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TANZANIA: Corruption, Democracy And The Strange Case Of John Pombe Magufuli

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President Maghufuli

Dar es Salaam, Tanzania – THE STRATEGY: CHANGING HEADS

JPM’s key policy concerns are tackling official waste and corruption, enhancing tax compliance, and creating large numbers of jobs through industrialisation. In the past 12 months, he has dismissed numerous senior officials in central and local government and state corporations for suspected corruption or poor performance, removed thousands of ghost workers from the government payroll, slashed unnecessary spending on out-of-office meetings, foreign travel, and official functions, increased tax compliance, and declared war on corruption and waste in the ruling party and, for good measure, the East African Community!

JPM’s strategy sees corruption as a matter of personal shortcomings rather than a systemic institutional problem. The solution is replacing corrupt with honest officials. As opposition legislator Zitto Kabwe puts it: ‘Changing heads alone means that the president is more interested in perfecting the existing system than overhauling it.’[1]

In our view, continuity rather than change characterises the engagement of the new government with rent-seeking behaviour of all kinds. The current government has moved to reduce the space for party political debate and action, passed legislation on access to information, cybercrime, and, most recently, the media, which may be enforced to limit access to information, and private freedoms.[2] Bloggers and Facebook users have been arrested for expressing ‘treasonable’ views or insulting the president. Here it is argued that moves to limit transparency and accountability predate the arrival of JPM.

CAPACITY TO DELIVER: SELECTIVE CONTROL

Opposition parties describe JPM’s governance style as ‘authoritarian.’ Impatient with due process, the president and Prime Minister Kassim Majaliwa have issued countless decrees, not all of which are congruent with official policy, spending priorities, or due process. Though suspicious of the integrity of the courts, JPM still relies on the Prevention and Combating of Corruption Bureau (PCCB) to investigate and prosecute grand corruption cases. In January, JPM dismissed Dr Edward Hosea, the Director General of the Bureau, ostensibly for ignoring major corruption in the port and the Tanzania Revenue Authority. His removal was supposed to clear the way for PCCB to bring some major corruption cases to court.[3] PCCB’s problem is that political pressures prevent certain cases from being investigated or prosecuted, and the most corrupt politicians and businessmen are simply untouchable. The Director of Public Prosecutions (DPP) routinely returns files to PCCB citing ‘inadequate evidence’ to bring a case to court.

Tanzania’s longest-lasting and most ruinous corruption case, the infamous Independent Power Tanzania Ltd (IPTL) power plant and the plunder of the Tegeta Escrow Account in the Bank of Tanzania in 2013, was thoroughly investigated by PCCB but no charges were ever brought. President Magufuli has complained bitterly about the cost of procuring power from private producers such as IPTL, vowing to put an end to corrupt public-private partnerships (PPP).[4] When asked why the IPTL case was not being prosecuted, Hosea’s replacement, Valentino Mlowola, said the case was ‘still active.’

If Magufuli wanted to make an example of IPTL he would simply order Mlowola to bring charges immediately. But against whom? The Kikwete government was heavily implicated in the escrow scam, as were other ‘untouchables’ including Andrew Chenge, one of IPTL’s key supporters for two decades, and James Rugemalira, who owned the minority 30 per cent of the power plant.[5]

One of the heads that rolled as a result of the investigation of IPTL/Escrow by the Public Accounts Committee in 2014 was that of Prof Sospeter Muhongo, Kikwete’s minister of energy and minerals. Magufuli’s reappointment of Muhongo to the same ministry in December sent out the message that is was business as usual in the power sector, and IPTL, under its new owner Harbinder Singh Sethi, continues to supply overpriced electricity to power utility Tanesco, despite Magufuli’s strictures on the subject. Other examples could be cited that suggest a selective approach to corruption control.

On becoming Tanzania’s fifth post-Independence president just over a year ago, John Pombe Magufuli (JPM, aka ‘The Bulldozer’) wasted no time in attacking tax-evasion by big business and waste, corruption and laxity in government, earning him plaudits both at home and abroad. Given the entrenched cronyism in business-government relations and pervasive rent-seeking within the state apparatus, can he succeed where so many African leaders before him have failed? To succeed, Magufuli needs a clear strategy, the capacity to deliver, and sustained support from both inside and outside parliament. All are problematic

To deal with the rapidly growing number of corruption cases, the government has set up the Economic, Corruption and Organised Crime Court, which has just begun operations. Time will tell whether the ECOCC has more teeth than Tanzania’s existing courts, which are routinely manipulated by the wealthy and the corrupt to make sure that justice is rarely if ever done in prosecuting major scams such as IPTL/Escrow.

POLITICAL SUPPORT: RESORT TO ‘DIRECT’ RULE

One of JPM’s self-declared strengths is that he is not beholden to any network (mtandao) of wealthy businessmen and political brokers within the current ruling elite. This is at once a strength and a weakness. It is reasonable to suspect that the majority of Tanzanian politicians are uneasy with the Magufuli strategy as it threatens their own rent-seeking activities. This is also the case for many lower level central and local government officials for whom ‘rent-scraping’ assures a significant proportion of their livelihoods. JPM has also declared his intention to clean up CCM.[6] Anecdotal evidence suggests that the wheels of the bureaucracy are turning even slower than usual as senior officials try to remain under the State House radar.

JPM aspires to marginalise opposition parties and to eliminate party politics in local government. There are stories of virtual ‘direct rule’ by Regional and District Commissioners in opposition-run councils. Many new District Development Directors are said to have been recruited from among CCM cadres and ‘operatives.’ Both CCM and opposition MPs have complained about their ‘incompetence’ and the powers usurped by the new DCs and RCs, many of whom are retired army officers.[7]

Magufuli has confounded those critics who expected a much messier transition from Phase 4 to Phase 5. Still, it remains unclear how he can maintain his anti-corruption momentum in the absence of a solid base of support both inside and outside parliament and the ruling party.

BUSINESS SUPPORT: FOLLOW THE SUGAR

JPM has expressed his dislike of companies that practise state capture and tax evasion. One of his first moves was to trace more than 300 containers to inland depots that had been cleared at Dar es Salaam port without paying duty. One of the depots and some of the containers belonged to Said Bakhresa, founder of the Azam group of companies, who also had a consignment of sugar impounded.

For year, sugar imports have been a contentious issue. The local sugar industry was almost bankrupted by massive sugar imports and smuggling during 2012-13. In February this year, the government announced the suspension of sugar imports so that local producers could market unsold stocks. It was announced that further import licences would only be granted by State House. Sugar prices shot up to over Tsh2,000 (about one US dollar) a kilo, compared with the government’s ‘indicative price’ of Tsh1,800. Local importers were blamed for creating artificial shortages to sabotage the president’s initiative. The stand-off lasted until May.

JPM’s stand-off with segments of the Asian and Arab business community over smuggling and tax evasion was resolved in October, when he opened a fruit canning factory near

Dares Salaam built by Azam’s Bakhresa. His consignment of sugar was also released from the port, and JPM promised to allot him land to set up a large sugar estate.[8] Asian and Arab conglomerates are key players in Tanzania’s ambitious industrialisation plans, an issue requiring separate coverage.

POPULAR SUPPORT: SCRATCH MY BACK…

The Tanzanian voter is generally characterised as a potential ally in the fight against corruption. Certainly, polls suggest that JPM’s anti-waste and graft project has really impressed many people, after years of poor governance. But we should be wary of assuming too much. There is a widespread popular view that a politician or official who fails to ‘eat’ when the opportunity arises (or is created) is a fool who will die poor after retirement for failing to abuse his or her public office.’[9] In a 2014 Afrobarometer survey, respondents were asked: ‘In your opinion, what are the most important problems facing this country that the government should address?’ The main problem areas mentioned were health, education, agriculture, water, infrastructure/roads. Corruption ranked 7th, equal with fighting poverty.[10] In a more recent survey, Tanzanians aged 18-35 were asked whether they would be prepared to give or take a bribe: Some 44% said they would; 58% agreed that ‘It doesn’t matter how you make money as long as you don’t end up in jail’; and 39% said they would only vote for a candidate who bribed them. Finally, three-quarters said that they were ‘afraid to stand up for what is right for fear of retribution.’[11]

Though numerous NGOs have a mandate to promote transparent and accountable government, Tanzanian civil society has generally not (with a few notable exceptions) played a major role in fighting corruption, even though many ‘governance’-oriented organisations exist. The Legal and Human Rights Centre has consistently challenged JPM’s governance practices, but there has not been a popular mobilisation of support for his anti-corruption policies or against his human-rights record.

