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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

SAP – SEASON TWO: Who is driving civil service reform in Uganda? The people or the IMF?

Ugandans should be alarmed that issues settled in the 1990s are having to be revisited in 2018. By MARY SERUMAGA

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SAP - SEASON TWO: Who is driving civil service reform in Uganda? The people or the IMF?

Two recent announcements made in Uganda recently create a sense of history repeating itself. The first, a plan to reduce the number of ministries, departments and agencies; 24 out of 29 agencies and authorities, regulating everything from road building to cotton and coffee development, will either be put back in parent ministries, merged with other authorities or abolished. Potential savings run to billions of shillings a year in salaries alone. The second edict followed a few weeks later; it was to freeze allowances payable to civil servants.

Both come against the background of broadening the tax base to increase revenue and are a repeat of similar measures under the Civil Service Reform Programme (CSRP) of 1992 to 1997. All three interventions are aimed at increasing resources available for loan servicing, service delivery and improving efficiency (in that order).

SAP II: Who are the drivers?

On the face of it, it looks as though the government is finally getting serious about improving service delivery. The president has been praised in offline and social media for these visionary interventions. Unfortunately, none of it is new. If anything, Ugandans should be alarmed that issues settled in the 1990s are having to be revisited in 2018. In 2018, as in 1992, the government is in negotiations with the International Monetary Fund (IMF) for bailout loans and it is the IMF driving the reforms.

Reduction of expenditure on administration is simply one conditionality of the new Structural Adjustment Programme (SAP II) as it was in SAP I. This should not be necessary in 2018, particularly because in the 1990s, the programme included a component called “Developing Establishment Control Mechanisms” that intended to keep the size and structure (i.e. the establishment) of the civil service affordable. Had those been effectively put in place, there would have been no crisis in the cost of the administration today.

THE NEW SCRAMBLE FOR EAST AFRICA: How rising debt and IMF loans have shielded kleptocrats and stunted human development in the region

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In the first SAP programme, there was an attempt to bring the public on board. Programme components were made public, and privatization – the most controversial aspect of the programme – even had a strategic communications office that branded and shared information about the programme through mass media and drama.

In contrast, in 2018, when the National Resistance Movement (NRM) has exhausted the goodwill and patience of many, SAP II is being rolled out by stealth. A meeting on increasing the tax base was recently invaded by an activist demanding to know why she as a citizen was not privy to the decision-making.

Apart from the three interventions announced, the rest of SAP II remains a mystery. The nature and size of the financial package sought (new loan, rolled-over old loan or capitalisation of interest etc.) and the conditionalities Uganda has signed up for in order to qualify remain a secret. In other words, Ugandans don’t know how broke they are and how much more debt they are taking on and for how long.

Given the recent unprecedented but inevitable challenge to the NRM’s monopoly of political power by the People Power movement, what is certain is that Uganda’s development partners (DPs) will prepare for a successor regime willing to continue to carry illegitimate debt. Put another way, lenders will not accept a repudiation of loans wasted or stolen by the current regime, but will lend more money to cover the bad debts. The transition to this regime is known by a code called Rule of Law. The laws in question are those governing the enforcement of exploitative agreements with corrupt leaders.

Apart from the three interventions announced, the rest of SAP II remains a mystery. The nature and size of the financial package sought (new loan, rolled-over old loan or capitalisation of interest etc.) and the conditionalities Uganda has signed up for in order to qualify remain a secret. In other words, Ugandans don’t know how broke they are and how much more debt they are taking on and for how long.

At the same time, opposition to the economic crimes of the NRM government and demands for structural change is called “hooliganism”. The privileged few to whom the NRM regime has channeled economic opportunities are working overtime to project the violence of the state (all victims were either shot or bludgeoned) on unarmed demonstrators and innocent bystanders.

In their reluctant statements on the atrocities of August 2018, the UK and European Union called for the government and its victims – civil society – “to cooperate to ensure that the events that had caused suffering to Ugandan citizens and damaged the country’s global image were addressed swiftly and transparently with full respect for the Rule of Law”. The implication is that somehow the victims contributed to the attack.

All of this is underpinned by militarising public order. Repressive public order laws were first used to try and suffocate the independence movements of the 1940s and 50s. In the 21st century they are being implemented by a military trained and equipped to maim and kill supporters of the People Power movement. It seems civil disobedience as a means of political expression is not a privilege to be enjoyed by dollar-a-day people whose immunisation and ARVs are gifts from foreign governments.

This will be denied, of course. It will be pointed out that the United States withdrew support from the deadly Special Forces Command (SFC). But they didn’t uninstall the capacity for state terror. They withdrew after having created a killing machine.

The huge amounts spent on immunisation and ARVs will be given as evidence of goodwill. However, most people understand that the primary purpose of immunisation of livestock is not to change the outcome for the livestock (it will still be butchered) but to ensure that the farmer gets maximum economic benefit from it.

Nevertheless, the fall of the regime is a real possibility and its attempts to cling to power by increasing repression makes even tacit support by development partners increasingly untenable. Because repudiation of illegitimate debt is more likely to be successful following a Compaoré–style exit, all hands are on deck to frustrate the People Power movement that has the potential to bring it about sooner rather than later.

Alternative candidates to People Power are already positioning themselves for nomination as the leaders most likely to maintain the economic status quo. Their language of “conciliation” between the government and its victims and calls for Yoweri Museveni to casually apologise and announce a retirement plan minimise the latter’s culpability and indicate that should they take office, Museveni and his regime would not be held accountable for either economic crimes or the latest sustained wave of assaults, wounding and murder. They are playing for time while the new formation is crafted.

The risk is that by enabling Museveni’s government to continue the pretence of being in control of the economy, DPs are keeping Uganda in a holding pattern until they are ready to airdrop their preferred candidate in time for the 2021 elections. Those negotiations will be happening in background mode around about now.

Recent evidence of a concrete policy of impunity in exchange for continuity can be found in the DPs’ selective application of the law governing the type of international corruption that has brought Uganda’s economy to its knees. The decision not to charge Cheikh Gadio under the Foreign Corrupt Practices Act is, according to defence lawyer Robert Precht, “in part a political move – the US government wants to maintain good diplomatic relations with [its ally] Senegal.” The United States also wants to maintain diplomatic relations with Uganda, one of the two countries involved, and has declined to charge the Ugandan recipients of the bribes either.

The international media can be expected to continue doing its part by pitching for candidates on the basis of their “sophistication”, work and travel experience and general dining-at-Davos capabilities.

Meanwhile, SAP edition II announcements are being disguised as the head of state’s own initiatives. In a letter instructing his cabinet to reduce the number of agencies, Museveni asked, “Why have an agency when you have a department of government dealing with the same area of responsibility?” He conveniently forgot that these agencies were entities of his own creation in his system of patronage.

