Kenyan president , ministers and MPs reduce pay President Uhuru Kenyatta of Kenya The Republic of Kenya is a country with the largest economy in East Africa and it lies on the coast of the Indian Ocean. It covers a total area of 224,962 square miles or 582,650 square kilometres. The country is bounded on the west by Uganda; by Tanzania on the south; Somalia on the east; Ethiopia on the north; and on the north-west by Sudan. The natural resources of Kenya include gold, limestone, soda ash, salt, rubies, fluorspar, garnets, wildlife (game reserves) and hydroelectric power. Its chief cash crops are coffee, tea, corn, wheat, sugarcane and fruits. On the average, the Kenyan economy grew by 4.8 per cent from 2004 to 2013. Last year, Kenya’s Gross Domestic Product (GDP) was 4.4 per cent. The country’s highest economic growth rate was a little over eight per cent in 2005; its lowest was 0.2 per cent in 2008 – during the Great Global Economic Recession. In 2012, the Kenyan government established the Salaries and Remuneration Commission (SRC) to review and determine salaries of all public servants. The commission recommended that the President’s salary should be reduced from about $340,000 to $185,000. Following the recommendations of the SRC, Kenyan Members of Parliament, among the highest paid MPs in the world, cut their salaries by 40 per cent in June 2013 from $120,000 to $75,000 a year. Today, Kenyan MPs earn $15,000 while the average Kenyan takes home $1,500. The minimum wage in Kenya is 8,500 Shillings a month. On March 7, this year, President Uhuru Kenyatta of Kenya announced a 20 per cent pay cut for himself and his Vice, William Ruto. All ministers are to suffer 10 per cent pay cut. Heads of public institutions will also have their pay reduced by 20 per cent. According to President Kenyatta who made the announcement at a cabinet retreat in Nairobi, the national capital, the pay cuts take immediate effect. Kenyans have been engaged in what is termed the National Debate on Public Wage Bill Sustainability and the consensus has been that the salaries and wages of public servants must be scaled down to control the spiralling wage bill. The current public wage bill, according to the Kenyan President, is unsustainable. “Wastage in my government will be significantly reduced”, he said, and added that “foreign travel will be restricted to only most essential trips. We are spending 400 billion Shillings ($4.6 billion or 3.3 billion Euros) every year on salaries; it leaves us only from our own resources, a figure of 200 billion Shillings to transform Kenya”, he said. “We need to deal with this monster if we are to develop this nation; otherwise, sooner or later, we will become a nation that only collects taxes to pay ourselves.” Every year, Kenya uses $8.4 billion of its total earnings to pay public wages and salaries and only $2.3 billion to develop the country, according to the Kenyan National Bureau of Statistics. The public wage adjustment is expected to be widespread. Middle-level as well as lower- level public servants will be affected. The result will be the saving of $5.5 billion for national development. It appears that the economic problems of Kenya, created by sky-rocketing public wage bill, are a photocopy of what is happening in Ghana. Ghana became a middle-level income country in 2010 with the rebasing of the economy, which increased total national revenue by six fold. In 2008, GDP growth was 8.4 per cent and it increased to 14.4 per cent in 2010 – minus crude oil revenue. In the same year, the Kufuor administration set up the Fair Wages and Salaries Commission (FWSC) to, among others, review public wages and salaries to eliminate imbalances and disparities. The FWSC began to implement its recommendations in 2010 – guided by terms of reference given by the Atta Mills government. By 2012, it was found out that the public wage bill consumed more than 70 per cent of national revenue – leaving the government with less than 30 per cent to develop the country. About the same time, the Presidential Commission on Article 71 (of the Ghana Constitution) public office holders presented its report to the government. The commission recommended salary increases for the President, Vice-President, ministers and top public servants, including MPs. The total effect of the report and the FWSC’s recommendations on the economy has been disastrous. Neither the FWSC nor the Presidential Commission suggested pay cuts for the President, his vice, ministers, MPs and top public servants. For the FWSC, it looks like the commission was migrating public servants to the sea of high salaries without a sea route map. A good map could have helped the FWSC to predict the impact of its recommendations on the economy before its implementation. On the pay of the President and his vice, the Office of the President adjusted the Presidential Commission’s recommendation by adding more to what the President should take home. Public outcry, however, compelled the President to return the requisite legislation to Parliament for amendment but the MPs refused to correct the mistake. In the meantime, the government has been forced by lack of sufficient funds to run the state – to withdraw subsidies on petroleum products and public utilities such as water and electricity. The nation’s pro-poor policy intervention has suffered and the country’s poverty reduction strategy has experienced a serious setback. In reference to the public wage bill, the Minister of Finance and Economic Planning, Mr Seth Tekper, in the budget statement last November, told the nation that the government had decided to cut the salaries of the President, Vice-President and ministers by 10 per cent. The decision, he added, was in line with a recommendation by Ghana’s development partners and donors that Ghana’s public wage bill be reduced to tally with the ECOWAS standard of 35 per cent of national revenue. The President was not, however, forthcoming in his state of the nation address last month on this important development. Presently, Ghana pays more than 70 per cent of its national revenue to about 700,000 public servants. Obviously, that is not sustainable and acceptable. Ghana has a population of about 25 million. It is my considered opinion that the Kenyan example has a lot of lessons for Ghana. For example, at this time of serious economic and financial difficulties, Ghana can avoid unnecessary spending by reducing foreign travel to the most essential; cut down its number of ministers and form a lean government (with due apology to Professor John Evans Atta Mills, the former President) and reduce the number of foreign missions to the minimum. Above all, a national debate on the sustainability of the public wage bill is necessary to deal with “the monster that threatens the present and future” of Ghana.
Posted on: Fri, 21 Mar 2014 18:25:55 +0000