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.
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.
(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:
(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
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
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
(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.
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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Africa’s Land, the Final Frontier of Global Capital
If the designs of global big money are not stopped in their tracks, Africa is threatened with environmental degradation and nutritional poverty.
Three great factors are coming together to constitute what may be a whole new, and final chapter in the book of horrors that have been visited on the African people since the birth of Western European capitalism.
If Native Africans do not begin to think very deeply about what this is going to mean for what is left of them, in terms of their livelihoods and ways of living, then the recent past will seem like a small piece of paradise.
Unlike our ancestors, who are often blamed — opportunistically — for the original conquest of Africa and the trade in enslaved Africans that came before it, this time round, there will be no excuses or debate. Africa now knows what colonial conquest is and what it does, in a way that our unfortunate ancestors could not.
The first factor is that capitalism is fast running out of things to destroy in order to make profits. The climate crisis is the best evidence of this. This has been a long-term trend, certainly since the 1960s. However, the most recent financial collapse of 2008 certainly intensified it. Of the grand things and sectors left for capitalism to ravage, there is the production of food for the masses of people crowded into the towns and cities of the West, with no space, time or fundamental skills to produce it for themselves from scratch.
The global corporate food industry is based on one key assumption: that the human race, as it continues to grow in number, will become less and less able to independently produce food for itself. These is because of embedded assumptions about the inevitability of intensive urbanization, as well as time and lifestyle choices, themselves often culturally encouraged, if not imposed, by the same industry.
Food, that indispensable need, is now recreated as a guaranteed industrial commodity.
And so, a lot of corporate interest and money has migrated into the corporate agriculture sector, globally. Global big money is now trying to colonise food production itself, on a global scale, in order to find new ways of keeping its money valuable. Writing in mod-2011, the late Dani Nabudere perceives a deeper conflict:
During the first three months of 2008-the year the global economic crisis intensified, international nominal prices of all major food commodities reached their highest levels for fifty years. The United Nations Food and Agricultural Organisation-FAO reported that food price indices had risen, on the average, by 8% in 2006 compared with the previous year. In 2007, the food index rose by 24% compared with 2006 and in the first three months of 2008, it rose by 53% compared with 2007. This sudden surge in prices was led by increases in vegetable oils, which on the average increased by 97%, followed by grains with an increase of 87%, dairy products with 58% and rice with 46%.
This means that investing in food, or the assumption of the future existence of food as a commodity to be traded. In short, what is known as the Futures market. But the problem with futures is that at some point, the commodity will have to come into existence.
The second thing native Africans need to be aware of, and arising from the first, is that African land is going to be in demand in a way not seen even at the height of the period of European colonial domination.
Most of the world’s arable land is now found somewhere in Africa. It is unclear if by this is meant arable land under use, or also land that can be put to agricultural use (but may be located under a forest, or something, at present).
The March 2012 issue of Finance & Development Magazine sheds some light on that equation:
Throughout the world, it is estimated that 445 million hectares of land are uncultivated and available for farming, compared with about 1.5 billion hectares already under cultivation. About 201 million hectares are in sub-Saharan Africa, 123 million in Latin America, and 52 million in eastern Europe. . .
The third factor is that arable land is only arable if it has fresh water near it. And it is only viable for corporate exploitation if it also has no people on it. Africa is therefore the prime target: plenty of fresh water, and very few real land rights.
In my estimation, the area of Africa between the Western and Eastern Rift Valleys running along the length of the Nile valley below the Sahel has been identified as on the last open, near-virgin territories, ripe for intensive mechanized agricultural exploitation.
That area’s human settlements have historically originated around the pattern of freshwater bodies. A lot of Uganda was once a wetland. As a result, the country will find itself located at the very epicentre of any such an enterprise.
Dr Mike Burry, a now legendary American stock market operator is reported in the Farmfolio website to have said, “I believe that agricultural land – productive agricultural land with water on site – will be very valuable in the future . . . . I’ve put a good amount of money into that.”
The website goes on to report quite sarcastically,
Over the next three decades, the UN forecasts the global population to increase to about 10 billion. How do you imagine farmland investments will benefit from an over 30% increase in mouths to feed? Good luck feeding two billion people with Bitcoin or gold nuggets.
In this sense, colonialism was just the attempted start, with the former white settler farm economies of Kenya and southern Africa as the increasingly decrepit leftovers. The goal now is African land in general, wherever land can be turned over to large-scale (and therefore mechanised, “scientised” and corporatized) production of the commodities needed to make factory food.
