Why Prosperity Will Trickle Down Before The Economy Expands

Call it deja vu, when comparing the Moi-Kibaki transition to the Kenyatta-Ruto changeover. Kibaki's and Ruto's regimes were/are both in after autocracies marked by economic exclusivity.

Ruto and Kibaki agree on trickle-down economics marked by shared prosperity.

When you move from tight-fisted economics into one that acknowledges the rights of the weakest in society, the purse strings of economic activity open up to all and sundry. This means that what was done by a few using state power is now democratized for many to partake in and enjoy in the benefits of financial empowerment.

It may mean that three entities all with turnovers exceeding 10 billion shillings will have to tough it out with another 100 entities claiming a slice of the 30-billion shilling market. Even if the other 100 win over just 3 billion in turnover, that prosperity will be felt in several homes. It doesn't indicate overall economic growth but an increase in opportunities for those cut out of the market by power-wielding cartels.

For about a year or more, the economic momentum will be driven by the re-entry of several small players into every sector. As we can see at present, there is plenty of hope but real money is yet to circulate. For the masses, opportunities are what matters. Economists focus on macroeconomics. The usual jargon, GDP, year-on-year growth, sector contribution, et al, are what keeps them excited, but mama mboga just wants to see economic activity.

With money circulating in more hands, the financial systems awaken to credit facilities that in turn grow the capacities of small businesses to serve bigger markets consistently. When these businesses begin to grow, the economy expands evenly.

The Ruto ticket was bought by the hoi polloi wholeheartedly as it was understood to be the single stroke/dose that would deal a single blow to the mighty alliances between cartels and dynasties. They saw it as the only way to return political power and economic power to the masses.

So, for as long as the new government opens up these opportunities to those that need them most, they are sure to keep popularity rankings high.

There's a possibility of certain firms that were on high growth trajectories because of protection by state agents, falling back badly as kienyeji organizations begin to race past them, simply because the street-trained and largely restrained small businesses are more competitive on ground-based combat in an open market.

If these organizations fall back, large as they may be, they should not be cited as reasons to believe that the economy has slowed down. Real growth is expected to go kienyeji for a long time to come.

Expect the decibels from the anti-trickle-down economics gang to rise because their protected markets are no more.

Mwai Kibaki broke some records on behalf of the masses. His policy not to borrow from local banks caused them to avail money through unsecured lending products. In fact, what was lent out from independence to the end of Moi's term, was by far much less than what was lent to individuals within Kibaki's first year in office.

Money was available and a true middle class away from civil servants emerged.

The Ruto regime must have its own records too on behalf of the masses.

Shared prosperity will be the single most important edifice of this presidency. Let the prosperity get felt before we strictly think about growth in economist parlance.