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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The Evolving Language of Corruption in Kenya
A cabal of politicos has appropriated the everyday language of hardworking Kenyans to camouflage their intentions to perpetuate corruption and state capture.
Andrew Ngumba had a curious way of explaining away institutionalized corruption every time he was accused of engaging in it. “In the days gone by, before the village elders arbitrated any pressing or thorny issue, they would be offered libation just before the deliberations and then thanked with a goat thereafter, as an appreciation for a job well done.”
Those who are old enough will remember Ngumba, who died in 1997, as the mayor of Nairobi from 1977–1980. He later became the MP for Mathare constituency, renamed Kasarani, from 1983–1986. Ngumba estate, off Thika highway, next to East African Breweries, is named after the canny entrepreneur-politician, who founded Rural Urban Credit Finance Limited, dubbed the “ghetto bank”. The finance house collapsed in 1984 and Ngumba sought political refuge in Sweden.
Just like your archetypal politician, the wily Ngumba would with characteristic panache then ask, “Was the libation and the goat a form of saying ‘thank you for your time’ to the elders, or was it just plain corruption?” His cheekiness aside, which Kenyan society was Ngumba describing? Pre-colonial, before the advent of British settlers and missionaries? Or was he referring to a pre-urban, rural-setting Kenya, before it was contaminated by colonialism, modern capitalism and corruption?
We can imagine what his answer to his own rhetorical question was. Of greater interest, is the way he chose to re-tell the socio-cultural anecdote, with the obvious intention of exonerating himself and like-minded politicians, when caught engaging in bribery and institutional corruption: he implicitly gave a nod to the nefarious activity by normalizing bribery, a vice previously unknown and unexperienced in the very society he was describing.
“Political elites [also] appropriate moral language and social norms to ‘conventionalise’ corruption, fashioning a vocabulary that takes the moral sting from opprobrium, corruption and its various forms,” says Wachira Maina in his report, State Capture – Inside Kenya’s Inability to Fight Corruption. “Corruption is ‘traditionalised’ and reframed as gift-giving or as a form of socially recognizable reciprocity. Corrupt practices are then expressed in the language of moral obligation. No moral wrong is involved when an official or politician from one’s village violates conflict of interest rules or other laws to provide some ‘token benefit’.”
But when is a gift a bribe and a bribe a gift? Let us take the example of the chief – village or otherwise. Until very recently, up to the late 1990s, the chief was a powerful creature bestowed with the powers of “life and death” over his subjects. Until just before the December 1997 general elections, the statutory powers of the chief were many times greater than those of any elected official that you can think of. With the Inter-Parties Parliamentary Group (IPPG) reforms, some of their powers were supposedly clipped.
Picture this: Two parties are squabbling over a land boundary. They must go to the chief for arbitration. On the eve of the arbitration, one of the parties, most probably the one who has encroached on his neighbour’s land, gets a brainwave and pays the chief a visit in advance, ostensibly to remind him of their big day. Because of the unwritten law that it is “culturally rude” to visit a chief “empty-handed”, the visiting party decides to “gift” the chief with whatever, as has happened from time immemorial. One can, without too much effort, imagine the possible outcome of the land tussle the following day.
Chiefs were not only very powerful, they happened to be some of the richest people wherever they reigned. Should we wonder why chiefs as public officials, for example, own some of the biggest chunks of land in their area of jurisdiction? At the grassroots level, a socio-cultural norm was deliberately subverted to allow open bribery and the establishment of institutionalized corruption.
As currently constituted in the country, chiefs are an invention of British colonial rule. They are part of the indirect rule that the colonial government imposed on Kenyans. When Kenya gained independence from the British in 1963, the post-independent government inherited the colonial indirect system of government — the whole kit and caboodle. With their “illegitimacy” and corruption networks carried over and sanctioned by the new African government, chiefs entrenched themselves even further by extending their corrupt patronage networks within the government bureaucratic structures.
During their “reign of terror”, which continues today, chiefs interpreted bribes as “gifts” that had to be given by “force of law”; any person with matters arising at the chief’s court knew that a “gift” had to be carried along. So, even though this form of corruption was covert and not dangerous to the existence of the state, it impoverished and terrorized the poor peasants.
Chiefs were not only very powerful, they happened to be some of the richest people wherever they reigned.
Corruption, as an evolving concept, was introduced into Kenya society by the British colonial government and, the civil service has been known to be the home of institutionalized state corruption since pre-independence Kenya. Think about it, the word corruption does not exist in the lexicons of Kenya’s ethnic communities. In the Kikuyu community, for instance, there is a specific lexicon that describes a thief and theft, but there is no word for corruption per se, because in African societies, corruption, a Western concept (and as defined today), was unknown in many African traditional societies.
Indeed, as Wachira observes in his report released in 2019, “corruption has been a persistent problem in Kenya since before independence, but it has flourished and put down robust roots since the country’s return to multiparty politics in 1992.”