The implications are clear: the goal of the huge capitalist formations that dominate public and foreign policy in the industrial countries, and whose agribusiness interests have a global reach, is to turn Africa into a huge farm, both as an opportunity, and as a response to an internal crisis.
In a May 2017 opinion piece published in the UK Guardian newspaper, then United Nations Environment Programme Head Erich Solheim made a similar point:
Several scenarios for cropland expansion – many focusing on Africa’s so-called “spare land” – have already effectively written off its elephants from having a future in the wild. These projections have earmarked a huge swathe of land spanning from Nigeria to South Sudan for farming, or parts of West Africa for conversion to palm oil plantations.
All this speaks directly to the immediate future of the African people. Put bluntly, in order to put industrial agriculture in place here, there will have to be genocide, massive environmental damage, widespread human displacement, and therefore repression and conflict as the tools of implementation.
African land is going to be in demand in a way not seen even at the height of the period of European colonial domination.
The Alliance for Food Sovereignty in Africa (AFSA), calls the bringing of the US agribusiness model to Africa “a grave mistake”. They describe the model as “the single largest cause of biodiversity loss worldwide,” that “also fails to solve hunger, negatively impacts small-scale farmers, and causes environmental harm.”
It is in this context that the debates in Uganda and Kenya, for example, about land use and policy, can then be appreciated.
In Uganda, President Yoweri Museveni has launched a political offensive (once again) against the Kingdom of Buganda, describing its neo-traditional land tenure system as “evil” and in desperate need of reform.
This should not come as a surprise to anyone. First of all, Mr Museveni has firmly established himself as the pre-eminent fixer for imperialist ambitions in the Great Lakes Region. Whatever the owners of Western capital want here is what he will always try to deliver, no matter the collateral damage. Secondly, whenever the Ugandan president hatches a plan targeting the wealth and resources of native Ugandans, he begins with an attack on Buganda. Not because there is anything more valuable there, but because it enables the ideological seduction of a useful section of Ugandan political society: Ugandan “patriotism” was built on the notion that native identities are a bad thing, and that the Ganda identity is the worst of all.
It worked in the process of marginalising native voices in the independence movement and replacing them with smooth-talking “pan-Africanists”.
It then worked again with the creation of the culture of dictatorship between 1966 and 1979. Voices raised in opposition were easily dismissed as “divisive”, or retrograde. The mission now, was to build the new non-ethnic nation.
More recently, it has been deployed again to justify global neo-liberal designs on African land, through dismissing native resistance to it as “backward” and “parochial”.
Once it has been politically established that the overriding of native objections to anything is an essential and desirable part of development, then the “principle” can be applied in practice, to all other parts of the country.
Through its loyal and devoted client, the National Resistance Movement regime, Western capitalism is targeting all Ugandan land, regardless of which natives own it and under what system.
The same principle works differently in Kenya, but towards the same end. Initial white settler-based agriculture was never successful. Part of the story of Kenyan independence is actually the story of the Empire at headquarters becoming increasingly unwilling to deploy the economic, political and military resources needed to maintain a colony largely for the benefit of a small group of unproductive, self-regarding “middle-class sluts”, as one of the British commanding officers is alleged to have described the settlers.
However, a legacy of that time is that unlike in Uganda, vast areas of Kenya’s potentially productive land are still in white and foreign ownership. And a lot of this is in areas historically within a pastoralist ecosystem.
A succession of Kenyan governments neglected to address this historical injustice. In fact, through corruption, key individuals in a number of those regimes actively took advantage of the situation and joined the white families in becoming big landholders themselves.
Put bluntly, in order to put industrial agriculture in place here, there will have to be genocide.
Today, the three-way contestation between native (often pastoralist) communities, dogged white and other land oligarchs, and a wavering, uncaring state, rumbles on.
Co-author of The Big Conservation Lie: The Untold Story of Wildlife Conservation in Kenya, longstanding Kenyan conservation biologist, and land rights activist, Mordecai Ogada, has long argued that the whole wildlife tourism-based “conservation” industry run off the vast settler-leased native landholdings is basically a landgrab. The question will be Is this just for tourism, or will it be open to other ventures, like industrial agriculture?
It could lead to something deeper. Arguments for “development” and “rangeland/wildlife conservation” will be mobilised as a cover to carry out large-scale land grabbing and the eviction of peasants and pastoralists from lands they have historically occupied. Not just for the parochial descendants of the original white settlers now turned “conservationists”, but the kind of mega-scale mechanised planting that has been so central (and destructive) to the American mid-west, the Amazon basin, and native Canada.
