Stop the bean counting and look out the window!

Kenya’s Central Bank Governor Prof. Njuguna Ndungu was recently ranked as the least effective policymaker in Africa’s emerging and frontier markets this year, according to a Reuters survey of regional analysts. Though one can say that collecting views from analysts may be subjective, their reasoning as well as other economic development experts bring to light glaring failure of the Central Bank: Namely that in its zeal to boost economic growth figures, actual human development has been ignored.

Indeed this fervour for growth has been described as an obsession which has resulted in inflation and the startling tumbling of the Kenya shilling compared to the dollar. In January the shilling was at 80 to US1 and reached an all time high of 107 in October.

One of Kenya’s foremost economists Prof. David Ndii while testifying before a Parliamentary Committee investigating the shillings depreciation, cited the pumping of cash into the economy through the stimulus programme which in his opinion went only towards consumption rather than production. The continual rise of the standard of living without an equal appreciation in remuneration has also been behind the numerous strikes Kenya has witnessed in 2011. It seems that almost all sectors have been affected with the most recent and ongoing doctor’s strike continuing.

The cost of fuel, electricity and food continue to rise to the point where one wonders if the powers that be who set interest rates, fiscal and monetary policy are merely testing our price sensitivity and psychological tolerance.

There is more to development than numbers. Central Bank policy makers need for a while to stop with their derivatives and economic models and read Prof. Amartya Sen’s Development as Freedom over the Christmas and New Year holiday. In this seminal book, the Nobel prize winner for economics argues that governments should be measured against the concrete capabilities of their citizens. This means that a country’s development can only be deemed as positive when it’s citizens are given the opportunity to exploit their innate capabilities to escape poverty and the resulting “state of unfreedom”. The Arab Spring is one such case in point of a backlash against the state of unfreedom faced by the general populace and more particularly the youth.

It cannot be ignored that the revolutions spreading first in Tunisia and then eastwards have been in economies with positive economic growth though coupled with wide disparities in wealth among citizens. In Libya where income levels and social facilities were admirable, the sense of unfreedom felt by the masses could not protect Gaddafi from the wrath of his people. More recently in Russia, even though the economy continues to grow, the citizens are still demanding their freedom to vote for the President they want.

Kenya enters an election year in 2012. What these economic growth bean counters in the Central Bank need to realise is that there is more to development than just growth figures. Who can eat 5%* growth anyway? So instead of just reviewing GDP statistics, simply look out the window – As Prof. Sen posits, freedom also can create growth.

* World Bank projections are to be believed that Kenya’s economic growth will hit 5% in 2012.

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About yipe
Yipe an acronym for the Youth Interactive Portal for Enterprise is an organization that assists entrepreneurs to start up and manage their small businesses.

One Response to Stop the bean counting and look out the window!

  1. Ghafla!Guy says:

    “Who can eat 5%* growth anyway?” lol…that cracked me up….Insightful post though…;-)

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