What We Must Do As A Country To Realize Vision 2030

What We Must Do As A Country To Realize Vision 2030

OPINION ARTICLES

BY ELIUD OWALO

The third Medium-Term Plan (MTP III) of the Kenya Vision 2030 covering the period 2018 – 2022 whose launch is expected in early 2018 will be the 12th cycle of National Development Plan. By the end of MTP III in 2022, the Vision 2030 will have undergone 14 years since inception and will be 8 years shy to its end. Therefore, while the launch of the MTP III will be a major milestone for the Country, widespread concerns abound as to whether the Plan is capable of addressing the myriad economic, social, environmental and political challenges that have traversed the previous national plan cycles.

As MTP III enters the arena, the critical begging question then remains; how can the National and County Governments meet the developmental expectations of Kenyans within a context of rapidly changing environment, population growth and limited resources? There are no straight-jacket answers to this question, but definitely the two levels of Government need to innovatively change their approach to planning and how they conduct business. In the circumstance, it is critical to ensure an efficient and effective continuum in policy, planning, budgeting and execution of Government programmes. The most basic implication is that we must integrate and ensure effective alignment of the planning framework at National; Sectorial; Ministerial and County Government levels if the intrinsic ingredients enshrined in Vision 2030 are to be effectively realized. To this end, I wish to postulate five imperatives to refocus the Country’s strategies and approaches in the MTP III period.

First, is the need to ensure that the MTP III and other lower level plans and strategies are effectively aligned to the Vision 2030 and major global initiatives. Alignment is vital as it ensures that the medium-term plans are able to actualize the goals and objectives of the long term blueprints, be they national, regional or global. Regarding global initiatives, it is important to note that the Vision 2030 incorporated the Millennium Development Goals (MDGs) which ended in 2015. Moving into the MTP III period, the country should align with the Sustainable Development Goals (SDGs) which were launched by the United Nations in 2015 to succeed the MDGs.

Alignment of the MTP III with the Vision 2030 and SDGs is the first level of alignment. Whereas this is important, it’s  my considered opinion that from the MTP III, we need to develop a minimum of twenty nine Sectoral Plans; 7 under the Economic Pillar, 6 in the Social Pillar, 2 in the Political Pillar, 11 under the Enablers, and 3 which are crosscutting covering HIV/AIDs; Disaster and Risk Management and Climate Change. Below the Sectoral Plans, all Government Ministries, Departments and Agencies should subsequently develop Strategic Plans aligned to the MTP 111 and the Sectoral Plans. And again at the County level, the County Governments must develop County Integrated Development Plans (CIDPs) which are aligned to the MTP in conformity to the County Governments Act, 2012. Subsequent to these should be Functional Strategic Plans at the County level well-aligned to the County Integrated Development Plans facilitate effective delivery of  the CIDPs.

These lower level plans are important for they form the bedrock upon which Government projects and day to day operations are anchored. Business people, economists and those interested in economic development know about and are likely to interact occasionally with the MTPs. However, very few Kenyans are aware of the Sectoral Plans, and even fewer numbers ever interact with Ministerial Strategic Plans and the County CIDPs. The lacuna in information and low participation in the preparation and execution of these important policy documents is a gap that urgently needs intervention. For example, it should be the interest of all Kenyans to understand in greater details what Government plans to implement in critical sectors such as water, oil and other mineral resources, energy, education, security and peace in the MTP III period.

The second imperative we must address as a Country is how to finance the plans. Budget-making through the Medium Term Expenditure Framework (MTEF) is well-anchored in the Constitution and the Public Finance Management Act, 2012. The National and County Governments participate in the process including the vetting and approvals which are done by the National Parliament and the County Assemblies respectively. The process aside, the Country continues to grapple with unmet revenue targets by the Kenya Revenue Authority (KRA) and own revenue sources by County Governments, ever-increasing debt-burden and widespread corruption. These perennial challenges must be urgently addressed by both levels of Government so to realize adequate resources for implementing the MTP and the CIDPs. It is my conviction that we have adequate legal and institutional frameworks to address financial hemorrhage and corruption. We must have Fiscal discipline at both National and County Government Levels if we are to deliver the MTP III and the second cycle of CIDPs.