This was also partly how the war that eventually split Sudan played out in the now separated south, and still plays out in Darfur and the Nuba Mountains. A significant section of Arab-descended northern economic elites was centered on the production of wheat. According to the Sudanese intellectual Dr Fatimer Babiker Mahmoud, in the late 1980s, this sector was making millions of dollars annually from the large-scale planting, harvesting and export of the grain to Europe, Asia and the Arab world.
Sometimes this meant the clearing of the more fertile lands of the south, the Nuba mountain lowlands and the Darfur region – all largely inhabited by Black Africans – for the mechanised growing of wheat. This is what gave the conflict its racial character, as Arab chauvinist arguments were used to justify this genocide.
But, as with the white settler projects, these should be seen as trial runs in the greater measurement of our economic history. There is a need to understand the sheer scale and scope of these operations.
What may be coming will be much grander in scale, out of both Western necessity and greed.
Of the top ten foods listed as traded the most within global trade by the Just-Food Magazine website in 2014, (fish, soybean, wheat, palm oil, beef, soybean meal, corn, chicken meat, rice and coffee) there are five key items that drive the processed food industry: palm oil, wheat, soya and corn. It seems sugar cannot be accurately measured because it features in just about anything processed.
In addition, meat production (chicken, beef and pork) is dependent on the others on the list. Cattle are fed on corn, and soya (and the soybean meal) comprises part of what is fed to chickens.
The scale of the operations means that huge sums of money are invested. In today’s world, this means money from banks and institutional investors (hedge funds, etc.) as shareholders in agribusiness corporations. Poultry factories can contain up to forty thousand chickens permanently locked in cages for laying, or just warehouses of several thousand square feet. In early 2020, some 20 million chickens were being slaughtered each week in the United Kingdom. Corn and other grain are usually planted on lots measuring thousands of hectares apiece.
When investing on this scale, certain guarantees must be put in place. These are not matters that are left to chance, or fortune. And the primary purpose of all capitalist economic activity, especially in the West, is to obtain the biggest private return possible on any investment. And also usually in the shortest possible turnaround time.
This is why “insurance” measures are locked in from the start. In particular, chemical-based fertilisers, pesticides and fungicides and also increasingly, the use of genetically modified seeds and livestock, as well as steroids and antibiotics to promote rapid growth and prevent sicknesses.
In fact, through corruption, key individuals in a number of those regimes actively took advantage of the situation and joined the white families in becoming big landholders themselves.
The goal is huge, regular volumes of uniform products to be processed and marketed to huge urbanized populations.
The whole commercialisation process begins in the West, where this industry is the most developed. The European conquest of the continents of north and South America, also mark the period when food production migrated from being a community-based activity, to an industry.
This led to the clearance of human settlement from large areas of land, as well as the destruction of forests and wetlands, all to make way for the animal ranches and very big plantations.
This way of life is now being increasingly imposed on all societies, as “the normal”.
The recent riots in the Republic of South Africa for example, are an illustration of the dangers of becoming prisoners of a privately owned, mechanised food supply system, and also an attempted repudiation of it.
The rest of Africa is quickly “catching up” to this advanced backwardness, with the increasing rate of unplanned migration to urban centers due to loss of opportunities in community-based agriculture.
In Uganda for example, this process was driven by the intentional Museveni-led neo-liberal disruptions to the adapted system of community-based agriculture that has been built up in the country over a period of nearly eight decades.
Agricultural production remains at the heart of this struggle. The Africans sought to ensure that they continued to produce their indigenous food crops so as to retain food sovereignty, while at the same time engaging in the new cash crop economy that was encroaching on their land and labour power.
Official African policy within each African state, as well as in the regional economic blocs and the various policy and finance bodies (such as the African Development Bank), remain uncritically in support (or at least not opposed) to this general strategic direction.
What may be coming will be much grander in scale, out of both Western necessity and greed.
“Africa must start by treating agriculture as a business,” wrote African Development Bank (AfDB) President Dr Akinwumi Adesina, in African Business magazine in 2017. “It must learn fast from experiences elsewhere, for example in south east Asia, where agriculture has been the foundation for fast-paced economic growth, built on a strong food processing and agro-industrial manufacturing base.”
Our official planners suffer from a tragic tendency of conflating any activity involving money and machines, with “development”. The intention is to duplicate life as it is almost universally led in the Western-style countries. They think is will bring “industrialisation”, and through that, jobs.
