Bottom-up Economic approach is A Campaign Tool not an Economic Recovery Plan
It goes without saying that the architects of the Bottom-up economic approach are the reason behind the current economic crisis we are undergoing. It should be remembered that the Deputy President William S. Ruto who is one of the top contenders for the 2022 is part of the institution of Presidency and supported all Jubilee administration’s policy decisions until the 2018 truce between President Uhuru Kenyatta and Former Prime Minister Raila Odinga.
Until then he supported Jubilee government agenda that was premised on tremendous development of infrastructure with a hope that that would translate to creation of employment unprecedently. The development of infrastructure is one of the cornerstone of trickle-down economic approach that the DP finds loathsome and abhorrent.
Funnily, he likes associating himself with all the good tidings that Jubilee administration has brought to Kenyans and distance himself from all the ills of the current regime, fortunately video clips exists in various social Networking sites to remind him of his cunning character that is not going to change soon. If he supported the trickle-down economic model that he abhors right now, what makes you think that that won’t be the case after assuming the Office of the President of the Republic of Kenya? He has proven in several instances that he is a master of double speak that is not changing soon. His mujahedeen and sycophants are quick to point out that only a fool does not change his mind but they should always be reminded that sometimes only a fool changes his mind.
What is Bottom-Up Economic Model and Why it is not viable for Kenya
The economy of any State or a Kingdom is shaped like a pyramid with the Small and Medium Enterprises (SMEs) at the bottom of the pyramid and large corporations and wealthy businesspersons at the top of the pyramid which is thin. Those at the top of the economic pyramid control means of production in different economic settings. Under this economic model or approach, the government through its exchequer gives economic stimulus mostly in form of incentives, grants and sometimes loans to SMEs to encourage investments in unrivalled manner. If spent prudently by the Small-scale traders and investors, the government exchequer expects a return of the financial aid given out but now in form of taxes. Increased tax collection will automatically lead to increased government revenue that will in turn spur the growth of economy unprecedently.
This economic has been applied elsewhere and the 46th President of the United States, Joe Biden has also hinted to trying it out in the US to help in the recovery of the economy that has been affected by the COVID-19 pandemic. The known application of this economic approach by a government or governments was just a decade ago in the European Union (EU) zone during the 2008/09 global recession. Four countries were adversely affected by this recession, these were: Portugal, Italy, Greece and Spain otherwise abbreviated as PIGS. In the wake of this recession, the EU through its exchequer the European Central Bank decided to give an economic stimulus in the form of loans to the affected countries. Interestingly, only three countries (Portugal, Italy & Spain)recovered rapidly and fully from the recession. What made Greece not to recover from the recession like the counterparts?
Various economists have noted that the rationale behind Greece’ failure to recover from the global recession was the nature of its economy. Unlike the economies of the three countries that recovered, Greece’s economy was and is still predominantly informal. Actually, the time 60 percent of the Greece’ economy was informal and that made it to default on the loans given by European Central bank.
Informal economies are economies where economic transactions are not easily visible and vice versa true. In an informal economic set-up, the economic stimulus injected at the bottom of the economic pyramid is likely not to comeback to the National Treasury in the form of taxes.
Greece’ situation can be equated to Kenyan scenario, as our economy is predominantly informal. Approximately 72 percent of Kenyan economy is informal and if bottom-up economic approach is to be applied by injecting money to the bottom of the pyramid, the Greece’ scenario is likely to be witnessed. However, one may argue that just because it happened so in Greece it does not mean that it will not work in Kenya. The best response to that is that, while the economic dispensation of the time may be quite different with the current one but there is a thin line epitomizing the difference. Again, our system is full of bureaucracies and corruption is deeply entrenched in it to an extent that the economic stimulus released by the exchequer may reach the small scale trades in small quantities or failure to reach. The implication of this may be debt-crisis in a massive way, more worse than what our country is experiencing at the moment.
As such looking at the call of our Deputy President to adopt bottom-up economic approach as an alternative to top down approach, it is clear what his intent is. Honesty dictates that he shares the same idea with his boss and if he fails to buy it, then he can proceed with what he is preaching but we know that he has not done that. The call for adoption of this different economic model is timely due to the economic times that we are in as a country. The ideas resonates well with the Common mwananchi despite the crusaders being dishonest to themselves and to Kenyans. Actually, as mentioned in the previous section, the main problem in this country is not the application of economic models, rather the problems like State bureaucracies, corruption, disregard for the rule of law, and several things consequential to that.
Ideally, a complete overhaul of the system would be of great help as the first step towards economic recovery. However, practically that cannot happen but a massive overhaul of the system bureaucratic measures can help a great deal. Consequently, sincerity in fight against corruption and every vice that relates to it can help in the restoration of Kenya’s economy. Additionally, regard for the rule law and principles of governance outlined in the Constitution of Kenya 2010 and various statutory authority can help sanitize the whole system politically and economically. Lastly, we the citizens can use the constituent power bestowed upon us by the constitution to remove incompetent leaders and replace them with competent ones.