The third imperative is the need to improve the Country’s performance management framework. For a long time, the public service operated without a performance management framework till the same was introduced in 2003, anchored mainly on Results-Based Management and Performance Contracting. It was admirable when Kenya won a United Nations award in the year 2006 due to noted improvement in public service delivery as a result of Performance Contracting. Unfortunately, the vigour with which performance contracting was launched and implemented has since waned off. If Government is serious with delivery of public goods and services, it must strengthen and institutionalize a comprehensive and sustainable performance management framework at all levels, with the starting point being the rejuvenation of performance contracting. At County level, performance contracting has largely been ignored, with only a few Counties (in the 2013-2017 County Governments) implementing it albeit in a lukewarm manner. My well- considered opinion is that it behooves us Kenyans to push the County Assemblies to enact Legislation that entrenches performance management in the Counties – as the value for this cannot be gainsaid.

The forth critical success factor in my view is the need for reforms in the public service. We need to build on the recent reforms in the public sector that include the afforestated performance management framework and reforms in the Governance, Justice, Law and Order Sector(GJLOs) institutions which for instance saw noticeable improvement in the prisons, police and judiciary. Unfortunately, just like with the Performance management, the reforms have widely waned off. Again to facilitate the desired reforms, the Country urgently needs deliberate initiatives to inform sustainable change in the culture and attitudes of public servants. Let us urgently undertake a National Culture Audit to inform interventions that will close the Culture and Attitudinal Gap to support realization of Vision 2030.

Fifth, we must improve the monitoring, evaluation and reporting framework. The weak monitoring and evaluation could be a deliberate action by public servants to evade accountability. Today, there is scanty information about how government projects are implemented – and in most cases it is almost impossible to know the actual cost of the projects. Kenyan citizens must be kept aware of what Government is doing with the tax-payers money and the monies being borrowed. Furthermore, and very central, the Constitution of Kenya, 2010 requires Government to make available to the public information related to its programmes. Going into the MTP III, therefore, the Government should make good the Constitutional obligation of providing such information to facilitate Accountability that informs efficient utilization of the Country’s resources.

In conclusion, I want to pose a challenge: – What Prospects lie ahead for Kenyans in the period of the Third-Medium Term Plan of the Vision 2030? Will we achieve better results during the MTP III period? Will there be remarkable flagship milestones like the realization of universal primary education under MTP I, improved infrastructure or increased generation of power under both MTP I and MTP II? In sum, will we realize the envisaged 10% Economic Growth rate every year to increase the Per Capita income levels? Will there be enhanced Disposable Income for the Kenyan people to enhance the Marginal Propensity to Save and create wealth that informs Net-Economic Welfare?

Devolution In Kenya- The Gains, Challenges, Opportunities And Emerging Issues.

Devolution In Kenya- The Gains, Challenges, Opportunities And Emerging Issues.

OPINION ARTICLE
BY ELIUD OWALO

Devolution is the decentralization, transfer or delegation of power from a higher to a lower level, especially by central government to local or regional administration. Devolution was at the core of the formation of the Constitution of Kenya Review Commission (CKRC) between 2000 – 2004. The Constitution of Kenya Review Act 2000 required the CKRC to consider people’s participation through the devolution of power, respect for ethnic and regional diversity and communal rights including the right of communities to organize and participate in cultural activities and the expression of their identities. The feeling of being marginalized and neglected, deprived of resources and victimized for political and or ethnic affiliations intensified the push for devolution. There was at that point particular resentment of the Provincial Administration, which was then accused of abuse of powers bestowed upon its officers, while the local authorities were considered to have failed to deliver services but had instead been turned into dens of corruption.