There are four significant conflicts or budding conflicts on the continent right now, in which arable land for mechanisation will increasingly become a factor. These are in southern Ethiopia, Congo and the whole Sahel zone, anchored on Nigeria (and Sudan), and Kenya.
If these developments are not challenged and stopped, Africa can look forward to environmental degradation, and nutritional poverty.
We will all become Africans in South Africa, and poor people in the West.
Assuming the Western industrial system lasts much longer. And that the planet also does.
How Capitalism Uses and Abuses the Arts
The arts business is a very flawed, archaic and extremely exploitative model but artists continue to rely on corporate sponsorship, without questioning the shrinking spaces and opportunities for the arts to thrive.
In my last piece, I talked about how our education system destroys the arts by corrupting the meaning of education, work and the arts. And I said that these lies that are perpetuated in the name of education come from the unholy and abusive marriage between education and business. (I have said elsewhere that this marriage should be annulled immediately.)
In this piece, I’m going to talk about how capitalist business is the prime beneficiary of the terrible state of the arts in Kenya.
Businesses swing artists between two extremes. On one hand, which I already explained in my previous letter, the business (parasite) sector encourages the education system to degrade the arts, so that art does not look like real work that takes skill and resources. By doing that, the business sector justifies artists not being paid for their work. If you have noticed that you are not getting paid, or your payment is delayed, it is because of that madharau for the arts. The accountants cooking books look at you and think to themselves “Why should I pay someone for shaking around or singing for people? Even I could have done that work if I wasn’t here balancing books.”
On the other hand, capitalism does pay artists huge amounts of money, like we see in Hollywood where people like Oprah and Jay Z have become billionaires through entertainment.
In the end, artists are treated like battered spouses. One minute, a spouse is being abused and beaten, and the next minute, when the battered person has had enough, the abuser apologizes, swears how much they love the battered person and promises not to beat the spouse again. And the cycle starts again.
Art and wealth
The first thing to understand about the arts business is that it is a very flawed, archaic and extremely exploitative model. I will talk mainly about music, but book publishing and other types of art business work using the same principle.
Basically, the art business uses the rentier model, like a landlord. A landlord builds a house once but earns money on that house as long as he owns the right to that house. The “work” of living there, or the business carried out there, is done by other people, but the landlord earns a cut of that work despite doing no work. Simply because he owns the property in which the work was done.
And that is the same thing record labels and studios do. They provide initial capital and make the artist sign a 360-degree contract that allows the label to earn from everything the artist is involved in for the rest of the artist’s life: performance, recording, brand merchandise and even artistic license. An artist who is signed to a record label is an enslaved person. In the US, artists who are lucky earn 10 to 15 per cent of the revenues they generate for the music industry. The rest are unlucky and earn much less, if anything.
Imagine that. For every artist billionaire we know, their record label earns nine times more.
As an artist, you’re probably thinking, “Well, it may be exploitative but at least it works. Why can’t those exploiters come and work in Kenya?”
Actually, they are working here, and we know it. They have names like MCSK and Liberty Afrika. And the way these companies exploit artists is the same way other companies exploit everybody else in employment. The wages we earn are nothing compared to the profits that entitled, lazy and ignorant fat cats make from our work, and yet — as we see with the doctors — companies are constantly coming up with new schemes to avoid paying us for the work we do.
An artist who is signed to a record label is an enslaved person.
I tell my arts students that they should spend time in the university studying and imagining a different model for earning income from the arts. For instance, 360-degree contracts should be considered slavery and outlawed. Saying that every future income of an artist is tied to the initial capital invested in their recording is just as ridiculous as a food supplier to a restaurant saying that they should earn 90 per cent of every plate or meal served by the restaurant. Once the food is delivered and paid for, the contract should end there. Artists should pay studios, publishers and marketers separately as bills, not on promise of royalties.
But because my students have been told that education is only for jobs, none has ever taken up my challenge to think about this.
There is another form of abuse and exploitation of artists that is less talked about because it is less easy to quantify. That is idea theft.
Through platforms like hubs, and through demanding proposals for shows and other performances, institutions exploits the artist’s energy and innovation, then pull the rug from under the artist and run off with the idea. That is why artists will start small concert gigs and before long, corporates, instead of sponsoring those gigs, create their own versions because they can pour in the money to make it big.
And these initially sustainable and indigenous ideas soon turn into monsters. These corporates invade natural parks like Hells Gate to sell even bigger than they should. Not only do they subvert eco-systems, they also crush their conservation opponents with media blitz and economic blackmail. What started as a Kenyan artistic initiative is not only hijacked but also turned into a short term, exploitative and destructive tsunami that dies almost as soon as it is born.
