Economic policy

Bottom Up Vs Trickle Down: Any economic policy must base its solutions on the current situation

There has been a debate about bottom-up and top-down economic models as this country prepares for elections next year. The main objectives of any economic policy are: to improve the lives of the population, to reduce poverty and to improve the human development indicators of the citizens.

Therefore, the discussion of the economic model must be placed in the context of the current economic and social situation of any country in order to determine which model has the most appropriate impact in solving its problems.
Let’s start by stating some facts about the Kenyan economy. Kenya has a very small labor force, with 29% of the population of working age. This cohort has a severe skills gap, which limits labor mobility to higher productivity sectors. This is the 18+ age group where 43% of the 25 million people have never been to school or have not completed their education. Of the 45% who have completed their education, the majority (61%) have pre-primary or primary as their highest level of education.

Second, out of 28.3 million Kenyans under the age of 24, 14 million attend primary or secondary school. This means that half of this age group will enter the labor market at various stages over the next eight years. The economy must therefore grow enormously to absorb this group.

The statistics also highlight the informal nature of the business space in the country. Forty percent of the 5.85 million unlicensed MSMEs operate unstructured, i.e. in the open. This excludes digital businesses. Twenty-five percent of MSMEs operate in temporary structures. The majority of licensed and unlicensed MSMEs operate in wholesale and retail trade, which mainly involves importing from outside and reselling. Only around 11% are involved in the manufacturing industry.

What does this mean for the next government? No economic policy, be it bottom-up, trickle-down, middle-man or preposterous, will move Kenya forward unless it approaches the future based on the current situation. To sum up the current situation: Kenya suffers from monetary and rural poverty. Second, the rate of upward mobility is either very low or stagnant.

The areas that will have the greatest impact on the above points in the coming years will be:

Growth and transformation of agricultural incomes that are paramount to reducing poverty with great impact. Growth of value chains, increase in production yields, mechanization (opportunity for local manufacturing of agricultural equipment for local and regional consumption), addressing land development issues, and research and development. But they need an enabling environment to do so and fewer regulatory hurdles. The top seven food importers are the United States ($158 billion), China ($136 billion), Germany ($98 billion), Japan ($70 billion), the Netherlands Bas ($67 billion), the United Kingdom ($63 billion) and France ($61 billion). , totaling $653 billion. With these numbers set to increase, every industry should revolve around agriculture as we have natural advantages, such as climate, soil and a port.

Second, an enabling environment for the growth of MSMEs. This would present a vehicle that could catapult job growth with great impact in Kenya. Since the majority of people are employed in the unlicensed MSME sector, it is also essential to diversify this sector from retail buy-and-sell to export orientation.

Next comes the transformation of the education system to reflect the demands of the 21st century. Investing in the right training will ensure a high transition through every stage of education. We cannot produce more people with business and social skills and fewer IT, engineering and science skills these days and we expect to develop, modernize and diversify the economy.

Governance has been defined as “the manner in which power is exercised in the management of a country’s economic and social development”. Therefore, to define how Kenya will develop, it will have to be in government, then it is important to understand the thinking of whoever you empower, because their management can make or break a country.

The writer consults Gravio.