Agencies critical to Uganda’s economic health have suffered from the appointment of unqualified personnel, such as Jolly Kaguhangire, who with a certificate in secretarial work became an Assistant Commissioner in the Uganda Revenue Authority before moving up to be Executive Director of the Uganda Investment Authority. She was ousted only after staff, smothered by her relatives, petitioned the Ombudsman regarding her alleged “high level tribalism, mismanagement, corruption, favouritism [….]” In another example, Jolly Sabune, the permanent managing director of the Cotton Development Organisation, who failed in her mandate to add value to raw cotton, donated UGX500 million ($130,000) to political supporters of the regime and another UGX20 million (over $5,000 at today’s lower rates) of state funds to her brother’s wedding fund.

Meanwhile, SAP edition II announcements are being disguised as the head of state’s own initiatives. In a letter instructing his cabinet to reduce the number of agencies, Museveni asked, “Why have an agency when you have a department of government dealing with the same area of responsibility?” He conveniently forgot that these agencies were entities of his own creation in his system of patronage.

The proposed removal of over 100 government ministries and agencies is a re-run of the “downsizing” of the civil service in 1991/2. It was part of the SAP component called “Optimising the Size and the Structure of the Civil Service” that resulted in merged ministries, retrenchment and voluntary retirement. Mergers between ministries reduced the number of ministries from 38 to 22, and the staff complement was reduced by about half.

The new rightsized civil service was to benefit from pay rises on the smaller, more affordable payroll. Salary surveys of the private sector were done and comparable jobs in the civil service measured against them. It was decided that the gap would be closed by gradual salary enhancement. In preparation, allowances were to be monetised, i.e. allowances were to be abolished and replaced with a cash equivalent. Instead of a house, a public servant was entitled to a house allowance that he or she could use to rent a house or buy one on mortgage. Government houses were sold, with the sitting public servants given priority.

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Other allowances, such as cars, were meant to be withdrawn and public servants’ salaries increased to a level allowing them to buy and insure their own personal vehicles on easy credit terms. Credit agencies supplied the numbers necessary to calculate a new pay scale.

Government pool cars were auctioned. (Pool cars were those available to a group of entitled staff for work purposes but which were usually monopolised by senior civil servants. In addition to those assigned to them, they commandeered the rest to ferry their children around and take relatives to and from hospital etc.)

Difficulties in implementation surfaced early on. There was a lack of commitment to the efficiency principle on which CSRP was built. The size of the government began to balloon. The number of ministries rose from 22 in 1997 to 75 today, plus the 29 agencies. The Ministry of Finance was detached from the Ministry of Planning and Economic Development before being merged again. Several of the statutory bodies slated for reabsorption in parent ministries have been cited for financial mismanagement in a number of Auditor General reports, meaning the expected efficiencies did not materialise.

There were two types of allowances: duty facilitating (needed to carry out the work e.g. transport for school inspectors) and remunerative (perks that went with the status of the job). The push-back against abolishing duty facilitating allowances was justified and successful but other allowances began to be reinstated. Ministers who had benefitted from the car purchase scheme became entitled to each subsequent scheme. The car ownership schemes themselves were very generous to the beneficiaries and a burden to the taxpayer.

Pool cars made a comeback and budget item 1010 (transport) reaffirmed its position as one of the most used and most frequently over-spent budget items. The unintended consequence of CSRP on transport was that civil servants at the top of the pay scale received higher salaries and subsidised vehicles yet continued to have access to pool cars fuelled and maintained by the state.

Salary enhancement did materialise for the most senior public servants as well as specialist staff. Doctors and the judiciary received considerable increases although their pay still remained well below private sector levels.

More specialised agencies and authorities were set up over the years with salaries at par with, if not greater than, private sector salary structures. While the agencies with their private-sector level salaries drained the Treasury, corruption in them outstripped levels in the traditional civil service. The Uganda National Roads Authority, the Uganda Revenue Authority, the Cotton Development Organisation, the National Environment Management Authority, and the new National Identification and Registration Authority are cases in point.

Teachers, on the other hand, are so numerous that salary enhancement for them was deemed impossible at the time. Years later, secondary school teachers were given a boost while primary school teachers’ pay remained below what is considered a living wage. However, the removal of ghost teachers from the payroll gave hope that genuine teachers would eventually receive meaningful salaries from the savings. The number of teachers’ strikes since then indicates that this has not been the case. At the time of writing, teachers in one district are on strike after a seven-month delay in their pay.

What went wrong? A number of things. First, the divestment procedure itself featured in numerous financial scandals. The accounts of the privatisation programme have never been published.

Privatisation was expected to reduce the amount the government was paying in subsidies to inefficient parastatals, such as the Uganda Electricity Board (UEB), thus freeing up revenue for service delivery. Since UEB was divested, however, subsidies to the electricity distribution company, Umeme, have been described as astronomical in Parliament and in fact exceed pre-privatisation levels in this sector.

The sale of other assets, such as government houses and vehicles, was similarly disappointing. In the meantime, health units, such as Kalisizo Hospital, are only able to attract 20 percent of the staff required. A mandatory transfer to such places is seen as equivalent to being homeless, there being no accommodation considered suitable by qualified personnel. For this reason, many newly refurbished rural health centres remained unused for lack of personnel.

Privatisation was expected to reduce the amount the government was paying in subsidies to inefficient parastatals, such as the Uganda Electricity Board (UEB), thus freeing up revenue for service delivery. Since UEB was divested, however, subsidies to the electricity distribution company, Umeme, have been described as astronomical in Parliament and in fact exceed pre-privatisation levels in this sector.

There are insufficient funds for salary enhancement and service delivery generally. Cash management on such a tight budget requires a degree of fiscal discipline that is impossible to maintain in a system of patronage.

Concluding his assessment of the CSRP of 1989–2001, Dr. Yasin Olum states:

“very little has so far been achieved due to the socio-economic and political state in which the country is in today. Issues such as public accountability, competence, and corruption are still high on the agenda. These and issues related to physical infrastructure have equally to be addressed.”

Since then, as documented by this writer in 2016, unsuccessful parts of the programme were re-done with poor results and high price tags. It is unfortunate, but World Bank internal assessments have falsified some reports to disguise failures and justify further lending.

The saga continues in 2018 with a new programme to repeat financial management capacity – building in local government, UgIFT (Uganda Intergovernmental Fiscal Transfers Programme), has been approved at a total cost of US$787.59 million in 2017. So far the World Bank has approved US$200 million. No wonder SAP must now go undercover.