What is corruption? For the longest time, corruption has been defined in the binary fashion of either petty or grand corruption. Political scientists have variously described corruption as an act in which the power of public office is used for personal gain. In other words, the misuse of public resources by state officials for private gain. Corruption has also been described as behaviour that deviates from the formal rules of conduct governing the actions of someone in a position of public authority or trust.
The benefits of corruption are either economic — when an exchange of cash occurs — or social, in the case of favouritism or nepotism. Hence, grand corruption, sometimes referred to as political corruption, involves top government officials and political decision makers who engage in exchanges of large sums of illegally acquired money. Petty corruption involves mid- or low-level state officials, who are often underpaid and who interact with the public on a daily basis.
In his concise report, Wachira notes that “a generation of reforms has not dented the corruption edifice or undone its rhizome-like penetration into the body politic of Kenya.” Why? “Part of the problem is conceptual: How we name corruption and how we understand its character,” points out the constitutional lawyer.
These simple but loaded terms of “petty” and “grand” corruption present a false dichotomy, says Wachira. “Petty” suggests that the corruption is merely an irritant, something people do to speed up things or evade a long queue — a way of “lubricating the system. “The term suggests an expedient with trivial effect, considered case by case. In fact, that characterization is deeply mistaken. . . . Most important, it becomes a fee, because it guarantees that what was initially a free service is no longer so. From a macro-economic perspective, its distortionary effect could be as at least as impactful as grand corruption,” writes Wachira.
That is why petty corruption in Kenya has long been baptized chai, meaning tea, or kitu kidogo, which means something small. It is daily language that is used to camouflage an illegal act by likening it to one of Kenya’s best-known pastimes — drinking tea. Civil servants demand chai from the public in order, they argue, to grease the bureaucratic wheel, which oftentimes revolves very, very slowly and needs to be lubricated for it to move. Chai and Kitu Kidogo have become interchangeable, because “something small” also connotes a kind of “lubricant” that “hastens” service delivery.
The police, especially traffic cops, who are synonymous with petty corruption, have perfected the language of chai-taking more than any other state official such that when Kenyans conjure bribe giving, the first person who immediately comes to mind is the policeman.
The State Capture report says, “Indeed language is in a parlous condition when the bribe a judge takes to free a dangerous criminal is named chai, like a nice ‘cuppa’ tea between intimates.”
During their “reign of terror”, which continues today, chiefs interpreted bribes as “gifts” that had to be given by “force of law”.
The report further states that, “the term ‘grand’ on the other hand can also be misleading if grand suggests debilitating to the state. Implicit in the term is the notion of a corrupt deal of significant size, involving senior officials and high-ranking politicians. Such corruption involves large-scale stealing of state resources and, the theory goes, it erodes confidence in government, undermines the rule of law and spawns economic instability.”
In Kenya, grand corruption has involved such mindboggling money schemes as the Goldenberg and Anglo-Leasing scandals and more recently, the Eurobond scandal. These mega-scams are a result of collusion between state officials and politicians, who over time have formed powerful corruption cartels that have proved inextinguishable.
Why does this corruption on a massive scale not cause moral outrage or shock in the public? Why is it not obvious to all? “There are cases in which the term ‘grand’ corruption fails to communicate the moral shock and magnitude that seems implicit. ‘Grand’ then becomes merely an audit term that simply describes financial scale,” says Wachira. “If that conclusion is right, it would then explain the frequent lack of moral outrage about widespread theft in government, with the result that there will be cases in which characterising corruption as petty or grand implies nothing about its impact or the social and political levers one can push to eliminate it.”
“Grand corruption” in Kenya today has evidently surpassed the current nomenclature; the staggering sums of money stolen have numbed the people’s sensibilities to shock and have refused to register in their psyche. How, for example, can the president have the audacity of treating Kenyans to shock therapy by telling them that KSh2 billion is stolen from the state coffers every 24 hours? That kind of pillage can no longer be termed as corruption, let alone grand corruption. A more appropriate language has to be found; and there can be no other word for it other than theft.
The State Capture report problematizes the matter of the naming of state plunder and discusses at length what could be the problem with language that seeks to explain the massive haemorrhage of state resources orchestrated by unscrupulous individuals. The report notes that corruption in Kenya has been described as a malignant tumour that hampers the government from governing properly “The problem of naming [corruption] is then compounded by medical or sociological language that pathologises corruption. . . . Therein lies the problem: Anti-corruption programmes ‘pathologise’ the relationship between corruption and the state, deploying medical terms like ‘cancer on the body politic,’ ‘a disease that we must cure’ or ‘a pervasive ill’ potentially responsive to curative interventions.
Even when the language used is sociological rather medical, the pathological dimension stays. Corruption is ‘a perverse culture’ or ‘negative norm’. Both the medical and the sociological language mobilise a deep-seated ‘conviction that there is something pathological – an illness – within [Kenya] politics and culture’. This suggests that what the reformers must do is ‘to identify this pathology’ and formulate a diagnosis that examines the Kenyan society and brings to the surface the ‘fissures and contradictions’ that explain the graft.
