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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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Anzetse Were is a Kenyan development economist, researcher, and analyst. She blogs at https://anzetsewere.wordpress.com

Features

Uganda: Why Only Public Oversight Can Stem Corruption and Incompetence in the Public Service

It is more productive for Ugandans to focus on the underlying incompetence in public administration and to devise means of increasing public oversight of the Treasury.

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Uganda: Why Only Public Oversight Can Stem Corruption and Incompetence in the Public Service

It is that time of the year when the Auditor General’s annual report, released at the end of December, is drip-fed to Ugandans, query by query. The majority of the population will only ever know headlines such as “Uganda’s Public Debt Worrying”. Along with the news that Uganda’s public debt has risen by 22 per cent, the latest report carried the first official confirmation that the country’s sovereignty has been put at risk by the terms and conditions of some loans. These two alarming pieces of information received minimal response from the public.

What did not make the news was that significant amounts of the petroleum fund set aside for infrastructure development is being used instead to fund the recurrent budget (wages, consumables, transport etc.) amounting to UGX.125.3 billion ($34,137,671).

Revenues receivable from oil developers amounting to UGX 12,877,415,932 ($3,508,073), have not been collected. A number of other entities have failed to collect monies due to them and it is possible the receivables have been diverted.

Outstanding Receivables

Outstanding Receivables

There is a real risk of loan default given that borrowing and on-lending to parastatals has increased by 975 per cent, from UGX 431 billion ($117,409,571) in 2015/16 to UGX 4,634 billion ($1,262,612,871) in 2017/18 even as parastatals continue to fail to repay earlier loans. Parastatals have traditionally been conduits for public funds in to private hands.

The debt to revenue ratio is now 54%, the highest in the region and projected to rise to 65% in 2020 when some loans expire. Historically, nothing above 40 per cent debt to revenue ratio has been sustainable. Interest payments as a percentage of revenue collection, at 17 per cent, are also above the accepted threshold of 15 per cent. The AG first flagged unsustainable interest payments in 2016 when they were still at 16 per cent of revenues.

Other areas of deterioration in financial management reported are: a rise in contingent liabilities (including potential court awards) to UGX 9.4 trillion ($2,560,731) from UGX 7.5 trillion ($2,043,187) a year ago; unpaid court awards and compensation against the government have risen to UGX 655 billion, from UGX 648 billion ($176,509,616) in 2017. Interest on a section of judgment debts is UGX 124 billion ($33,790,210). Yet awards made in favour of the government amounting to UGX 20.6 billion ($5,611,883) have not been collected.

The debt to revenue ratio is now 54%, the highest in the region and projected to rise to 65% in 2020 when some loans expire. Historically, nothing above 40 per cent debt to revenue ratio has been sustainable.

The country has continued to fall short of the amounts it is required to contribute to donor-aided projects. In 2017, the shortfall was UGX 43 billion ($11,714,056) and rose to UGX 1.6 trillion ($435,891,546) in 2018.

The Youth Livelihood Programme attracted more attention than the debt situation, with its salacious details involving revolving loans being made to youth groups, 67 per cent of which do not exist. A small minority will find out from Twitter that 79,000 army veterans haven’t been paid their pension and gratuity arrears worth UGX 500 billion ($136,211,575) or that UGX 65.6 billion ($17,843,484) was released by the Treasury for pensions but was returned after the recipients could not be verified or were being deliberately frustrated by ministries, departments, agencies and local governments. (The latter is more likely. This writer was involved in arm-wrestling the Education Service Commission and the Ministry of Education for an elderly friend’s gratuity. A Ministry of Education official demanded an unspecified “share”; it was denied to him, and so the gratuity was not paid.)

The full report will come into its own with daily television coverage later in the year when the Parliament Accounts Committee (PAC) gets round to debating it. There will be further scrutiny if and when COSASE, Parliament’s committee on commissions, statutory authorities and state enterprises, debates its management. COSASE might spend some time trying to understand why out of the 11 public enterprises in which the government has invested UGX 70 billion ($19,067,642) only Kalangala Infrastucture Services is operational. KIS first came up for mention by the AG in 2016 when it was discovered that it had been paid UGX 16 billion ($4,358,994) to run two ferries between Ssesse Islands and the mainland while the nine other ferries countrywide were operated on a combined total of UGX 10 billion ($2,724,196). The AG pointed out that a new ferry can be acquired for UGX 14 billion ($3,813,865). KIS has never declared profits since the project began in 2012.

All except two of the government’s non-operational commercial enterprises are in the agricultural sector and were designed to transform smallholdings into commercially viable farms (See the State of the Nation Address 2018), fruit and sugar factories and tea factories and growers.

Non-operational Projects

Non-operational Projects. Source: Auditor General’s Report, December 2018

This should come as no surprise given that the AG had earlier warned against these investments made without strategic plans or feasibility studies;

Lack of guidelines for strategic investments

“The government, through the Uganda Development Corporation, is undertaking investments countrywide in the areas of fruit processing and helping others to set up industries in Soroti, Luwero, Kabale and Kisoro districts. These investments cumulatively amounted to UGX 26.6 billion ($7,246,598). However, I noted that there was no policy to guide the establishment of these investments.” The Auditor General’s report of 2016 also shows that some of the investments have been undertaken without feasibility studies on marketability and commercial viability.” (Auditor General, 2018)

The competence of parliament and the general public to oversee public expenditure is also in issue. Kira Motor Corporation (KMC), recently in the news for test-driving a car supposedly made in Uganda, was audited and is listed as non-operational in 2018.

