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Jubinomics in an Era of Austerity: Will the New VAT on Fuel Lead to an Economic Crisis?

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The increased taxation of fuel is making life harder for Kenyans and is neither good politics nor wise leadership. By DAUTI KAHURA

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JUBINOMICS IN AN ERA OF AUSTERITY: Will the new VAT on fuel lead to an economic crisis?
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Three weeks ago, at the Karen bus stop opposite the Karen Police Station, there was a face-off that pitted passengers against matatu crews and their surrogates, the freelance touts that hang around such stops soliciting for passengers. The 33-seater matatus headed to Ngong town, 10km from Karen, were charging Sh80. Just a couple of weeks ago, the standard fare was Sh30. Occasionally, if the demand outstripped supply, which happens from time to time in the matatu industry, the fare would go up by Sh10. Any increase in fare exceeding Sh40 for the 10km ride, whatever the circumstance, would be considered exorbitant. The passengers won this round, but the lingering problem of arbitrary and surreptitious increases in transport fare had not been solved.

The Nairobi-Karen-Ngong route is a microcosm of the looming confrontation between passengers and matatus. And Karen town could be the flashpoint. The route is a very lucrative one, especially during peak hours. Most of the matatu passengers on this route work in the many church institutions, mega malls, restaurants, schools and universities and a big hospital that are located in Karen. Some work for the wealthy Kenyans who have homes there. There are also a lot of casual labourers working in Karen for whom every penny counts.

The tension that had been building between the passengers and the matatu crews had been palpable: “Hawa wathii siku moja watachoma hizi matatu, hii hasira yao ni mbaya sana,” (“These passengers will torch these matatus one of these days, their anger is real”) said a matatu driver. Wary of the people’s wrath, the matatu crews wait for the people to board the matatu, then ambush and cajole them with the ridiculous fare increase. But a fortnight ago, the people refused to enter the matatus, until the crew members publicly announced the fare they were charging. After a 30-minute stalemate, the matatu crew eventually lowered the fare to Sh100. “Lakini bado hawa wathii wananung’unika, sasa sijui wanataka tufanye nini.” (“Even after giving them a fairer price, the people are still grumbling, I don’t know what they expect us to do.”)

Since September 1, 2018, when the new 16 per cent VAT (value added tax) on fuel took effect, there has been a commotion in the public transport industry. The Karen-Ngong town driver who said that angry passengers may one of these days burn down matatus to protest against what they consider to be unfair matatu fares, was voicing a concern that has in the past few weeks put matatu crews on edge. “Wathii wanateta sana, wengine wanataka tu guoko na sisi…si kupoa,” said a matatu driver operating on the Nairobi-Limuru town route. (“Passengers are really complaining, some are picking fights with us…it is not a good sign.”)

Since September 1, 2018, when the new 16 per cent VAT (value added tax) on fuel took effect, there has been a commotion in the public transport industry. The Karen-Ngong town driver who said that angry passengers may one of these days burn down matatus to protest against what they consider to be unfair matatu fares, was voicing a concern that has in the past few weeks put matatu crews on edge.

The Karen-Ngong driver who was edgy about passengers’ uneasiness with the hiked fares said that he was struggling to remit the Sh8,000 his boss demands at the end of each day. “On several instances, we’ve had to forego our own pay. At Sh115 a litre, the diesel has become way too expensive. We asked the matatu owner to stabilize his profit to Sh7,000, with the hope of balancing the books, at the end of every day but it is not working. I think some people have cut their reliance on matatus. This has a direct relation with frequency of the roundtrips we make – the fewer the roundtrips, the lesser the money we make.”

The matatu cooperatives (Saccos) in Nairobi are in a quandary: they have been mulling (even before the fuel tax increase) over how to “rationalise their increasing costs of operations without being seen as gleeful and uncaring,” said a top brass at the Matatu Owners Association (MOA). “The business is really hurting, but so are our customers, yet, somebody has to carry the load and feel the pain. Unfortunately, it has always to be the consumer.”

But the Saccos have been hesitant: They are afraid of pushing too hard lest their customers rebel and spark off a wave of street demonstrations. Conversely, the industry is undergoing one of its most trying times in recent times – dwindling fortunes occasioned by a gloomy economic outlook. “How long can they hold on like this? That is the Saccos’ bosses’ question,” said the MOA official.

In a bizarre incident on September 16, a matatu stopped at Corporation stage (that is before Uthiru on the Nairobi-Nakuru highway) to pick passengers to Nairobi. Before the driver could know what was going on, a chap grabbed the matatu keys, scaled the dividing wall of the dual carriageway and ran off with keys. The people milling around the stage seemed unperturbed by the incident and the passengers inside and outside the matatu did not seem to mind the ordeal. Afterwards, when I asked one of the freelance touts why the fellow (who is very well known around the area), was risking his life snatching keys from a matatu, his answer was: “Hizi mathree zinaumiza watu sana.” (“These matatus are squeezing people financially.”)

