Monday, January 16, 2012

Kenya's Defining Year: 2012

Politicians, pundits, and development practitioners have been arguing that 2012 will be a make-or-break year in Kenya’s history, similar to 1963 or 1992. Is the 2012 challenge real or just a case of pundits playing Cassandra? Specifically there are three challenges coming together.

First are national elections. The last general elections ended in a catastrophe. If the 2012 elections are again violent, Kenya’s image as a peaceful, mature democracy may be tarnished for a generation. Investors and tourists would be even more reluctant to come to Kenya and quick to dismiss the “friends of Kenya” (including your blogger) who strongly believe in the strengths of this country and its medium-term potential. In news headlines, Kenya would join the ranks of other unstable African countries, and drift away from emerging economies such as India and Indonesia.

Second is implementation of the Constitution. Even though all eyes are on the presidential race, elections will be held simultaneously for parliament and the brand-new forty-seven counties governors and assemblies. This will not only make it the most challenging logistical effort in Kenya’s electoral history but also establish a new system of devolved government an alter Kenya's structure as a country. Kenyans bring to this process tremendous enthusiasm and energy, but the devil lies in the detail. The specific design of fiscal architecture, accountability systems and the management of this massive transition will determine whether Kenya can weather the economic storm in a way that enhances social equity, service delivery, citizen engagement, and so deliver the promise of institutional transformation.

Third is the next global economic crisis. It is clear that the world economy will be in turmoil in 2012.The only uncertainty is about the extent of the crisis. Europe’s inability to solve its debt problems is directly affecting economic prospects in developing countries.Flowers and vacations are luxury goods, which Europeans are likely to sacrifice as their income drops. Unfortunately for Kenya, these are among the main sources of foreign exchange. During 2008/09, Kenya was able to weather the global financial crisis by using fiscal and monetary stimuli. But today, Kenya’s economy is in a weaker position and fiscal buffers need to be rebuilt before they can be used again. Also, these economic challenges come at a time when more resources are needed, including for decentralization and the war in Somalia.

Kenya is at a similar turning point in its history. There is a direct relationship between the 2007/08 post-election violence and the adoption of the new Constitution, with its radical provisions for improved governance and devolution. 2012 will be the first big test of whether the “New Kenya” can deliver free, fair and peaceful elections as part of a new institutional structure and at the same time provide continued growth during a global economic crisis. Let us hope that Kenya’s politicians keep these challenges and opportunities in mind as they finalize their wishes and resolutions for the New Year. (World Bank)

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