It was only noticed when in February 2019 a parliamentary committee visited KMC and found that the plant does not exist. Where foundations and scaffolding worth UGX 15 billion ($4,087,095) had been expected, there was only bush. Like other presidential initiatives announced to fanfare and outside the NDP, KMC is being revealed as a scheme for gaining access to Treasury funds that have been embezzled.

Nugatory expenditure is a useful indicator of competence in the public service. The AG defines it as avoidable and therefore wasteful “expenditure that does not achieve any result”. In 2017 UGX 2.74 billion ($746,508) was wasted on “delayed settlements of obligations arising from contracts for construction services, court awards.” In 2018, the Ministries of Water and Education lost UGX 1.6 billion ($435,900) on “interest charges including on interest on delayed payments, litigation costs for wrongful termination of contracts and refund of embezzled funds”.

Masked corruption

However, the details are no longer important and not many more can be taken in by an exhausted polity. It is more productive for Ugandans to focus on the underlying incompetence in public administration that gives rise to audit queries such as these and to devise means of increasing public oversight of the Treasury. Some audit queries arise out of incapacity but most mask corruption.

It was only noticed when in February 2019 a parliamentary committee visited KMC and found that the plant does not exist. Where foundations and scaffolding worth UGX 15 billion ($4,087,095) had been expected, there was only bush. Like other presidential initiatives announced to fanfare and outside the NDP, KMC is being revealed as a scheme for gaining access to Treasury funds that have been embezzled.

Take wetland management. It has been government policy for at least a decade to halt encroachment on wetlands. The reasons are both to prevent environmental degradation and to maintain access for communities that derive livelihoods from them. The Wetland Management Department has not updated the inventory of wetlands since 2000; they are neither demarcated nor gazetted. This omission is convenient for those who acquired illegal title in the wetlands in anticipation of the planned standard gauge railway and the compensation that would have to be paid for them being vacated. In 2017 the National Environment Management Authority announced that the titles were to be cancelled. In 2018, the AG found that the cancellation exercise was not funded and therefore did not take place.

The target of restoring 12 per cent of destroyed wetlands by 2020 is unlikely to be met. Degradation of the wetlands outpaces restoration, with only 0.3 per cent of the targeted restorations having been implemented.

Furthermore, it has been found that reclaiming wetlands as part of irrigation schemes has led to enclosure of the irrigated land and exclusion of the local populations dependent on them for their survival. Land management generally is in similar straits with two million hectares belonging to the police, prisons and Ministry of Agriculture encroached upon. At the time of writing a massive tract of wetland is being filled with earth on the Bombo Road – a highly visible highway leading north out of Kampala. The public is mystified.

Thirty-four per cent of ministries, departments and agencies (MDAs) and local governments are understaffed. The level in 2016 was more or less the same – 119 local governments were understaffed by over 40 per cent. “This affects service delivery as a majority of these are critical jobs like doctors, clinical officers, Professors, Commissioners.” (Auditor General). The most affected are public universities and local governments. Following[1] is a sector by sector list of audit findings for MDAs highlighting the understaffing and other difficulties they face.

Then there is the usual corruption, such as the case of six officials in Apac District receiving over UGX 2 billion ($544,883) without supporting documents; financial controls are still being overridden because the twenty-year-old IFMIS has still not been rolled out country-wide. Where it does operate, controls have been by-passed to allow UGX 369 billion ($100,531,084) in expenditure not related to the relevant budget line (up from 168 billion in 2016), unaccounted for expenditure of 21.7 billion ($5,912,119) and nugatory expenditure of 66.9 billion ($18,226,765). Undisclosed arrears, which may or may not be genuine, amount to UGX 377 billion ($102,707,560).

Overall responsibility must be ascribed to the top leadership of the public service, the planning departments of the Ministry of Finance, line ministries and local governments. Unfortunately, that is where the largest gaps exist between expected services and outcomes.

In 2016, a large number of MDAs failed to submit strategic plans “as a result most sector plans and targets are not aligned with the National Development Plan (NDP) and assessing service delivery and level of implementation of the NDP is difficult without service delivery standards and regular interviews.”

However, the details are no longer important and not many more can be taken in by an exhausted polity. It is more productive for Ugandans to focus on the underlying incompetence in public administration that gives rise to audit queries such as these and to devise means of increasing public oversight of the Treasury. Some audit queries arise out of incapacity but most mask corruption.

Low debt absorption is understandable now that it is clear that money is borrowed without plans. In 2016, UGX 18 trillion ($4,903,604,818) was committed but was not disbursed. The Treasury paid UGX 20 billion ($5,448,388) in wasted commitment fees for those loans. In 2018, the trend continued; municipal councils under the Uganda Support for Municipal Infrastructure Development failed to utilise UGX 95,006,243,857 ($25,881,547) while the project support unit did not utilize UGX 6,722,829,229 ($1,831,386). This occurred against the background of “various incomplete and abandoned works due to non-payment of contractors. Work on Mbarara-Nkenda and Tororo-Lira transmission lines was delayed for almost 8 years resulting into cancellation of the loan by the funder with an undisbursed loan amount of USD 6.5m”.

The same loan was audited in 2016 when the unabsorbed amount was UGX 94.783 billion. Officials at that time attributed the failure to a lack of specialised staff (understaffing), which in turn limited their capacity to procure specialised equipment, such as for land surveys.