It is quite unclear how Tanzanian voters assess corruption in politics. Systemic rent-seeking in the CCM government was the main opposition political platform prior to the 2015 elections. One prime target was Monduli MP Edward Lowassa, who was forced to resign as prime minister over the Richmond power scandal during Kikwete’s first term. Nevertheless, Lowassa was by far the most popular candidate vying for the CCM nomination, perceived as a man of the people who was generous in rewarding his supporters out of his considerable fortune, however acquired. After being rejected by CCM’s Ethics Committee during the vetting process for the CCM candidature, Lowassa defected to Chadema and promptly became the opposition alliance’s[12] joint candidate for the presidency! This suggests that Lowassa’s image as a man of the people carried more weight than his reputation for corruption. He took his wealth and popularity to the opposition camp, and the opposition quickly forgot about his corruption.[13]

While polls suggest that Tanzanians are highly supportive of Magufuli’s policies to date, it is unlikely that the war on corruption will assure continued mass popular support in the absence of more material benefits to ordinary people.[14]

DEVELOPMENT PARTNERS… AND CHINA

The traditional multilateral and bilateral donors are hamstrung when it comes to engaging with what they see as the authoritarian JPM approach to fighting corruption and waste. Still heavily influenced by the proposition that democracy=development, many ‘development partners’[15] continue to finance programmes and projects designed to enhance transparent and accountable government. There is a strong case to be made that donor-inspired economic and political liberalisation since the mid-1980s have contributed to the competitive money politics that characterises the current political settlement. Arguably, JPM is right to discredit oppositionist politics: Prom a developmental point of view, party politics is a costly and often frivolous distraction of no obvious public utility. Whether it is JPM’s right to decide on the issue is another matter altogether.[16]

While the influence of established donors on policy has declined significantly since the beginning of this century, the influence of China as a major trade and ‘development partner’ has increased. Unlike OECD donors, the Chinese government deals exclusively with the central government and its agencies, and does not tie aid to concerns with human rights or ‘good governance,’ JPM recently signed off on a $7.6 billion soft loan to build a new standard gauge railway (SGR) to replace the existing Central Line. This and other projects bypass public procurement laws and regulations and parliamentary perusal. Projects such as the SGR have been criticised for their cost and their economic rationale. Magufuli’s infrastructural ambitions are again a subject for another day.

Many aid agencies continue to employ a normative approach to corruption. The notion that corruption is the result of personal ethical shortcomings is implicit in the widely used definition of corruption as the abuse of official position for personal gain.[17] Defining petty corruption in terms of ‘need’ and grand corruption in terms of ‘greed’ is equally normative and judgmental. Arguably, ‘corruption’ of all kinds is largely the consequence of competitive clientelism, or patronage, where inter-personal trust is lacking and formal institutions are weak. The widespread failure of traditional ‘supply-side’ approaches to corruption control through institution and capacity building, and on the ‘demand-side’ through ‘empowering’ citizens, civil society and the media is testimony to how difficult donors find it to go beyond the ‘good governance’ paradigm.

Unfortunately, JPM’s equally normative approach to governance is unlikely to work unless it can change the underlying incentive structure governing intra-state and state-business relations. Without massive popular support and a change in the way politics is done (the ‘political settlement’), the Magufuli approach to fighting corruption is likely to disappoint its supporters. As President Obama put it: ‘Africa doesn’t need strong men, it needs strong institutions.’[18]

REGIONAL SUPPORT: BUILDING BRIDGES

Space prevents a full treatment of this dimension of ‘Magufulism,’ but East African regional relations have been changing rapidly since JPM came to power. In particular, JPM has built bridges with Rwanda’s Paul Kagame, whose relationship with the previous Tanzanian regime was particularly testy. Observers note the parallels between Kagame’s and Magufuli’s undemocratic governance styles. Those who see human rights as the basis for sound development strategies cannot accept that Kagame and Magufuli are potentially more ‘developmental’ than their fellow presidents in the region. The intricacies of inter-EAC relations are a subject for future reflection.

THE LIMITS OF THE POSSIBLE?

What some see as an apparent resort to authoritarianism continues a recent trend to unwind governance gains achieved during the Kikwete administration that had allowed parliament inter alia to address the Escrow scandal and for the Constitutional Reform Commission to produce a new draft constitution with stronger controls on executive power.[19]After the Escrow debacle in 2014, conservative elements within CCM decided that the open government business had gone far enough, and took steps to reinforce executive power at the expense of parliament. In this respect, Magufuli can be seen as part of an underlying trend to shore up the ruling elite against its opponents, including the political opposition, and the traditional and social media. The 2016-17 budget saw a 50 per cent cut in the budget of the Controller and Auditor General (CAG), whose reports were frequently used by parliamentary committees to make life uncomfortable for certain senior officials.[20]

President Magufuli bears comparison with Tanzania’s first president of the competitive era, Benjamin Mkapa (1995-2005). Like Mkapa, Magufuli was a compromise candidate, not the frontrunner. Both he and Mkapa were ‘selected’ by the incumbent president to prevent other contenders from acceding to the presidency.[21] Though both were seasoned politicians, neither was particularly well-known by the public or highly networked within the ruling party. Mkapa was under pressure to clean up the mess left by his predecessor Ali Hassan Mwinyi’s casual approach to governance, just as JPM is doing in relation to Kikwete.

But there the comparison ends. Mkapa’s anti-corruption policies were strongly influenced by donors, and the path-breaking Warioba Report (1996) on the state of corruption in the country was never implemented with any conviction. By contrast, JPM hit the ground running, and has kept running, with homegrown rather than donor-driven momentum. Many of his ‘governance’ initiatives are clear indictments of his predecessor’s performance, yet there is no evidence of serious friction between the two.[22] JPM’s selective approach to anti-corruption may help explain why.

[1]Zitto Kabwe 2016. ‘Will the real opposition emerge under Magufuli’s presidency?’ Citizen on Sunday, August 7.

[2] Stakeholders are urging the president not to sign the Media Bill.

[3]PCCB prosecutes very few large corruption cases and loses most of the cases it initiates, including the small ones, which are the majority. See www.policyforum.or.tz for details.

[4] PPP has also been dubbed ‘Personal and Political Preferences’. The PPP model is uncritically embraced by most policymakers. IPTL was one of Tanzania’s first PPPs.

[5]In late 2014, Mr Rugemalira received $70m (in local currency) for his company’s 30 per cent share in IPTL. See: http://www.policyforum-tz.org/sites/default/files/TGR2014OnlineVersion.pdffor details.

[6]Polycarp Machira 2016. ‘JPM now to cleanse CCM’, Guardian on Sunday, Dar es Salaam, 24 July.

[7]Athuman Mtulya 2016. ‘Lawmakers criticise ’incompetent’ DEDs’, Citizen, Dar es Salaam, 11 November.

[8]Mohamed Enterprises, another Asian conglomerate, has also announced plans to open a large sugar estate.

[9]Mwassa Jingi 2016. ‘Setting leadership integrity pace’, Citizen, 24 January.

[10]REPOA interviewed a nationally representative, random, stratified probability sample of 2,386 respondents. The question cited was open-ended. Respondents were asked to list three problem areas. All three responses were weighted equally in calculating the ranking. See: afrobarometer.org/sites/default/files/publications/…/tan_r6_sor_en.pdf.

[11]Aga Khan University 2016.‘The Tanzania Youth Survey Report’ October. Only a third of 18-35 year olds (34%) thought it was important to pay taxes.

[12] The UKAWA/Umoja alliance was made up of four opposition parties, the most important being Chadema and CUF.

[13] Rumours that Lowassa bought the opposition candidature are circumstantial, though figures for who got how much are bandied about in social media. Only two senior opposition leaders resigned on principle upon Lowassa’s move to the opposition, Chadema’s Dr Wilbrod Slaa and CUF’s Prof Ibrahim Lipumba, both former presidential candidates.

[14]A recent Twaweza poll revealed that 58% of respondents did not consider Magufuli a dictator, while 60% supported the ban on political rallies. See: http://twaweza.org/uploads/files/DemonstrationsFinal-EN-web.pdf

[15] Including UN agencies, the IFIs, the EU, other multilateral and bilateral donors, international NGOs, presidential/state initiatives (Feed the Future, PEPFAR, Power Africa), private foundations (Gates, Soros, Aga Khan), and others.

