An Economy Built on Crony Capitalism
I’ve said here before that the Kenyan economy does not make sense to me. However, I will reverse that statement by saying that it does in fact make sense. It makes sense if I define it not as a capitalistic society, but rather, as a society that has fooled itself into believing that crony capitalism is the same as real capitalism.
In many ways, I would actually say that crony capitalism is even worse than socialism. It is worse that socialism because it rewards those that don’t deserve to be rewarded and it punishes those that could actually make a real difference in the economy by actually producing and developing real products. i.e. it punishes and stifles the innovative and creative entrepreneurs.
As I read about Raila’s son and his involvement in this maize scandal, I can’t help but think that this issue of crony capitalism is what is destroying Kenya’s potential (and it’s not just about Raila’s son – because his son is not the only one who is stealing). It’s about Uhuru Kenyatta being given the post of finance minister. It’s about Kiraitu Murungi stealing oil and William Ruto stealing even more maize. The wrong people are being rewarded for doing the wrong things.
You can’t build a real economy if you continue to allow this kind of behavior and what is a real economy? A real economy is one that grows through innovation, creativity and productivity. It creates new wealth and this new wealth is what creates jobs.
The country will never be built by the children of politicians who are simply inheriting their parents corruption and cronyism. If the country ever hopes to build a real economy, it will have to be done by entrepreneurs who are starting from scratch; by people who have nothing — because having nothing instills in you the drive and hunger you need to build and sustain a real business.
I don’t know why people in Kenya don’t get this. The most successful entrepreneurs in the world are people who started from scratch and who were forced (by necessity) to learn and to innovate in order to survive.
People like Fidel Odinga and Uhuru Kenyatta will never have this drive or this hunger because their goal is not to create anything. It is simply to MAINTAIN what has already been stolen and that is NOT what creates wealth or jobs.
Fidel Odinga ought to be ashamed of himself for stealing food in a country where millions are starving.
How stupid do you have to be to steal food? Can’t you steal something else? Steal cars, steal tyres….anything but food meant for starving people.
The children of these politicians are as crazy as their corrupt parents.
**Additional note on this topic:
At some point, in order for a country to develop, it has to start rewarding thinkers, but in order to do this, you’d have to institute a level of fairness within that society.
So, in India for example, Indira Gandhi’s son, Rahul Gandhi, did benefit from his family’s political connections, but his benefit was confined to the political arena. However, if he ever wanted to start a business, he’d have to compete with all the other entrepreneurs in that country.
What seems to be happening in Kenya is that the benefits (both political and economic) are being totally and completely skewed towards a very small segment of the society and this cronyism is locking out other people who may have great potential.
Competition is what breeds innovation, thinking and hard work . Take it away and you end up with stagnation and very little real production.
There’s lots of cronyism when trying to get government and corporate orders. But all is not lost. There is no shortage of shilling billionaires who have made their fortune from the mass middle class. The mass middle class are people who pay rent of 6-60k a month or own homes that can fetch such rent. You can supply them with housing, loans, schools, transport, cars, entertainment, clothes, security, etc. This group is ruthlessly meritocratic but will reward you handsomely beyond your wildest dreams if you have the right product at the right price at the right time.
Then there’s also the lucrative export business. The beauty about exporting to the west is that westerners know very few people so they’re far less likely to engage in cronyism compared to Kenyans. They’re also less likely to default of invoice payments compared to Kenyans due to strong law enforcement in the west.
I don’t even know why people bother trying to get government orders when government spending is only 26% of GDP according to the CIA World Factbook. To make matters worse, the bulk of government spending goes to payroll so non-payroll government spending (what entrepreneurs target) is a tiny fraction of GDP that’s really not worth pursuing.
@Kenyan Dude: 26% is still too high. In addition, you are looking at DIRECT GOVERNMENT spending whereas the government (unfortunately) controls other spending avenues through its parastatals including KenGen, KPLC, NBK, KPA, etc.
Furthermore, a lot of government spending it tied to development funds i.e. GoK contributes 10% while donors/WB contributes 90%. Therefore the government spending is multiplied.
KE,
Man this is funny. You know I used to think this Fidel chap was smart…
The dude is slow in learning the ropes. He should know better than dipping in the cookie jar. Anyhow, since he already did what can we say… Raila is in the Bandwagon ?…
Personally I don’t mind Cronyism. As long as their are fair business laws then… I’m sure people can survive this..
Do you know whats funny about cronyism in Kenya ? They have cronyism but they don’t have monopoly to good ideas. They are a bunch of greedy a**holes.
That’s why the wahindis are flossin right in their faces. I love it when I see Kenyan Indians doing big things… Since it only tells me one thing… Our strategy(Cronyism) is not working !!