A minor but interesting detail is that 115 properties under the management of the Departed Asian Custodian Board (DAPCB) have been repossessed by their former owners who were compensated for these properties in 1999. These properties may be lost to the State once the winding up of the DAPCB is complete.

Class action suits

Returning to the issue of an appropriate response to the Auditor General’s findings, the aggrieved have a number of options. The most promising would be to file class action suits for negligence and any losses consequent upon that, be they avoidable deaths in hospital or those caused by bad roads.

Where funds have been available and commitments made, the failure to transmit electricity for eight years and resulting loss of industrial capacity and simple comfort of the affected population is similarly actionable. Nugatory expenditure is actionable in its own right but various communities can demonstrate in lawsuits how it has adversely affected them and obtain compensation.

It is the right of affected populations to petition the Ombudsman, individual MPs, as well as COSASE. If they appear toothless, it may be because the public they represent has abdicated responsibility for the economy.

[1] ANNEXURE II: SUMMARY ENTITY FINDINGS OF MDAS Table 2.1 Adverse Opinions

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The Original Sin: Land, Politics and the History of Ethnic Tensions in the Rift Valley

As the theatre of the politics of succession leading to 2022 plays out in the expansive Rift Valley region, the spectre of the ever-simmering land question looms large. By DAUTI KAHURA

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The Original Sin: Land, Politics, and the History of Ethnic Tensions in the Rift Valley

“Chitap koret,” this is my ancestral land, a Kalenjin from the Sabaot community, one of the nine ethnic dialects that make up the Kalenjin nation, said to me at the foothills of Mt Elgon, in Trans Nzoia County. Sabaots are a pastoralist community and just like the Maasai people, believe in keeping cattle – even the poorest Sabaot must have a cow or two. “Kalenjin believe North Rift especially belongs to them and nothing will change that,” said Kip, my Sabaot acquaintance.

“These people (the Kikuyus) will always be tenants on our land,” said Kip. “They are here temporarily. It doesn’t matter whether the land they occupy has been bought legally or not, was dished out, bought from one of us or any other person, whether it has a title or not. One day they must vacate this land.” Kip said mutual suspicion between the Kikuyus and Kalenjin in the Rift Valley will always abound. “Mark my words,” said Kip emphatically, “just like the Kikuyu don’t forget, we Kalenjin don’t forgive – we will revisit the issue of land ownership in the Rift Valley. We will soon show them who the true owners of the Rift Valley are.” It was an ominous threat.

Every time there is a shift in the political relations at the national level, between the Kikuyu and Kalenjin elites, every time these elites engage in a public spat, the Kalenjin people of the greater Rift Valley allude to foreigners among them who should be ejected. Every time the issue of foreigners arises in the Rift Valley region, the first targets are specifically the Kikuyu people, some of whom have lived in the Rift Valley region for the last 70 years.

Kip said mutual suspicion between the Kikuyus and Kalenjin in the Rift Valley will always abound. “Mark my words,” said Kip emphatically, “just like the Kikuyu don’t forget, we Kalenjin don’t forgive – we will revisit the issue of land ownership in the Rift Valley. We will soon show them who the true owners of the Rift Valley are.” It was an ominous threat.

The genesis of the land quagmire between the Kalenjin and Kikuyus in the Rift Valley region, traces back to the 1940s, which the British colonial government exacerbated by settling the Kikuyus in the area. An annual colonial write-up of 1957 reported, “In common with other Kalenjin people, however, there is everywhere else, dislike of the Kikuyu settlement being established in what is regarded as their district’s sphere of influence in Uasin Gishu”.

Yet, the colonial government had, by the turn of the 19th century, sowed the seeds of discord, when it pushed many of the ethnic communities into reserve lands and squatter camps, to create room for cash crop growing by the European settler farmers in the White Highlands. Central Kenya, Rift Valley and Coast Province were the major culprits in this settler land colonial project.

A pastoralist community, the Kalenjin, however struck an exceptional deal with the settler farmers: provide manual labour in the farms for exchange of grazing rights. But come the mid-1940s, this arrangement was destabilized, because the settler farmers needed more land for their cash crops. Why? World War (II) had ended in 1945 and Europe had decimated most of its agricultural lands for cash crop production. In addition, the Kalenjin people were expanding in population, even as their livestock grew in numbers. They too were demanding more land to graze their animals. This naturally created further tensions.

The first thing the colonial government did in reaction to this agitation by the Kalenjin was, to contain them in squatter camps and deny them grazing land. A warrior-like people, the Kalenjin refused to be squatters in the settler farms. So, in search of pastureland, they trekked off. This migration led them to central Rift Valley, Taita-Taveta and even in as far as Tanzania.

Every time there is a shift in the political relations at the national level, between the Kikuyu and Kalenjin elites, every time these elites engage in a public spat, the Kalenjin people of the greater Rift Valley allude to foreigners among them who should be ejected

To replace the departing Kalenjins, the colonial government brought in the Kikuyus from Central Kenya to work in the settler farms arguing that the agrarian, sedentary Kikuyus were hardworking and attuned to plant cultivation, unlike the “lazy” pastoralist Kalenjin.

By 1950s therefore, Kikuyu population in the Rift Valley had tremendously grown and this greatly upset the indigenous Kalenjin. This is around the time the Kalenjins started agitating for their land and viewing Kikuyus as strangers and intruders. Hence, the temporary halting of more “importation” of Kikuyus from Central Kenya to Rift Valley, according to colonial reports that quoted Mr P.H Brown, the Uasin Gishu District Commissioner (DC), who recommended the stop.