The People Power movement gaining momentum in Uganda to fight the impact of these injustices is being vigorously fought by the NRM and its beneficiaries. The government is undermining resistance with a two-pronged approach. On the one hand, urban artisans, drivers and other workers and “ghetto youths” (of whom between 60 and 80 per cent are unemployed) who are the prime movers in the movement are being appeased with cash handouts. For instance, the first batch of traders along Entebbe Highway received a total of UGX180 million ($47,000) and a truck. Youths in Kamwokya, in the constituency of R. Kyagulanyi, the leader of the People Power movement, were given UGX100 million (over $26,000) to share. The following week, taxi operators and market vendors in the central business district received or were promised UGX3 billion ($800,000). During the six stops he made in the CBD, the president chided the traders for voting against the NRM in three mayoral elections and promised to take care of their financial needs from then on. Naturally, Ugandans outside central urban areas are beginning to demand a share in the bonanza.

The second prong is the militarisation of public order in anticipation of resistance to further economic outrages. A fourth announcement launched the ongoing nationwide recruitment drive of 24,000 youths for local defence units (LDUs). To understand the magnitude of this militia, compare it to the traditional Uganda Police Force establishment of 30,000.

LDUs are normally civilian patrols recruited by their neighbourhoods to carry out neighbourhood watch type tasks. However, the current drive has been launched and is being carried out by the military. According to Dr Kizza Besigye, the recruitment is a covert reinforcement of the Special Forces Command to be used to quell growing civil unrest. A creation of the NRM and the US government, the SFC has been responsible for most of the state brutality seen in recent years. It was established in the colonial era when Zanzibaris and Sudanese were used to subdue what became Uganda in the belief that atrocities are more effectively carried out by people foreign to the area where they are committed.

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Dr Besigye’s suspicion is borne out by the fact that it is the military carrying out the recruitment exercise and not civilian local councils. It was the army commander who announced the arrangements. New LDU members will be paid UGX200,000 per month as compared to the UGX10,000 per month their civilian bosses, the chairmen of local defence councils, are entitled to. The new LDUs will cost a total of US$20 million a year.

Note also that the military, parliament and some agencies have not been paid for two months although the funds were released by the Ministry of Finance. Like the cash handouts to urban dwellers, expenditure on the new militia was not provided for in the budget.

Public planning, public audits and People Power

Looking forward, the Ugandan public can avoid repeating the errors of the past by demystifying public finance altogether. The people of Uganda can and must take charge of decisions on whether or not to enter into further debt. And it must be the people who decide what is an acceptable level of service delivery.

The service delivery cycle – budget planning-implemention-audit – can only be diligently overseen by those it is meant to serve. What the public is unaware of is that an Auditor General can only cover so much ground and so audits are done selectively. Targets for audits are picked according to the materiality (relative size) of the budget item in question, meaning that average-sized accounts can be plundered or wasted in a serial fashion as long as they are not caught by the auditor’s net. The relatively new value-for-money audits are separate from annual audits and occur as and when the Auditor General deems them fit or when ordered by parliament.

Looking forward, the Ugandan public can avoid repeating the errors of the past by demystifying public finance altogether. The people of Uganda can and must take charge of decisions on whether or not to enter into further debt. And it must be the people who decide what is an acceptable level of service delivery.

Parliament (to which the Auditor General reports) has been so compromised that it is no longer feasible to leave public financial management oversight exclusively to it. Elected representatives are becoming clients of the Executive as was seen when they received cash for votes, most recently to defeat opposition to the mobile money tax. Furthermore, some recently-dropped members of Parliament’s Public Accounts Committee were alleged to have sat on reports implicating officials in major financial scandals for the benefit of the perpetrators.

Monitoring the quality and quantity (value-for-money) of services also needs to be devolved. For example, Service Delivery Surveys (SDSs) introduced in the late 1990s were an intervention that seemed to have promise. The idea was that government departments would survey public perception of their service delivery and respond appropriately. Not being overly enthusiastic about monitoring themselves, it is no surprise that allowances for the survey personnel and other logistics are often not available. SDSs have not caught on as a regular part of the budget cycle.

Legislation for public audits would allow end-users of public services, citizens who have intimate knowledge of a particular government entity, to carry out their own audits where they suspect they are receiving inadequate value for money. It is such people-driven initiatives that will bring fundamental change to the quality of life of ordinary Ugandans.

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IT’S THE ECONOMY, STUPID: Why the current push for a referendum is a distraction from the reforms Kenya needs

The history of Kenya is a story of distracting the people of Kenya from fundamental economic reforms that would allow the Kenyan people to participate in their economy and have institutions that serve them, rather than serve the interests of Western capital and its local caretakers in government. BY WANDIA NJOYA

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IT’S THE ECONOMY, STUPID: Why the current push for a referendum is a distraction from the reforms Kenya needs

The history of Kenya is a story of distracting the people of Kenya from fundamental economic reforms that would allow the Kenyan people to participate in their economy and have institutions that serve them, rather than serve the interests of Western capital and its local caretakers in government. The latest referendum push led by Raila Odinga, against our will, despite claiming otherwise, is just the latest installment in the process of scuttling economic and social reforms.

And yet, Raila’s insistence on a referendum to restructure political power is, strangely, a fulfillment of his father Jaramogi Oginga Odinga’s principles. Until recently, I held onto the romantic notion that Jaramogi was interested in fundamental social reform, and was opposed to the capitalist and feudal accumulation of wealth by the Kenyatta family and their fellow ethnic elites. That was until I stumbled about the work of Nicola Swainson, author of The Development of Corporate Capitalism in Kenya, 1918-1977. I now understand what Julius Malema calls the “arrangement” of Kenya very differently from before.

To understand the Jaramogi paradox, one must first go back to what happened with colonialism and independence. According to the popular story of independence, the Mau Mau peasants fought against foreign domination, and now Kenya is an independent country. An increasingly popular amendment to that narrative is that Jomo Kenyatta was never part of the Mau Mau, and that is why, after independence, he betrayed the Mau Mau cause, protected the white settlers and became a version of them. An additional amendment is that Jaramogi understood that it was “not yet uhuru,” and that by forming the Kenya People’s Union with Bildad Kaggia, he sought to promote land reform and politics based on issues, not identity.

Thankfully, more Kenyans are beginning to understand that the first president was never interested in freedom. But what remains is our view of the Europeans as all sharing the same interests. Understanding the different European interests is key to understanding what exactly Jaramogi stood for, and how Raila’s politics do conform to Jaramogi’s position, but at the same time do not serve the interests of Kenyans. ​

As Swainson explains, the settlers, the British government and the British corporations were all serving different interests. When the British East African Company landed in Kenya, it did not have white settlers in mind, and in fact, it only supported their stay in Kenya on the understanding that what the settlers would produce on the land would serve British corporations at home.