The CKRC detailed proposals for devolution, but however, did not propose structures right down to village level, which were later discussed by delegates at the Bomas of Kenya with input from a Committee of Experts that finally delivered a new Constitution, articulating a devolved-system of Government entailing a National Government and 47 County Governments. Subsequently, the Constitution of Kenya, 2010 as enshrined in Chapter 11 of the Constitution and spelt out in the County Governments Act, 2012 created a decentralized system of government wherein two of the three arms of government; namely the Legislature and the Executive are devolved to the 47 Political and Administrative Units provided for under Article 6 and specified in the First Schedule. The Devolution Chapter of the Constitution established the Intergovernmental Relations Act, 2013, which created key structures, namely a National and County Governments’ Coordinating Summit to help in the regulation and guidance of the relationship and co-existence of the two levels of government to facilitate success of devolution. The Constitution also created the Transition to Devolved Governments Act, 2012 which established the Transition Authority (TA) with the mandate of facilitating and coordinating the transition to the devolved system of government.

Devolution is therefore a key pillar of the Constitution of Kenya by seeking to bring governance closer to the people, with county governments being at the center of dispersing political power and economic resources to Kenyans at the grassroots. The Principles that underpin devolution in the country are that County governments established under the Constitution shall be based on democratic principles and the separation of powers; have reliable sources of revenue to enable them govern and deliver services effectively; and ensure no more than two-thirds of the members of representative bodies in each county government shall be of the same gender.

The primary objective of decentralization is to devolve power, resources and representation down to the local level. Specifically, the objects of devolution of government in Kenya were to promote democratic and accountable exercise of power; foster national unity by recognizing diversity; give powers of self-governance to the people and enhance the participation of the people in the exercise of the powers of the State and in making decisions affecting them; and recognize the right of communities to manage their own affairs and further their development;

Other pertinent intentions were to protect and promote the interests and rights of minorities and marginalized communities; promote social and economic development and the provision of proximate, easily accessible services throughout the Country; ensure equitable sharing of national and local resources throughout the Country; facilitate the decentralization of State organs, their functions and services, from the capital; and enhance checks and balances and the separation of powers. To this end, various laws have been enacted by Parliament to create strategies for the implementation framework and the adoption on which the objectives of devolution can be realized..

The Constitution in the Fourth Schedule assigns functions between the National and County governments. The functions of National Government include Foreign affairs; use of international waters and water resources; immigration and citizenship; Language; agriculture; tourism; monetary; veterinary; energy, health and education policies; national defense; police service; courts; primary schools; transport and communications; and national public work, among others. On the other hand, the functions of county governments include agriculture; health services (excluding national referral hospitals); pollution control; cultural activities; animal control and welfare; trade development and regulation; county planning and development; and pre-primary education, among others.

It is my well-considered opinion that devolution has presented a major transformation of the state and undoubtedly reversed the system of centralized control and authority established by the colonial powers. It now opens the prospects of fundamental and progressive changes in both our politics and the economy. Through devolution, County Governments now not only have the mandate and budgetary provisions to deliver services relevant to the local population but are also required by Law to involve the people in the planning process. So far, we have witnessed County-driven infrastructural development through tarmacking of roads; development of markets; provision of water for both irrigation and domestic use; provision of agricultural and extension services; facilitation of early child development(ECD); enhancement of access to health care; creation of investments and trading blocs; promotion of leadership’ accountability in the utilization of funds; increased public-participation in the prioritization of key projects; and better access to information on both policy and operational issues.

However, fundamental challenges have continued to dog the Counties including irregular or delayed disbursement of devolved funds from the national Exchequer; low revenue collection levels from local sources; weak and uncoordinated planning and execution; stalled projects; inadequate financial  resources; corruption; misallocation of the available financial resources; over-indebtedness including bank overdrafts negotiated to off-set wages and salaries; huge pending bills; bloated workforce; tribalism, nepotism and clannism in the employment and deployment of workers; persistent political wrangling and infighting; inadequate capacity at the county level to effectively and efficiently perform the devolved functions; instances of duplicity of effort at both the national and county levels; and utilization of budgetary allocations on non-core activities in contravention of  the Public Finance Management Act. However, there are opportunities for Foreign Direct Investment (FDI) and capital inflow; Public-Private Partnerships (PPP); Grants; exchange programmes; and wider markets for local products, that the Counties need to explore and pursue.