But, no sooner had Brown stopped further Kikuyu migration into the Rift, than his successor revoked the decree. Mr R.S Symes-Thompson pointed out that Kikuyus were central to agricultural success in the settler farms. It is an arrangement that Jomo Kenyatta inherited and perfected when he became first, the Prime Minister in 1963 and, later President in 1964.

When it became apparent that the British would have to relinquish its power in Kenya, they bought between one and three million acres of land to resettle the landless. They also put a caveat to land ownership: any Kenyan would own land anywhere in Kenya, regardless of their ancestral origins and ethnicity. Secondly, there was no free land. If anybody wanted to buy land, it would, henceforth be, on a willing-seller, willing-buyer. It is an arrangement that greatly favoured the Kikuyus and that Kenyatta took to heart and implemented it even better than the departing British. To date, these two decrees appear in the new promulgated 2010 constitution.

To this end, the British colonial government gave Kenyatta’s government 100 million sterling pounds under the Settlement Fund Trustees (SFT) to buy land for the squatters – many of who were Kikuyus. In 1969, fiery Nandi MP Jean Marie Seroney, convened a charged meeting to debate the land question in Rift Valley. The Nandi Hills Declaration was the aftermath of that meeting, which decreed all land in Nandi belonged to the local community, that would henceforth oppose any further acquisition and settlement of Kikuyus in the area.

Moi who was the Vice President and Minister for Home Affairs and was Seroney’s political nemesis, threw him into detention. The Kalenjins have always argued that even when they had money to buy their own land, the Kenyatta government opposed the move. They cite the example of the Makonge (sisal) Farm in Ziwa. The attempt to buy this land was thwarted by the state in 1976, leading to the arrest of Eldoret North MP, the controversial Chelagat Mutai. The farm, instead, was handed to a land buying company belonging to Kikuyus.

In Property and Political Order in Africa: Land Rights and the Structure of Politics, published in 2014 by Cambridge University Press, Catherine Boone, ably tackles the intricate interconnectedness of supra local politics and land ownership in the volatile Rift Valley region.

“The statist land tenure regime (LTG) established in the Rift Valley farming districts by the colonial state was perpetuated and elaborated by the Kanu government after independence,” writes Boone. She says, the government bought the land from the departing European settlers, and allocated the land through settlement schemes to smallholder farmers between 1960–1975. “The rest of the land so acquired was transferred in the form of large estates to high ranking members of the Kenyatta regime entrenching their status as an economic, as well as a political elite.”

Burnt Forest area – which become infamous in December 2007, after some Kikuyu families were trapped in a Pentecostal church and that was set on fire, burning mostly women and their children below 10 years – “become a zone of mostly Kikuyu settlement schemes and was purchased by the state in 1965.” During the highly contested presidential 2007 election, the Opposition coalition led by Raila Odinga, running on an ODM ticket cried foul and accused the Mwai Kibaki led Party of National Union (PNU) of stealing the elections, provoking ethnic cleansing in Rift Valley, especially in areas that were heavily populated by Kikuyu. Burnt Forest became one of the notorious flashpoints of that ethnic warfare.

“Many settlers on the Uasin Gishu and Trans Nzoia Districts schemes were Kikuyu who had previously been employed on European farms in these areas” points out Boone. “Under Kenyatta, the kanu government used its land powers to open the Rift to settlement by peoples and persons who were not recognized by the state as indigenous to these jurisdictions, and who did not claim ancestral or customary rights in these areas.” Boone adds, “Under colonial rule, these people were categorized into state-recognized ethnic groups (the Nandi, Kipsigis, Maasai, Tugen, Elgeyo, Samburu, Marakwet, Sabaot, Pokot Terik, Turkana and so on).”

Catherine Boone who is a professor of Government, International Development and Political Science at the London School of Economics (LSE), makes the point that even after these communities were pushed to the margins of their lands (presumably to create room for the sedentary communities such as the Kikuyu to engage in agricultural farming), the loss (of land) did not decrease, or become less onerous, overtime.

Conflicts over access to land in Kenya’s Rift Valley have marked all stages of Kenya’s national history and shaped each critical juncture, says Boone. “The colonial state expropriated much of what is now Rift Valley Province from the Maasai and other people indigenous to the Rift. The British proclaimed direct jurisdiction over what it designated as Crown Land in the Rift Valley in 1904.”

Boone argues in her book that “the farming districts of Kenya’s Rift Valley Province are some of the most productive and highly commercialized rural zones of sub-Saharan Africa. These districts – Nakuru, Trans Nzoia, Uasin Gishu and Nandi – are territories with high in-migration and high ethnic homogeneity and with settlement patterns and land allocation authored directly by the central state. It is also one of Africa’s worst conflict-ridden rural areas, with a long and bloody history of land-related struggles.”

Once Daniel arap Moi was in control of the state organs, after succeeding Mzee Jomo Kenyatta in 1978, “he used the central state’s land prerogative in Rift Valley to reward its own clients, who were encouraged by the regime to coalesce around ethnic identity, Kalenjin-ness that was centred on indigeneity (autochthony) in the Rift Valley,” notes Boone. “From 1986 on, government forestlands became caisse noire of patronage resources that were used to cement elite alliances and build political support for Moi among Kalenjin constituencies he needed as a mass power base.”