The matatus operating along long distances are not faring any better. My driver friend who operates a Nairobi-Nyahururu shuttle has been mourning since VAT on fuel was introduced. “I’m now spending Sh5,000 on fuel to and from Nyahururu, up from Sh3,200. Nyahururu is exactly 200km from Nairobi city centre. I used to charge my passengers Sh350 one way from Nairobi to Nyahururu before the fuel increase and I’d still take home between Sh3,200 and Sh3,500. It was reasonable.”

After September 1, he increased the fare to Sh400, but this has not helped. “Ndiraruta wira wa kuhura mai na ndiri.” (“I’ve resorted to pounding water in a mortar – in short, I’m doing zero work.”) Even after increasing the fare by Sh50 per person, the best he can take home at the end of the day, he told me, was Sh3,400, after deducting his expenses. As it is, his transport business was running on a Sh1,800 deficit every day – courtesy of the fuel tax. “I can’t dare push the fare more than Sh400: I know my customers, they are also suffering, we’ve to wait and hope President Uhuru will lower the prices,” said the driver nonchalantly.

The journey to Nyahururu is usually a one-way trip: A shuttle leaves Nairobi for Nyahururu in the morning at around 9.00am. The 200km trip usually takes about four hours. If the shuttle is lucky, it will make the return trip to Nairobi by between 5.00pm and 6.00pm, arriving in Nairobi at around 10.00pm. There are between 240 and 260 14-seater shuttles on the Nairobi-Nyahururu route. “If you make the round trip,” said my driver friend, “you count yourself lucky.”

His prayer about President Uhuru rescinding the implementation of VAT on the fuel sounded half-hearted and without conviction – like a person who already knows it is impossible but hopes for the unexpected to happen. “The truth of the matter,” he opined, “is that even if the fuel levy was dropped entirely, there certainly would be some relief, but life as it is, is already tough. Too much money had been stolen under President Uhuru’s watch and that is the price we’ve to pay for the profligacy.” But it has become increasingly difficult to hold a discussion on President Uhuru Kenyatta’s performance, especially with Jubilee supporters, like my driver friend. “Nitutigane na uhoro ucio.” (“Let’s just leave that topic alone.”)

President Kenyatta’s recent fulmination against matatu owners increasing fares, lest their licenses are revoked by National Transport and Safety Authority (NTSA) was rebutted by MOA, which argued the threat had no basis in law. “The President,” said a Jubilee Party MP, “will soon realise that nobody will be taking his threats any more seriously. He is a lame duck president who is doing his final term and holds no sway whatsoever on the politics of the future.”

The imposition of VAT on fuel has had an inflationary effect on practically every commodity that must be transported from point A to point B. In effect, this means that soon almost every household item will become more expensive.

On 20 September, the controversial Finance Bill, 2018 was passed by MPs. And without wasting any time, the President assented to the Bill the following day. The Bill’s vote in Parliament had been preceded by a little-nested game between the MPs and the President. The Parliamentarians had already threatened to shoot down Uhuru’s proposal to halve the VAT to 8 per cent, maintaining that there should be none placed on fuel and defying party chief whips.

The imposition of VAT on fuel has had an inflationary effect on practically every commodity that must be transported from point A to point B. In effect, this means that soon almost every household item will become more expensive.

“I’m afraid to tell you that even with that seeming reprieve, nothing much will move immediately,” said an oilman who imports oil products and runs several petrol stations in Kenya, Rwanda and Uganda. “These are the reasons: VAT is charged at the point of sale and is calculated as 16 per cent on all other costs of the product, over and above the other taxes and levies other than VAT. No importer will agree to sell at a loss simply because politics have been at play. So, even if the Finance Bill 2018 becomes law, with the President’s incorporation of the eight per cent VAT proposal, oil importers will not agree to lower their prices. We must first empty all the fuel bought within the time the VAT on fuel was imposed till we bring in new consignments. And this will take some time. If the people are thinking they are going to enjoy the VAT reprieve immediately, they are deluded.”

The oil tycoon told me that such a situation presents a perfect scenario for the industry to play market games. “If, for example, some oil importers, for whatever reason (most obviously, it would be for a quick super profit), choose to create an artificial oil shortage by hoarding their product, the price must necessarily shoot upwards, momentarily disrupting the official levy on fuel products.”

