Infrastructure fund: What of debt and brains funds too?

Five trillion Kenyan shillings is not a lot of money. It’s about half our national debt. That is the target for the infrastructure fund.

The money will be raised from the sale of government entities and private sources. Never mind the Privatisation Act, 2025, which states that the money collected from such sales will go to the consolidated fund

Why the excitement over the fund? What next? First, if my opinion mattered, I would use the funds raised from such a sale to pay the national debt, the millstone around the nation’s neck.

That is a bigger issue than even the infrastructure. If we cleared half the debt, we would substantially reduce the interest paid and free up lots of money for projects and services.

Unless we want to leave the debt for the next government, as a poisoned chalice. What of a debt fund?

Two, the fund will not raid our pockets like the housing levy. One could ask why housing can’t be reclassified as part of the infrastructure, actually, the most important and be included in that fund. That would earn the Kenya Kwanza government some votes by withdrawing the housing levy.  The funds will be open to “investors, including pension funds, sovereign partners, private equity firms and development finance institutions,” the cabinet memo says. May I add that once they smell money? Will that inflate the cost of projects to earn returns for the investors, just thinking loudly? 

Three, the focus is on roads and other transport hardware. We use roads, rails and airports every day; that is likely to resonate with most citizens. And in the political lexicon, it’s part of the legacy, just like the Thika superhighway and the Standard Gauge Railway (SGR).

It’s stated: “The government plans to dual 2,500 kilometres (km) of highways, tarmac 28,000 kilometres of roads, extend the SGR to Malaba, expand regional oil pipelines, and modernise airports alongside the ports of Mombasa and Lamu.”  Such structures are “visible” and have an impact. Visitors to the United States (US) talk of superhighways or freeways, as they are called, skyscrapers, bridges and monuments.

Not about the American core values, philosophy, belief systems or the national identity. Such structures require big money, and hence the attraction.

No one is disputing the catalytic power of a good transport network in economic growth. But “soft issues” equally matter.  What matters after you own a house? Three, why not a brain fund?

Our brains are the most critical infrastructure. Think of it, adults and their cars use the roads.

Children and their vulnerability use the schools, labs, and computers.

And more importantly, what they learn, how they learn it matter throughout their lifetime. Beyond the meme on scarecrows, we pay scant attention to what our kids learn. Beyond the end-of-term performance, do we bother with the content, what our kids learn?  

Let’s be bold; we are building hostels near universities. Who is building labs? Who is building libraries? Who is funding the ideas that go into books and journals? Who is funding the research and development? Think loudly, it took 100 years to commercialise quantum mechanics? Who can fund such research apart from the government? 

That is why a brain fund would be in order. The promise that we shall increase R&D (research and development) to two per cent of our gross domestic product (GDP) is very good news.

I have nothing against the infrastructure fund, but infrastructure should be defined more broadly to include national values, dreams and aspirations. Is the Social Health Authority (SHA) a fund?

The source of the funds can be enhanced. There is lots of money that goes to waste through corruption and duplication of tasks between the national and county governments. And overemployment.

Political backlash

No one wants to reduce the size of the government; they fear the political backlash. And without oil, the government will replace it with pooled money from donors, taxes and debt. More curious is why there is less talk on sovereign wealth fund, first proposed when oil was discovered in northern Kenya in 2010?  This is likely to attract more and easier money than an infrastructure fund. 

Think of Coltan, gold and rare earth metals, the new oil. That fund could be bigger that infrastructure fund. Is it strategically being muted?  A few questions: What happens to any idle money in the fund? Will it be invested? Where? Can other sectors borrow from that fund? Can the money fund a deficit?  Who will manage this fund?  In which law is it anchored? What are the regulations? 

Can we learn from Norway’s government Pension Fund Global? “The aim of the fund is to ensure that we use this money responsibly, think long-term, and so safeguard the future of the Norwegian economy.” The Norwegian fund targeted money from oil and gas.   To conclude, Kenya loves experiments.

Remember Kenya’s Industrial and Commercial Development Corporation (ICDC)? Remember single-party, multipartism and now coalitions.

Have we started economic experiments with funds? What happens to the sectors without funds? Happy Holidays, my countrymen, wherever you are on this small planet.