[16]Many criticised the termination of full-time coverage of parliamentary sessions as undemocratic.

[17]This definition has been used by Transparency International, the World Bank, and many other international development agencies for the past two decades.

[18]http://www.sundaytimes.lk/090712/International/sundaytimesinternational-03.html

[19]See Policy Forum 2016. ‘Tanzania Governance Review 2014: the Year of Escrow’, July, Chapter 1.

[20] Some committee members abused their oversight role and accepted or demanded bribes. Rosina John 2016. ‘3 MPs arraigned over Tsh30m bribe request’, Citizen, Dar es Salaam, 1 April.

[21]Nyerere thought Mkapa was the least bad of a rather mediocre group of candidates. Kikwete was bent on preventing his former prime minister from replacing him, preferring his minister of foreign affairs, Bernard Membe, for the job. Kikwete had to sacrifice Membe in order to block Lowassa.

[22]JPM’s accession to the CCM Chairmanship in July took place without incident.

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DEBT AND TAXES: Kenya is living large on borrowed money

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DEBT AND TAXES: Kenya is living large on borrowed money

Kenya’s fiscal policy – the means by which the government adjusts its spending levels, revenue generation and collection, and debt to monitor and influence the economy- has been a defining feature of the current administration. The three have been characterised by almost consistent features and trends.

Some background information is useful. Kenya has had an annual growth rate of about 5.46 percent from 2004 until 2016. Initially, the economy was slated to grow at around 6 percent in 2017 but this has since been revised to 5 percent. According to Genghis Capital, it will actually be between 4.25- 4.75 percent due to the drought-induced contraction in agriculture, the negative effects of the interest rate cap on the financial sector and the prolonged electioneering period. The Government thinks the economy will grow by over 6 percent next year though the World Bank projects a lower rebound to 5.8 percent in 2018 and 6.1 percent in 2019.

Kenya’s economy is primarily services driven and according to the Kenya National Bureau of Statistics (KNBS), under the Kenyatta administration, growth has largely been on the back of government spending on infrastructure projects such as the Standard Gauge Railway (SGR), the expansion of the road network as well as electricity generation and transmission projects. Other significant contributors to growth include a resurgent tourism industry and growth in information and communication, real estate and transport and storage.

Over the past 6 years, government spending has grown at an average of 14.7 percent, yet revenue growth has only increased by 12.7 percent. Under the current administration, spending has gone up by two-thirds, from Sh1.6 trillion in 2013/14 to Sh2.64 trillion in 2017/18.

Back to fiscal policy, we will address each component separately: expenditure, revenue generation and collection, and borrowing.

EXPENDITURE

Over the past 6 years, government spending has grown at an average of 14.7 percent, yet revenue growth has only increased by 12.7 percent. Under the current administration, spending has gone up by two-thirds, from Sh1.6 trillion in 2013/14 to Sh2.64 trillion in 2017/18. While some of this can be explained by inflation reducing the value of money, there is a consistent trend of notable increases in government spending.

Public spending as a % of GDP

(Source: Institute of Economic Affairs)

 

A fundamental problem in analysing fiscal policy at both national and county levels is determining the intended recurrent vs development budgets and comparing these to the actual expenditure pattern. The image below from the Institute of Economic Affairs Kenya (IEA) details this for the National Government:

Share of Recurrent and Development Budgets in Total MDA Budget.
(Source: Institute of Economic Affairs)

Overall, two key trends are clear, the first of which is that the national budget is still geared towards recurrent spending. Indeed, as the Treasury itself has admitted in the past, recurrent expenditure is reaching unsustainable levels.

There are several factors behind this aggressive growth in expenditure, the first of which is devolution. In 2010 Kenyans enacted a new constitution, which established a bicameral Parliament and 47 county governments. At the beginning of the implementation of devolution, a parliamentary report indicated that it would cost at least Sh36 billion to set up. Prior to devolution, it cost Sh6.6 billion per year to run Parliament, but that figure is expected to rise to Sh14.3 billion. The Parliamentary Budget Office has also stated that it will cost Sh21.75 billion annually to run the 47 county assemblies. Thus, while welcome, the reality is that devolution is expensive.

At the beginning of the implementation of devolution, a parliamentary report indicated that it would cost at least Sh36 billion to set up. Prior to devolution it cost Sh6.6 billion per year to run Parliament, but that figure is expected to rise to Sh14.3 billion. The Parliamentary Budget Office has also stated that it will cost Sh21.75 billion annually to run the 47 county assemblies. Thus while welcome, the reality is that devolution is expensive.

Linked to the point above is the public wage bill which, according to the Salaries and Remuneration Commission (SRC), has ballooned from Sh465 billion when the Kenyatta administration took over to Sh627 billion in the 2015/2016 financial year, an annual average growth of 9 per cent. SRC’s projections show that it will be Sh676 billion in 2016/2017. Earlier this year, the International Monetary Fund (IMF) raised concerns, stating that Kenya is among countries that exhibit large increases in the wage bill, particularly in the run-up to elections. IMF is of the view that given Kenya’s rising debt levels (more on this later) the decision to increase spending on public sector wages is a concern as less funds are left over for economically productive development expenditure. The SRC pooh-poohed the IMF’s concerns, stating that wages were actually falling as a proportion of GDP: from 10.3 per cent in 2012/2013 to 9.5 per cent in 2015/2016.

A second factor behind the growth in expenditure, which the government has been eager to finger as the primary reason, has been the investment in infrastructure. According to the Capital Markets Authority (CMA), Kenya’s current estimated infrastructure funding gap is USD 2-3 billion per year over the next 10 years. To address this, government has allocated nearly a third of total budget expenditure to infrastructure between the 2016/17 and 2019/20 financial years.

The World Bank makes the point that the infrastructure investment drive in Kenya needs to be done in a way that is both efficient and sustainable. With such a robust commitment, key questions must be asked. For example, is Kenya investing in the right infrastructure? The Brookings Institution makes the point that a push for more infrastructure only raises economic growth and people’s well-being if the focus is on quality and impact, rather than quantity and volume. Has Kenya fallen short here? Has the government conducted an audit of infrastructure investment and the development it has engendered thus far? Has there been an audit of its quality? How efficient is our investment? Without an answer to these questions, the country risks wasting resources on aggressive infrastructure expenditure that generates no real benefits for its people.

Indeed, the link between infrastructure and economic growth is more tenuous than previously assumed. According to the London School of Economics, most recent studies on infrastructure’s contribution to growth tend to find smaller effects than those reported in earlier studies; this is linked to improvements in methodological approaches. Kenya, therefore, shouldn’t assume that infrastructure investment and development will automatically lead to significant improvements in economic growth. It is time for a fundamental rethink of the scale, nature and efficiency of the government’s spending on infrastructure.

Kenya, therefore, shouldn’t assume that infrastructure investment and development will automatically lead to significant improvements in economic growth. It is time for a fundamental rethink of the scale, nature and efficiency of the government’s spending on infrastructure.

The final issue regarding expenditure is linked to the mismanagement of public funds at both national and county levels. At the national level, allegations of corruption and financial mismanagement are legion and include: the National Youth Service (NYS) affair where the Auditor General stated a loss of Sh1.9 billion; Sh5.2 billion misappropriated at the Ministry of health according to an in-house audit report; mobile clinics valued at Sh1.4 million each being sold to the government at more than 7 times the price then abandoned in an NYS yard; inflated rig charges at the Geothermal Development Company (GDC) in which the Ethics and Anti-Corruption Commission (EACC) found the tender committee culpable and six managers were sent on compulsory leave.

At county level, there are rising concerns with expenditure considering that the national government has sent to the counties more than Sh1 trillion since their establishment in 2013. Research by the International Budget Partnership Kenya (IBPK) reveals that county governments are not making available fiscal documents required by the Public Financial Management Act (PFMA). Only about 20 percent of key budget documents, including fiscal expenditure documents, meant to be online had been uploaded. Indeed, IBPK reports that in some cases, budget allocations are based on lists of projects drawn up by Members of County Assemblies (MCAs). There is no clarity on the criteria governing such allocations, and even less clarity on how county funds are actually spent. There is a distinct air of mischief informing this laxity. It is not a secret that the first iteration of devolution revealed how much autonomy county governments have in the planning and use of funds they receive and generate. This lack of transparency seems to be aimed at facilitating a culture of financial mismanagement and corruption at the county level in an environment where, frankly, no one is holding them accountable.