Emerging issues within the Counties include the need for better planning; strengthened performance management framework; improvement in quality of County leadership; prioritization of investment in thematic areas based on comparative advantage; strengthened  public participation in project identification, planning and execution; intensified financial resource-mobilization; improved governance framework to facilitate prudent utilization of resources and enforce accountability at all levels; rationalization of staffing levels; optimization of the wage-bill; institutional capacity building; determination of relevant training needs and corresponding staff training; eradication of duplicity of effort; massive sensitization of both leaders and the citizens on relevant pieces of legislation supporting devolution; massive Culture and Attitudinal change programmes; strengthening of the monitoring, evaluation and reporting framework; enhanced strategic alliances and partnerships; effective management of resistance to change; and benchmarking with best-case examples globally. My humble submission is that unless and until the afforestated strategic issues are adequately addressed, it would remain insurmountable for the devolved system of government in Kenya to facilitate prudent, efficient and effective delivery of services to the citizenry at the grassroots. This is my hypothesis.

The Writer is a Management Consultant

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

By Eliud Owalo

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

Self-identification in Africa has sometimes been oppressive and humiliating. But it has also often fallen short of the intended purposes, making it ineffective. A new digital identity is a must, in the emerging global order. The old way of doing things is dying. Those who do not change with the rest of the world must accept to become irrelevant. National identification belongs here.

The origins of the Kenya personal national identification is traced back to colonial-times. An ordinance signed by Sir Henry Conway, the Colonial Governor in 1912–1917 made it mandatory for all adult males aged 16 and above to have official identity documents. Identification was largely for the purposes of controlling the movement of natives. It also  facilitated payment of hut tax and recruitment into colonial labour. They were issued with a registration document that was carried in a metallic container, attached to a chain and was worn around the neck at all times. This colonial ID, referred to as kipande, was designed to be a tool of exploitation.  Africans hated it. They saw it as a symbol of oppression and imposed servitude.

But if our great grandparents were overburdened and condemned to wearing the demeaning kipande around their necks, there has been little improvement. Consider this: despite quantum leaps in technology, an adult Kenyan carries an even greater burden of identification than their forefathers did. Our forefathers only  carried a single kipande. Today we variously carry up to twenty-five different forms of identification, to prove that we are whom we claim to be.

Almost every new critical service requires a new set of data from us, leading to issuance of an additional special purpose ID.  For example, the Inua Jamii program was introduced in 2004. It came with a new bank ID and a new token, to enable beneficiaries access their benefits.  Anticipated future services portend a rise in the number of IDs per individual.  Our ID items today include a national ID card, NSSF and NHIF cards, employers’ ID, passport, birth certificate, marriage certificate, driver’s license, academic certificates, health insurance card, bank card, disability card, birth certificate, passport photo, among others. In many cases you are required to carry them in triplicate copies, each certified by an advocate, or notary public.

You often also require witnesses, or a sworn affidavits, as an additional layer of verification. Woe unto you should you lose any of these documents. You will begin the recovery process by re-authenticating yourself, possibly by visiting your local sub-chief for a letter of introduction, a police station for a police abstract and finally, a Huduma center, or some other government office, to complete forms in a prescribed manner. You  then wait for up to 14 days, or more, for the re-production and replacement of the physical document.

Despite efforts to identify ourselves using the national ID as we know it, the exercise is not full proof. A 2021 report by the credit rating agency TransUnion shows that Kenyan banks are losing to fraudsters over Ksh.13 billion ($121.49 million) every year, through identity theft and loan stacking.  It is also estimated that up to 47% of Kenyans using mobile money have reportedly lost funds through identity theft and other forms of related fraud.The country is also an unwilling host to hundreds of thousands of illegal immigrants with forged paper identification that gives them access to our resources at the expense of deserving citizens. The public service also has to cope with growing cases of ghost workers, because of inadequacies in authentication. Apart from ghost workers, ghost beneficiaries of social security benefits, insurance fraud, exam cheats and forged academic certificates are all outcomes of authentication failures that bring to question the aptness of our current analogue IDs.