In his report, Wachira goes on to say, “The medical perspective that implies that the state has gone awry and can be put to rights with an appropriate intervention is pervasive. Implicit in the diagnosis and the proposed cure is the thought that the state is constructed for some legitimate — or benign — purpose that has been perverted by corruption.”
Joseph G. Kibe, a Permanent Secretary in six different ministries in the 1970s, was once interviewed about his experience working as a top government bureaucrat, many years after his retirement in 1979. Said Kibe, “In those days, I could see some kind of low-level corruption starting to creep in, especially involving clerks. For instance, in the Lands Office, they would remove one file and hide it away from where the index shows it is and wait until the owners of the land wanted to conduct a transaction at which point they would ask for a bribe.”
The same low-level corruption has been rampant in the corridors of justice. The low-paid court clerk in the magistrate’s court “disappears” a case file so that he can solicit a bribe to enable the miraculous re-appearance of the “lost” file.
“A generation of reforms has not dented the corruption edifice or undone its rhizome-like penetration into the body politic of Kenya.”
The former PS, who went on to work for Transparency International (TI) Kenya Chapter, said in 2004, “Corruption had crept into ministries, departments and government corporations and was likely to entrench itself unless it was stopped. With corruption you give up development because all resources you have, only a little will do good. A lot will be taken away for personal use.”
Because the patronage networks created by the civil service and the political class have ensured that corruption is profitable and has high returns, it has become extremely difficult to fight the vice. “The difficulties of fighting corruption lie in the union of corruption and politics; a union in which, at least since Goldenberg scandal, a power elite has captured the state, especially the Presidency and the Treasury and repurposed the machinery of the government into a ‘temporary zone for personalised appropriation’” says Wachira.
State capture is a term that was popularized in South Africa, a country that since its independence 27 years ago, has witnessed some of the biggest state scandals since the end of Apartheid. “What is at play in Kenya [today] is ‘state capture’ defined as a political project in which a well-organised elite network constructs a symbiotic relationship between the constitutional state and a parallel shadow state for its own benefit”, explains the State Capture report.
The success of the state capture rests on the ability of a small group of powerful and rich operatives to take over and pervert the institutions of democracy, while keeping the façade of a functioning democracy. Thus, oversight institutions are weakened; law enforcement is partisan and in the pockets of the politicians; civic space is asphyxiated; free elections are frustrated and are typically won by the most violent or the most corrupt, or those who are both violent and corrupt. Arrest and indictments are often the precursor of inaction, not proof of official will to fight corruption.
“Corruption eats at the moral fabric of the nation,” once said Harris Mule, one of the finest PSs to have served at Kenya’s Ministry of Finance. “Positive norms and traditions, once appropriated by the corrupt, instantly transform themselves into curses. Take the uniquely Kenyan institution of Harambee, as an example. It has been changed from what was once a positive manifestation of the culture of philanthropy and community service, into a political tool that fails to deliver what it promises.”
Mule further said, “Corruption causes poverty by promoting unfair distribution of [the] national income and inefficient use of resources. Poverty and inequality in turn breed discontent and can cause national instability. The political implications of sharp economic inequalities are potent.” The former PS was clear in his mind that corruption was the art of “transferring state assets into private hands at the expense of the public interest and purse.”
Harambee, which means, “pulling together”, was a noble idea that tapped into the egalitarian and altruistic nature of African society, that of pooling their meagre resources together for the public good. It was very popular throughout the 1970s and 1980s and to a lesser extent in the 1990s. When Mwai Kibaki came to power in 2003, his government instituted a probe into the now much-maligned popular group effort. Wachira explains that,
As the report of the Task Force on Public Collections or Harambees showed clearly, politicians are the largest donors to ‘charitable’ causes — churches, schools, higher education and funerals are firm favourites — to which they give fortunes that are many times more that their own legitimate incomes. Such charity is, in truth, a bait and switch ploy: once moral institutions buckle to the lure of corruption money, the corrupt buy absolution and are free to dip deeper into the public coffers.
Both the Jomo Kenyatta and Daniel arap Moi regimes misused the Harambee spirit for self-aggrandizement. Mzee Kenyatta, who hardly gave any money towards any Harambee effort and if he did, it was a symbolic sum, expected Kenyans to contribute to his Harambee causes, which were baptized all manner of noteworthy names. The monies were not accounted for and nobody would dare ask how the funds raised were spent, whether they were spent on the causes for which they had been contributed. In many instances, the money collected went to line the pockets of Mzee’s friends.
During Moi’s time, Harambee was used by civil servants, especially chiefs, to solicit bribes and favours from people calling into government offices for services that are meant to be free. A citizen visiting a chief’s office to obtain a personal identification document would be presented with a card for a Harambee by the chief and his subordinates. If you wanted to be served at the Ministry of Lands for example, you would be presented with a Harambee card by a junior officer acting on behalf of his boss. Yours was not to question the authenticity of the card, why a public office was presenting a Harambee card to and all sundry, or why it was “mandatory” to contribute before being served in a public office. If you did, you would be called an “enemy of development” and labelled anti-Nyayo.