Apart from the matatu price jolts, the effects of the VAT on fuel has been heavily felt by the long-distance transport trucks that move all manner of goods from source to different markets. Businessmen who transport goats and sheep from Isiolo, Laisamis, Loiyangalani, Mandera, Maralal, Marsabit, Moyale, Turbi, Sololo and southern Ethiopia to Kiamaiko abattoirs in Huruma, Nairobi, told me that their fuel costs had gone by up by between Sh10,000 and Sh12,000 per trip. These animals are carried for up to 14 hours by 10-wheel Mitsubishi Fuso trucks on some of the roughest roads and in the most bandit-prone territories. “Already the wear and tear of the trucks has been staring down at us, but with this new tax on fuel, it has complicated our business,” said one of the transporters.

“The increase in the fuel costs means that they have to also pass down the burden to us butcher-men,” said Francis Kimani, a butcher, who goes to Kiamaiko every day to buy meat products, including goats’ heads, offal for making mutura (sausage-like delicacies) and hoofs for boiling soup. Until recently. Kimani was buying up to 100 goat heads every day at Kiamaiko to sell to his staunchly loyal customers at his outlet at the central bus station in Nairobi. “I arrive at Kiamaiko by 6.00am, pick my stuff and quickly head back to my base, because my customers want to find me ready by latest 11.00am.”

Kimani hires a boda-boda (motorcycle taxi) to transport his meat products in a box-like container. “I was paying the driver Sh250 per trip to the bus station, but after the VAT increase, he doubled the amount,” he said. But that is not the only burden he has to bear: already the prices of his meat products have gone up by more than 30 per cent. “I’ll confess I was doing a roaring business until this VAT thing came. My customers have dwindled, partly because I am buying less goat heads and partly because they are also feeling the pinch.” From selling 100 heads by the end of the day, Kimani is now barely selling 30. He said that if nothing improves, he will consider relocating to either Isiolo or Rumuruti in Laikipia County. The business was proving too difficult to sustain. “I was born in Rumuruti, I know there isn’t much there, but home is home.” “Nairobi tuokire gwetha ido na muturiri.” (“Nairobi’s not home, we just came here to look for money and a living.”) He said that in Isiolo he could look for work as a truck driver.

The VAT on petroleum products was first mooted in 2013, just after President Uhuru Kenyatta and his deputy, William Ruto, formed the Jubilee coalition government. The VAT Act 2013, as it came to be known, was not implemented immediately; it was shelved for three years till 2016. When it came for review in September 2016, Treasury mandarins, through the drafting of the Financial Act 2016, postponed its introduction. But in March 2018, the Treasury Principal Secretary, Kamau Thugge, finally signalled the fact that beginning this September, the 16 per cent VAT on fuel would certainly be effected. This would mean that for every litre of fuel sold at a petrol station, Sh18 would be added on top of the original cost: a 14 per cent increase per litre.

Thugge was candid: The government had no option but to swallow the International Monetary Fund (IMF)’s bitter pill. Since 2016, the IMF has wanted the government to levy VAT on fuel as a way for it to collect extra revenue domestically. However, it is important to note that although petroleum products were previously exempt from VAT, they are still one of the most taxed commodities in Kenya.

This time last year, the Jubilee government was reeling from two shambolic elections – both conducted within two-and-half-months. The government was broke and was looking for credit facilities, so it turned to the IMF. The VAT on fuel, therefore, is part of the stringent conditions that the IMF has imposed on the Jubilee government in exchange for access to a standby credit facility – a fallback plan for Kenya’s Exchequer in case the economy finds itself in the ICU and needs quick resuscitation.

“Playing good politics,” and presumably exhibiting “poor leadership”, President Uhuru seemingly chastised MPs for initially rejecting his proposal halve the VAT on fuel to 8 per cent. The truth of the matter is that the President himself, in regard to the “problematic” taxation issues, is neither playing good politics nor exhibiting wise leadership.

This time last year, the Jubilee government was reeling from two shambolic elections – both conducted within two-and-half-months. The government was broke and was looking for credit facilities, so it turned to the IMF. The VAT on fuel, therefore, is part of the stringent conditions that the IMF has imposed on the Jubilee government in exchange for access to a standby credit facility – a fallback plan for the Kenya’s Exchequer in case the economy finds itself in the ICU and needs quick resuscitation.

“The Bill according to the Budget highlights by the Cabinet Secretary for the National Treasury and Planning is intended is to raise an additional KSh27.5billion to finance 2018/19 fiscal budget year,” observes the Department Committee on Finance and National Planning: Report on the Consideration of the Finance Bill 2018. The report says, “total projected expenditure and net lending for 2018/19 estimates amounted to KSh2.533 trillion to be financed through ordinary revenue (KSh1.743 trillion) and AIA (Annual-in-Advance) (KSh179.95 billion). Expected external grants will amount to KSh47.037 billion, bringing the revenue to KSh1.970 trillion. This leaves a fiscal deficit of KSh562.748 billion to be financed through debt. The proportion of revenue estimates to GDP for 2018/19 is 19.6 percent which is equivalent to that of the 2017/18 budget.”