The analogue ID increasingly risks losing trust. With a myriad photo and document manipulation applications readily available in the market, ID manipulation and editing is rampant. This is worrisome in an increasingly sophisticated digital economy where MPESA alone digitally moved Ksh.29.6 trillion in 2021/22 (8 times Kenya’s national budget) and in the process undertaking billions of ID authentications in an eco-system where there is a manifold increase in financial crimes and ID thefts.

 Under these circumstances, an ID that is read and interpreted by the naked eye and authenticated via human judgement across hundreds of thousands of agents, is increasingly open to human error, abuse, fraud or manipulation.  It is, therefore, insufficient as a trusted source of authentication. The diminishing trust level in the current analogue ID can be attributed to the fact that when it was ideated in 1900s, it was for a different purpose, operating in a different eco-system. It was never designed to be a transactional enabler operating in the new digital space that we occupy today.

In my estimation, the current pace of technological advancement and the advent of the Fourth Industrial Revolution, now automating and digitalizing every conceivable service and process, will render analogue paper IDs obsolete by 2030. Apart from the natural attrition that the analogue ID faces in the new digital world order, the role of a national identification system has also changed significantly, almost beyond recognition. Countries are, accordingly preparing for the consequences of this rapidly approaching digital revolution.

Of course the modern-day ID is totally different from the colonial ID and its immediate derivatives. Whereas the colonial ID contained basic foundational data to inform the colonial government of your exploitative utility value, a modern-day ID is a point of convergence between the citizen as a rights holder and the government as a duty bearer. It is also the citizen’s source of authentication to various stakeholders in the world at large. It is what identifies, profiles and defines the citizen to the world.

Through its linkages, the ID provides data about the citizen’s rights, entitlements, obligations and even credit-worthiness. According to the World Bank, it is also a crucial tool for achieving sustainable development, including bankers’ twin goals of ending extreme poverty and boosting shared prosperity. For this reason, ensuring that everyone has access to identification is the explicit objective of Sustainable Development Goal (SDGs) Target 16.9—to “provide legal identity for all, including birth registration” by 2030. It plays a central role in individual rights and access to basic services and entitlements in the physical and digital worlds. 

The modern day ID must be a functional official identification system provided by governments and recognized and trusted by all stakeholders with whom the citizen interacts. It is ideally going to be a platform that gives proof of identity and digital authentication services capable of meeting customer due diligence (CDD) requirements in new models where some government services are also outsourced to private sector entities.

With Kenya now digitalizing all Government services by mid-2023 and almost every financial service and business process being digitalized, you will require to be authenticated remotely for services virtually everywhere – in government and outside. The physical paper or plastic IDs are going to be increasingly irrelevant.

A modern-day ID will create a virtual digital persona. Whereas the citizen’s foundational data remains the same, the functional aspects of the ID, which forms part of their digital persona, is not static. It recognizes their changing status, resulting from different stages of their life cycle.  A modern ID will be the equivalent of a social curriculum vitae. It will be continuously updated to capture your changing progressive life events and statuses, like acquisition of drivers’ license, marriage, new qualifications, etc.

Kenyans will not need to carry around over 25 different ID documents to prove their identity in 2023. But it is not Kenyans alone. The Fourth Industrial Revolution (4IR) is a real global disrupter. The digital technology is reordering everything. We are entering the age of  big data and connectivity, artificial intelligence, cryptography, blockchain technologies, biometrics, database technologies, cloud computing, analytics, human-machine interaction, and improvements in robotics. You only need to have a single digital ID that points to all this information, virtually and accessible by authorized persons even without your physical presence.