Hence, “evictions of Kenyatta-era forest squatters and the declassification of new forest land opened a land frontier that Moi used to settle thousands of Kalenjin families. Most Kikuyus were expelled from the Mau Forest in the 1980s, so that Kalenjins could move in. Many were allowed to settle south of Njoro.”

In the South Rift, largely composed of the Kipsigis, Kalenjin’s biggest dialect, a simmering anger of volcanic proportions is going on, brought about by the eviction of the Kipsigis people from the Mau Forest beginning 2018. Many were settled there, originally by President Moi in the early 1980s, soon after becoming the second president of Kenya, and for some as late as 15 years ago during the tenure of President Mwai Kibaki. The Kipsigis are now accusing the Deputy President William Ruto of ominous silence, as they are forcefully being kicked out and their property burned.

Daniel Burgei told me the Kipsigis helped marshal Kalenjin vote for Jubilee Party through Ruto, “now he is mum about the evictions. This is very troubling as we watch this whole spectacle in bewilderment. The Kipsigis have been practicing shamba system in the Mau Forest, where the soils are rich, do not need fertilizer and are good for cabbage, maize potatoes and tomato production. They also have been keeping livestock; cows, donkeys, goats and sheep.” Yet, in the process, they have hived huge chunks of the forest by cutting trees, hence destroying the natural environment, all in the name of giving way to farming, said Burgei.

Ruto, like Moi in the 1970s when he was Jomo Kenyatta’s VP is accused by a section of the Kalenjin people of keeping quiet in the face of the long-standing issue of land ownership in the Rift Valley region.

It is significant to note that “the name Kalenjin came into use as a group of designation in Kenya among World War (II) servicemen and ex-servicemen and students in the elite East Africa high schools in Nairobi and Kampala in the 1940s. “This ethnic consciousness of being Kalenjin was rooted in the native-stranger distinction. In very part, it was produced by the land tenure regime. The form of ethnic consciousness and mobilization that developed in Kenya was not the consciousness of all the people.

“When (former President Daniel arap) Moi led the efforts to amalgamate the political organization of the state-recognized tribes of the western Rift Valley in early 1960, he called the umbrella group the Kalenjin Political Association (KPA).” Boone adds that when the colonial government lifted the ban on indigenous politics, Kenya African Democratic Union (KADU) took over the interests of KPA.

“By the time of the February 1962 Lancaster House constitutional negotiations, “the rifts between Kanu and Kadu were…deep and deeply felt…During the talks, Moi would repeat that the people of Kalenjin were prepared to fight and die for their land.” Boone reminds us all, that “Kalenjin first appeared as an official ethnicity on the Kenyan census in 1979, Moi’s first year as a president. Moi promoted Kalenjin identity in the 1980s and 1990s as an ethnic designation to transcend the narrower, older colonial-era identities of Nandi, Kipsigis, Elgeyo, Tugen, and so on.” These ethnic consciousness of being a Kalenjin, says Boone was driven by the sensitive land politics of the Rift.

This consciousness has had the effect of creating a peculiar “tribalism,” in the Rift Valley land politics “namely that in it was almost wholly a consciousness of being, either a Kikuyu or not-Kikuyu.”

If the 1960s and 1970s were decades of consolidation of the Kenyatta regime which sidelined those claiming ancestral land rights in the Rift Valley and “inserted” African settlers into Rift Valley farming districts, the 1980s and 1990s were a reversal of these settlements. Forced to accept plural politics in 1991, by the West, his erstwhile allies in the Cold War era, Moi mobilized the Rift Valley constituencies, “along an axis of competition that pitted indigenes of the Rift Valley against settlers who had been implanted by the Kenyatta regime.”

Boone observes that the Rift Valley politicians tapped into existing land-related tensions in which the central state was directly implicated as the author and enforcer of a contested distribution of land rights. “This conflict found direct expression in electoral politics at the national level. Political rhetoric that pervaded Nandi, Nakuru, Uasin Gishu and Trans Nzoia districts dwelled on how land was lost to the Europeans was never recovered and how under Kenyatta ‘black colonialists’had been allowed to buy up land that rightfully should have belonged to indigenous communities.”

Prof Boone gives the example of Likia location, in Molo division, Nakuru District, “where most land belonged to Kikuyus in the early 1990s, local Kalenjin politicians reminded the people of the past ownership of the land and encouraged them to reclaim it.”

On January 10, 2019, a former Molo MP, Joseph Kiuna held a press conference in Likia area of Molo and reminded the Kalenjin that they had not forgotten what they had done to the Kikuyus in 2007/2008post-election violence (PEV). “All this time the Kikuyus have been pretending that they had forgotten and moved on,” said Kip. “We Kalenjin are very much aware they have not forgotten anything.” Even though thousands of Kikuyus were internally displaced – up to 600,000 people were dislocated from their homesteads in the greater Rift Valley during PEV, by the marauding Kalenjin warriors – many a Kikuyu nevertheless returned to Rift Valley. The allure of fertile soils, the armistice arrived at between Ruto and Uhuru Kenyatta and a desire to go back to their lands, which they had occupied for many years, was greater than the ominous existential threat of a repeat “ethnic” attack on their farms.

