To understand why Kenya’s crisis of youth unemployment has been so difficult to resolve, you must go back all the way to the pre-independence economy which was set up in what was then known as the Kenya Colony.
The British government, which created this colony, encouraged British citizens to come out here and start a new life as farmers. And not just ordinary, small-scale, peasant farmers. Each “settler” coming out to Kenya was assured that he would be transformed into “landed gentry”: a status that was beyond any reasonable aspiration for most of them if they remained in the UK.
It could not have been otherwise. You cannot expect middle-class Englishmen to come all this way to live much the same lives as they already had in England.
So, an elaborate system of farm subsidies, as well as various “marketing boards” that would organise for the export of whatever these “gentlemen farmers” grew on their expansive estates had to be created.
Cheap local labour was taken for granted.
There was, incidentally, a long-term benefit for the indigenous Kenyan communities in this arrangement. By the time of independence in the early 1960s, the country had a well-established, globally competitive, agriculture sector, which has continued to be the indispensable pillar of the Kenyan economy to this day.
The kind of subsistence farming that existed in pre-colonial times would certainly not have provided an adequate foundation for a modern economy, much less a modern nation.
The problem arises though, in that to a very large extent, the management structure that controls the economy today is much the same one that was created in colonial times.
It is what economists call a “command economy” and can be defined loosely as “an economy in which a centralised government controls the means of production and determines output levels.”
The one thing guaranteed in a command economy is some degree of “market distortion”, of which a recent example was when the government decreed a minimum price for all teas delivered to the Mombasa tea auctions. The immediate result of this was tonnes of tea, ready for export, not finding any buyers. Warehouses were soon filled to overflowing with unsold teas.
The economic fate of independent African nations that inherited command economies based largely on the production of cash crops, has long been studied in empirical detail, most prominently by the late Prof P T Bauer of the London School of Economics.
One of Prof Bauer’s key insights was that any system for managing the production and sale of cash crops, designed to serve the interests of just a few thousand large-scale settlers, was inadequate for the post-independence political dispensation, where millions of small-scale farmers would enter the cash crop economy.
In colonial times, the agriculture sector (like everything else) was managed by a handful of civil servants whose greatest aspiration was an official recognition for their service – principally an MBE or an OBE.
But such a command economy, in the hands of popularly elected leaders who faced regular elections and had to appease a desperately poor electorate, provided a recipe for official corruption, and mismanagement.
Which is why you find so many of the biggest scandals in Kenya, revolving around maize imports, fertiliser imports, sugar imports, etc – all of which are controlled by the government.
Our energy sector too, remains a state-controlled monopoly, despite the creation of quasi-independent institutions for regulation and power generation.
Like agriculture, the energy sector is structured to incentivise corruption. And the levels of corruption within the energy sector are legendary.
This has led to flawed policies that made Kenyan electricity so much more expensive than those of our continental rivals like Egypt and South Africa, that massive industrialisation has simply not been possible.
And it is only through such industrialisation that enough decent jobs could be created.
So just as the independence-era constitution had to be overhauled to create the new (2010) constitution, which is more aligned to our 21st-century political realities, so too must Kenya’s economic policies and institutional structures now be overhauled, if more and better jobs are to be created.