Why does this corruption on a massive scale not cause moral outrage or shock in the public?
Just after the Narc party was swept into power in 2003, the country witnessed a “citizen’s jury” at work: it exposed and sometimes went as far as making citizens’ arrests of errant police officers caught engaging in bribery. But what happened to citizens’ arrests? It was just a matter of time before the citizens themselves caved in and returned to offering the same bribes to the very same police officers. Why? Because they realized belatedly that to fight institutionalized corruption in Kenya, there must be goodwill and concerted effort from the government: the fish rots from the head and the fight against corruption must begin at the top.
Since 2013, corruption seems to have acquired a new word to camouflage it – hustler. Under the Jubilee government, “hustler” has come to describe tenderpreneurs masquerading as the toiling masses. It is the new lexicon that has been adopted by a cabal of people intent on raiding government coffers, a cabal that has appropriated the everyday language of Kenyans who eke out a living the hard way. It is the latest socio-cultural jargon that has been unleashed on the political landscape by a network of politicos intent on acquiring state power so that, in their turn, they can perpetuate state capture.
Pan-Africanism in a Time of Pandemic
Solidarity conferences have been replaced by aid conferences called by “donors”. What we need is a Pan-African conference organised by movements and individuals committed to human development.
There was a time, in the last century, when the under-privileged of the world shared a common understanding of the causes of their condition. Today the causes manifest in vaccine Apartheid. That the COVID-19 pandemic should find most African countries with less than one doctor and less than ten beds per a thousand of their population shows the failure of the development efforts of the past 60 or so years. The same countries all struggle with unsustainable debt, which is still being paid during the pandemic and has been increased by the COVID debt. When the global emergency was declared in January 2021, development partners began to hoard personal protective equipment. When vaccines became available a year later, there was insufficient production capacity to meet world needs. The same development partners rejected the option of allowing African countries to manufacture the vaccines on the continent. They hoarded their supplies until they were nearly expired before donating them to African countries.
In the 1950s, there would have been a different reaction. By then, African and Asian countries were moving inexorably towards independence. Organised by Indonesia, Myanmar (now Burma), Ceylon (now Sri Lanka), India, and Pakistan, African countries attended the Bandung Conference of 1955 with economic and social development in mind. Then as now, China and the United States were on opposite sides of the Cold War and each sought to influence Africa while Africa sought non-alignment in order to freely pursue her development goals.
For one week in Bandung, Indonesia, twenty-nine African and Asian heads of state and other leaders discussed the formation of an alliance based on five principles: political self-determination, mutual respect for sovereignty, non-aggression, non-interference in internal affairs, and equality. The ten-points in the communiqué released after the conference became the governing principles of the non-aligned movement and they included self-determination, protection of human rights, the promotion of economic and cultural cooperation, and a call for an end to racial discrimination wherever it occurred. The alliance began to disintegrate when India and Yugoslavia shunned the radical stand against Western imperialism, leading to the organisation of a rival non-aligned conference in 1965. The 1965 conference was postponed.
While there was no follow-up to Bandung, the ideals it stood for were being espoused by other formations. On the African continent, the Casablanca Group—the precursor to the Organisation of African Unity (OAU)—had a membership of five African states: Egypt, Ghana, Guinea, Mali, Libya, and Morocco. The All-African Peoples’ Conference (AAPC) took place in Cairo in 1958 after the founder, Uganda’s John Kale, was inspired by his attendance at the Afro-Asian Peoples’ Solidarity Conference the previous year. It was a meeting representing peoples and movements and not just states. The conference demanded the immediate and unconditional independence of all the African peoples, and the total evacuation of the foreign forces of aggression and oppression stationed in Africa.
The All-African People’s Conference recommended African co-operation in the interest of all the Africans, denounced racial discrimination in South, East and Central Africa, and demanded the abolition of apartheid in South Africa, the suppression of the Federation of Nyasaland (Malawi) and Rhodesia (Zimbabwe), and independence for the two countries.
The Afro-Asian People’s Solidarity Organisation (AAPSO) organised a conference in Cuba in 1957. The 500 delegates to the AAPSO conference represented national liberation movements as well as states and after a number of such gatherings, AAPSO resolved to include Cuba and Latin America in its membership. Thus was the organisation of Solidarity with the People of Asia, Europe, Africa and Latin America (OSPAAAL) born.
The activities of OSPAAAL included financial support for the anti-colonial struggle in Palestine and for South Africa’s Africa National Congress (ANC). American aggression towards Cuba and its blockade of Vietnam were denounced and global solidarity was shown to political activists under threat of arrest. The movement solidified in the 1966 Tricontinental Conference in Havana, Cuba. The Solidarity movement established a think tank, the Tricontinental Institute for Social Research which produced educational materials in the form of newsletters, articles and the now iconic revolutionary art. This work continues to this day.