Thankfully, more Kenyans are beginning to understand that the first president was never interested in freedom. But what remains is our view of the Europeans as all sharing the same interests. Understanding the different European interests is key to understanding what exactly Jaramogi stood for, and how Raila’s politics do conform to Jaramogi’s position, but at the same time do not serve the interests of Kenyans. ​

However, the settlers didn’t play to script. They consistently fought against the colonial government’s control of land, agriculture and trade, and towards the 1950s, they were getting more control of agriculture and trade in the colony.  But the Achilles heel of the settlers was that they still needed the colonial government’s military might to force Africans off their own land, and to work on the colonial farms.

After the Second World War, the British homeland needed more resources for its recovery and started to put more pressure on the colonial government to expand the extraction of resources from the colonies. For more resources, the colonial government needed to expand trade and land ownership to Africans, and encourage the growth of an African middle class to help the British corporations. But the settlers would have none of it. As a result, the colonial government had a hard time pleasing both the settlers here and the government back home.

The stalemate ended in the 50s, when the peasants revolted against the settlers.

Of course, the settlers did not have the firepower to crush the rebellion, and so the British government sent its troops. But once in charge, the British government pressed the settlers to concede to more African involvement. This move allowed the British state and corporations to weaken the hand of the settlers and to strengthen their own. It also allowed more space for the compromised African elites who would not ask for radical social reform. Companies like Brooke Bond and East African Breweries, and later on Bamburi Cement, consolidated their positions in Kenya as the clueless Jomo Kinyatta initially told Kenyans that since the British were leaving, we could have the land back.

Jaramogi began his career before independence intending to be a businessman. As he explains in his book, Not Yet Uhuru, his initiation into politics came from the realisation that the British were putting obstacles in the path of African capital. African land was community-owned, which meant that Africans could not borrow loans because they did not have title deeds. Africans couldn’t form cooperatives unless the colonialists controlled the cooperatives. Africans couldn’t get credit and couldn’t buy shares. Africans couldn’t set up businesses in the towns, only in the “bush”. Town trading, even in Kisumu, was reserved for Asians.

The colonial government justified all this micro-managing of African entrepreneurship in the name of Africans needing to be protected from going into debt (the irony!). Jaramogi, therefore, understood that the obstacles to African capital were racial and political. He decided to join politics, because, in his words, “politics was the only sphere [of African advance] approved by the government.” That was when he quit teaching and ran for a seat in Central Nyanza African District Council. Thus Jaramogi entered politics as an indigenous capitalist.

At independence, Jaramogi would rudely discover that the fault lines of access to capital simply shifted from race to ethnicity. The Kikuyu elite fixed the economy so that even though Western corporations would continue to exploit the country, it was only the Kikuyu elite who could share in the exploitation. In other words, entrance into the comprador elite group was necessarily ethnic.

And, as Swainson explains, the Kenyatta government set into motion a series of laws to control access to capital. Laws required the British multinational corporations to employ African managers and board members, and to give them shares. One cabinet minister, whom Swainson doesn’t name, was so notorious for demanding ten percent of the start-up capital of Western multinational that he got the nickname “Mr Ten Per Cent.”  In 1975, the government wrote laws that allowed African elites to seize the businesses of Asians, and even though the law talked of non-citizens, Asians who were Kenyan citizens also lost their businesses.

At independence, Jaramogi would rudely discover that the fault lines of access to capital simply shifted from race to ethnicity. The Kikuyu elite fixed the economy so that even though Western corporations would continue to exploit the country, it was only the Kikuyu elite who could share in the exploitation. In other words, entrance into the comprador elite group was necessarily ethnic.

So Jaramogi understood that it was not yet uhuru, and that the transactional economic relations between the exploited peasants and Western capital hadn’t really changed. Western capital had simply fired colonial settlers and replaced them with African (Kikuyu) elites to help Western capital to continue exploiting the majority of Kenyans. In other words, independence was just about replacing white chief executive officers with black ones and putting some black faces on the board – but the companies were still foreign-owned. And, as we now know, it was more difficult to fight against the black “nyapara” for Western capital, because they used ethnicity to erase the class distinctions between themselves and the ordinary Kenyans.

Since then, the obsession of Jaramogi and now of his son, is to reform this political set- up so as to open up the economy. The referendum is part of first seeking the political kingdom, with the promise that the economy will be added to it as well.

But in this 21st century, we need to refuse the formula of one first and the other later. We must fight for the economy now.

Jaramogi’s experience highlights the problem that we still have today. It’s difficult to make money if you are not in politics. The laws and economy are structured so that if you’re not a politician, or if you do not have politician friends, you can barely make it as an “entrepreneur”. And if you’re not a Kikuyu connected to the Kenyattas, it is even harder for you to join the elite. All you can do is negotiate with the Kenyatta elite or its ethnic representatives.

However, this relationship between politics and economics is now a catch-22 because you need money to run for office in order to be in a position to grow your business. This means that without education, poor people stand a slim chance of social mobility, unless they find the formula to steal. And stealing means that you can never go to jail because you have enough to bribe a judge, assuming charges are leveled against you in the first place.

Since independence, the role of the political class (almost synonymous with the Kikuyu elite), with the help of Western governments, has been to keep performing elections and ethnic politics to blind us to this reality. In the name of reform, they make Kenyans obsessed with the mathematics of the ethnic composition of government and probabilities of electoral success so that the Western capital involved in our exploitation continues to remain faceless and we do not see politicians as a mere comprador elite getting their 10 per cent.

That is why Kenya has gone through a succession of political reforms that do not fundamentally change the economic arithmetic. In 1963, KADU crossed the floor. We repealed Section 2A of the constitution and re-introduced multiparty elections three decades later. In 2005, we had a referendum. In 2008, a coalition government. In 2010, as a result of the chaos of 2008 and pressure from the international community, we finally got a constitution that puts the Kenyan people at the center of governance.

But with this last reform, some things have changed, although not nearly enough. With devolution, the people are starting to see fundamental changes that they had not seen for the previous fifty years. We have also now got bolder in demanding public participation in policy and governmental institutions. Kenyans are now demanding more, and are even more adamant about it.

Unfortunately, that is not what the political elites on either side want. Of course, the Kenyatta family maintains an interest in the status quo, where it controls the economy and reduces elections to a joke whose purpose is to justify why Western corporations must still trade in Kenya since Kenya has a “democracy”. Their son is sinking us into debt simply because he wants to build infrastructure and exploit our labour for capital.