I tell my arts students that they should spend time in the university studying and imagining a different model for earning income from the arts.
Other artists report having given studios or media houses an idea for a show, leaving with a promise that they will hear from the producers. Within a few weeks, they see a bad version of the show they proposed. Is it a wonder that television entertainment is so unimaginative and poorly executed?
But this is the nature of capitalism: like a paedophile, it lets nothing mature and thrive. It instead derives a perverted sense of pleasure from exploiting the vulnerable and destroying budding ideas before the ideas develop to maturity.
Impunity and abuse
This paedophilia is replicated across all institutions. As someone recently said on Twitter, we are often employed on the promise of our ideas, upon which we are promptly frustrated and prevented from developing them.
No institution has escaped change and democratic supervision like the workplace. Workers around the world are succumbing to the abuse of the workplace, whether they are employed or not. Stress levels are high, and sexual bullying, mental illness, addiction and suicide are on the rise. The workplace has become a crime scene, where people get away with abuse and psychological torture.
But what is slightly unique about the arts is that when artists suffer from the same vices, the business world convinces us that this inhumanity is part of the artists’ creativity. That is why the high rate of depression and suicide among artists is not treated as a pandemic. When artists suffer violence such as being shot in clubs and being drugged and raped, we the abused and terrorized Kenyan public thinks that their abuse comes with the artistic territory.
In fact, we even accept that the business community does not treat artists as workers like other employees. Artists are not paid a salary, pension and benefits. They don’t go on leave. They are on the road all the time, or constantly searching for new gigs and new contracts, and never taking a break. The constant toil takes a toll on their minds and bodies and they start to use substances to stabilize their lives instead of getting some rest. Then there is the parasite industry of the paparazzi who make sales from intruding on artists’ lives and selling the details to the world.
The workplace has become a crime scene, where people get away with abuse and psychological torture.
But instead of us criminalizing these vices committed against artists, we let the business world convince us that this inhumanity is part of the artists’ creativity. That is utter nonsense.
Worse, the impunity also makes every new generation join the arts thinking that creativity requires criminality, substance abuse and insanity.
And the business sector has an evil, devilish interest in making literal murder and depravity acceptable for artists. Because of the power of the arts to free people, capitalism cannot let the arts thrive on their own, for the arts will inspire the people to challenge the tyranny of business by looking for alternative business models.
But at the same time, capitalism needs the power of the arts to manipulate people to behave in the interests of business. It puts the arts on a leash, so that the arts go only where capital wants the arts to go — to sedating the masses into accepting exploitation or into buying things.
And the artists, unfortunately, are joined to corporations at the hip and naively celebrate their reliance on corporate sponsorship, without questioning the shrinking spaces and opportunities for the arts to thrive.
And we artists need to understand that this abusive relationship is made possible by the hostility of the church. Instead of the church being our refuge in times of trouble, the clergy side with the state when the state crushes us through bans and censorship that are implemented in the name of morality.
Laikipia Land Crisis: A Ticking Time Bomb
Historic land injustices, changing land ownership and use, and heightened competition for natural resources — exacerbated by the effects of climate change — make for a perfect storm.
“Here we have a territory (now that the Uganda Railway is built) admirably suited for a white man’s country, and I can say this with no thought of injustice to any native race, for the country in question is either utterly uninhabited for miles and miles or at most its inhabitants are wandering hunters who have no settled home . . . .” Sir Harry Johnstone
There have been significant changes in the pattern of land ownership in Laikipia in the last two decades. These changes are set against a background of profound inequalities in land ownership in a county where, according to data in the Ministry of Lands, 40.3 per cent of the land is controlled by 48 individuals or entities. The changes have not brought about an improvement in the lives of the pastoralists and other indigenous communities who occupied Laikipia before colonisation. These groups — and the Maasai in particular, following their 1904 and 1911 treaties with the British — were forced out and relegated to reserves in southern Kenya to make way for the establishment of large commercial ranches owned by White settlers. Those indigenous inhabitants who remained were pushed by subsequent colonial legislation to Mukogodo in the north of the county, the driest part of Laikipia.