Further, county governments see themselves as expenditure units, not development units. This needs to change. Rather than concentrating on how much they have to spend, they ought to focus on the development dividends they are responsible for generating. Without this fundamental shift in thinking, county governments will continue to be like spoilt children, forever crying over what they are owed, but with nothing to show for the development they ought to deliver.

For example, 16 firms listed on the Nairobi Stock Exchange issued profit warnings in 2016, which meant less corporation tax could be collected. Additionally, the 7000 jobs lost to downsizing and shuttering of firms, mainly in the banking sector, reduced Pay As You Earn receipts.

The greatest concern beyond the moral question of the financial mismanagement of the public funds of a poor African country, is the issue of how corruption affects spending efficiency. As will be explained later, Kenya is getting into significant debt, particularly to finance development expenditure. If such debt is not being used as efficiently as possible and instead funds are stolen or dubiously spent, the country will be saddled with onerous debt without he means – the improvements in economic performance that were to come from debt financed development projects – to pay it.

Given the factors detailed above, there are several broad changes that ought to be made. At national level, the first recommendation is for government to commit more money to development expenditure and put more effort into actually absorbing the allocations given to the docket.

Secondly, the national government ought to be more consistent in the manner in which it presents data and should make it easier to track planned versus actual expenditure, particularly across the recurrent and development dockets.

Thirdly, large allocations to infrastructure projects need to be audited and a determination made on the effectiveness of the allocations, how funds can be better spent and recommendations on how to improve efficiency.

Finally, national government has to clamp down on financial mismanagement and prosecute and punish culpable officials. Without this, the government’s commitment to ending corruption will be seen as insincere and ineffective.

At county level, there are several issues that ought to be addressed the first of which is that there needs to be a very clear hierarchy of accountability for county expenditure. Governors and the County Ministers of Finance must be held accountable for their spending and individuals need to be punished if found guilty of corruption.

Secondly, counties must comply with the PFMA and provide breakdowns of their expenditure which includes a delineation between recurrent and development expenditure.

Thirdly, the principle of fiscal discipline should carry considerable weight when national government makes county allocations such that responsible use of resources is rewarded and poor performers are punished.

Finally, a citizen-led effort to create a ranking of county governments according to fiscal transparency with a focus on expenditure would likely create pressure on county governments to adhere to their legal obligations. Included in the ranking should be how well they comply with PFMA stipulations, with the top and bottom performers widely publicised.

REVENUE GENERATION AND COLLECTION

Kenya Revenue Authority (KRA) has been falling short of its revenue targets for some time. For example, in 2016/17 total collection stood at Sh1.365 trillion representing a performance rate of 95.4 percent, and a shortfall of Sh66.64 billion- a significant number. In the first four months of this fiscal year, KRA has already fallen behind by Sh40 billion. There are questions as to why revenue collection consistently underperforms. I am of the view that KRA is given unrealistic targets, more informed by aggressive increases in government expenditure and oblivious to the serious constraints that mute tax collection.

Without this fundamental shift in thinking, county governments will continue to be like spoilt children, forever crying over what they are owed, but with nothing to show for the development they ought to deliver.

Revenue generation targets tend to be revised upwards over the course of the year. KRA’s original revenue target for the 2016/17 was Sh1.415 trillion which was later revised to Sh1.431 trillion, an increase of KES 16.24 billion. This is a concern because motivations behind the increases in targets are not clear. Do they perhaps stem from a realisation in Treasury that it cannot raise as much as anticipated in borrowing?

The second constraint is that the macroeconomic environment informs the extent to which revenues deviate from targets. For example, it is estimated that a 1 percent reduction in GDP growth reduces revenue by Sh13.4 billion and as noted earlier, this has been something of a tough year. A similar increase in inflation also requires that revenue targets be raised by Sh13 billion.

This is linked to sectoral issues which can affect the ability of KRA to collect tax. For example, 16 firms listed on the Nairobi Stock Exchange issued profit warnings in 2016 –a rising trend since 2013– which meant less corporation tax could be collected. Additionally, the 7000 jobs lost to downsizing and shuttering of firms, mainly in the banking sector, reduced Pay As You Earn receipts.

Third, government policy decisions, particularly those related to tax policy, affect the ability to generate revenue. For example, the non-implementation of changes to specific excise rates in 2016/17 reduced revenues by nearly Sh5 billion. Additionally, the duty-free importation of essential foods (maize, milk, sugar) led to a revenue loss of over Sh4 billion in the fourth quarter of the same financial year. Indeed, it is estimated that government policy decisions cost it Sh13 billion in lost revenue that entire year. The government tends to shoot itself in the foot in other ways too. For example, delays in remitting income tax from public institutions costs it Sh823 million.

Finally, revenue generation and collection in Kenya like the rest of Africa is negatively affected by illicit financial flows from the country. According to the UN, Africa loses more than US$50 billion through illicit financial outflows per year. Companies evade and avoid tax by shifting profits to low tax locations, claiming large allowable deductions, carrying losses forward indefinitely, and using transfer pricing.

The main reason why consistent subpar revenue collection is worrying is because the national treasury continues to construct budgets based on the unrealistic targets. For example, revenue generated was meant to play a bigger role in the current budget, financing 60.7 percent of the overall deficit and 58.7 percent of the development expenditure. Since it appears as though targets will again not be met, government will have to borrow more than anticipated.

 

There ought to be fundamental rethink of revenue generation and collection in order to effect a sustained increase. There are several factors to address, the first of which is improvements in the business environment that increase profits and thus taxable revenue. A key component that is often ignored here is the environment for the informal economy. Current assessments largely ignore the sector in which 90 percent of employed Kenyans earn a living. More ought to be done to make informal businesses more profitable.

At the same time, the government ought to seek to expand the revenue base by encouraging the formalisation of these businesses. Concerted efforts must be undertaken to pilot schemes that remove barriers to – and create incentives for – formalisation, particularly of larger businesses that easily evade tax yet are robust enough to consistently pay.

As recommended by the Africa Progress Report 2013, alongside demanding the highest standards of propriety and disclosure from their government, Kenyans should push citizens of the developed world to demand similar standards from their governments and companies.

Finally, Kenya needs to work on curbing illicit financial outflows. The UN makes the point that G8 leaders have committed to the 2013 Lough Erne Declaration, a 10-point statement calling for an overhaul of corporate transparency rules. Among other things, the declaration urges tax authorities to automatically share information to fight evasion. It states that poor countries should have the information and capacity to collect the taxes owed to them. Kenya should join other African countries in lobbying rich countries to enact stricter laws against tax evasion. As recommended by the Africa Progress Report 2013, alongside demanding the highest standards of propriety and disclosure from their government, Kenyans should push citizens of the developed world to demand similar standards from their governments and companies.

BORROWING AND DEBT

In 2013, the Jubilee administration inherited a debt of Sh1.7 trillion after a decade of the Kibaki government. Less than 5 years later, that has ballooned by nearly 250 percent to Sh4.4 trillion. This year’s borrowing has been particularly aggressive. The Central Bank of Kenya (CBK) says that the government is borrowing an average of Sh86 billion per month, the highest level since the bank started listing public debt in 1999, and over Sh30 billion more than the monthly averages of 2015 and 2016.

Despite this, it seems the government’s debt appetite won’t wane any time soon. The Treasury recently announced that it is seeking to issue another Eurobond, which could be used to repay the outstanding US$750 million syndicated loan the government raised in 2015 and which came due in October. What seems to be clear is that given expanding expenditure and subpar revenue collection, borrowing from both foreign and domestic sources will continue to grow. Further, as a Bloomberg analyst points out, Kenya has among the highest debt levels in sub-Saharan Africa, partly a result of having neither the commodity revenue sources of Nigeria and Angola nor the budget support from donor countries enjoyed by neighbouring Tanzania and Uganda.

Before looking at the specific features of Kenya’s debt, it is important to state that debt itself is not necessarily a problem. If used wisely, it can fund investment into activities and projects that catalyse economic development, GDP growth and growth in per capita incomes. Concerns only start being raised when the pattern of debt accrual and servicing seems headed in an unsustainable direction. If expenditure is growing in the context of muted revenue generation, that creates momentum for more debt than cannot be sustainably serviced. Further, if debt is not used efficiently and linked to increases in productivity and GDP growth, it also saddles countries with burdensome repayments. At the moment, Kenya is on the cusp where the government can either take decisive action to put the country on a better debt path, or continue with current trends that are edging the country closer to an unsustainable position.

