Tuesday, June 17, 2014


Investor Jim Rogers made a trip around the world on his motor cycle in 1980.

On his trip through China then, he predicted that the most populous nation would be a major economic power house. He based his prediction on the massive investment the country was making in its roads, railways and ports despite the visible poverty he saw around.

This was barely three years after Chinese leadership chose to introduce some elements of the market economy to help them boost the economy. By 1980 the country was investing 25 percent of its economic output compared to the US’ 16 percent.

Fast forward to the present and the results are there for all to see. Their massive investments in infrastructure and human resource is such that economists are now predicting that China will overtake the US as the largest economy this year and not in 2027 as previously thought.

One can imagine that even then when they set off on their journey they were many competing needs for the money, but the Chinese committed massive amounts to investment, put their heads down and ground it out.

The work is far from over since even now in terms of GDP per capita they are still below $10,000 and are ranked 83rd in the world. There are still questions about how they mitigate against environmental degradation but it’s safe to say their momentum will carry them along nicely into the future.

Last week’s budget reading showed that the government has stayed the course in its determination to bridge our infrastructure gaps. Between the works and energy ministry they account for three in every ten shillings of the sh15 trillion budget.

Finance minister Maria Kiwanuka said the money would be used to accelerate the construction of ongoing works on 1,700 km of road and embark on 650km of new roads. Monies were also set aside for the railway line, power dams and transmission lines.

Of course it is one thing to plan but another altogether to execute these plans properly.

But all the infrastructure in the world will count for nothing if you don’t have the quality of people to exploit these resources to their and the nation’s benefit.

It was heartening to see that education and health followed behind investments in physical infrastructure with these four categories taking up half the entire budget.

A lot of work has got to be done on raising the level of our education but until that is done I guess we will play the numbers game. So if it takes 1000 students to enrol in P1 to produce a top notch engineer, statistically we will have a better chance of discovering top notch engineers if we push a million kids into school. Not quite but something like that.

The same can be said for health when it comes to things like national vaccination programs but not necessarily for jamming people into our overstrained health facilities.

So the key is, that with all this money being thrown at our most pressing deficiencies, if used properly we should see a qualitative improvement in our lives five, 10- or 15-years down the road.

Which brings us around to the issue of corruption. In the last financial year the finance ministry moved to reduce the number of government accounts and devolved the payroll to the districts as part of attempts to streamline government expenditure – a euphemism for plugging the loopholes the thieves were exploiting.

As a result many ghosts workers have been exhumed (forgive the pun) and frivolous expenditures whittled down.

It’s beginning to happen already but increasingly money is being spent on what it’s supposed to be doing and a certain segment of the population is gnashing their teeth as the easy money has stopped flowing.

They of course are not taking it lying down but are fighting back  with such nastiness and vehemence that you have to wonder how long before our politicians lose their resolve and restore things to business as usual.

On the whole the budget set the right tone – shifting our expenditures away from consumption to investments.

The rehabilitation of our transport and communications networks in the eighties and nineties underpinned the growth of the last 30 years. Building hundreds of kilometres of road, adding hundreds of megawatts to the grid and increasing the efficiencies on our railway line will be at the heart of the next surge in growth. That is if we can execute these programs properly.

In the meantime the huge monies need to pull off these investments means we might be in for a few more years of belt tightening unpalatable as it sounds. But to get a better standard of living for us that is the sacrifice we have to make.

But as they say everyone wants to go to heaven but now wants to die.

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