Third Kenya Human Development Report: A Discussion Paper

I’d like to join Permanent Secretary of Ministry of Labor and Human Resource Development, Mrs. Deborah Ongewe, Vice Chancellor, University of Nairobi, UNDP Resident Representative, Mr. Paul de la Porte, and Professor Dorothy McCormick of Institute for Development Studies in underscoring the importance of the theme of Participatory Governance in this Year’s Kenya Human Development Report. It could not have been more appropriate and timely for Kenya in 2004.

Participatory Governance is like motherhood and ugali, how can one have any doubt about its importance for human development? But more important than the questions of What and Why Participatory Governance, I believe, is How one puts into practice this Participatory Governance, whether in terms of political leadership, aspirations, vision, commitment, strategic approach, or policies. How does one act act in a consistent manner to bring about the desired results of economic, socio-political, and human development?

I have been asked to focus my remarks today on Chapters 5 and 6 of the Report. The two chapters discuss Service Provision for Human Development and Linking Participatory Governance to Human Development.

Service Provision for human development. With respect to service provision for human development, the Report provides useful evidence to make a cogent case that in the forty years since Independence, Kenya has yet to make significant progress in the provision of core services for most of its population – specifically: access to health care, education, clean drinking water, electricity, and housing. The Report then attributes this to four major factors: first, increased demand as a result of population growth while economic performance has stagnated or declined, especially since 1990; second, the implementation of economic reforms, especially the implementation of Structural adjustment Programs (SAPs) and the consequent diminished role of the Sate or what the Report calls “State Withdrawal”; third, the introduction of cost-sharing and its adverse impact on the poor; and fourth, the entry of private, non-governmental service providers in the absence of an effective institutional and policy framework to coordinate non-governmental service providers. The Report recognizes the large number of non-state actors – private sector, civil society, non-governmental organizations, community-based organization, philanthropy and volunteering – and their collective importance in supplementing state service providers. The Report highlights three major challenges: first, the need to develop a comprehensive and coherent policy on service provision instead of different ministries having their own policies on specific sectors; second, the need to strengthen structure and systems for service provision; and third, the importance of improving coordination and of developing partnerships with various non-governmental actors, such as, community-based organizations, local authorities, non-governmental organizations, and the private sector; such partnerships would improve mobilization of resources and enhance core services for human development.

Let me focus my comments on two issues: first, the issue raised by the implementation of Structural Adjustment Programs; and second, the issue of the adverse impact of cost sharing strategy and policy.

Implementation of Structural Adjustment Programs (SAPs). The Report suggests that the implementation of SAPs has resulted in the decline of core service provision for human development. The Report suffers from the common fallacy of comparing the situation before the SAP implementation with the situation after the implementation of SAPs. This is misleading. The correct approach is to compare the situation without SAP implementation with the situation with the implementation of SAPs. Of course, this requires a more sophisticated approach because of the inherent difficulty in coming up with counterfactual results in the absence of SAP implementation when in fact some structural adjustment policies have been implemented.

There is still another consideration. The conclusions drawn in the Report regarding the impact of structural adjustment on service provision are obviously based on the premise that donor-supported reforms are actually implemented. Nothing is further from the truth. In 2001, the World Bank published a book entitled Aid and Reform in Africa. Kenya is one the ten countries examined in this study. In it, Kenya was categorized as a “mixed performer” because it has a half-hearted, stop-and-go pattern of reform implementation. The authors of the Kenya chapter -- Professor Terry Ryan of University of Nairobi and Steve O’Brien, a former World Bank Resident Representative – provided a detailed, systematic analysis of Kenya’s reform efforts under adjustment programs over a twenty-year period. They documented that all the IMF and most of the World Bank adjustment programs between early 1980s and 1996 have not been fully implemented. Among many interesting insights and findings, they concluded “the economic results from almost 20 years of structural adjustment in Kenya must be considered disappointing.” The lack of implementation of certain reforms contributed to macroeconomic instability and high inflation that limited the ability of the government to meet its service provision and hurt the poor more than the better off.

A more plausible explanation or hypothesis for the decline in service provision in the early 1990s and early 2000s is poor economic performance and the inability of the stop-and-go pattern of reform implementation to attract adequate investment flows and generate growth. In addition, there may be other reasons, such as the quality of infrastructure, and poor governance. Without a strong economy, it is more difficult to finance public services.

Cost Sharing Strategy. The Report points out that the strategy of cost sharing in a number of service sectors has affected poor households’ access to basic core services, especially in health care and education. In spite of the negative effects of cost sharing, I believe it would be wrong to abandon the strategy. Instead, it may be useful to draw at least three lessons learned from the Kenyan experience. First, the implementation of cost sharing strategy in Kenya, as in many other countries, suggests the importance of putting effective social safety net programs in place as part of the strategy. Second, public choices have to be made: private wants are unlimited but economic and financial resources are scarce. Political leaders and policy makers must rationalize between private wants and public need. Finally, in a growing economy with proper institutions, it would be less difficult to implement cost sharing strategy. This underscores the importance of having a growing and strong economy. The implementation of Kenya’s cost sharing strategy does not appear to have adequately taken into account the above considerations. The challenge for the next generation of cost sharing policy is to learn from the lessons of the past as well as from experiences elsewhere. It would be wrong not to consider cost sharing as a strategy and policy. Public pronouncements of free goods or services that are not available in reality may be good pro-poor political rhetoric, but it does not really help the poor.

Linking Participatory Governance to Human Development. Let me now turn to the last chapter of the Report: Linking Participatory Governance to Human Development. The Report provides useful analysis of the relationship between the failure of governance and the crisis of human development. It advocates reforms of Kenya’s governance structure by improving democratic pluralism through strengthening of civil society organizations, adopting participatory, transparent, and accountable in the management of public resources. The Report recommends, among other things, that the government facilitate increase of local funding and support for civil society organizations, and strengthening partnerships among the government, civil society, and private sector. The challenge is how to implement these recommendations. Given Kenya’s limited history of philanthropy, local funding for civil society organizations will take time to materialize. In the foreseeable future, Kenya is most likely to rely on government and donor funding. It would be useful for the Report to go further into how local funding can be mobilized. What role can the government play to facilitate resource mobilization for civil society organizations? What institutions and incentive systems are needed? And if funding comes from the government, how to ensure that there is no conflict of interest between civil society organizations and the government. Although there are now increased efforts by the government to include participation by civil society and private sector, more is needed to strengthen partnerships and coordination.

Conclusion. I congratulate UNDP and the Institute for Development Studies for selecting the important theme of participatory governance for Kenya Human Development Report this year. As I said above the real important question is how to put into practice and implement participatory governance for human development as this Report has thoughtfully articulated. There is no doubt that this is an important task and now is a challenging time for Kenya. But it is my view; this is also a time of great opportunity. Now is the time to build on this work and to move forward. Nobody would argue that there is an easy path to follow. It requires leadership. It requires discipline and persistence. And often, it requires dogged commitment.

Thank you.