In addition, the institutions of this country are still solidly colonial.  The politicians and their political appointees in government bodies still plan the country and the economy as if we Kenyans don’t exist. For example, healthcare reforms have not been to treat Kenyans, but to encourage medical tourism and Kenyan doctors trained by our taxes go abroad so that they can send remittances. Meanwhile the government imports a handful to Cuban doctors as a way of showing the finger to Kenyan ones.

Foreign ideas and foreigners have driven the recent education curriculum reforms, and the contempt for Kenyans is so bad that the government would only recognise the problems we have been talking about after they hired foreign experts to tell them the obvious. Land is being given away to foreign landowners in Laikipia and Isiolo, with Africans branded as threats to wildlife, which needs wazungu to conserve the environment.

​Our politicians have become so predatory that when our health is threatened by poisoned sugar, their first worry is that Western tourists and investors might hear the truth and not bring their money to Kenya.

Even politicians’ wives repeat the contempt for African Kenyans. The Kenya government organised Melania Trump’s visit to orphaned human and animal children, and the US First Lady wore colonial settler costume. In other words, Kenya is a country of no people, or no adults. Children have no parents and the job of the elite is to help the West help us.

Our politicians have become so predatory that when our health is threatened by poisoned sugar, their first worry is that Western tourists and investors might hear the truth and not bring their money to Kenya.

And for all these insults, all we get is managerialist lip service to Kenyans through plans like Kenya Vision 2030 and the Big 4 agenda. The fancy strategic plans have not prevented inequality from growing at a rate faster than before. According to Oxfam, 8,300 Kenyans own more wealth than the bottom 99.9 per cent (more than 44 million of us). Kids are still not going to school, and healthcare is still out of the reach of most Kenyans, yet the weak public services are still being privatised.

So we can no longer hold onto the Jaramogi-Raila ideal that our lives can improve only after we have more diverse ethnic representation in the top political office. The one thing that must remain is that the government must be accountable to the people. Armed with the constitution, Kenyans have made great strides in this endeavor, and we must not let politicians fool us into abandoning our struggle in the name of cutting down spending and reforming power sharing.

Photo: Oxfam Kenya

Most of all, the political class must realise that there is a new generation in Kenya. We have abandoned the naivete of the Nkrumah doctrine and have started to put a face to Western capital and ask what havoc it is wrecking in this Kenya. We now realise that referendums and elections cannot address our issues when the billionaires and their Western friends have the money to rig elections, compromise the electoral bodies and pay Cambridge Analytica millions of dollars to misinform and distract Kenyans from the real issues. So we don’t want an economic conversation after we’ve tinkered, yet again, with political succession problems. We want an economic conversation now.

During the Cold War, it was less easy to see the love affair between black Kenyan elites and white capital. The educated Kenyans were few and a majority of them were working for government. The population was smaller, and the government was funding social services in places where the educated Kenyans raised their kids. Also, the threat of Communism in the East and the strong welfare states in the West meant that the World Bank and the United States were more sympathetic to our government funding education and healthcare. But with the neoliberal turn and the fall of the USSR, Western governments no longer felt the same.

So as the World Bank reduced funding for social services, kids like me, with educated parents, started to see that our economic fortunes were worse than theirs. We can’t afford the same social services our parents afforded at our age. In addition, social media has enabled us to get live updates on the social struggles all over the world. We not only see Donald Trump, but also Alexandria Ocasio-Cortez. We not only see Theresa May; we also follow Jeremy Corbyn. We listen to the conversations of people like Chris Hedges, Tariq Ali and Yanis Varoufakis.  Some of us have studied in the US and have been raised by Pan-Africanists. We don’t just hear about Frantz Fanon, Julius Nyerere, Thomas Sankara, Malcolm X, Angela Davis and James H. Cone. Now we also read them.

So we now see the face of capital more clearly than our parents did. And the more we ask questions about why our money doesn’t stretch as far, the more we see that the poor are worse off than us.

So we are not the generation of 1974 or 2008. We are no longer people who believe that our economic and social problems will be solved through mere political reshuffling without a conversation about the economy. We know that the problem is that white capital still runs this country and that our old school politicians want a referendum to make themselves, not us, comfortable. We know that a referendum will simply waste money on campaigns and popularity contests, the same money that politicians now say that we waste on counties and MPs. And in the end, the referendum will leave the logic of the market, driven by foreigners, very much intact.

What we need is economic reform. We want a government whose pillar of development is WE THE PEOPLE, because we Kenyans are talented, resourceful and simply awesome. We don’t want to hear more of foreign investors and tourists when we want to put our minds and muscles to work. We need the toxic relationship between the state and capital to end. Title deeds should no longer be used as loan security. We want a country that believes in us Africans and that will give us loans because they know we can do the work and succeed. If one does not use land, let them give it back to the public and the public will find someone who will use it. You should not be able to sell land, because you did not make it.

What we need is economic reform. We want a government whose pillar of development is WE THE PEOPLE, because we Kenyans are talented, resourceful and simply awesome.

We want an education that makes Kenyans proud to be human and African, and that encourages them to be creative.

We want universal healthcare because our people deserve to be healthy and live in dignity. That way, our people will also not be afraid to try new ideas because they will not be worrying about healthcare for mothers and kids.

We want a tourism industry that appreciates that the best tourists are WE Kenyans. The communities living alongside wildlife can offer us their homes, build hotels and take care of wildlife better than any foreign “conservationist” who inherited land from King George V.

The push for a referendum instead of economic reforms comes from a fundamental flaw in the Jaramogi doctrine:  the belief in indigenous capital as the main economic driver and that we need ethnic diversity in the top 1% of this nation to gain economic justice. And that we cannot get ethnically diverse capitalism before we get political reforms. This naive Jaramogi-Raila belief in indigenous capitalism forgets that capitalism is fundamentally designed to be ethnically exclusive, and ultimately racist.

We still honour Jaramogi for opening our eyes to the complicity of the Kenyattas in economic injustice. And we honour Raila for accepting to be the face of the spirited fight of the Kenyan people against the feudal, capitalist and Western-dominated arrangement that we call independence. However, one thing is clear from Raila’s political career: he’s not willing to extend his challenge to the status quo to the economic realm. That is why he gave up on the most legitimacy he ever had – the people’s presidency – as well as the economic boycott that was our best weapon to challenge Kenyatta’s and Western capital’s hold on Kenya.

The push for a referendum instead of economic reforms comes from a fundamental flaw in the Jaramogi doctrine:  the belief in indigenous capital as the main economic driver and that we need ethnic diversity in the top 1% of this nation to gain economic justice. And that we cannot get ethnically diverse capitalism before we get political reforms. This naive Jaramogi-Raila belief in indigenous capitalism forgets that capitalism is fundamentally designed to be ethnically exclusive, and ultimately racist.