For the next decade, Cuba provided support to the armed struggle for independence in Angola, Mozambique, Guinea Bissau and Equatorial Guinea, and to South Africa’s ANC. Fidel Castro was a familiar face on the diplomatic circuit and received Julius Nyerere of Tanzania, and other leaders, in Havana.
The United States government was caught between the expectations of its allies, the former colonial powers and those of the soon-to-be independent countries whose alliance it sought. The civil rights movement in the United States was a thorn in its side as it appealed to Africans in the Independence movement. America chose her traditional allies and neo-colonialism put down roots.
Regardless of that, leaders of African and American movements interacted, learning from each other; Julius Nyerere, Kenneth Kaunda, and a number of other leaders of the day met Kwame Nkrumah at Ghana’s independence celebrations in 1957. Martin Luther King was also there. Reflecting on the cost of freedom and mentioning Egypt, Ethiopia, South Africa, Uganda, Nigeria, Liberia and Kenya, King later wrote, “Ghana reminds us that freedom never comes on a silver platter. It’s never easy. . . . Ghana reminds us of that. You better get ready to go to prison.” Following a visit to Nigeria in 1960, King reported,
I just returned from Africa a little more than a month ago and I had the opportunity to talk to most of the major leaders of the new independent countries of Africa and also leaders of countries that are moving toward independence [. . .] they are saying in no uncertain terms that racism and colonialism must go for they see the two are as based on the same principle, a sort of contempt for life, and a contempt for human personality.
Today Dr King would probably have added predatory debt to that list.
Malcolm X visited Egypt and Ghana in 1959 and met Gamal Abdel Nasser and Kwame Nkrumah. In 1964, he spoke at the OAU conference in Egypt. He went to Tanzania and to Kenya where he met Oginga Odinga and Jomo Kenyatta. Back in New York Malcolm X related his experience: “As long as we think—as one of my good brothers mentioned out of the side of his mouth here a couple of Sundays ago—that we should get Mississippi straightened out before we worry about the Congo, you’ll never get Mississippi straightened out.” Prophetic words. Just this month the President of the United States warned against a “Jim Crow assault” on the voting rights of people of colour and the under-privileged that were won in 1965 after a long and hard civil rights struggle.
By the time the Bandung Conference was taking place, Frantz Fanon had already published Black Skin, White Masks and was to follow it up with A Dying Colonialism and The Wretched of the Earth. Walter Rodney’s How Europe Underdeveloped Africa would appear in 1972. There was an explosion of global awareness of Africa. Musicians like Miriam Makeba, Hugh Masekela, Letta Mbulu, and Caiphus Semenya and others became known in Europe and America as they raised awareness about apartheid. African fashion became the signature of the civil rights movement. On the African continent, the Second World Black and African Festival of Arts and Culture (Festac77) was held in Lagos, attracting 59 countries. Exhibits ranged from David Aradeon’s African architectural technology to work by the Chicago Africobra arts collective. The welcome given to the American diaspora contingent at the venue is testament to the sense of oneness that prevailed at the time.
Yet here we are in the new millennium facing identical existential crises. Palestine has lost over half the territory it had in 1966. The televised ethnic cleansing taking place in the country is openly supported by American aid. The Republic of South Africa has found that the end of apartheid may only have been the beginning of the struggle for human development. The country is just emerging from three days of looting and burning by impoverished citizens. Cuba is still under a US embargo and there was even an attempt to blockade medical supplies being shipped to Cuba for the fight against COVID.
Cold War tensions between China and the West have been revived with the United State’s growing opposition to China’s Belt and Road Initiative. China has remained faithful to the non-interference principle, to the extent of transacting business with African leaders without regard to that other principle, the observance of human rights.
While most African countries are nominally independent, this has not brought development as they had envisaged it. Now, as in 1966, the main economic activity is the export of raw commodities. Africa’s Asian partners in the Bandung Communiqué have long since moved out of the realm of what used to be called “The Third World”. Malaysia, at number 62 out of 189 countries listed on the Human Development Index, is ranked as a Very High Human Development Country. Indonesia, the host of the Bandung Conference, is in the High Human Development category, with a ranking of 107. India, which abandoned the spirit of Bandung, is a medium human development country (ranked 131) while Yugoslavia ceased to exist. Only eight African countries are highly developed, while 30 fall in the Low Human Development category. Within that category, Uganda slipped down one place in 1997 and is ranked 159.
Solidarity conferences have been replaced by aid conferences called by “donors”. They are no longer organised by activists like the Moroccan Mehdi Ben Barka who, together with Chu Tzu-chi of the People’s Republic of China, organized the Tricontinental Conference (Ben Barka was abducted and “disappeared” in 1965 before the conference took place.) or John Kale. Recent conferences have been organised by European heads of state or United Nations bodies. India and China organise their own conferences for Africa, having transitioned to the ranks of developed countries. Attending delegates are the residual wretched.