And the Kikuyus have had big group farms ranging between 1000 and 3000 acres in Trans Nzoia and Uasin Gishu Counties. 35 kilometers from Kitale town are the better known Gitwamba and Munyaka Farms located at the foothills of Mt Elgon, bordering Mt Elgon Forest. Most of the Kikuyus who settled here were from Nyeri and its environs. Endowed with black alluvial soils, the farms are very fertile. Since settling there, decades ago, the Kikuyus have grown beans, cabbages, carrots, potatoes, tomatoes amongst a host of other horticultural crops. Markets days in Iten, Kitale, Matunda, Moi’s Bridge and Soy are filled with fresh produce from these farms. As fate would have it, in Trans Nzoia, it is Gitwamba – which in Kikuyu language means a flat, rich plateau with fertile soils and Munyaka which means to be lucky – that were the first flashpoints of ethnic upheavals in 1991. They have remained so to date.

The 1991 ethnic clashes were instigated, organized and executed by Moi’s Kanu regime which suddenly felt under siege from the multi-party advocates. Hoping to tap into their age-old grievances of land ownership and aware he had kept mum as land in the Rift Valley was being parceled to Kikuyus and other communities, by the Kenyatta government in the 1970s, Moi allegedly encouraged the Kalenjins to “reclaim” their land from foreigners, in exchange for their support to further cement and consolidate his grip on state power. By foreigners, he meant the Kikuyu people.

The other Kikuyu farms in TransNzoia are: Wamuini Farm A, the 1,000 agricultural land near St Joseph High School on the Kitale-Ndalu Road. Wamuini Farm B, formerly Mabonde Farm that was called mabonde – Kiswahili for denes, because of its ridges and valleys. There is also Meru Farm bought in the early 1970s. It is near Kitale showground, adjacent to the posh Milimani Estate. The other big farms owned by Kikuyus are Kiirita, Makui and Weteithie Farms. Weteithie, which in Kikuyu means self-help. All these farms were bought through land-buying companies with loans from Agricultural Finance Corporation (AFC). They include Mwihoko, which means hope in Kikuyu, Ngwataniro-Mutukanio, Nakuru District Ex-Freedom Fighters Organization (NDEFFO) and Nyakinyua, which was President Kenyatta’s favourite cultural dancing troupe made up of women.

The 1991 ethnic clashes were instigated, organized and executed by Moi’s Kanu regime which suddenly felt under siege from the multi-party advocates. Hoping to tap into their age-old grievances of land ownership and aware he had kept mum as land in the Rift Valley was being parceled to Kikuyus and other communities, by the Kenyatta government in the 1970s, Moi allegedly encouraged the Kalenjins to “reclaim” their land from foreigners, in exchange for their support to further cement and consolidate his grip on state power. By foreigners, he meant the Kikuyu people.

In Trans Nzoia, other Kikuyus acquired land through SFTs, formerly white farms, given ostensibly to “landless people” by Jomo Kenyatta government. In Uasin Gishu County which borders Trans Nzoia, there is a replica of Munyaka Farm, today referred to as Kimumu-Munyaka Farm, located on the Eldoret-Iten Road. The more famous Ya-Mumbi Farm is on the Eldoret-Kapsabet-Kisumu Road. Rukuini and Kondoo Farms are near Burnt Forest. Kimuri and Kiambaa Farms are not far from Eldoret town. Rukuini and Kondoo, just like Gitwamba and Munyaka in Kitale, have remained focal points of “ethnic wars” since 1991.

After the violent uproar that took place in Eldoret North following the controversial 2007 general election, many Kikuyus living in Uasin Gishu County, abandoned their farms in Turbo 30 km from Eldoret town and went to live in town, at Langas estate, the sprawling Kangemi-type ghetto located on the Eldoret-Kisumu highway, just after the Eldoret Polytechnic. Kangemi is a slum on Waiyaki Way, seven kilometres from Nairobi city centre. Stephen Kiplagat, who was born and bred in and whose family still lives in Langas told me that it is today estimated to be 85 per cent populated by Kikuyus. “My family is one of the very few Nandi families that still reside at Langas, the rest are Kikuyus.”

Five Nandi families originally owned Langas. Many of them started parcelling the land and selling it mostly to Kikuyus from the 1980s. Two factors drove this sale: the Kikuyu desire for a plot of land and the fact that they had ready cash to buy the land. With the money, the departing Kalenjin bought land in Kitale, Soy, Turbo and Ziwa so that they could engage in agricultural and livestock farming.

I went to school in Kitale in the 1980s, then it was a one-street settler town and that is where I first heard the phrase “revisiting the issue.” A prominent Kalenjin businessman, (he later become an influential politician in President Moi’s inner circle and today he is retired), said in my presence: “We’ve only leased the land to them (Kikuyus), they should be knowing that…we’ll soon revisit that issue.” When the push for multiparty elections in 1991, appeared inevitable, Moi’s monolithic Kanu one-party dictatorship relented to political pluralism, but not before igniting “ethnic” skirmishes in the Rift Valley.

Kip told me, “resources are becoming scarcer by the day in the Rift Valley region and our people would like the land issue in the Rift Valley region prioritized as a matter of national political discourse.”

The first wave of Kikuyu settlers in Trans Nzoia district first appeared as colonial civil service workers in the mid-1940s after the World War II. The next group showed up in the mid-1950s. These were Kikuyus running away from the Mau Mau insurgency and capture by the British colonial police. Many of them converted to Islam and assumed new identities. Indeed the first Kikuyus to settle in Kitale town were Hamisi Saidi and Hussein Ramadhan. They had taken up Islamic names and soon became petty traders in town.