 

The IEA points out that as of June 2012, total public debt was composed of 52.9 percent domestic debt and 47.1 percent external debt. However, the share of external debt has been steadily growing and recent statistics show that today the situation is reversed, with external debt taking up more than half (52.3 percent) of total debt.

The National Treasury Report 2015 indicates that the external debt stock for Kenya is composed of multilateral debt (54.7 percent), bilateral debt (27.1 percent), export credits (1.5 percent), commercial banks (0.6 percent) and International Sovereign Bonds (16.1 percent). As the IEA points out, a large part of the external debt remains concessional (i.e. on terms substantially more generous than market loans) and mainly from multilateral creditors; however, the share of concessional loans has been falling over the last three years which means external debt is becoming ever more expensive for the country.

There are several factors affecting the composition of debt, the first of which is Treasury’s desire to reduce domestic borrowing in order to release domestic credit for the private sector. This was a major reason given for issuing the Eurobond. As shown by the statistics above, he government has stayed true to this intent in some ways. However, the cap on interest rates introduced last year, has perversely facilitated government’ ability to raise domestic debt as banks, reluctant to lend to the general public due to profit margin and risk concerns, have more aggressively pursued government securities. The attractiveness of government debt is thus pushing the domestic private sector out of the domestic debt market, which contradicts government’s original intent.

The Central Bank of Kenya (CBK) notes that the government is borrowing an average of Sh86 billion per month, the highest level since the bank started listing public debt in 1999, and over Sh30 billion more than the monthly averages of 2015 and 2016.

It is important to note that, as reported in The Standard, World Bank data indicates that the average grace period on repaying new external debt has shrunk by half in the last four years. On average, in 2013, the country was given 8.2 years before starting to repay loans. This had reduced to 4.6 years by 2016. Shorter grace periods reduce the government’s room for flexibility and could be an indicator of jittery lenders keen on getting their money back as soon as possible. Indeed, Bank of America Merrill Lynch notes that Kenyan debt underperforms its peers as evidenced by the fact that yield premiums over U.S. debt have not narrowed as much as those of other sub-Saharan debt. In short, Kenya is seen as riskier to lend to than other African countries.

Informed by the expansion in borrowing, Kenya’s fiscal deficit has also grown. Its ratio to GDP has widened significantly from 6.4 percent in 2013/14 to 10.4 percent in 2016/17. The IEA points out that the large increase in deficit partly reflected the financing of the first phase of Standard Gauge Railway (SGR) project.

Fiscal deficit as a percentage of GDP

Fiscal deficit as a percentage of GDP
(source: IEA)

The government is targeting a fiscal deficit of 5.9 percent of GDP, in the 2018/19 fiscal year, down from an estimated 7.3 percent this fiscal year. Others however do not expect this will be met. Genghis Capital thinks Kenya’s budget deficit for this fiscal year will likely reach 8 percent of GDP. Further, the government doesn’t always hit its fiscal deficit projections. Indeed, according to Cytonn Investments, in the 2016/2017 fiscal year, the government’s deficit actually widened to 8.3 percent of GDP, some way above its revised target of 6.9 percent. In any case, despite the efforts it may be making to reduce the deficit, current government targets and performance are still higher than its own preferred ceiling of 5 percent.

 

The IEA points out that as the amount of debt held increased, the cost of debt has also gone up with debt servicing increasing from about Sh19 billion in 1990 to Sh400 billion by the end of 2015. A larger component of debt servicing emanates from servicing of domestic debt, but since the proportion of domestic and external debt to GDP are almost at par, it may indicate that it is costlier to service the former.

Debt service 1980 – 2016, KES billions

Debt service 1980 – 2016, KES billions
(Source: IEA)

There are growing concerns as to how much revenue is being committed to servicing debt. In the first nine months of the 2015/16 financial year, the government spent four out of every 10 shillings it collected as tax to settle debts. In April, the IMF estimated Kenya’s debt-service to revenue-ratio at 34.7 percent against a threshold of 30 percent, and a report in the Business Daily pointed out that in the last fiscal year, the country spent more money to settle debt (Sh435.7 billion) than it did to finance development (Sh394.2 billion). If more and more revenue has to be locked into servicing debt, government will either have to ramp down spending on development (given the relatively fixed burden of recurrent expenditure) or borrow even more, none of which is good.

The IEA also notes that the ratio of debt to GDP rose from 40.7 percent in 2012 to 56.4 percent in June, which merited a ranking of 78 out of 138 countries on the World Economic Forum’s Global Competitiveness Index.

Government Budget and Public Debt as % of GDP

Government Budget and Public Debt as % of GDP
(Source: IEA); GDP is for full year (FY) and measured in thousands; * Provisional estimates

As borrowing continues to grow aggressively, it will lead to higher imbalances that will raise concerns about sustainability.

Views differ on whether Kenya’s debt is sustainable. Some are of the view that given the massive gaps in key sectors such as energy and transport infrastructure, the country must continue to do everything possible to finance and address the gaps and that debt accrued now will pay off in the long term. Kenya remains below the World Bank’s debt-to-GDP ratio ceiling (or tipping point) of 64 percent. The IMF, in its review of Kenya a year ago, said Kenya’s risk of external debt distress remains low but notes there is need for reduction in the deficit over the medium term. While the IMF has raised concerns about Kenya’s public debt, it is below what they view as the applicable ceiling for Kenya – 74 percent of GDP.

The IEA points out that as the amount of debt held increased, the cost of debt has also gone up with debt servicing increasing from about Sh19 billion in 1990 to Sh400 billion by the end of 2015.

Others, however, are of the view that a debt-to-GDP ratio beyond 40 percent for developing and emerging economies is dangerous. The IMF itself envisages fiscal consolidation that targets a 3.7 percent of GDP deficit by 2018/19 (compared to the government’s own target of 5.9 percent) which it says is critical to maintaining a low risk of debt distress while preserving fiscal space for development priorities.

I disagree with the Treasury’s assertions that the national debt is manageable and that there is headroom for more. Kenya’s debt is only manageable if decisive action is taken to reduce expenditure, boost revenue collection and reduce borrowing. If this does not happen within the next three years, the country will start feeling the effects of debt distress.

The credit rating agency Moody’s has already raised concerns about the country’s accumulating debt. Indeed, the agency is currently assessing whether it needs to downgrade the country’s credit rating from the current B1 status on grounds of its weakening ability to repay debt. Moody argues that unless a decisive policy response is introduced, the upward trajectory in government debt will see the debt-to-GDP ratio surpass the 60 percent mark by June 2018, pushing financing costs for the private sector even higher. Its assessment points to the fact that in the latest fiscal year, the government spent 19 percent of its revenues on interest payments alone, up from 10.7 percent five years ago. It notes that persistent, large, primary deficits and high borrowing costs continue to drive government indebtedness ever higher. Further, government liquidity pressures risk, the danger that the government may not have enough readily available cash to settle its immediate and short-term obligations, is rising in the face of increasingly large financing needs.

Another credit rating agency, Fitch, has also indicated that it could downgrade Kenya’s rating due to its debt position. Fitch noted that the country was spending a larger proportion of its revenue on paying debt compared to its economic peers such as Uganda, Rwanda and Ghana.

Fitch gave Kenya a B+ rating, with a negative outlook. These credit ratings are important as a fall in rating will mean any new foreign debt taken on by the country will be more expensive.

 

There are several broad strategies Kenya can use to better manage its debt the first of which is to aggressively reduce expenditure. Government must implement austerity budgets and limit unnecessary expenditure. I also think here should be a fundamental downward review of salaries of those in government. While those of technocrats such as Cabinet and Permanent Secretaries as well as professionals such teachers and doctors should remain attractive, there are far too many people in elected office on overly generous terms, and the related wage bill is not sustainable for a relatively poor African country.

Secondly, government needs to improve its recurrent vs development expenditure allocations. As elucidated before, year after year, more money is allocated to recurrent expenditure which is not economically productive. A reduction in recurrent expenditure is crucial and this can be partially addressed by a downward review in wages as explained above. The IEA points out that although in relative terms the proportion of recurrent expenditure to GDP has slightly declined while that of development expenditure has nearly doubled from 5.7 percent of GDP in 2007/8 to 11.0 percent in 2016/17, recurrent expenditure still remains comparatively high.

In April this year, the IMF estimated Kenya’s debt-service to revenue-ratio at 34.7 percent against a threshold of 30 percent, and a report in the Business Daily pointed out that in the 2016/17 fiscal year, the country spent more money to settle debt (Sh435.7 billion) than it did to finance development (Sh394.2 billion).

