Why It Is Hard To Sell KIbaki's Message Of A Rising Economy To Those Employed In The Informal Sector

I am sure some in Kibaki's corner are wondering why their message of a rising economy is falling on deaf ears. After all, in the last five years the Kibaki government has presided over one of the best economic periods in Kenya's history by posting a steady GDP growth rate, which in all honesty deserves global recognition. However, all is not well. Most Kenyans have not been affected by this economic growth since it has failed to increase the size of ugali on their dinner tables.

Any student of economics knows that it takes time, a number of years, before the effects of a trickle-down economy can be felt in all sectors of the economy.   In fact, some industries have to wait for more than five years before they can derive the full benefits of a growing GDP. It is this disconnect between a growing GDP and its direct impact on certain industries, which is causing the size of ugali not to increase in most dinner tables.

What makes Kenya's case more challenging are the unique characteristics of our economy. Most Kenyans are employed in the informal sector-small and complex business operations-which makes it hard for every single entrepreneur to adjust their business models fast enough in order to fully respond and exploit the new opportunities generated by a booming economy.

For example, let's take a person working as a self-employed cobbler on the streets of Nairobi. Such a person/entrepreneur, limited in resources and ideas, may not experience increasing revenues in a booming economy because as people make higher wages, they may prefer new shoes to mending their old ones.  Even if the cobbler decided to change industries and become a carpenter, he or she will be limited by the required capital and the needed technical-know-how.

But if this same person was employed at Kenya Breweries-the formal sector, as a middle manager it would be much easier for him to realize the benefits of a growing GDP. Kenya Breweries, through its smart allocation of resources and organized business strategy, can easily increase beer sales in an improving economy. Increased revenues will  translate to higher wages for KBL employees, which means a bigger ugali on the  dinner table.

In most developed countries, it is possible to base a political campaign on a growing economy because the message can resonate with those employed in the formal sector. Most of these people are employed by large corporations, which can quickly and effectively exploit new opportunities found in a growing economy. These profiting corporations increase employee wages and create new jobs for the citizenry as they expand their operations. Higher wages and better jobs mean bigger paychecks and any political party that can guarantee bigger paychecks to its people, usually stands to win the peoples' political vote.

Unfortunately in Kenya, we don't have enough large companies employing a significant percentage of the electorate, thus, the message of economic growth is lost on most people. With an unemployment rate reported between forty and fifty percent, rising inflation, and a negligible middle-class, most Kenyans can't fully participate in a booming economy. Most people, especially those employed in the informal sector will continue to be marginalized.

Many of the current and lucrative opportunities in Kenya demand capital, which most people do not have. Not everyone in Kenya can afford to buy stocks on the Nairobi Stock Exchange or buy a rental-flat in Lavington; most people are barely getting-by. Not to mention that such opportunities are not accessible to eighty percent of the Kenyan population; people living in the rural areas.

In the short-run, large companies in Kenya will continue to report stellar financial results because they can quickly and effectively exploit new opportunities. Stock values will continue to soar, and the country's GDP will keep on rising, but it will take a number of years before every Kenyans can taste the sweet fruits of economic prosperity. There is an immediate need to absorb most of the citizenry into the formal sector, through the creation of corporate jobs, before most Kenyans can embrace Kibaki's message of a rising economy.

George Kyalo Mutua

Atlanta, GA, USA