We are a new generation. We have tasted the promise of the constitution in putting the people of Kenya at the steering wheel of our own destiny. We are not willing to destabilise the constitution and with it, the framework for public involvement at the counties through devolution, and the demand for public participation in national policy-making. We believe that we can have, and need to have, economic reforms before constitutional change. Most of all, we do not believe that freedom can ever be too expensive.

So we are not seeking first the political kingdom on its own; we are seeking the political kingdom through the economic one. Once we cut down the economic stranglehold of the elites on the economy, we will get closer to a reality where a girl from Turkana or a boy from Kwale, through sheer will power, hard work and social support from an educated nation that is able to see through the ethnic and racist lies, can grow up to become the president of Kenya.

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UTHAMAKI, GOD AND THE ECONOMY: ‘Tano Tena’ fails to deliver the Kingdom of Prosperity

As the economy takes a turn for the worse, many of President Uhuru Kenyatta’s disappointed followers are seeking solace in religion. By DAUTI KAHURA

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UTHAMAKI, GOD AND THE ECONOMY: ‘Tano Tena’ fails to deliver the Kingdom of Prosperity

1 October 2018 was a market Monday just like any other that has come and gone at the Githurai fruits and vegetables market, one of the busiest markets in Nairobi that is located 10 km from the central business district. Githurai Market is busy because its catchment area spreads all the way to Thika town and its environs. Although the older and more famous Wakulima Market, aka Marigiti, located in Nairobi’s CBD, could be busier, its market reach is not as widespread and does not go as deep into the hinterland as Githurai Market does. But, just like Marigiti, Githurai’s produce is transported from as far as Mbeya in southern Tanzania and Soroti in eastern Uganda.

This year has been one of the toughest years that the market women at Githurai Market have faced in recent times. Six out of every ten traders at Githurai Market are women. The market is largely run by resilient and seasoned female fruit-and-vegetable sellers, all of whom are Kikuyus and who in the true sense of the word, are entrepreneurs, whose grasp of the trade encapsulates the dictum: What they did not teach you at Harvard (or Yale) School of Business.

It was not the first time I was going to Githurai Market; this year alone, I have made enough trips there to get to grips with what makes the market tick, engaging with the women traders, sharing lots of cups of tea and chapatis, as well as listening to their stories about the funnier side of the market’s shenanigans.

That the market women had great faith that the economy would improve and eventually stabilise had become a point of sore contention between them and me. I often asked them what miracle they expected President Uhuru Kenyatta to perform to wish away their economic woes.

All of this year, the market women have kept telling me how bad business has been. But strong-willed and tough-spirited as they are, they have held on to their undying optimism and belief that matters will eventually even out; in the long run, the economy will be fine and everything will flow smoothly. Their optimism is not pegged on any economic principle or the variables of fresh produce market dynamics, but on the presumption of a shared political-cum-tribal commonality through imagined ties with the ruling Kikuyu elite (referred to as Uthamaki). Hence, their presumed political correctness and unquestioned and unparalleled loyalty; in their minds, their Kikuyu tribe ought to serve as an economic shield, especially in tough economic times. “Uhuru ndangerika tuone uru. Kai twamucaguraga wake?” (Uhuru cannot let us suffer. That is not the reason we elected him.) The women’s unshaken faith in President Uhuru Kenyatta, in the face of very obvious economic turbulence, is truly puzzling, but also admirable.

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That the market women had great faith that the economy would improve and eventually stabilise had become a point of sore contention between them and me. I often asked them what miracle they expected President Uhuru Kenyatta to perform to wish away their economic woes. The country had mounting debts that ran into trillions of shillings, runaway theft that had crippled the state coffers in his first term and a Standard Gauge Railway project that had turned into a white elephant was gobbling Sh750 million in losses every month. Their chorus answer was always: “We should not keep saying the economy is bad. God is on our side and He will protect us.” It was a curt answer to a painful situation that threatened to fester indefinitely and which they were not prepared to talk about openly and publicly.

Sometime in July, when I told them that the government would impose Value Added Tax (VAT) on fuel come September, they outright rebuked me: “Aaah Uhuru ndangetikira.” (Nah, Uhuru will not consent to such an arrangement.) The VAT came and Kenyans immediately started experiencing the impact of the harsh tax. Matatu Saccos hiked fares overnight and kerosene prices shot up.

Meanwhile, the Githurai Market women’s optimism and faith in the person of President Uhuru was getting blurred and confusing. On this Monday, their spirits were beginning to break. It was 10.30am and the market was dull, inactive and quiet. The hustle and bustle had disappeared. The brisk business that used to be a permanent feature at the market throughout the week had whittled away. Something was just not working right, the unswerving belief in President Kenyatta’s “political abracadabra” and perpetual trust in the eternal Almighty notwithstanding.

To kill time as they waited for customers, the market women spontaneously formed a quasi-baraza and delved into the politics of the day. “Nitwarie caruruku,” said one woman, meaning “Let us brutally and honestly talk with one another other”. “Ithue nio ahari aa rua, no one riu uria turaria thina” (We are the people who do the lowest of the menial jobs, but look how now we are suffering). The Kikuyu idiom she used describes men who scrub and treat animal skins for a living. It is considered the lowliest job that any man could do.

“We supported Uhuru to the hilt but look at what he is doing to us now,” said one of the women. The trader said that President Uhuru had annoyed them so much that they did not want to have anything to do with him. It is obvious that it took a lot of courage to be publicly emotional about President Uhuru, a sacrosanct subject among Uthamaki loyalists, but the fact of the matter is that the market women are hurting financially and the prevailing political climate is anything but reassuring.

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“Ni gaitu ga gweciarira” (It is our very own son) had been the rallying call for the market women to come out in large numbers and vote for President Uhuru in the August 8 and repeat October 26 elections. In this ethnic logic, their son had let them down terribly and now they had their back against the wall: First, the VAT on fuel had increased the transport expenditure of many of the traders who bring in fresh produce from within and across the county’s boundaries by more than Sh5,000 per trip, per truck. Second, the economic hardship was slowly resuscitating the proscribed Mungiki gang.

The nefarious activities of the Mungiki was another taboo topic: in public, they defended the youth, arguing that as their sons, they offered protection to them at the market, ensuring it was not invaded by intruders. During the repeat presidential election on October 26, many of the so-called Nairobi Business Community (a pseudonym for Mungiki) ferried to the CBD were from Githurai. “If we didn’t have these youth, who would have protected the Kikuyu businesses in the city centre?” the women challenged me. But in private, the women dreaded “their sons”. The Mungiki blackmailed and extorted money from them. In the words of one market woman, “They reap where they do not sow.”