The pastoralists did not recover their land with the end of colonial rule. On the contrary, Jomo Kenyatta, the first president of Kenya, encouraged White settlers to remain after independence and today, some of the descendants of those settlers who decided to make Kenya their permanent home still occupy vast swathes of land in Laikipia County. Those who were unwilling to remain in Kenya under majority rule sold their land to the Kenyatta administration. As Catherine Boone, Fibian Lukalo and Sandra Joireman observe in Promised Land: Settlement Schemes in Kenya, 1962 to 2016,
With the approach of independence, the settler state and the British government stepped in to protect the interests of Kenya’s white land-owners by creating a land market for white settlers who wanted to sell their agricultural holdings, and supporting land values for those who wanted to stay. The buyer of most of these properties was the Government of Kenya, using loans provided by the British Government and the World Bank. Through this process, the Kenyan state acquired about half of the land in the (ex-) Scheduled Areas.
In 1968, under the World Bank-funded Kenya Livestock Development Programme — whose stated objective was “to increase beef production for home consumption and export mainly by subsistence pastoral groups” — the government enacted the Land (Group Representative) Act (Cap. 287) that saw the creation of 13 group ranches in the northern part of Laikipia, which is the driest part of the county. However, well-connected local elites helped themselves to part of the land, excised as individual ranches. There are 36 such individual ranches that should have been part of the group ranches.
Those ranches that were sold to the Kenyan government by the departing British settlers are within the expansive Laikipia plateau. The government later sold them to land buying companies formed by Kikuyus that in turn subdivided them into individual holdings. Examples of such lands include Kamnarok, Kimugandura, Kirimukuyu, Mathenge, Ireri and Endana, among others. The remaining land was gazetted as government land such ADC Mutara and Kirimon, or outspans such as Ngarendare and Mukogodo, which were used for finishing livestock for sale to the Kenya Meat Commission.
Land tenure and use
In the Kenyan context, and compared to other counties, the history of land in Laikipia County is unique, with a diversity of tenure systems each representing a unique system of production. The map below shows the different land use and tenure systems in Laikipia County that include large-scale ranches, large-scale farms, group ranches and smallholder farms.
There are 48 large-scale ranches sitting on 40.3 per cent of the total land area in Laikipia County, 9,532.2km², some of which are still owned by the descendants of the colonial settlers. The ranches occupy huge tracts of land, the three largest being Laikipia Nature Conservancy with 107,000 acres, Ol Pejeta with 88,923.79 acres, and Loisaba with 62,092.97 acres.
Source: Ministry of Lands
Most of these large-scale ranches — many of which have an integrated economic system that includes livestock, horticulture, wildlife conservation and tourism — were acquired during the colonial period and legislation governing their ownership was taken from the colonial law and integrated into the constitution of independent Kenya under the land transfer agreement between the colonial government and the Kenyatta regime. It should be noted that the Maasai land campaign of 2004 pushing the government to address historical injustices following the forced ouster of Maasai from their ancestral lands in Laikipia, brought to light the fact that some of these ranches had no legal documents of ownership. In an article titled In the Grip of the Vampire State: Maasai Land Struggles in Kenyan Politics published in the Journal of Eastern African Studies, Parselelo Kantai observes,
Ranchers interviewed could not remember how long their own land-leases were supposed to last, were unaware of the Anglo-Maasai Agreement, and, in at least one case, were unable to produce title deeds to their ranches. And when opinion was expressed, it bordered on the absurd: the ‘invaders’, observed Ms Odile de Weck, who had inherited her father’s 3,600-acre Loldoto Farm, were not genuine — not Maasai at all. They were, she noted emphatically, Kikuyus. The Maasai, she said, had willingly ceded rights to Laikipia, had been compensated long ago and now resided happily in some other part of Kenya, far away.
Immediately following the campaign, the Ministry of Lands started putting out advertisements in the print media inviting those landowners whose leases were expiring to contact it.
Twenty-three large-scale farms occupy 1.48 per cent of the land in Laikipia County. These farms are mostly owned by individuals from the former Central Province who bought the land following sub-division by the Kenyatta administration, or through land buying companies, which opted not to sub-divide the land but to use it as collateral to access bank loans.
Source: Ministry of Lands
Smallholdings sit on 27.21 per cent of the total land area in Laikipia County. These farms were initially large-scale farms bought by groups of individuals who later sub-divided them into smallholdings of between two and five acres. There are three categories of farmers in this group: those who bought land and settled to escape land pressure in their ancestral homes, those who bought the land for speculative purposes, and those who bought land and used it as collateral for bank loans. A majority of the first group still live on their farms, practising subsistence, rain-fed agriculture. Most members of the other two groups are absentee landowners whose idle land has over time been occupied by pastoralists in search of water and pasture for their animals, or by squatters seeking to escape the population pressure in the group ranches. In some cases, pastoralists have bought the idle land and have title.