Development expenditure should be prioritised by considering projects which bring immediate returns to the economy. More money must be committed to spurring the growth required to pay debts, if Kenya is to avoid a repayment crisis.

Thirdly, government has to create strategies to ensure more development expenditure is absorbed. A November 2017 report by Controller of Budget showed the use of development funds for the financial year ending in June was at 70 percent, the highest since 2013. While this is good news and higher than the 66 per cent rate recorded in the previous year, it is not good enough. Indeed, the organisation Development Initiatives notes that the 2017/18 fiscal year actually saw a decline in total allocations to development spending by 12.3 percent, as a result of lower absorption of development spending by ministries in 2016/17. The problem is at both national and county levels. As Price Waterhouse Coopers points out, if the entire amount allocated is not being absorbed, it defeats the purpose of the budget especially around development expenditure. Given that the country is getting into a great deal of debt for development expenditure, it is crucial that absorption rates in this docket increase in order to spur economic growth.

Fourthly, government needs to better track how the debt which is financing the development docket, is being used. Given concerns with financial mismanagement of public funds at both national and county levels, it is crucial that the debt spending is meticulously tracked. This is because financial mismanagement of debt funds poses the dangerous risk of pushing the country into debt unsustainability as money is pocketed rather spent to generate growth.

 

CONCLUSION

This article has elucidated Kenya’s fiscal policy and position in terms of expenditure, revenue generation and debt accrual. It is important that the country reduces expenditure, increases revenue generation and better manages debt spending to put the country on a more sustainable fiscal path. We are in a position where Kenya’s fiscal health can be dramatically improved by taking decisive action as per the recommendations herein. It is my hope that the government takes the required action to improve the country’s fiscal path so that fiscal policy plays the positive and important role it can in driving the country’s development.

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MIND YOUR LANGUAGE: Roots of the crisis in Cameroon

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MIND YOUR LANGUAGE: Roots of the crisis in Cameroon

Since October 2016, Cameroon – one of the most stable states in a volatile subregion – has been making international headlines. A political crisis – the Anglophone Crisis – is shaking the country to the core. It started as a sectoral crisis – with lawyers and teachers demanding for English to remain the primary language of the education and judiciary systems of the English-speaking part of the country – but later turned into a political crisis after the protests were met with military violence, mass arrests and torture.

A country in turmoil

In November 2016, hundreds of people took to the streets in Bamenda after violence was inflicted on lawyers asking for Common Law and English to remain the basis of the judiciary subsystem and on teachers asking for the non-Francophonisation of the Anglophone education subsystem. At first, many people from the northwest and southwest regions were not for separation or violence; people were peacefully protesting for change. However, denial in official statements and the continuous violent responses from the government led to the emergence of small secessionist groups that are taking advantage of the situation to radicalise local activists and non-activist citizens.

Local groups and parts of the Anglophone diaspora have revived the separatist agenda: some demand federalism, others secession.

On October 1st, thousands of people in the English-speaking regions of Cameroon took part in a peaceful march to symbolically proclaim the independence of Ambazonia, the name of an independent country that would be located in the northwest and southwest regions.

According to an International Crisis Group report, security in Cameroon has deteriorated in the Anglophone regions of the northwest and southwest. To protest against the government’s marginalisation of Anglophones, protestors set fire to seven schools and several shops and, for the first time in Cameroon’s post-independence history, homemade bombs were detonated in mid-September 2017. Between 14th and 20th September, two bombs exploded in the northwest region; there were no casualties. On 21st September, another bomb was detonated at a police station in Bambenda, injuring three police officers. A fourth bob nearly exploded in Douala.

After the explosion, the governors of the northwest and southwest regions imposed a de facto curfew, cutting off the Internet for 24 hours, barring movement between Anglophone divisions, and banning gatherings and demonstrations until 3rd October. Despite these measures, around 50,000 people took to the streets in tens of towns and communities in the northwest and southwest regions on September 22nd, demanding the departure of President Paul Biya, the release of Anglophone political leaders and separation. The date chosen coincided with the president’s speech at the United Nations General Assembly. However, what was supposed to be a peaceful march turned violent in some areas. According to local newspapers, some protesters in Buea vandalised the home of the town’s mayor, who is Anglophone but against the protesters. In Mamfe, a police station was set on fire. Four protesters were shot to death by police forces and several more were injured.

On October 1st, thousands of people in the English-speaking regions of Cameroon took part in a peaceful march to symbolically proclaim the independence of Ambazonia, the name of an independent country that would be located in the northwest and southwest regions. This also coincided with the anniversary of the reunification of Cameroon under French mandate and British Southern Cameroon in 1961.

The response of military forces to the march was the most repressive to date. According to Amnesty International, 17 people were reported dead and more than 200 people were arrested during demonstration. The government put the figure at around 10 deaths, but according to locals, the army killed about 100 people on that day. In total, since the beginning of the crisis in October 2016, at least 55 people have officially been reported dead.

These repressive measures led to retaliation by the populace. People burnt vehicles belonging to the sub-prefect and prefect in Boyo and Fundong (in the northwest), snatched weapons from gendarmes in Kumba (in the southwest), ransacked police stations in Ikiliwindi, Mabanda Teke and Kongle, and threw stones at police and military officers in Buea and Bamenda. Since the beginning of November, four military men have been killed in conditions that are still not clear. Cho Ayaba, a leading member of the political wing of the separatist movement who lives abroad, told Reuters, “Cameroon soldiers are enforcing an occupation. The only thing that will make us stop these attacks is if the regime withdraws. If they stop using the military to impose political exclusion and systematic terror on our people.”

The so-called Anglophone Crisis is not something new, as the international media suggest; it has its roots in the decolonisation era.

Currently, the English-speaking regions of Cameroon have become ghost towns due to general strikes – an initiative taken by the Cameroon Anglophone Civil Society Consortium as part of their long-term protest against a government they deem biased towards French speakers. For a year now, schools have not been fully operational, a lost year for students. In September, the so-called Ghost Town operations continued for three days each week. Several stores and seven schools were burnt down to protest against them opening despite the ban. Paul Biya agreed to release some Anglophone leaders and activists to stop the operations and to prevent the school year from being jeopardised for the second year in a row. However, the releases had little or no effect; enrolment rates remain very low and the ghost town operations are still ongoing.

The root of the crisis

The so-called Anglophone Crisis is not something new, as the international media suggest; it has its roots in the decolonisation era. Despite the fact that the current crisis started as a language issue between Anglophones and Francophones, the problem is not really about language; it is about people fighting for respect, integration and identity.

In July 1884, the German government and the traditional Douala chiefs signed a treaty that established a protectorate called Kamerun. After Germany lost in World War I, the victorious powers imposed punitive territorial, military and economic provisions that led to Germany losing her colonies. Kamerun, which was a former German colony, was partitioned between Britain and France under a League of Nations mandate, which appointed France and Britain as joint trustees of Kamerun. France gained the larger share and ruled its territory Cameroun from Yaoundé. Britain’s territory, Northern and Southern Cameroon – a strip bordering Nigeria from the sea to Lake Chad – was ruled from Lagos. During the period of the mandate and the trusteeship, each colonial power shaped their territories in their own image.

 

A report from International Crisis Group describes the situation clearly:

This resulted in major differences in political culture. English was the official language in the territory under British administration. The justice system (Common Law), the education system, the currency and social norms followed the British model. The system of indirect rule allowed traditional chiefdoms to remain in place and promoted the emergence of a form of self-government to the extent that freedom of the press, political pluralism and democratic change in power existed in Anglophone Cameroon prior to independence. The territory was administered as though it was part of Nigeria and several members of British Cameroon’s Anglophone elite were ministers in the Nigerian government in the 1950s.

 In contrast, the Francophone territory was directly administered by France following the assimilationist model, although colonisers and the traditional elites also practised a form of indirect government, especially in the north of the country. French was spoken and France’s social, legal and political norms shaped the centralist political system of successive regimes. Bogged down in a total war against the nationalist movement (Union des populations du Cameroun – UPC), which challenged French presence, the Francophone territory was less democratic.