So how do we align our identification system to the new digital reality? The solution lies in collapsing all available authenticated foundational ID data about the individual into a single digital ID that provides biometric authentication. In our context, a digital ID is the body of verified information about an individual as defined in the Kenya Registration of Persons Act (foundational ID data) often arising from the Integrated Population Registry Service (IPRS), National Integrated Identity Management System (NIIMS) and the National Registration Bureau (NRB) and digitally linked to aggregated data from various official and trusted sources (functional ID data) such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) and the National Education Management Information System (NEMIS) among other trusted sources of information.

It will also be linked to the birth-to-death UPI, enabling a cradle to grave overview of the citizen. Equally, it will contain the individual’s embedded biometric data that is used to associate them with the data for the purposes of authentication. This would de-duplicated, cleaned up and integrated into a single digital source of truth. All government-held data about Kenyans will be linked to the digital identity, and all public services will be available through digital channels from one single source of truth.

What would all this mean? It means that all your authenticated foundational ID data is stored in a single, secure location digitally. Instead of you producing a physical ID, it is the service provider, or other interested party, who checks your data online (or in cases offline) upon your authorization and upon authentication, provides requisite services. Your authorization entails providing your biometric data (finger print, iris, voice etc.) to be compared with that stored and embedded in your online ID data from the single source of truth.

A biometric match between your physical and stored biometrics authenticates you in a foolproof manner, based on the principle that your biometrics are unique to you and cannot be misrepresented, or impersonated.  This foundational data is then linked to functional ID data e.g., NHIF, NSSF, NEMIS, KRA, NTSA, KNQA, CRBand the CRS (the Civil Registration Services) and is continually updated. The effect is that when you want to open a bank account, the bank will not necessarily require you to produce a physical ID. They will authenticate you via your biometrics and get all the pertinent information from the single source of truth and proceed to serve you, including when you apply for a loan, or wish to withdraw funds, thereby avoiding the risk of a fraudulent impersonator presenting a fake or photo-altered ID. This automated process will also be used to authenticate you to medical service providers and link you to your medical records seamlessly, without the need for a medical card or a hospital card with your medical history. The digital ID will also be key in authenticating citizens to access the over 5,000 Government services, currently being digitalized. The various Government agencies will be able to efficiently provide services to the correct persons without imposters, or fraudsters, coming in between as those requesting services will be authenticated online via their biometrics which are largely foolproof.

This aggregated data pooled together in one location will also provide useful and organized information to help the nation in development planning. Data stored digitally, in the correct format and in one location can provide useful insights if applied to various statistical analysis tools to inform development needs segmentation and profiling. It also promotes inclusivity. When well-designed, digital ID not only enables civic and social empowerment, but also makes possible real and inclusive economic gains.

Research by the McKinsey Global Institute (MGI) indicates that digital ID can create economic value for countries, primarily by enabling greater formalization of economic flows, promoting higher inclusion of individuals in a range of services, and allowing incremental digitization of sensitive interactions that require high levels of trust. An MGI analysis of Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the United States indicates that individual countries could unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

The four largest contributors to direct economic value for individuals globally are increased use of financial services, improved access to employment, increased agricultural productivity, and time savings. The five largest sources of value for institutions in both government and the private sector as a benefit of operationalizing the digital ID are cost savings, reduced fraud, increased sales of goods and services, improved labor productivity, and higher tax revenue. Civil and population registers are a critical administrative source of demographics and vital statistics, which in turn provide essential evidence to support the ability of governments and the private sector to engage in long-term planning and policy making in areas such as public health and infrastructure. For example, civil registration with inputs from the health sector enables policymakers to monitor cause of death and maternal and infant mortality rates and to rapidly respond to epidemics e.g., the Corona Virus, HIV/AIDS and non-communicable diseases. It is also envisaged that a digital ID system would enhance good governance by reducing incidences of ghost workers and enhancing public savings.