The 13 group ranches cover 7.45 per cent of the total Laikipia land area and are occupied by pastoralists who use them for communal grazing. However, some of the group ranches such as Il Ngwesi, Kijabe, Lekurruki and Koija have also established wildlife conservancies and built tourist lodges.
Changing land ownership, changing landscapes
Since the late 1990s, when agitation for political reforms and a new constitution began in earnest, and in the intervening period, new patterns of land ownership and land use have been emerging in Laikipia County.
Data from the Laikipia County Government indicates that 16 of the 48 large-scale ranches have been internally sub-divided into units of between 3,000 and 4,000 acres, with the land rates due for each sub-division paid according to the size of the sub-division. The sub-divisions are made through private arrangements and do not appear in the records at the Ministry of Lands. There are claims that the sub-divided parcels have been ceded to European retirees looking to acquire land for holiday homes in Laikipia, and to White Zimbabweans. There are also claims that the large, palatial, private residences that have sprung up within the sub-divided parcels are in fact tourist destinations for a high-end clientele in a business that operates outside Kenya’s tourism regulatory framework and violates Kenya tax laws.
In the Kenyan context, and compared to other counties, the history of land in Laikipia County is unique, with a diversity of tenure systems each representing a unique system of production.
Whatever the case, the County Government of Laikipia confirms, “Most of the white settlers buying property are soldiers or tourists who loved the [county’s] climate, its people and natural beauty and want to experience it all over again. Big time investors [sic] in real estate flock the area, either to buy or construct multi-million shilling holiday homes, targeting wealthy European settlers and tourists.”
The Laikipia County Government also confirms that the large-scale ranches have also been leasing training grounds to the British Army Training Unit Kenya (BATUK), adding, “In 2009 BATUK expanded these grounds to 11 privately owned ranches, including Sosian, Ol Maisor and the Laikipia Nature Conservancy.”
Multinationals have also moved in, buying up the large-scale farms, particularly those situated near permanent sources of water, where they have set up horticultural businesses growing crops for export to the European market. The arrival of export horticulture in Laikipia has increased competition for resources as “agro-industrial horticulture, pastoralism and small holder agriculture compete for land, capital, and water, with access to water being particularly hotly contested.”
Absentee owners of smallholdings that have over time been occupied by squatters are also selling their land. With the help of brokers and officials from the Ministry of Lands, the smallholdings are consolidated and sold to individuals and companies who may not be aware that the land is occupied and that the sale could be a potential source of conflict.
Only the group ranches — which are occupied by pastoralists who use traditional grazing management techniques — have not changed hands and remain intact. They are, however, facing pressure from a growing population, intensive grazing and increasingly frequent droughts that are putting a strain on the natural resources.
On the other hand, most of the land gazetted as government land has been grabbed by senior government officials, politicians and military personnel. Of the 36 government outspans, only four remain. Outspans neighbouring large-scale ranches have been grabbed by the ranch managers and such grabbed land has since changed hands and been acquired by individuals.
Where farmers were settled in forests during the era of former President Daniel arap Moi, forest cover was plundered for timber and the forest floor given over to cultivation. When President Mwai Kibaki succeeded Moi, these farmers were constantly under threat of eviction but they continue to occupy the forests to date. There are, however, intact forest reserves where on-going human activity has not had a negative impact. They are used and managed by pastoralists as grazing lands, or managed by conservation groups, or by the government.
Impact of change of ownership on other livelihood groups
Land deals are coming to compound an already existing multiplicity of problems related to the access, use and management of scarce resources in Laikipia County. Compared to neighbouring counties, in the past Laikipia received moderate rainfall and severe droughts like those experienced in 2009, in 2017 and now in 2021 were the exception. This attracted pastoralists from Baringo, Samburu and Isiolo counties to settle in the county in search of water and pasture for their livestock.
Over time, land pressure in central Kenya also forced subsistence farmers to move and settle in Laikipia, practicing rain-fed agriculture and keeping small herds of sheep, goats and cattle. This has led to competition for space and resources that has been compounded by frequent and increasingly severe droughts in recent years.
“The Maasai, she said, had willingly ceded rights to Laikipia, had been compensated long ago and now resided happily in some other part of Kenya, far away.”
The consolidation of smallholdings belonging to absentee owners — where land that had previously been sub-divided into units of between two and five acres is now being merged to form bigger units of 500 acres and above, sold off and fenced — is further reducing the land available to pastoralists and to squatters who have been using such idle land to graze livestock and grow crops, leaving them with limited options and leading to an increase in levels of vulnerability as they have to rely on relief food in order to survive.
