Kenya's Economic Reforms: A Case Study in Development

Introduction

From its rough beginnings, Kenya has instituted a series of economic reforms in an attempt to improve the condition of the Kenyan people. These reforms represent an effort to bring Kenyans out of poverty and repression toward stability and economic security. Each reform has been an improvement on the last, yet the country remains far from resolving its fundamental challenges. This paper argues that a key reason for this persistent shortfall is the need for the people to recapture the spirit of nationalism that characterized Kenya's early years of independence.

Kenya's History

Prior to 1800, Kenya consisted of groups of small tribal governments. Kenya is home to more than 70 ethnic groups. Some of these groups are large — for example, the Agikuyu, who form a majority of the population within their homeland in the Central Province and are also present in significant numbers in other districts across Kenya. In the 1800s, Christian missionaries and explorers arrived in Kenya in large numbers and established colonial rule over the Kenyan people [Africa Guide, 1997].

In 1952, Kenya experienced an agrarian revolution. In 1963, Kenya gained independence and became a republic in 1964. The first president of Kenya was Mzee Jomo Kenyatta, who held office until his death in 1978, at which point Daniel arap Moi became president. In 1992, Kenya became a multi-party state [Africa Guide, 1997].

The Mau Mau movement began among the Gikuyu in the 1940s. All Kenyan people at that time shared the same grievances of land shortages, as many farms in Gikuyu territory had been taken for European settlement [Africa Guide, 1997].

Since the end of the Second World War in 1945, Africans had been presenting these grievances to the colonial government in Nairobi and to the government in London. Under the leadership of Jomo Kenyatta, the Kenya African Union (KAU) had become a national party with wide popular support. They continued to issue grievances, which went unheeded by the colonial government. At the same time, white settlers were pressing Britain for independence under white minority rule [Africa Guide, 1997].

This situation had been documented from the early 1920s and did not change. By the 1940s it had become explosive. The Mau Mau movement emerged when certain tribal members swore allegiance to it. The movement had several important effects: the British learned that the African people would not tolerate continued colonial governance and that rule could not be maintained except under massive military force. It also brought the problems facing Kenya to the attention of the wider world [Africa Guide, 1997].

Kenyan Independence

Independence became a reality for Kenya on December 12, 1963. The African people believed, perhaps unrealistically, that independence from British rule would solve all of their problems. The British, for their part, feared an African government bent on retribution for decades of past wrongs. Mzee Jomo Kenyatta understood that raising the standard of living after British rule would be a long, difficult road. He launched a major campaign to unite the Kenyan workers and encourage collective effort to raise their shared status and lighten the burden on all citizens.

Kenyatta identified three major obstacles to development in Kenya: poverty, disease, and ignorance. The new government, KANU, developed a series of objectives to build a just, democratic, African socialist country. These included political equality, social justice, human dignity, freedom from want and disease, equal opportunities, and high and equitably distributed incomes [Africa Guide, 1997].

At independence, Kenyan leaders adopted a system of five-year development plans. At the end of each term, planners would review whether the stated needs had been met or whether they had been overtaken by domestic or international developments [Africa Guide, 1997].

Mzee Jomo Kenyatta died suddenly in 1978. With security in place and no regional disturbances, the constitutional provisions for the succession of power operated smoothly. Elections for a new president of KANU were held promptly, and Moi, the Vice President, assumed the presidency. Moi inherited a fledgling socialist democracy full of hope, but in reality conditions were not as good as had been anticipated. The country was poor, and public institutions were corrupt and unable to fulfill their intended functions [Africa Guide, 1997].

The Need for Reform

Moi recognized that he had to act to prevent this young country from falling into ruin. He first conducted a study to determine the true state of conditions across the country. The findings revealed that human development indices — including life expectancy, nutrition, and education levels — were all deteriorating. Economic growth had halted, and per capita income was falling. The country was heading toward disaster.

Perhaps the best single measure of living standards is real private consumption per capita. This measure peaked in 1978 and then began a steady decline. The falls in average living standards reflected a failure to keep pace with population growth, which increased by 74% during the period [World Bank, 1998].

In 1966, the Kenyan education system had been changed from eight years ("Standards") of primary education to seven. Kenya also experienced a dramatic fall in urban real wages during this same period. This contradicts the predictions of some economic models from the early 1970s, which posited that urban real wages were rigid downward [Harris and Todaro, 1970]. It appears that studies of the time were skewed in favor of the new economic reforms and cannot be relied upon for accurate data. Although statistics showed a decrease in poverty, this conclusion remained debatable.

Moi adopted a new policy called the Fourth Development Plan 1979–1983. This plan set the stage for Kenyan economic and social development, with its central theme being the "alleviation of poverty." The strategy centered on meeting "basic needs": creating income-earning opportunities and providing education, reasonable housing, water supplies, and a rural development infrastructure [Africa Guide, 1997]. The plan was expected to increase GDP per capita and give the Kenyan people greater capacity to grow exports. It was also intended to return land ownership to the hands of the Kenyan people and restore their sense of pride. The plan targeted primarily agriculture and manufacturing so that Kenyans could provide for themselves and their families while contributing to society as a whole. Its core philosophy was that raising the level of the individual would raise Kenyan society as a whole.

The plan also included what it called "hard option" objectives. It acknowledged that the easier forms of development in agriculture and industry were coming to an end, and that redistribution of previously held land would have to be followed by more intensive farming techniques, including higher inputs and greater use of marginal land.

In July 1983, the District Focus for Rural Development (DFRD) was established. This allowed the implementation of development plans across all of Kenya's districts, moving planning and action from Nairobi to the district level and thus bringing government closer to the people [Africa Guide, 1997].

Conclusion

A report by Appleton, Bigsten, and Manda of Oxford University found that educational expansion followed by economic decline was associated with a fall in the returns to secondary education — calculated at 20% in 1978 and only 5% in 1995 [Appleton, 1999, p. 1]. Wage benefits from primary education fell as well; however, this has not led to a reform in educational policy, as the costs of education have also fallen.

At this point it is clear that constitutional reform alone is not sufficient. As Michael Kamau of Africa Economic Analysis states, "Almost all Kenyans are living lives of terror, misery, despair, and insecurity. Law and order has broken down, and a total breakdown is imminent. The likelihood of the despair and terror that obtained in Idi Amin's Uganda, Jean-Bédel Bokassa's Central African Republic, Samuel Doe's Liberia, and Mobutu Sese Seko's Zaire are fast becoming a reality in Kenya" [Kamau, 2000].

In a statement to the United Nations General Assembly, President Moi declared: "The biggest challenge facing the African continent today is the increasing level of poverty. Poverty has become an obstacle, a roadblock to every effort we are making at improving the overall welfare of our people. Poverty is a fertile breeding ground for conflict and instability and even terrorism. It is therefore regrettable that very little progress, if any, has been made since the World Summit on Social Development in Copenhagen in 1995. I remind you that the main outcome of that summit was the resolve to eradicate poverty as an obstacle to human development."

Dr. Amoako summarized the continental condition as follows: "As ECA's Africa Economic Report 2000 shows, for five years running, Africa's gross domestic product (GDP) has grown faster than its population, reversing the falling living standards of the previous 15 years. Still, poverty is higher in Africa than in any other region of the world. Two out of five Africans subsist below a poverty line of less than $20 per month; the majority of these are women. Africa has the most unequal distribution of income of any region in the world" [Amoako, 2000].