The digital ID is also significant in creating the ability to confirm and authenticate citizenship and its derived rights and entitlements by ensuring a biometric linkage between parents and their offspring at birth, as is the practice in countries that have adopted digital IDs like Pakistan, where the National Database & Registration Authority (NADRA) uses relational databases that allows all data points to be tied to each other in pre-defined relationships. This means that illegal immigrants would find it difficult to just gain fraudulent citizenship without having being tied to a citizen at birth. Linkages can also be created in relationships through marriage, by relating spouses’ biometrics. Illegal immigration is a great security risk to any country, and also a strain to limited resources.

The digital ID will also be a great enabler of e-Commerce. It will help create digital trust by facilitating the authentication of an actor’s identity in e-commerce, through a connection between the identity attributes in the digital world and the real-world legal identity. E-commerce activities depend on digital trust to process transactions. Lack of a verifiable digital identity will preclude participation in these systems. The pre-requisite for e-Commerce transactions is the establishment of a digital trust relationship between a vendor and a buyer, so that both parties know who they are transacting with. The private sector –  including e-commerce platforms, digital banking, payment processing, and logistics –  provides key services that enable e-commerce and enhance digital trust. The success of e-commerce depends on digital trust, built through verification and authentication processes, especially during merchant and customer registrations and payments, as well as through rating systems. Strong digital trust generates a sense of security in a transaction—key to any e-commerce activity.

Given the fundamental need for secure and accurate online identification and authentication, digital ID and other trust services, such as e-signatures form part of the core foundation, or a “stack” needed for successful digital economies. When enabled by digital infrastructure that brings people and organizations online, digital ID and trust services can be leveraged by government and commercial platforms to facilitate a variety of digital transactions, including digital payments. Together, digital ID and payments platforms provide the means to move towards a cashless society, creating productivity gains, reducing corruption and fraud, and further improving user convenience.

Transition from the analogue to the digital ID is key in Kenya’s digital transformation agenda because it carries our citizens along with us in this journey whose time has come. Digitalization of our systems, processes, services and re-engineering how we do business will be incomplete unless the citizens can participate digitally. As indicated above, the benefits are manifold. It is estimated that this transformation has the potential to unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

Digital ID can promote increased and more inclusive access to education, healthcare, and labor markets. It can aid safe migration and also contribute to greater levels of civic participation. For example, in Estonia, over 30 percent of individuals vote online, of whom 20 percent say they would not vote at a physical polling place. The envisaged benefits are immense. Digital ID is indeed paramount to increasing the adoption of formal financial services and identifying specific policy interventions. Implementation and usage of digital ID is therefore critical as an enabler for financial inclusion.

Finally, the concept of a digital ID is different from Kenya’s previously proposed Huduma Number that issued a physical ID card. There is no physical ID card associated with the digital ID. It will, instead, be an instrument for enabling citizens to be part of the new digital transformation in the world. The Digital ID unlike the Huduma Number is a dynamic social vitae, and tool for realizing citizens’ rights, enabling social and financial inclusion and carrying our citizenry along with us, on the journey of Kenya’s digital transformation. The digital ID will be very instrumental in helping us to remain socially, economically and technologically relevant in the new world order. It has been utilized effectively in India, Pakistan, Estonia, Belgium and many other parts of the world. Kenya as a country cannot be left behind in the new world order. This is my take.

Eliud Owalo is the Cabinet Secretary for Information, Communication and the Digital Economy.

Let’s Prepare For The Looming Recession

Let’s Prepare For The Looming Recession

OPINION ARTICLE

BY ELIUD OWALO

The adverse effects of the Covid-19 pandemic will definitely lead to a period of economic recession in the country. Kenya will witness a period of significant decline in the level of economic activity spread across all sectors of the economy, characterized by a decline in the gross domestic product (GDP) for a period of about two consecutive quarters. The implication is that the market value of all goods and services produced within the country during this period of time will be drastically diminished. We should therefore anticipate a period of contraction in the economy. Should this situation persist for a longer period, then the economy will regrettably move into a worse state of depression.