The India–Africa Forum Summit (IAFS) inaugurated in 2008 is scheduled to be held once every three years. The France-Africa Finance Summit is an initiative of French President Emmanuel Macron whose various remarks about Africa on his tour of the continent were perceived as racist and disparaging.
At the Forum on China-African Cooperation (FOCAC) in Johannesburg in 2015, China offered US$60 billion in development assistance, US$5 billion in the form of grants and the rest in loans. Attendance by African heads of state was higher than for the most recent African Union Conference; only six did not turn up (but were represented).
Attending delegates are the residual wretched.
The following year FOCAC was held in Beijing. On the first day, members of the American Congress issued a statement condemning China’s predatory lending to African and Asian countries. They argued that the recipient countries eventually wound up needing to be bailed out by the IMF, mostly with American money, thereby transferring American capital to China. For his part, the beleaguered president of economically battered Zimbabwe received the offer of another US$60 billion with fulsome gratitude, saying President Xi Jinping was doing what “we expected those who colonised us yesterday to do.”
The International Development Association for Africa: Heads of State Summit held on 15 July 2021 was a World Bank exercise. The agenda, according to their website, was “to highlight the importance of an ambitious and robust 20th replenishment of the International Development Association.” In other words, it was about increasing members’ debt. These days “cooperation” means aid – with strings attached – not solidarity. This year there will also be a virtual African Economic Conference (AEC) to discuss “Financing Africa’s post COVID-19 Development”. It is organised by the United Nations Development Programme, the African Development Bank and the Economic Commission for Africa.
Of the original anti-colonial activist countries of the 1960s, most Asian countries are in a position to offer solutions to economic questions; they compete in the global arena manufacturing pharmaceuticals and agricultural technology. China has mastered all of the foregoing as well as dominating foreign infrastructural development investment. The African bloc stands alone in not being organised enough to participate in the global discourse except as receivers of aid.
It is true that together with Latin American countries, resource-wealthy African countries have endured Western-engineered coups d’état and other debilitating interference but the dynamism of Gamal Abdel Nasser, Patrice Lumumba, Kwame Nkrumah and Amilcar Cabral is missing. In its place is the renewed use of the once hated colonial public order laws to quell dissent against corruption and repression.
These days “cooperation” means aid – with strings attached – not solidarity.
Two decades after Lumumba’s assassination, the less wealthy Burkina Faso lit the path to self-sufficiency before the country’s radical president, Captain Thomas Sankara, was assassinated with French connivance. Three months earlier, Sankara had called for the repudiation of debt at an Organisation of African Unity Conference. The delegates were stunned as can be seen from the expression on the late Kenneth Kaunda’s face.
The last African-Asian Conference organised by Africa may or may not be more of a memorial than the birth (re-birth?) of the solidarity movement. On the 50th anniversary of the original Bandung Conference, in 2005, Asian and African leaders met in Jakarta and Bandung to launch the New Asian-African Strategic Partnership (NAASP). They pledged to promote political, economic, and cultural cooperation between the two continents. An interesting outcome was their communiqué to the United Nations General Assembly and the Security Council concerning the development of Palestine. On the cultural front, there is talk of a third Festac.
Then there is Cuba, host of the 1966 Tricontinental Conference. Cuba ranks as a high human development country and has the highest doctor-patient ratio in the world—more than double the concentration in the US—and the most hospital beds per 10,000, nearly double what is available in the US. Cuba also has the highest pupil-teacher ratio in the world. Out of necessity due to the economic embargo imposed on it, and being unable to import fertilisers, Cuba pioneered vermiculture, a technique now in use globally. The country manufactures 80 per cent of its vaccines and has five COVID-19 vaccine candidates (two are being used under emergency licence like AstraZeneca, J&J and the other Western products). While Western pharmaceutical manufacturers took an early decision to bar Africa from manufacturing its vaccines on intellectual property grounds, Cuba is willing to transfer its technology to countries that need it. Funds should have been no object as the African continent is awash with COVID Emergency Response funds borrowed from the World Bank and the IMF. This is the kind of development that has been sought for the last sixty-plus years.
The dynamism of Gamal Abdel Nasser, Patrice Lumumba, Kwame Nkrumah and Amilcar Cabral is missing.
But Africa is not talking to Cuba about developing vaccine capacity. African leaders are waiting for UNICEF, appointed by the World Bank, to procure Western-made vaccines for them with funds they shall have to repay. In Uganda, delivery is expected in six months. Meanwhile, Norway and others are donating small amounts of vaccine, hardly enough to cover the twenty-nine million Ugandans that will give us immunity. The Indian-manufactured brand, AstraZeneca, is not recognised in Europe and will prevent recipients travelling there.