Githurai Market is completely under the control of Mungiki godfathers who live in the sprawling Githurai neighbourhoods, especially those bordering the railway. All the trucks that offload fresh produce pay protection fees to their agents. The police and the community are aware of these activities, but at Githurai Market and its environs, nobody mentions the M word; when the youth come to collect money, no banter is exchanged. The communication rules are very clearly spelt out – have the loot ready for the young man to pick up and no delays or asking unsolicited questions. “Now,” said one trader to me in low tones, “the godfathers are demanding cash from not only the trucks, but they have sent word that the traders should now start paying ‘Mungiki Tax’”. The traders know what will befall them if they refuse to pay up. “Mungiki don’t blackmail Luos, they don’t chop Luo heads, it’s our sons that they will start killing.”

Githurai Market is completely under the control of Mungiki godfathers who live in the sprawling Githurai neighbourhoods, especially those bordering the railway. All the trucks that offload fresh produce pay protection fees to their agents. The police and the community are aware of these activities, but at Githurai Market and its environs, nobody mentions the M word

At the Githurai roundabout, Mungiki youth had erected a banner that read: Githurai Chapter of Nairobi Business Community supports Uhuru Kenyatta. A month ago, their vibandas (sheds) mounted on the Thika superhighway’s shoulders were demolished by a combined force of regular police, Administration Police (AP) and city askaris. “Why is Uhuru so careless and merciless?” asked a woman trader in total confusion. “Why is he demolishing businesses run by these youths? Does he know what he is doing? The trader said President Uhuru in just one swoop had unleashed Mungiki youth on them. “Turihetukagira ku riu?” (Where will we be passing now?)

The market women, in their ingenuity, had come up with a super idea: summon all these youth and give them fresh produce, mostly fruits, on credit to sell on the roadsides. Whatever they could not sell, they could return. It was a win-win solution for the youth and the women traders. Now even that idea had been undone by President Uhuru: The Mungiki youth who had been conscripted by the Jubilee Party to ostensibly “protect” Kikuyu businesses in the city centre were about to turn on their own, as they always do when faced with economic hardship.

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The women now questioned the utilitarian value of President Uhuru’s presidency to them, specifically as members of the House of Mumbi. “Uthamaki wa Uhuru ututeithetie na ke? (How has President Uhuru’s presidency helped us?) “Tungethura kihii riua ritigethua?” (If we elect an uncircumcised man (to be the president), will the sun not set?) The reference to circumcision was directed at Raila Odinga, President Uhuru’s chief rival during the election.

Still, after releasing all their frustrations and anger against their muthamaki (king/ruler), the traders were agreed in unison that “Mwathani nii ngutukinyaniria” (The Lord will protect us). Then they broke into the chorus of a famous Kikuyu song: Onei! Ni Wendo Utarii Atia – Look! What Great Love without Measure.

Hutia ria keri Ngai wakwa
Ndige kuona marundurundu
Niigetha nyone wega Baba
Bururi uria ndi riragitira.

Touch me twice My Lord
That I stop seeing darkness
So that I can see clearly my Father
The promised country I desire.

That weekend, I had attended a graduation party in one of Nairobi’s leafy suburbs, and although it was an opportunity to make merry while the sun shone, the prevailing religious undertones of the gathering could not be missed: three evangelical pastors – two men and a woman – had been invited to offer up an abundance of prayers for the Bachelor of Arts graduate.

When each of the pastors stood to administer The Word, it quickly became obvious that the prayer-warriors’ messages were not exactly geared towards the celebration of a degree in a time of austerity and tough economic times; they were meant to reassure the people assembled there – all Kikuyus – that although it was clearly evident that there was an air of political confusion and economic uncertainty a year into President Uhuru Kenyatta’s second and final term, this was not a time to despair or lose hope, but rather a time to recommit and rededicate oneself to God.

“We’re going through the hardest economic times in recent times and many of the businesses are doing terribly badly, some are even collapsing,” said the first pastor who was invited to speak by the master of ceremony. “But we cannot give up because we know the good God is watching over us.” The pastor said it was at times like this that the people ought to rediscover their relationship with God.

When each of the pastors stood to administer The Word, it quickly became obvious that the prayer-warriors’ messages…were meant to reassure the people assembled there – all Kikuyus – that although it was clearly evident that there was an air of political confusion and economic uncertainty a year into President Uhuru Kenyatta’s second and final term, this was not a time to despair or lose hope, but rather a time to recommit and rededicate oneself to God.

“The Lord Almighty must have a good reason for allowing us to undergo these trials and tribulations,” reaffirmed the pastor to a crowd that looked like it was hanging to his every word. “We’re a special people, anointed by God, to be an example to other communities, of our fearfulness to Him,” said the preacher man, pausing momentarily and peering into the peoples’ eyes to let the message sink in. “We are fearfully made, unlike the gentiles, who, we know, have been always setting traps for us. But all their tricks will come to naught.”

Speaking like he was now in a holy sanctuary, the pastor promised the gathering that the blood of the lamb was with them and Jesus Christ had thrown a protection ring around them. “We know, Lord Jesus Christ, you’re going to fight our battles on our behalf, even as you shame our mortal enemies.” Reminding the crowd that it should always be aware that it is surrounded by adversaries, he proclaimed that they were a chosen people and, therefore. they had nothing to fear.

“Always take comfort that the Lord’s people have never been admired or liked. Has anybody ever liked the Jews?” wondered the pastor, his deliberate comparison of the Kikuyus to the Jews slipped in for effect. “We’re going to triumph – but it’s incumbent upon us to be steadfast, because our Lord Jesus Christ is seated at the throne. I know many are beginning to question the reason why we now seem to suffer so, but this is not the time to question the Lord.” As he went to take his seat, he asked the people to sing with him the following chorus:

Nii ni gwenda Ngai umenyage ningenaga muno niwe
Tondu niujikaga wega na ukanyenda hingo ciothe
Irio ciothe iria ndiaga, mai maria nyuaga
Ona nguo cia kwihumba ciothe nowee uheaga
Muoyo naguo niwe waheire, niwe ugiragia ngue
Ungetheingia hinya waku, ndingiikara gathaa kamwe.

Lord, I want you to know that I’m much pleased by you
Because you take good care of me and love me so always
All the food I eat, the water that quenches my thirst
Even the clothes that I wear, it is you who has always provided
You gave me life and you protect me from dying
If you ever removed your almighty power, I wouldn’t last even for a second.