Resources are becoming scarcer by the day in the Rift Valley region and our people would like the land issue in the Rift Valley region prioritized as a matter of national political discourse

Kigotho Njuguna, Mbugua Gachani, Danson Kangonga Mbugwa, John Muchuri, Wanguhu Githiomi (who hailed from Kijabe) and Peter Kinyanjui – one time Democratic Party of Kenya (DP) point man in Trans Nzoia) formed part of the earliest pioneers of Kikuyu settlers in Kitale. DP was an opposition party once led by Mwai Kibaki, the third President of Kenya. The others were: Lawrence Waweru, Kirima Githaiga, David Kiberu, Waigi Mwangi (originally from Ngecha in Limuru) and Apollos Mwangi. All these men are dead and many of them hailed from Nyeri district.

As the theatre of the politics of succession leading to 2022, plays out in the expansive Rift Valley region, the spectre of the ever-simmering land question looms large. William Ruto, like his predecessor Moi, and not Seroney, finds himself in a dicey position of canvassing the entire Kalenjin vote, amid unsettled land ownership saga that remains an unresolved issue.

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The History Kenya Forgot: Untold World War II Stories

The sinking of SS Khedive Ismail suffers from the same historicity issues that World War II, in general, suffers from in former colonies. It was a war (mainly) away from home, driven by issues that most of the one million Africans who enlisted had little or nothing to do with, at least at a socio-cultural level. By OWAAHH

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The History Kenya Forgot: Untold World War II Stories

Before 2:30 pm on 12th February 1944, everything on SS Khedive Ismail was as normal as things aboard a troopship could be. In the music room on the upper decks, someone was playing the Warsaw Concerto on the grand piano. In the lower decks and the cargo hold, which had been converted into barracks mainly for the black soldiers, it was hot and humid. Both spaces would become death traps within a matter of seconds, and the grand piano, a weapon.

A lookout, probably bored out of his mind, noticed a periscope peeking from the water. He raised the alarm, alerting the gunners to the position of the Japanese submarine deftly charging towards SS Khedive Ismail. The troopship was on a routine mission to deliver troops, mainly East Africans, from Mombasa to Colombo in Ceylon (now Sri Lanka) before their onward journey to Burma (now Myanmar). It was part of a convoy codenamed KR8, which had begun its journey from Kilindini port in Mombasa a week earlier.

The alarm was a little too late. Just as the gunners opened fire, the submarine fired four torpedoes. Two missed, but the other two found their target. The first struck the engine room. The second hit the boiler room. The troopship listed, and in less than two minutes, disappeared under the water. The other troopships and the destroyers in the convoy, codenamed KR8, barely had time to react or help. They fled to safety before two destroyers doubled back to face the Japanese submarine and to rescue survivors.

As the troopship sank, survivors clutched onto whatever they could get their hands on. The Japanese submarine, I-27, hid beneath them as the destroyers in the convoy doubled back and tried to hit it with depth charges, killing even more of the survivors. The submarine was eventually forced to surface, and one of the destroyers, Palladin, rammed into it. The hit breached the destroyer’s hull, forcing it to retreat and leave the work to the other destroyer in the convoy, the HMS Petard. The Petard’s torpedoes hit the submarine at 5:30pm, three hours after SS Khedive Ismail had sunk. The sub broke into two and sank with everyone on board.

Aboard the SS Khedive Ismail before the sinking had been 1, 511 people, 996 of whom were members of the 301st Field Regiment, East African Artillery. Only 215 people would make it out alive. The survivors were rescued once the submarine had been sank and moved on to Ceylon, where they got survival leave for two weeks before rejoining the war effort.

Of the 1, 296 people who died that day, only four of them were given a proper sea burial. The rest were left in the shark-infested waters, far from home and virtually forgotten.

***

The sinking of SS Khedive Ismail is the subject of Brian J. Crabb’s 1997 book Passage to Destiny. In an email conversation, Crabb says his interest stems from his father, Percival Crabb, who “…was a fortunate survivor of the sinking, escaping through an open porthole with his leg still in plaster!”

In the book, Crabb includes an extensive appendix with all the names and ranks/roles of everyone, black and white, on board the doomed ship. The list of East Africans, mainly from Kenya, Uganda, and Tanzania, takes up several pages. The troops are ranked by names, rank, and number. That’s all we know about Warrant Officers Alfani Ndagile, Kathuka Ndajo, Mua Kilonzi, Muema Ileli, Selemani Mzee, Shabani Mbaraku and Siligwi Mwita. The seven of them were the highest ranking enlisted men among the hundreds of East African troops who died that day. Most of the East African casualties were gunners.

The sinking of SS Khedive Ismail suffers from the same historicity issues that World War II in general suffers from in former colonies. It was a war (mainly) away from home, driven by issues that most of the one million Africans who enlisted had little or nothing to do with, at least at a socio-cultural level.

When World War II began, there were only 2,900 men in the Kings African Rifles (KAR). The real threat of an Italian invasion from Ethiopia, and the entry of Japan into the war, drove the need for fast mobilisation.

Although the Great Depression (1929-1939) was a relatively prosperous time for Kenyan farmers, it gutted the settler economy and the colony’s budgets. Job opportunities in urban areas and farms dwindled, and crime levels in the former rose for a time. Combined with the crop failure of 1939, it meant that the best option for young men was to join the military. Any able-bodied man could enlist, although there had been restrictions as late as 1941 based on ethnicity. The Pioneer Corps, for example, were initially recruited from Western Kenya.