The smallholder land consolidation process, which is being undertaken by former ranch managers who are brokering for individual buyers, is also blamed for the over-exploitation of natural resources in some areas and their conservation in others. In those areas occupied by farming communities, forest cover has been exploited either for charcoal burning, firewood or timber production as people look for alternative sources of livelihood. In the smallholdings where pastoralists have title, overgrazing of the rangelands due to constrained mobility does not allow the range to regenerate. This in turn has led to the degradation of the land and the emergence of unpalatable invasive species of plants like prosopis that render grazing areas unusable, further compounding the problem of access to pasture in the few areas left for pastoralists to graze.
In the group ranches, the most degraded rangelands are overrun with opuntia stricta, an invasive species of cactus whose fruit is harmful to livestock and has caused “economic losses in excess of US$500 in 48% of households in Laikipia”.
On the other hand, in the large-scale ranches, large farms, consolidated smallholder farms and group ranches where conservation and resource use fall under the intensive management of a few individuals, the availability of resources is assured even during times of stress. However, the availability of resources for one group of users and the lack of resources for another often leads to conflict as those without poach from those who have them. One example is when pastoralists graze illegally in the large-scale ranches whenever there is scarcity in their own areas, leading to arrests and sometimes confiscation of livestock from the pastoralists by government agencies in an attempt to protect the large-scale ranches.
Historical injustices and government failures
Article 60 of the Constitution of Kenya 2010 guarantees equitable access to land and security of land rights. Further, Article 68(c)(1) states, “Parliament shall enact legislation to prescribe minimum and maximum land holding acreages in respect of private land.” Parliament has failed to pass such legislation and, indeed, the government has shied away from addressing historical land injustices in Kenya in general and in Laikipia – where they are most visible – in particular. Policy makers rarely discuss justice in the context of land reform and what has taken place are land law reforms in lieu of the essential land reforms that would confront the material consequences of unequal access to land. As Ambreena Manji observes in her paper Whose Land is it Anyway?,
The consequences of a legalistic approach to land reform are starkly evident in Kenya’s new land laws. First and foremost, it foreclosed debates about redistribution, prioritising land law reform as the most effective way to address land problems and so evading more difficult questions about who controls access to land how a more just distribution might be achieved.
The recent violence that visited death and destruction on parts of Laikipia is a continuation and an escalation of a crisis that first came to a head in May 2000 when pastoralists drove their livestock into Loldaiga farm. Then the Moi government intervened and allowed the pastoralists into the Mt Kenya and Aberdare forests while big ranchers supported the government by allowing some animals onto their ranches.
In 2004, pastoralists again occupied commercial ranches while agitating for the non-renewal of land leases which they believed had expired. This time the Kibaki government used force to dislodge them. However, the question of land leases remains unresolved to date. Outbreaks of violence have become more frequent since 2009, caused by a combination of factors including the effects of climate change and increasingly frequent droughts that force pastoralists from neighbouring Baringo, Isiolo and Samburu into Laikipia in search of water and pasture. This inevitably leads to conflicts with ranchers onto whose land they drive their animals.
Population pressure, from both humans and livestock, is another cause of conflict in Laikipia. The carrying capacity of group ranches is stretched to the limit while it is plenty on neighbouring commercial ranches. Moreover, population migration to Laikipia from neighbouring counties is placing additional pressure on resources.
The sub-divisions are made through private arrangements and do not appear in the records at the Ministry of Lands.
The proliferation of small arms in the county has added to the insecurity; pastoralists from neighbouring counties invade and occupy commercial ranches, conservancies, smallholdings and forests armed with sophisticated weapons. Laikipia pastoralists have also acquired weapons both to defend themselves and their animals and to invade other land.
Politicians have since 2009 also been encouraging pastoralists from neighbouring counties to move to Laikipia on promises of protection in exchange for votes. There are also claims that politicians have been helping the pastoralists to acquire arms and that most of the livestock being grazed in private ranches and farms belongs to senior government officials and politicians who have exerted pressure on the government not to act on the pastoralists.
In the twilight of another Kenyatta government, relations between the commercial farmers and ranchers, the pastoralists and the smallholders remain poor and there is a lot of suspicion among them, with each group acting as an isolated entity. But for how long can the big commercial ranches and large-scale farms continue to thrive in the midst of poor farmers and dispossessed pastoralists?
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