Ordinarily, the economic cycle in the country fluctuates between periods of expansion (growth) and contraction (recession). During recession, the gross domestic product (GDP) declines; interest rates rise; unemployment levels rise; income and consumer spending levels diminish; while investment levels stagnate due to a reduction in the level of disposable incomes and savings. It is anticipated that during the period of recession, the Government will intervene in the economy through either Fiscal or Monetary policies to manage and reverse the downward course and effects of the economic cycle. The Government could deploy a Fiscal policy by adjusting its spending levels (public expenditure) and tax rates (taxation) to influence the level of economic activity in the country. Conversely, the Government can utilize monetary policy through which the Central Bank influences the amount of money in supply or circulation in the economy. Monetary policy ordinarily either increases liquidity levels in the economy to create economic growth, or reduces liquidity levels through a credit squeeze to prevent inflation.

My humble submission is that during the period of recession, the Government should deploy an  expansionary fiscal policy that entails reduction in  taxation levels and increase in the level of public expenditure to boost production; maximize sustainable employment; maintain price stability; and moderate long-term interest rates, all of which are important factors for the health of the economy.Alternatively,the Government can also employ an expansionary monetary policy where the Central Bank lowers  interest rates to increase access to credit; boost liquidity levels in the economy; and enhance spending and investment levels.

Just like any other policy document, our Budget Policy Statement (BPS) is formulated taking into account the obtaining environment. The Corona virus is a fundamental risk to the full realization of the policies spelt out in the BPS.The global, regional and local environment upon which the BPS assumptions were based has drastically changed due to the pandemic. Kenya’s projected growth rate will therefore reduce, and we should correspondingly review the priorities outlined in the BPS to take into account necessary mitigating measures required for an economic stimulus program. This therefore calls for adjustments in the ceiling provided for various sectors and Government Ministries, Departments and Agencies to channel more resources to sectors that drive production, trade and commerce. Given that revenue generation will be affected, we must adjust the revenue and expenditure projections factored in the BPS and institute remedial action. For a start, various levels of government should revise their budgets to cut down on non-essential spending and redirect expenditure to stabilization of the economy against the backdrop of an anticipated economic downturn.

Equally, we should anticipate a combination of supply, demand and financial markets shocks. It is necessary to strike a delicate balance in addressing these shocks. First, the manufacturing and services sectors must immediately be supported to ensure that, as much as possible, production and supply of goods and services does not grind to a halt in the wake of the measures put in place to address the pandemic. Measures such as social distancing, partial lockdowns and bans on international travel have had adverse effects on the supply side of the economy. On the demand side, the population is already feeling the effects of reduced disposable incomes. We must adopt bold and innovative ways of addressing this by striking a balance between the revenue to be collected by the Government and the disposable incomes of the people. Measures such as reduction in levels of income tax and VAT which have already been introduced is commendable. On the markets, we should urgently implement desirable measures to calm the stock market and manage debt. It is notable that the BPS had already proposed expenditure rationalization and revenue enhancement measures to manage the fiscal deficit. This should now be expanded and deepened further in the wake of the COVID-19 pandemic. The timing of these proposals is also critical for the economy and should form an integral part of the economic revitalization strategy.

Suprisingly,our BPS is till anchored on the Government’s ‘Big Four’ Agenda focusing on Affordable Housing, Universal Healthcare, Food Security and Manufacturing. One anomaly however is that the BPS has not provided an implementation review of the Agenda. However, on a cursory look at economic performance indicators, my view is that the Government is far from realizing its targets on all the Four Pillars, with Manufacturing and Affordable Housing as the biggest laggards. This is where we should now be bold and propose a radical review of the Agenda. Our main focus now must be on the Universal Healthcare, Food Security and Manufacturing pillars. The former two will help in cushioning the population while the latter will help in mitigating the supply shocks to the economy. The Housing Agenda may be desirable but not a priority in the prevailing circumstances. My humble submission therefore is that the Government should be bold enough and adopt a ‘Big Three’ Agenda moving forward to enable the country focus efforts on addressing effects of the COVID-19 pandemic.

Eliud Owalo is a Management Consultant specializing in Strategy’ formulation, implementation and control.