Commentary (by Jaindi Kisero) - Too much government will bode ill for the economy

Ref:http://www.nationmedia.com/dailynation/nmgcontententry.asp?category_id=25&newsid=118280


Story by JAINDI KISERO
Publication Date: 3/5/2008

How is the grand coalition likely to impact on Government spending? We must hope that it will not lead to bigger government.

Already,we are spending a dispropportionate share of tax revenues on the political sector and related institutions.

If you scrutinise the expenditure patterns of the Government closely-the picture is that of a country that devotes a dispropportinate shares of its taxes on administration and wages at the expense of provision of services .

The capital expenditure budget is still way below the reccurrent budget- a sign that we are spending more on managing and circulating existing wealth- than on creating and building new assets.

Today, the salaries we pay our MPs are well above those in neighbouring countries , or developed countries such as the US, the UK,or Norway.

Implemented well, this grand coalition experiment we are trying may provide the opportunity to restructure government,reduce the number of ministries and re organise the Government around a few core functions.

During his first term, President Kibaki was forced by the political exigencies of the day to create far too many more ministries than we needed .

We still remember what happened after the 2005 referendum on the constititution when the President was arm-twisted by Charity Ngilu and Musikari Kombo into appointing more of their tribesmen into the cabinet.

Political acquisence was purchased at a very high price because we ended up with a situation where mere Government departments were transformed into fully-fledged ministries.

And, more ministries not only meant more ministers, assistant ministers, permanent secretaries and deputy secretaries, but more new carpeted offices and more fuel-guzzling limousines.

Clearly, the Government has become too big. How exactly, does it spend our taxes? Here is a snapshot.

Parliament, the presidency, the judiciary, 31 ministries and nine departments and three statutory commissions-consume about Sh 500.4 billion in a year.

In other words,this category of institutions alone absorb about 24.3 per cent of all wealth produced in Kenya in a year- what is reffered to in fancy lingo as the Gross Domestic Product.

The second largest consumer of taxes is the category known as Consolidated Fund Services, money spent on servicing public debt, pensions and other statutory obligations. It consumes about Sh 154 billion or 7.5 per cent of GDP.

In the third category will be autonomous Government agencies such as public universities , publicly funded research bodies and regional authorities. In all,these institutions consume an estimated Sh 60 billion-or 2.9 per cent of GDP.

IN THE FOURTH CATEGORY ARE 175 local authorities which consume an estimated Sh 20 billion- including the money they receive from Local Authority Transfer Fund.

Finally, is the Constituency Development Fund that consumes approximately Sh 10 billion in a year.

In future, the biggest challenge to any government will be how to re -orient spending from devoting too much to wages and debt to creating new wealth and assets.

We simply can not afford to have more ministers,assistant ministers and permanent secretaries.

How will the “ grand coalition” principle of sharing portfolios be applied in the civil service and parastatals?

While sharing power and portfolios among politicians will have fewer challenges-reshuffling of top permanent secretaries and managing directors of critical parastatals will not be easy.

Politicians can agree to share power. But sharing permanent secretary and managing director positions will be alot more difficult.

I say so because a good number of permanent secretaries and managing directors of parastatals wield much more power than politicians.

The most formidable opposition to the principle of responsibility-sharing is likely to come from this clique.

After more than 20 years of pork-barrel politics under the regime of former president Daniel arap Moi, and perhaps due to the relatively small size of the private sector, big public sector jobs are a hot political potato.

Our people still put a high premium on public sector jobs. Indeed, the flip side of the grand coalition idea is that it will entrench the system of appointing managing directors of parastatals and permanent secretaries through patronage.

Today, the public service is suffocating with individuals who owe their positions to politicians and power brokers.

Some permanent secretaries and managing directors have long passed the retirement age but continue to serve on contractual terms -in some cases-with salaries that are way higher than the salaries of career civil servants.

And, the problem with managing directors or civil servants who secure their positions through the influence of powerbrokers is that they tend to owe their loyalty to the powerbrokers rather than their hierarchical superiors.

The way i see it,some degree of pork-barrel politics will have to continue. A grand coalition arrangement that is not based on inclusion can not work.

And, in our context, this includes restoring the ethnic arithmetic in public appointments.