Being used to self-administration, Southern and Northern Cameroon were in many ways more developed than French Cameroun, with several industries and a sense of democracy. French Cameroun accessed independence before English-speaking Cameroon on January 1, 1961. British Cameroon was aspiring to independence as an autonomous state, but former colonial powers believed that it would not be economically viable and advocated for not creating microstates. So a referendum took place on February 11, 1961: British Cameroon was supposed to choose between joining Nigeria or the new Republic of Cameroon. Northern Cameroon chose to join Nigeria and Southern Cameroon chose to join the Republic of Cameroon. This led to the independence of Southern Cameroon in October 1961 and the creation of a federal state with a flag with two stars symbolising the two territories coming together – West Cameroon being the former Southern Cameroon and East Cameroon being the former Republic of Cameroon. Both territories were now one under the name United Republic of Cameroon.

Problems started when, despite the constitutional provision stating that English and French were both official languages, French became the language of administration.

A federal constitution approved by the National Assembly of the Republic of Cameroon in August 1961 and promulgated by the then president Amadou Ahidjo in September 1961 was imposed when negotiating the terms of reunification. (Southern Cameroon was then still under the trusteeship of Britain since as it obtained independence on October 1, 1961.)

Centralisation was the governing mode of the former French territory, and the federated state was administrated from Yaoundé, where political leaders held all powers in their hands to the detriment of traditional chiefs whose authority was recognised and respected during the trusteeship. The assimilationist model the former French territory experienced under French trusteeship became its way of governance. In line with the constitutional provision stating that the vice president must be from West Cameroon if the federal president comes from East Cameroon and vice versa, John Ngu Foncha became vice president of the country and prime minister of West Cameroon.

Problems started when, despite the constitutional provision stating that English and French were both official languages, French became the language of administration. Then Amadou Ahidjo divided the country into six administrative regions and appointed federal inspectors in each region. English- speaking Cameroonians were not happy because West Cameroon could not at the same time be a federated state according to the constitution and be an administrative region by decree. The appointed federal inspector had more powers over the region than its prime minister. At the economic level, Ahidjo imposed an exchange rate of £1 to FCFA692 instead of the normal FCFA800, which reduced the purchasing power of the region that still had strong ties with Britain. Then he demanded for West Cameroon to cut ties with Britain, which made the region lose export duty advantages.

Though the southwest and northwest regions play an important role in the economy, especially when it comes to agriculture and trade, and though most of Cameroon’s oil, which accounts for one-twelfth of the country’s gross domestic product (GDP), is located off the coast of the Anglophone region, these regions are still lagging behind.

The economic decline of West Cameroon became evident. Reunification came with the dismantlement of the federal state/region’s economic structures, such as the West Cameroon Marketing Board, the Cameroon Bank and Powercam, as well as abandonment of several projects (the port of Limbé, and airports at Bamenda and Tiko), with investments in the Francophone part of the country having more advantages. The problem still persists to date.

Though the southwest and northwest regions play an important role in the economy, especially when it comes to agriculture and trade, and though most of Cameroon’s oil, which accounts for one- twelfth of the country’s gross domestic product (GDP), is located off the coast of the Anglophone region, these regions are still lagging behind.   As Amindeh Blaise Atabong declared on Quartz, “In Cameroon’s 2017 public investment budget, home region of president Paul Biya, in the south, was allocated far more resources than the northwest and southwest regions put together. Going by the country’s government project logbook for the year, the south region was accorded over 570 projects at a total sum of over $225 million (FCFA 126 billion). For its part, the northwest region had no more than 500 projects to be executed with over $76 million (FCFA 42 billion), while the southwest region had slightly over $77 million (FCFA 43 billion) for over 500 projects.”

When Paul Biya succeeded Amadou Ahidjo in November 1982, he further centralised power. On August 22, 1983, he divided the Anglophone region into two provinces: North-West and South-West provinces. The following year, he changed the country’s official name to the Republic of Cameroon and removed the second star representing the English-speaking part of the country from the flag. (The Republic of Cameroon was the name of the former Francophone territory.) These decisions symbolically killed West Cameroon and assimilated it within the Republic of Cameroon.

The separatist agenda and the way forward

As previously mentioned, the separatist agenda is not a new one. In 1993, English-speaking Cameroonians organised the All Anglophone Conference (AAC) and called for a return to federalism. During this period, Anglophone political leaders Muna and John Ngu Foncha went to the United Nations to demand independence for former Southern Cameroon. The position of the Social Democratic Front (the main opposition party then and now with a strong contingent of English-speaking Cameroonians) was judged to be ambiguous since it was against secession, which led to the creation in 1995 of the Southern Cameroons National Council (SCNC). Since 1996, the SCNC has been demanding secession and has taken its case to the UN, the African Court of Banjul, the Commonwealth and national embassies.

Cameroon cannot afford another armed conflict. The country is already engaged in the fight against Boko Haram in the far north and militias from the Central African Republic in the east. The president has to take drastic and lasting measures to solve the crisis.

Despite the situation being a stalemate, measures have been taken to solve the crisis: there have been several attempts to dialogue; about a thousand English-speaking teachers across the southwest and northwest have been appointed; a Commission for the Promotion of Bilingualism and Multiculturalism has been created; and leaders of the separatist movement have been released. In reality, however, these measures were doomed to fail from the start. Dialogue was actually the government trying to impose its conditions on the English-speaking leaders at the table. And the Commission is nothing but the recycling of former members of government or people with close ties to it.

Cameroon cannot afford another armed conflict. The country is already engaged in the fight against Boko Haram in the far north and militias from the Central African Republic in the east. The president has to take drastic and lasting measures to solve the crisis.

Firstly, the president should act as if he cares about the situation and spend more time on national soil instead of abroad. Secondly, a mediator should be appointed to negotiate high-level talks between the government and the separatists, be they on national soil or from the diaspora, since the diaspora is playing a major part in the movement. Thirdly, each official who has ever been publicly disrespectful when addressing or talking about English-speaking Cameroonians should apologise and resign.

The law on decentralisation promulgated in 2004 should be enforced, not for regions to operate autonomously, but for each of them to be in charge of social and financial development of the region for the sake of the region and of the country as a whole. English-speaking regions of the country are not the only ones suffering from bad governance, so this will be an opportunity for the government to solve the crisis and improve the desperate situation of the country as a whole. The best way to go about this is to work on these issues before the next presidential election that is supposed to take place in 2018.

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CHANGING FACES: How Zimbabwe’s Liberation Movement is Re-Inventing Itself to Hold on to Power

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Changing Faces: How Zimbabwe’s Liberation Movement Re-Inventing Itself to Hold on to Power

Zimbabwe has a new president thanks to what its military chiefs called an “intervention” to “weed out criminals” that were negatively affecting the work of the President.  The actions of the army generals ended up leading to a popularly, if not emotionally, supported removal of President Mugabe, the man they had initially pledged to be acting to protect.

The new president, Emmerson Mnangagwa was sworn in on Friday 24 November 2017.  The state media glowingly called it an inauguration at Harare’s National Sports Stadium at a ceremony attended by at least 60,000 people, including serving presidents from the Southern African Development Community (SADC) member states, Ian Khama, Edgar Lungu and Filipe Nyusi of Botswana, Zambia and Mozambique respectively.

There are multiple reasons why the army and those sympathetic to the ruling party within SADC would not out rightly call the tumultuous political events in Zimbabwe over the last two weeks a coup.  Or why the commander of the Zimbabwe Defence Forces (ZDF) General Constantino Chiwenga and his subordinates would reach such alarming levels of national popularity.

The most obvious reason is that a lot of people in Zimbabwe, the region and the continent were genuinely tired or annoyed by Mugabe’s long stay in power.  His wife most certainly did not help matters in a patriarchal society by insulting those who were long time loyalists (including Mnangagwa) in public. The move by the military, well-choreographed as it was, invariably had a popular veneer to gloss over what it really was, a decision by the military to defy their commander in chief and hold him in captivity. Also generally known in political science studies as a military coup d’etat.

There are multiple reasons why the army and those sympathetic to the ruling party within SADC would not out rightly call the tumultuous political events in Zimbabwe over the last two weeks a coup. Or why the commander of the Zimbabwe Defence Forces (ZDF) General Constantino Chiwenga and his subordinates would reach such alarming levels of national popularity.

The other more significant motivation for the military intervention is that the ruling ZANU-PF party had failed to deal with its succession politics via the clearer political route.  And that the veterans of Zimbabwe’s liberation guerilla war which run from the late 1960s to 1979 and who are recognized in the national as well as the ruling party constitutions, were beginning to stake a claim on who they thought should succeed Mugabe. Initially, and this is to their credit, the Zimbabwe National Liberation War Veterans Association (ZNLWVA) sought the political route to resolving this issue. They were the only members of the ruling ZANU-PF party that consistently asked Mugabe to appoint his successor, much to the latter’s chagrin. Mugabe would insist that his successor would come from the people via congress and that it was only the people who would tell him to go.

