Kenya can learn from the success stories of countries that have risen from economic obscurity to attain first-world affluence.
The formula for economic growth is well documented, and a key input is a thrifty, saving society.
Savings are critical resources that create opportunities for investment and mass employment, leading to higher economic growth and improved standards of living.
Singapore is an oft-quoted example of a country that has achieved this feat, with a per capita GDP of $72,000 and a gross savings rate almost three times Kenya’s 16%.
To encourage people to save more, the government has introduced the Housing Fund, which allows Kenyans to contribute up to Sh3,000 monthly towards building houses for those without the means to do so.
However, there are concerns about how the fund will be managed given past mismanagement of similar funds.
To achieve sustained economic growth, Kenya must also support local manufacturers through tax incentives or policies geared towards promoting growth.
Incentives should be put in place to avoid capital flight and attract foreign direct investment (FDI).
Manufacturing offers the greatest positive multiplier effects on employment.
There is huge demand for Kenyan products in the East African market with its population of almost 500 million.
The government must incentivize businesses through consistent policies and continued investments in key utilities and infrastructure such as the standard gauge railway (SGR), which could be a game-changer if fully utilized.
However, completing the final phase to Malaba is crucial for it to attain its full potential.
Tanzania is moving fast in its infrastructure projects while Rwanda is building technology hubs to rival Nairobi’s.
Investments need capital, and Kenya may need to borrow despite concerns about over-leveraging both domestically and internationally.
Even the best economies borrow and engage in fiscal policies that raise taxes to finance large infrastructure projects.
Discipline and integrity in usage of funds are crucial.
The government needs to show how it will manage funds raised, how stakeholders will be nominated into the governance body, and assure its independence.
The focus should be on ensuring that every penny is accounted for to avoid white elephants.
As Henry Kissinger said of Singapore, “Every great achievement is a dream before it becomes reality.” Kenya has big dreams, and it’s time to make them a reality.
