rt. Rev. Linus Okok Homa Bay
    Rt. Rev. Joseph Mairura Kisii
    Rt. Rev. Boniface Lele Kitui
    Rt. Rev. Philip Anyolo Kericho
    Rt. Rev. Luigi Locati Isiolo
    Rt. Rev. Alfred Rotich Military Ordinariate
    Rt. Rev. Maurice Crowley Kitale
    Rt. Rev. Norman King'oo Wambua Bungoma
    Very Rev. Fr. William Kamau - Administrator Murang'a
    Fr. Michael Charo Ruwa - Secretary General KEC
    8th June, 1999

Notes

[1] Amos 5:24.
[2] cfr. Ex 22: 21ff; Deut 10:18; Is 1: 17.
[3] Prv 30:8.
[4] Lk 12: 16-21.
[5] Mt 6: 19-23.
[6] Lk 16:13.
[7] Mt 25: 35-44.
[8] Rerum Novarum Para. 5.
[9] Vat. II Gaudium et Spes.1.
[10] Populorum Progressio, para. 45.
[11] Solituo Rei Socielis P.42/43.
[12] Our Social Responsibility, para. 13 ADS No: 455.
[13] See Catherine Mulholland, ed. Ecumenical Reflections on Political Economy, WCC Publications, 1988.
[14] National Development Plan 1997- 2001 Government Printers, Nairobi.
[15] Our Problems Our Solutions.
[16] Our Problem Our Solutions.
[17] National Development Plan 1997- 2001.
[18] KWS 1990. A Policy Framework and Development Programme.
[19] Pope John Paul II Apostolic Exhortations, Familiaris Consortia.
[20] Ecclesia in Africa 113.
[21] Ibid.
[22] Ibid.
[23] Sunday Nation May 2, 1999.

Bibliography

  1. Ministry of Health, AIDS in Kenya: background projects and impact intervention.
  2. Government of Kenya 1996: Kenya: economic reforms for 1996 - 1998: the policy frame work paper. GOK IMF and World Bank.
  3. Government Printer: National Development Plan 1997- 2001.
  4. Daily Papers, May 2, 1999.
  5. Pope John Paul II, Apostolic Exhortation Familiaris Consortio (22 November 1981, 42: AAS 74 (1982), 134.
  6. The Conscience of Society: The Social Teaching of the Catholic Bishops of Kenya, 1960- 1995.
  7. Pope Leo XIII, Rerum Novarum. (15: 5:1891) Acta XI, Rome 1892.
  8. Pope Paul VI, Encyclical Letter, Population Progressio, 26 March (1967) AA 59 (1967).
  9. KWS 1990. A Policy Framework and Development Programme.
  10. Pope John Paul II Encyclical Letter, Sollicitudo Rei Socielis (30 December 1997) AAS 38 (1998).
  11. Vatican II: Pastoral Constitution on the Church in the Modern World, Gaudium et Spes.
  12. Ministry of Finance: Mid-term statement for Finance on implementation of the 1998-1999 budget. Nation Newspaper 11th February, 1999.
  13. Daily Newspaper Publications Review. Republic of Kenya: Working Paper for Economic Consultative Meeting: 6th May, 1998, Mbagathi I, Nairobi.
  14. Our problems, Our solutions and Public Policy Institute of Economic Affairs, 1998.
  15. Agenda for Kenya: Robert Shaw, Mamuyu Gatheru.