The decisive factor to consider, therefore, is how the war veterans eventually got to the stage where their preferred successor, Emmerson Mnangagwa, got fired and made what is with hindsight a startlingly prescient claim as he left for exile in South Africa that he would be back to lead Zimbabwe.  He would also cheekily refuse to meet Mugabe before the latter resigned because the ‘people have said so’.

The war veterans are not only former guerrillas in Zimbabwe’s liberation war. They are also still serving in key command positions in all sections of the National Army, the Police Service, the Airforce and the Prisons Services.  The commander of the ZDF, General Chiwenga is himself a war veteran, and so are all of his subordinates.

In the corridors of the ZNLWVA, it is an open secret that the veterans felt it was the turn of one of their own, or at least one who had undergone military training during the war to take over. This, it was argued by some of the war veterans leaders, was because the nationalists (such as Mugabe, Joshua Nkomo and others) had had their turn at the head of the liberation movement and, more significantly in Mugabe’s case, as head of state and government.

Their consistent argument was that as a liberation movement, due recognition should be given to those that went to war but are still alive and still capable of playing a leadership role in the post-independence ruling ZANU-PF party and its government.  And quite literally, this role meant having ‘one of their own’ being the first secretary and president of the ruling ZANU-PF party. (Mnangagwa is viewed as exactly that by the war veterans.)

And that the veterans of Zimbabwe’s liberation guerilla war which run from the late 1960s to 1979 and who are recognized in the national as well as the ruling party constitutions, were beginning to stake a claim on who they thought should succeed Mugabe.

Zimbabwe’s military is therefore led by those that were and are part of ZANU-PF in two specific respects.  First as a liberation movement and secondly as a contemporary ruling party.   It is also important to note that unless they have been unwell, all service chiefs, including the commander of the ZDF, have religiously attended, the ruling ZANU-PF party’s annual conferences and periodic congresses.

Though they will claim neutrality in politics, their actions clearly indicate that the military top brass is embedded in the liberation struggle claim of being the military wing of what once was a revolutionary movement prior to independence.

When Mugabe used to claim that his party had committed itself to the Maoist dictum that it is ‘politics that always leads the gun’, he probably assumed that those holding the gun had no vested interests.  Nor thought that they could carry out an internally (to the party) and externally (nationally) popular coup.

They did this using a combination of understanding national constitutional and internal ruling party processes and procedures, knowing the then first lady Grace Mugabe’s lack of popularity, and reaching out through cultural events/music to younger Zimbabweans.  (There is a popular musical outfit called Military Touch Movement that, as its name suggests, is rumoured to have close ties to the military establishment).

On the national party processes and procedures, they knew that SADC would never accept anything that they referred to as a coup.  Their carefully choreographed public statements – referring to Mugabe as being confined to his home, and as still being in charge of the country while allowing him to appear at a graduation ceremony and undertake a “State of the Nation” address where he conceded that their actions had his permission – were testament to that. Allowing and urging Zimbabweans, through the ZNLWVA to march on the capital’s streets and closely controlling the domestic media narrative, the veterans managed to get the American and British governments to support their cause through issuing positive statements even as SADC dithered.

The subsequent roping in of the ZANU-PF Central committee to dismiss Mugabe and recommend Mnangagwa to succeed him until not only their extraordinary congress scheduled for early December 2017 but also the harmonized general elections for 2018, entrenched a civilian dimension in what was a military-led deposing of the party leader.

After it turned out Mugabe was ‘refusing’ to resign, a process of parliamentary impeachment that ZANU-PF embarked upon, ironically with the support of the mainstream opposition Movement for Democratic Change-Tsvangirai (MDC-T), sanitized the military change of ZANU-PF leadership.

The generals had however not stopped trying to persuade Mugabe to resign and through a mediation process facilitated by a Catholic priest, eventually got the letter they wanted on 21 November 2017 as parliament sat to impeach their Commander in chief.

When Mugabe used to claim that his party had committed itself to the Maoist dictum that it is ‘politics that always leads the gun’, he probably assumed that those holding the gun had no vested interests. Nor thought that they could carry out an internally (to the party) and externally (nationally) popular coup.

Emmerson Mnangagwa upon his return was well aware of this and made it apparent in his first remarks to his supporters at a rally held at the ZANU-PF headquarters.  He however indicated that he had all along had a hand in this ‘intervention’ by staying in ‘constant touch’ with the generals even though he was in exile.

He also made it clear in his first address as president of Zimbabwe, that he owed his ascendancy to the ruling party.  This is a point that the generals would have no problem with, as they were acting, in the final analysis, in tandem with their role as what General Chiwenga has referred to in previous interviews with the state media as ‘stockholders’ of the liberation struggle and therefore the country. All via the party.

SADC could do little else.  Not least because of the fact that apart from Malawi, Zambia, Seychelles and Mauritius, all of the current governments in the region are led by former liberation movements (Kabila’s in the DRC claims Lumumbist origins to his government).   And they tolerated this military action on a serving president so long there was deference to the ruling party and a modicum of constitutionalism could be salvaged from the process.

For now, with Mnangagwa sworn in as a president to finish off Mugabe’s term as outlined in the sixth schedule of Zimbabwe’s constitution, this would appear to be the case. I am certain that SADC will probably follow up with the new president on the holding of free and fair elections in 2018 as scheduled, which Mnangagwa confirmed in his first speech as president and when he will pursue a full five-year term.

This is not to say ZANU-PF’s military-political complex does not understand the need for ‘performance legitimacy’ despite having the capacity to deploy force for a political outcome. They understand this entirely hence Mnangagwa’s new focus is on the national economy.

SADC will definitively seek a greater role in supervising these elections and closely monitor the role of the military in how they are conducted.  But the ruling party will not worry too much about this as it is already riding on a peculiar wave of popularity that while it is surprised by, it is still very keen to consolidate, not only to renew its stay in power, but also to make it unthinkable for the opposition MDC-T, or any new opposition parties for that matter, to realistically hope to wrestle away power. Also, because the war veterans actively serving in the defence forces have become the guarantors of the ruling party’s succession politics and its ability to stay in power at a time of political crisis.

This is not to say ZANU-PF’s military-political complex does not understand the need for ‘performance legitimacy’ despite having the capacity to deploy force for a political outcome. They understand this entirely hence Mnangagwa’s new focus is on the national economy.  His government intends to introduce free market economic policies and probably do so within the ambit of Chinese-style ‘state capitalism’ which will court foreign direct investment and introduce property rights to the controversial issue of the Fast Track Land Reform Programme (FTLRP).

One of the first acts of his government will be to ease the liquidity crisis and seek the effecting of what Mugabe had referred to as ‘mega deals’ with the Russians and the Chinese in order to create a massive influx of jobs. The American and British governments will be courted to invest in the economy in return for the removal of sanctions and the re-integration of Zimbabwe into Western investor circles. And the Australian government will get promises to protect its mining interests again in return for support in other areas of the national economy.

What is apparent is that in the aftermath of this military intervention, there is limited scope for a value based politics in Zimbabwe. The now very popular actions of the ZDF in tandem with the political endorsements of ZANU-PF have left a void that the opposition cannot fill.

While this temporary and highly politicized economic shift is underway, the opposition will be courted with carrots such as support for the livelihoods of some of its leaders along with deferential treatment.  But essentially, they will be a divided lot that will be unable, barring a miracle, to defeat Mnangagwa’s militarized but popular version of ZANU-PF in what the latter will be at pains to prove to SADC, the African union and the world, is a free and fair 2018 election.

What is apparent is that in the aftermath of this military intervention, there is limited scope for a value based politics in Zimbabwe. The now very popular actions of the ZDF in tandem with the political endorsements of ZANU-PF have left a void that the opposition cannot fill. That void is the inability to articulate what would have been a democratic alternative to ZANU-PF rule, especially given the backing of war veterans in the military and the neo-liberal global west and east in their pursuit of markets, minerals and military dominance.

As it is Zimbabweans must brace themselves to be governed by a military–political complex that claims legitimacy on the basis of national liberation and assumes it can re-create itself in subsequent generations of not only civilians, but also those that would serve in the defence forces.  All in aid of an intended perpetuation of ZANU-PF’s hold on political power and the cosmetic maintenance of a hapless and long suffering political opposition.

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