The Conscious Era began to wind down with the accession of leaders of independent African states more interested in the instant gratification of cash inflows than in the principles of the past. Yoweri Museveni had the opportunity to learn from the Cuban model when he met Castro in the early months of his rule. As it turned out, he was only wasting El Comandante’s time. Despite condemning his predecessors’ SDR177,500,000 debt to the IMF during the Bush War, Museveni’s SDR49,800,000 structural adjustment facility was signed on 15 Jun 1987—he had been in power for just eighteen months. Since then he has extended his credit to SDR1,606,275 (US$2,285,199.26) from the IMF alone. New debt to the World Bank (contracted since 2020) amounts to US$468,360,000.00. A separate COVID Debt owed to the World Bank amounts to US$300 million so far while over US$31 million is owed to the African Development Bank. These funds have not been used to purchase vaccines.
The Black Lives Matter movement has echoes of the Black Power movement of the 1960s. The movement is strong on showing solidarity with persecuted activists and victims of racism through online campaigns. BLM chapters are in solidarity with Ghanaian activists. Like the Tricontinental Institute, BLM has made attempts to educate, for example via the Pan-African Activist Sunday School. What is needed is another Pan-African conference organised by movements and individuals committed to human development.
Protests, Chaos and Uprisings: Lessons from South Africa’s Past
The recent riots are an attempt to force change after years of neglect by a state that has remained aloof and uninterested in the economic and social dispossession of the African majority.
The current upheavals across South Africa are ostensibly in response to former President Jacob Zuma’s arrest (or surrender) on 8 July 2021. But contrary to the misinformation in circulation, Zuma was not arrested on charges of corruption, racketeering and for diverting state assets and resources to a circle of cronies including the Gupta family. His reluctance to appear before the Zondo Commission led Deputy Chief Justice Raymond Zondo, the Chair, to issue a warrant for Zuma’s arrest for contempt of court.
Protest politics in South Africa have a long history and protests have been deployed differently at different historical moments. Whereas protests were an important vehicle during the fight against apartheid, their resurgence and propulsion to the centre of the struggles in post-apartheid South Africa has come as a surprise to many. These so-called “service delivery protests” are said to be caused by community dissatisfaction with municipal service delivery and to lack of communication between councils and councillors on the one hand, and citizens on the other.
The African National Congress-led (ANC) government has been facing growing protests associated with economic contraction, and the dual pressures of a recessionary environment and rising unemployment. But while their grievances may be valid, citizens’ protests have been perceived as having a negative impact on government programmes, businesses, investor confidence and jobs. Indeed, the ongoing service delivery protests could be regarded as a self-defeating strategy in those areas that are more susceptible to them, mostly the municipalities located in the peri-urban areas.
Historians and experts argue that these types of riots are not merely random acts of violence or people taking advantage of dire circumstances to steal and destroy property. They are, instead, a serious attempt to force change after years of neglect by politicians, media, and the general public.
This article takes a historical view of South Africa’s current upheaval and suggests that this moment has been a long time coming.
Service delivery in historical context
The pre-1994 era was prone to mass protests and defiance campaigns, some sporadic but most coordinated by social movements. They include the two defiance campaigns of 1952 and 1989, in Gauteng, the PAC (Pan Africanist Congress) defiance campaigns that led to the Sharpeville and Langa massacres in 1960 and, of course, the 1976 Soweto student uprisings. These coordinated mass protests had a clear aim — the abolition of the apartheid laws which were central to racial segregation, white supremacy and the oppression of the majority black population.
The violent service delivery protests, which are mostly prevalent at the local government level, have been associated with the results of apartheid: marginalisation of the majority black population with regard to basic needs, including housing, clean drinking water, proper sanitation, electricity, and access to healthcare and to infrastructure. After the end of apartheid, the new democratic government led by the ANC inherited an unequal society and was confronted with protests against lack of basic services and systemic corruption at local government level. Some scholars and analysts have suggested that such unrest epitomises the dispossession of African people, precluding them from complete liberation in their own land and subjecting them to continued subjugation by their white counterparts.
The ongoing service delivery protests could be regarded as a self-defeating strategy in those areas that are more susceptible to them.
Various communities throughout the country have resorted to violent riots, destroying schools, libraries and the houses of underperforming local government councillors. One opinion is that service delivery protests are exacerbated in the informal settlements where poverty and unemployment are high, and where there is a lack of technical and managerial skills within municipalities beset by corruption, poor financial management, and a lack of accountability on the part of local councillors and municipal officials.
Public protests did not feature as prominently during the initial part of the Mandela administration (1994–1999). The relative lull in public protests following the inauguration of the Mandela presidency in 1994 might have been a result of three key factors. One aspect is the negotiated settlement that gave rise to what is often characterised as a democratic dispensation, popularly and quite falsely described as a new era for South African people but which rapidly descended into mass frustration. In the neo-liberal euphoria of the “new democratic South Africa”, the strategic power of mass protest action that had helped to remove the apartheid regime struggled to find a new footing. Protests were suddenly viewed as acts against the state and were vigorously discouraged by an ANC government that was increasingly detached from the broader population. The ANC-led administration preferred to mobilise mass movements as cheerleaders of government programmes and as a result, when protests did take place, they were often state-managed to be peaceful, media-friendly events.