The second pastor, unlike the first, was more circumspect. “We’ve fundamental problems in Mt Kenya region,” boomed the pastor-cum-university don. “And if we don’t solve these issues decisively and promptly, it’s not going to augur well for the community. The Kikuyu people have a problem with money: “Kwina gathina haha Central…nitukwenda twicirie uhoro wa handu hau…na ndigutenderia muno.” (We’ve have a problem here in Central [Kenya]…and it’s incumbent on us to ponder over that issue…and I will not rub it in.)

The pastor observed that the Kikuyus had abnegated everything else for money. They only think of making more and more money, said the pastor. “It’s a problem the community must come to terms with, as it also tackles the other socio-cultural norms that the community has negated. As it is, things are not good now and the businessmen seated here know what I’m talking about: the economy is going south, state theft in the government has become the order of the day and you know what, a lot of that theft has been perpetrated by our very own people.

“Today our children are graduating from universities, every year in big numbers, but we don’t have anywhere to take them. Employment opportunities are shrinking by the day and doing business in this country has become extremely difficult, much worse than it was several years ago. But we cannot give up, because we must never allow the devil to triumph. Yet, we as the Kikuyu people, should, as a matter of urgency, ponder very seriously over these legitimate and pertinent issues that are afflicting the community – now and in the years to come – which we are afraid of talking about them openly and publicly.”

As he sat down he invited the crowd to sing along with him, the hymnal lyrical chorus that to many Kikuyus comes naturally to their lips, just like the Lord’s Prayer.

Ngukinyukia oo kahora
Njerekeire ya matuini
Naninjui ningakinya
Ngahuruke na mwathani
Niwega Ngai muhonokia
Nake Jesu ni mugate,
Roho waku munyotokia
Nii ndikahuta, kana nyote

Step by step
Heaven bound
I know I’ll reach
To rest with my Lord
Thank you God, my saviour
And Lord Jesus is my bread,
You holiness is a blessing
I’ll never go hungry or thirsty.

“In times of socio-economic and political distress, Kikuyus rediscover their prayerfulness and religiosity to numb their political confusion and mitigate their hard economic times with endless beseeching prayers. Every igogona (socio-cultural ceremony) is an opportunity to unearth and sing select religious songs to presumably comfort them,” an Anglican Church of Kenya elder from Waithaka parish recently pointed out to me.

As the graduation bash was coming to end, a businessman who has operated in downtown Nairobi for 28 years, and who I have known for 20 of those years, pulled me aside to moan about the economic meltdown that was taking place on Gaberone Road, Kirinyaga Road, Kombo Munyiri Road, Munyu Road, Nyamakima area, Ngariama Road and River Road, the strongholds of Kikuyu business.

“Businesses are shutting down in real time as we watch. What the heck is going on? Why is Uhuru doing this to us?” This was a lamentation from an Uthamaki fundamentalist who barely a year before had dismissed my economic projections as the musings of a person who did not have a proper grasp of national politics and the economic underpinnings of a country like Kenya that was supposedly led by a businessman.

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“For the very first time, in all my years as a businessman, I’m seeing tenants unable to pay shop rents,” he said. “Ona igitunyuo mwana, ni ikagirio mungu,” he proclaimed to me. The literal translation of this Kikuyu saying is that if you snatch a baby from an ape, the least you can do is throw a pumpkin at it to assuage its loss. Figuratively, the businessman was telling me that while they were not expecting saintly treatment from President Uhuru, the least he should have done is shielded them from the faltering economy so that their businesses would not collapse, and they would not be run out of town.

“Businesses are shutting down in real time as we watch. What the heck is going on? Why is Uhuru doing this to us?” This was a lamentation from an Uthamaki fundamentalist who barely a year before had dismissed my economic projections as the musings of a person who did not have a proper grasp of national politics and the economic underpinnings of a country like Kenya that was supposedly led by a businessman.

Businesses worst hit by the sudden tax collection regime are the hundreds of electronics shops at Nyamakima area south-east of River Road, said my business friend. Completely colonised by Kikuyu businessmen and women, it is famous for its trade in cereals pioneered by brazen Kikuyu women, who in a single day are known to collect hundreds of thousands of shillings. In the last twenty years or so, there has been an explosion of miniature electronics outlets lining the alleyways of Nyamakima, which have made scores of young men, especially from Murang’a County, rich.

“I know electronic shops that have been run out of town, unable to pay monthly rent and unable to import any more goods. In fact, many of my friends’ goods have been stuck at the Mombasa port because of being slapped with a sudden humungous tax,” said the businessman. “To complicate matters for the electronics businessmen, many of them have been accused of importing counterfeit goods from China. Has the government just discovered they have been importing contraband? Because of this, their goods have been impounded, and many have lost hundreds of millions of shillings.”

None of the businessmen can afford to import enough goods from China single-handedly, so they usually come together as a group and buy goods that can fill a 40-foot container. “So, it is very possible that some businessmen import substandard goods, but the government has never given them a catalogue of specifications of the types of electronics that they should bring into the country.” The businessman said four of his friends had shut their shops. “Today walk down River Road and Kirinyaga Road and Munyu Road, you will see prime business premises empty, their tenants having vacated them.”

After the nullification of the August 8, 2017 presidential election, businesspeople from downtown Nairobi came out in the open to show their undying support for Uhuru Kenyatta. They hung banners across the roads that read: Munyu Road Business Community Supports President Uhuru Kenyatta and Nyamakima Business Community Supports Uhuru Muigai Kenyatta. Others read: Ni Kumira Kumira, Wembe in ule ule.

“Just 12 months down the line, businessmen are gnashing their teeth,” said the entrepreneur. “The banners have since been pulled down and now they have printed new banners such as, Traders & Importers Association – Stop Killing Our Businesses.”

A scene in Muigai wa Njoroge’s video of his popular song, Mbari ya Kimeendero (The Oppressors’ Clan), shows some people carrying a banner reading: Matunda ya Tano Tena ni #Gutee…Stop Harassing Our Businessess (The Fruits of Five More [a rallying call for support for Uhuru Kenyatta’ second term] was a waste [of time]).” The popular singer reminds his listeners (and the President) that “the Nyamakima businessmen community celebrated your Tano Tena (five more [years]) victory by slaughtering many goats…now their goods have been razed down and declared fake…The person who bewitched us (Kikuyus) must have been paid real well,” concludes the lyricist.

As the preacher woman at the graduation ceremony concluded her prayers, she called on the people to join her in the chorus:

Thutha wa magirio ma thii enu
Jesu niakajoya anyinukie
Jesu wakwa hiuha mbara enu ni nene

After all the trials and tribulations of this world
Jesus (Christ) will take me home
My Lord Jesus, please come quickly,
the battle before me is big.

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