9 November 2012

Kenya: Peacefull Polls Key to Growth


According to the latest KRA taxpayers' list, the top 10 taxpayers in the country paid a total of Sh115 billion in tax during the 2011/2012 financial year, which is equivalent to 17 per cent of revenue collected by the exchequer during that period.

The issue of paying taxes in Kenya has drawn varied reactions from different quarters, ranging from complaints that the tax burden is too high for the ordinary Kenyan, to the outrage about our MPs' reluctance to pay taxes expressed in very colourful language on social networking sites.

A common saying goes that in this life, only two things are certain: death and taxes. And while I agree that paying taxes is painful when one doesn't see and/or feel the impact of these taxes on one's day-to-day life (admittedly, we would all much rather keep all our hard-earned money), there is no denying that no country can move forward without these taxes.

But for us to generate wealth and pay these taxes we need an environment conducive to business. Let me paint a picture of what our economy lost in the aftermath of the 2008 election; it is estimated that KRA was losing approximately Sh2 billion daily in revenue collection, owing to the actions of a few.

Before the last elections Kenya enjoyed its highest ever GDP growth, registering a 7 per cent growth rate in 2007 boosted by foreign direct investment of about $729 million.

This growth rate plummeted to under 2 per cent after the elections, with foreign direct investment dropping to $183 million in 2008 following the post-election chaos.

Close to five years later and we are yet to reach that level of economic growth again, despite the relative stabilisation of the economy. The lesson here is that it is very easy to destroy, but extremely difficult and painful to rebuild.

Now as we head towards the elections in March 2013, we can be sure that there will be a spike in campaign-related liquidity in our economy.

Economists have spoken of election-related inflation, where the economy experiences an increase in the amount of money in circulation during periods of high political activity. Even

President Kibaki himself acknowledged this when he humourously told Kenyans at a public function recently, to take the money dished out by politicians during campaign rallies, but not to forget to vote for true leaders and shun those who incite violence.

The Head of State may have seemed to be joking when he said this, but the fact remains that if we can have people incited to violence over a few hundred shillings, then we as a country must look at the issues we need solved by the next government.

We cannot elect to office people who once there pillage our resources and do nothing to, for example, create employment for more Kenyans so that we can solve the poverty issue by decreasing the estimated 40 per cent national unemployment rate and increasing tax collection to become a self-sufficient nation, and thereby finance our infrastructure, security and social sector needs to support the productive sectors of the economy.

The IMF, in a recent report, ranked Kenya a low income country and voiced its concern over our rapidly increasing debt to GDP ratio, ranking us 2nd after Mongolia in a list of countries with dangerous debt levels.

Admittedly, though we have made considerable gains in tax collection and are one of the few developing countries financing most of their expenditure internally, we still have a long way to go before we can achieve the status we are seeking through Vision 2030 and beyond.

Bottom line is: as much as we have seen tremendous growth in the financial sector in the last decade, we cannot build our nation without peace.

For Kenya to prosper, peace cannot be an option, for peace breeds opportunity, opportunity breeds a desire to invest, and investment leads to income generation.

In the years since the last election Kenya has proved that she does not have the makings of a failed state, rather she has a majority of people who see beyond politics to the core of a prosperous nation: business.

We have undergone a radical makeover since then, wooing investors and fashioning ourselves as the newest African business hub. We cannot afford to let all this go to waste.

Supporting the Mkenya Daima campaign for a peaceful Kenya is not enough if no steps are taken to protect the peace we currently enjoy. We must identify with being 'mwenye nchi' and not just 'mwana nchi,' be it in our payment of taxes, or our engagement in politics.

In Benjamin Franklin's words, 'there never was a good war or a bad peace.' There can be no justification for any kind of violence, whether ethnic or political. So let us guard our peace jealously and adopt an attitude shift to focus more on building our nation rather than on the politics of the day, maybe then we will feel the impact of paying taxes even as we celebrate the big taxpayers.

Martin Oduor-Otieno is the CEO of KCB Group and a Member of the Mkenya Daima Steering Committee.

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