Another factor is that militant apartheid-era civic society formations were demobilised, which effectively weakened opposition to unpopular government policies and even brought newer NGOS into sharp disagreement with the government. Finally, the adoption of the pro-poor Reconstruction and Development Programme (RDP), which was aimed at redistributing wealth, was well received as a pacifying measure. However, in 1996, less than 24 months after the introduction of the RDP, the Growth, Employment and Redistribution (GEAR) macro-economic policy was adopted, signalling a shift to neoliberalism that prioritised the interests of big business over those of poor citizens. The adoption of GEAR led to the immediate loss of the few economic benefits citizens had received under the apartheid system.
Various social formations including the labour movement and civil society organisations accused the government of “selling out the people’s mandate”. Cost recovery was an essential part of GEAR, and this soon pitted indigent citizens against the government. While the shift to GEAR marked a radical change in how the government approached delivery of services and generated criticism from various quarters, it did not immediately trigger mass protest action mainly because the organisations championing workers’ and ordinary citizens’ rights were in alliance with the ANC. But the grounds were laid for future public protests.
In the neo-liberal euphoria of the “new democratic South Africa”, the strategic power of mass protest action that had helped to remove the apartheid regime struggled to find a new footing.
Some point to the FIFA World Cup (June–July 2010) as a tipping point. The country’s working poor came out in protest, angered by the commercialisation of municipal services and escalating poverty. Other factors that have been the cause of the so-called service delivery protests include the rising costs of basic services (clean drinking water, sanitation and electricity) as a result of the implementation of orthodox market policies, forced demolitions of informal settlements, disparities between luxury stadia and impoverished neighbourhoods and the gentrification brought on by the World Cup which has made inner-cities inaccessible to low-income informal traders.
This contradictory socio-economic policy framework has produced a highly fragmented regulatory structure, which has further compounded the socio-spatial unevenness of contemporary South Africa. The protracted low growth after the 2014 crash of commodity prices and various political scandals undermined the credibility of the ANC leadership. The national difficulties reverberated at the local level; after ruling Johannesburg for over two decades, the ANC lost the city to a coalition of opposition parties in 2016. The new mayor, Herman Mashaba, a self-styled libertarian entrepreneur, announced his commitment to “pro-poor” investments and to ending the arm’s length approach of municipal service providers.
Analysing the rationale behind the provision of basic services may help to clarify the uneasy categorisation of South African social policies and political discourse with respect to the neoliberal paradigm.
The current situation
In the first quarter of 2021, amidst the social and economic devastation wrought by the COVID-19 pandemic, the South African Treasury announced, and subsequently defended, its decision not to increase the country’s extensive social grant payments — that now reach 18 million impoverished citizens — above inflation. Treasury officials have argued that a bigger increase in social welfare protection is simply not currently feasible given the country’s rapidly rising public debt — which has now breached the 80 per cent of debt-to-GDP ratio threshold — and investor demands for fiscal consolidation. This type of fiscal restraint is unfolding in a context of heightened wealth inequality and an official unemployment rate now above 30 per cent.
And, as is often the case — whether they have been peaceful, organised, or not — protesters have been largely viewed as looters, rioters and thugs. Feelings of righteous anger following a year of lockdown, precarious livelihoods, escalating state aggression, and hostile and often deadly policing are bound to have been co-opted by thuggish elements. But the dangerous shades of ethno-nationalism that originally seemed to fuel the riots cannot be left unexamined as they have an impact on how we think about the protests, just as terms like “uprising” and “upheaval” offer ways to think about the unrest as indications of a far deeper social, economic and political rupture.
The adoption of GEAR led to the immediate loss of the few economic benefits citizens had received under the apartheid system.
Reducing the unrest to a “looting spree” also averts attention from a state that has for 27 years been aloof and not interested in recalibrating the economic and social dispossession of the African majority. While President Ramaphosa seems lethargic and tone-deaf, he is no different from his predecessors in insisting on market-led policies, foreign-investor largesse and failed non-distributive economic policies. Add to this the small matter of the “missing” R500 billion. In April 2020, a stimulus package of 500 billion rand was announced. The money was meant to augment the existing social safety net that provides 11.3 million South Africans with monthly assistance for food and other social services. The Auditor-General has described the expenditure as irregular, noting the wrongful diversion of some of the funds to state employees through contracts. To date, the hectoring tone adopted by most public officials regarding this matter shows no sense of irony or self-awareness that their own hands are dirty.
Many analysts and observers inside and outside South Africa have predicted this moment for over fifteen years, evoking the Arab Spring as a cautionary tale. South Africa is not the only country going through a seismic shift. Haiti, Cuba, Swaziland, Zimbabwe, Myanmar, Mozambique and Hong Kong are all facing profound upheavals. But while South Africa elicits deep sentiments across the world, it is not immune to the complexities of state formation, fractured class interests and a leadership vested in maintaining the status quo.
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