@coldtusker (my favourite booze)
Ok, even if gava spending is more than 26% of GDP, si ur better off instead targeting the mass middle class by starting with one branch and figuring out how to scale without getting burnt? There’s also exports to the west. If you successfully scale, you’ll end up with sales of more than KSh 1bn before you’re 65.
So so true, KE. Please send this article to Daily nation…
KE: Please add ‘dates’ to your posts… it makes it easier to know when it was posted… I like the newspaper layout!
CT:
I’ve fixed the dates. They were there, but at the bottom. So I’ve moved them to the top.
Word has it Raila agreed to meet with Kibaki in exchange for dropping of the maize investigation.It has now emerged that Fidel is a convicted thief in the states addding to the drama.
James:
I hardly think Fidel was ever in danger of being prosecuted for anything. Kibaki doesn’t care about corruption.
Fidel needs to become smarter about his stealing, but the problem for guys like these is that they’re simply not that many companies that they can attach themselves to (or are they?).
A guy like Gideon Moi was able to steal outright for many years because his father was an outright dictator, but when things got thick, their theft changed. The best example of this is Safaricom/mobitelea. In exchange for letting safaricom set up operations in Kenya, they got shares in a very good company and they’re making millions off those shares.
The problem with stealing is that once you taste that easy money, you are never, ever, going to want to work and you have to continue stealing in order to maintain your lifestyle.
That’s the problem with many of these young sons of politicians. If they were smart, they would be encouraging entrepreneurs to set-up companies and then they’d take a cut in those companies, but at least with that, new wealth would be created.
James,
Can you tell us more about Fidel having a criminal record in the States ?
This stuff get deeper everyday.
Ke,
I think you’re missing the point. You see, In most families the Son will take the fathers struggle… If the dad was striving to build a house and never completed it.. the son will try and do it.. If the dad was trying to quit smoking… the son will try do it..to the extent they have win over the vice…
In the Kenyan Scenario… The sons of politicians are trying to finish off on what their father had left… David Mwenje was a clown and a corrupt politician… His sons will promote this vice to the next level.. Moi’s was authoritative his sons will be authoritative and take nepotism and corruption to the next level…. Kenyatta was Corrupt and had a problem with Luo politicians… Uhuru Kenyatta will follow the same route…
Like its almost unbelievable how all these ties in.. But honestly i’m not suprised Fidel has come out of the closet…. It simply means he knows what his dad does……. and he’s just replicating… it… Au Sio Jameni ?
“The problem with stealing is that once you taste that easy money, you are never, ever, going to want to work and you have to continue stealing in order to maintain your lifestyle”.
More than 50 percent of all crimes are committed by re-offenders, and 40 percent to 60 percent of parolees return to prison. 70% of the offenders become repeat offenders.
Fidel’s record can be found at the case search section on the left of this Maryland judicial site(link below).It seems the man has a record of sticky hands and drug usage. what is shocking is even with all the money the odinga’s already have fidel couldnt keep his sticky hands to himself even in the states .
http://mdcourts.gov/
The Nairobi Chronicle also has a good image of Fidel’s petty crime record in maryland. Link below.
http://nairobichronicle.wordpress.com/
Fidel’s crimes are quite minor, but I do wonder how he got caught for smoking weed.
Who gets arrested for smoking weed unless you are stupid enough to smoke it right in the open or on the streets.
You smoke it in your apartment and you put a wet towel underneath the door to eliminate the odor and eliminate the chances that your neighbors will smell it and call the cops.
Like I said earlier, he doesn’t appear to be a very smart criminal.
kenyanentrepreneur there is nothing minor about theft.For someone born in money to steal! shows their moral compass is messed up
James,
The truth of the matter is, none of us is good. For a lot of people, staying out of trouble is done because they are afraid of getting caught and being punished. i.e. they are afraid that the law will catch up with them and they’ll end up in jail.
Now, can you imagine being in Kenya when you are the president’s son or the PM’s son? When you know for sure that you are untouchable as far as the law is concerned? It’s very easy to get greedy and end up doing the wrong things.
That’s why I’ve said that I expect some corruption in situations like these, but I what I don’t understand is the excessive and downright stupid corruption. i.e. Fidel should not steal food when 10 million people are starving. They are other things he can steal. This guy is a downright idiot for doing that.
Also, don’t be like Gideon Moi. Don’t steal so excessively to the point where you end up destroying the economy and leaving a majority of the population in poverty.
So, if I was in that situation, I’d probably steal, but I’d steal from companies like Safaricom. i.e. I’d try and get my 10% cut from private companies and I would not touch public money (i.e. taxpayer money or foreign aid money) – that would be used to develop the country because I know that a population where 50% or more are living in poverty, would eventually be dangerous for me politically.
The problem with Africans is that they steal without thinking.