Good governance key for country’s economic growth, World Bank says ahead of August elections

Good governance key for country’s economic growth, World Bank says ahead of August elections
  • countries and donors need to think more broadly to improve governance so that policies succeed
  • As demand for effective service delivery, good infrastructure, and fair institutions continues to rise, it is vital that governments use scarce resources as efficiently and transparently as possible
  • While the growing Kenya economy is creating more jobs now than in the past, the Kazi ni Kazi report says these are mainly in the informal services sector and are low productivity jobs

The World Bank has urged Kenya and other developing countries to rethink their approach towards governance, saying that is the only way that will save the country from a collapsing economy.

According to a 2017 World Development Report dubbed ‘Governance and the Law’, unequal distribution of power in a society interferes with policies’ effectiveness.

“Power asymmetries help explain why model anti-corruption laws and agencies often fail to curb corruption, why decentralisation does not always improve municipal services; or why well-crafted fiscal policies may not reduce volatility and generate long-term savings,” reads the report.

The analysis notes that when policies and technical solutions fail to achieve intended outcomes, institutions often take the blame.

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It finds that countries and donors need to think more broadly to improve governance so that policies succeed.

It defines better governance as the process through which state and non-state groups interact to design and implement policies, working within a set of formal and informal rules that are shaped by power.

“As demand for effective service delivery, good infrastructure, and fair institutions continues to rise, it is vital that governments use scarce resources as efficiently and transparently as possible,” World Bank Group President Jim Yong Kim said. “This means harnessing private sector expertise, working closely with civil society, and redoubling our efforts in the fight against corruption. Without better governance, our goals of ending extreme poverty and boosting shared prosperity will be out of reach.”

World Bank Chief Economist, Paul Romer says good governance bolster commitment to policies in the face of changing circumstances, enhance coordination to change expectations and elicit social desirable actions by all as well as encourage cooperation’s.

Kenyans turned up in large numbers to find good leaders in the past general elections in 2013.

“Government officials do not act in a vacuum. Their decisions reflect the bargaining power of citizens who jockey with each other to advance competing interests,” said Paul Romer.

“We need to confront a complicated political process in every country where power can influence the outcome of that process and we have to ask how can make sure that process leads to progress for everyone,” he said.

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A Kenya Economic Update (KEU) report, dubbed ‘Kazi ni Kazi – Informal Should Not be Normal’, notes that Kenya’s economy remains vulnerable to domestic risks that could moderate the growth prospects. According to the World Bank these include the possibility that investors could defer investment decisions until after the elections, that election-related expenditure could result to a cut back in infrastructure spending, and that security remains a threat, not just in Kenya, but globally.

The KEU report also notes that changes in monetary policy in industrialized countries could trigger volatility in financial markets putting the currency under pressure.

“While the growing Kenya economy is creating more jobs now than in the past, the report says these are mainly in the informal services sector and are low productivity jobs. Notably, nine million youth will join the labor market in the next 10 years. Given the scarcity of formal sector jobs, the youth will continue to find jobs in the small household enterprises,” the research states.

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