The sinking of SS Khedive Ismail suffers from the same historicity issues that World War II in general suffers from in former colonies. It was a war (mainly) away from home, driven by issues that most of the one million Africans who enlisted had little or nothing to do with, at least at a socio-cultural level.

In his memoirs, Fan to Flame, John G Gatu, the future Reverend and Moderator of the Presbyterian Church of East Africa, writes that he joined the armed forces because he was unemployed. Gatu joined the Signal Corps and served in Ethiopia and Somaliland. Like Gatu, Waruhiu Itote (General China) joined the military because he was unemployed and “to escape the boredom”.

For some, the economic benefits were a result, not a motivation, of being recruited. Kenya’s first four-star general, Jackson Mulinge, accidentally found himself in the military after he chose the wrong day to go to Machakos to sell a chicken. A recruitment officer grabbed the teenager and conscripted him, marking the beginning of a journey that would see him climb up the ranks over the next three decades.

The contracts the new recruits signed stated that they would be discharged “after the cessation of hostilities”. Most of them were in their early 20s, still single, and because of the education policies at the time, barely literate, if at all. By the end of the war, in 1945, there were nearly 100,000 Kenyans in the military either as members of the Kings African Rifles or the Pioneer Corps, a successor of the Carrier Corps.

Being a soldier meant a steady income and other benefits, such as being exempt from excruciating hut and poll taxes. It also gave the soldiers a common martial identity as well as exposed them to unprecedented trauma and horrors that would also go largely undocumented.

In the heat of war, despite concerns from the settler community about everything from labour supply to the economic and security risks, thousands of Kenyans were trained, armed, and deployed to fight in Northern Kenya, North Africa, and Asia. They were all enlisted men, meaning they could never rise beyond the rank of Warrant Officer. That would be one of the challenges in the lead up to and immediate aftermath of independence two decades later.

Discipline was still enforced mainly with corporal punishment. Major infractions were punished with a kiboko, while cowardice was punished with execution. There were at least three incidents of retaliation, once when a sergeant shot and killed three officers, and then when two enlisted men were executed for shooting officers and wounding others with a grenade.

In 1945, a quarter of those who survived the war were discharged. The demobilisation went on for two more years, which meant that tens of thousands of young men who had seen war and death were expected to resume their pre-war status. The Kenya that the veterans returned to had barely changed, but they had. They had not only seen the perils of war but they had also been exposed to a new lifestyle, and had had a steady income and developed new habits. Gatu, in his book, offers that the war was the beginning of unparalleled drug use among the troops. Every week, the soldiers would be issued with matches, soap, and cigarettes.

But they were also liquid and most of them were still young, single and raring to go. Studies of the post-war period mention a rising discomfort with the power held by chiefs and elders, as well as inflation in the social scene as bride price was hiked.

In 1945, a quarter of those who survived the war were discharged. The demobilisation went on for two more years, which meant that tens of thousands of young men who had seen war and death were expected to resume their pre-war status. The Kenya that the veterans returned to had barely changed, but they had.

The money they had made could not last forever. Many of them applied for trade, shop and transport licences, only to be met by a racist bureaucracy that expected them to fall back to wage labour, primarily in agriculture. Some re-enlisted into the Kings African Rifles, while others struck out in new businesses. Others, like my grandfather, used the training they had obtained during the war to eke out a living as health officers and drivers.

A number of the former soldiers were involved in the political upheaval of the late 1940s and the 1950s, but not to as significant a level as one would imagine. Dedan Kimathi, the de facto leader of the Mau Mau, was only a soldier for a month in 1940 before he was dishonourably discharged for violence and drunkenness.

Some rejoined the KAR and other disciplined units, but a large number disappeared into the normalcy of reserve life.

What’s less acknowledged in our history books are the number of enlisted men who died or suffered during the war, and the trauma the survivors came home with. Because a large number of the survivors did not have any formal education, and there was little interest in chronicling their experiences, we can only glean aspects of them from scattered memoirs and academic studies. Several memorials and cemeteries in major towns celebrate their lives and sacrifice, but very few black soldiers are named.

The sinking of SS Khedive Ismail was also problematic because of its magnitude; it was the single largest loss of East African troops, and third worst Allied mercantile shipping disaster of World War II. Publicizing it in the immediate aftermath would have affected recruitment and morale as the sinking of SS Mendi during World War I had done with South African troops.

What’s lesser acknowledged in our history books are the number of enlisted men who died or suffered during the war, and the trauma the survivors came home with. Because a large number of the survivors did not have any formal education, and there was little interest in chronicling their experiences, we can only glean aspects of their experiences from scattered memoirs and academic studies.

Despite Kenya’s central role as the home of the East African force, the Eastern Fleet, and also as a war front with Italy, the war itself is merely a footnote in the events that followed in the next decade. Thousands of enlisted men who died for a cause they didn’t necessarily believe in remain mainly nameless and unacknowledged. The unit that suffered the heaviest losses, the 301st Field Regiment, had been formed just two years before and had already served in Madagascar. The only thing that remains in their memory is a plaque at the Nairobi War Cemetery. Few of the thousands of Kenyans who died on different fronts and missions are named, and their stories have all but disappeared. Even the wounds of war, such as the bombing of Malindi and the Italian excursion 100km into Kenya, are now mere footnotes in history.

It is a significant gap in our military history, and if the lacklustre coverage of our eight-year war in Somalia is anything to go by, a part of our national ethos.

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