The Kenya Association of Manufacturers (KAM), one of the lobby groups that presented its resolutions to the committee, argues in the report that, “(the) local manufacturer was losing competition vs major foreign player. The local industries are manufacturing basic products with low gross margin compared to most foreign players, who can support the duty costs. Local players had to increase their prices around (five percent) and it’s the final consumer that will pay for the final bill. This, in turn, was jeopardising local employment.”

A Kenyan industrialist who had intended to contract some local companies to manufacture carton boxes for packaging consumer goods, such as milk, in the Democratic Republic of Congo (DRC), told me he took his business to Uganda after he was hit with a prohibitive tax levy. “The Kenyan companies were charging me $0.7 per carton box – that is exclusive of transport logistics and documentation charges,” said the entrepreneur. “Yet in Kampala, I was being charged $0.42 – inclusive of transport and documentation costs, what they refer to as free on board (FOB).”

On September 18, 2018, President Uhuru Kenyatta rejected the Bill passed by MPs a fortnight before, citing his reasons in a memorandum that sought to overturn some of the proposals shot down by the MPs – chief among them, the 16 per cent VAT on petroleum products and the National Housing Fund, a new tax where the government hopes to impose a tax of 1.5 per cent of income on employees and their employers, ostensibly to fund a home ownership and social housing programme. According to the memorandum, the 16 per cent VAT on fuel has been scaled down to 8 percent in order to raise Sh17.5 billion in the current financial year.

A Kenyan industrialist who had intended to contract some local companies to manufacture carton boxes for packaging consumer goods, such as milk, in the Democratic Republic of Congo (DRC), told me he took his business to Uganda after he was hit with a prohibitive tax levy.

Another proposal contained in the President’s memorandum was to tax betting companies 15 per cent, down from 35 per cent as the case is now. This proposal, instead, hopes to raid the lottery winners’ cash by taxing it 20 per cent. The President is looking to raise between Sh25 and Sh30 billion accrued from the sports gaming taxes. The total computation of President Uhuru’s memorandum proposal was collecting Sh100 billion in this financial year.

Gitau Githongo, writing in the E Review, succinctly observed that “over the past five years, several tax measures have been introduced, including: 12 per cent Rental Income Tax on landlords from 2015, successive excise duty and fuel levy increases in 2015, 2016 and 2018; VAT on bottled water and juices, VAT on food served by restaurants, as well as, piped water; successive increases in excise duties on spirits, cigarettes and mobile telephony; and 50 per cent Gaming Tax on lotteries and bookmakers in 2017, among a host of others.”

Gitau’s article touched on the real reasons why President Kenyatta returned Kenya into the arms of hard-nosed IMF economists: “The parlous state of Kenya’s national accounts – most notably the KSh 5 trillion stock of public debt and ballooning budget deficit…suggests that the slew of tax measures proposed in Budget 2018 was purely about desperately seeking to finance reckless government spending and not about providing incentives for private sector economic growth.”

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Mr Kahura is a senior writer for The Elephant.

Politics

Who Won Kenya’s “Nominations”?

Being nominated rather than selected by party members may undermine grass-roots legitimacy but it is hard not to suspect that some of the losers in the nominations process might feel a little bit relieved at this out-turn.

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Who Won Kenya’s “Nominations”?
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Who won Kenya’s “nominations”, the tense and often unpredictable political process through which parties select which candidates they want to represent them in the general election scheduled for 9 August? That may sound like a silly question. Social media is full of photographs of smiling candidate clutching their certificates of nomination—surely we need to look no further for the winners?

But maybe we do. Beyond the individual candidates in the contests for nominations, there are other winners. One may be obvious: it seems the general feeling is that Deputy President William Ruto came out better from the nominations than did his principal rival in the presidential race, former opposition leader Raila Odinga—about which more below. However, for some, coming out on top in the nominations may prove a poisoned chalice. Where nominations are seen to have been illegitimate, candidates are likely to find that losing rivals who stand as independents may be locally popular and may gain sympathy votes, making it harder for party candidates to win the general election. This means that there are often some less obvious winners and losers.

One reason for this is that nominations shape how voters think about the parties and who they want to give their vote to, come the general election. Research that we conducted in 2017, including a nationally representative survey of public opinion on these issues, found that citizens who felt that their party’s nomination process had not been legitimate were less likely to say that they would vote in the general election. In other words, disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out. In 2017, this appeared to disadvantage Odinga and his Orange Democratic Movement (ODM), whose nomination process was generally seen to have been more problematic—although whether this is because they were, or rather because this is how they were depicted by the media, is hard to say.

In the context of a tight election in 2022, popular perceptions of how the nominations were managed may therefore be as significant for who “wins” and “loses” as the question of which individuals secured the party ticket.

Why do parties dread nominations?

The major parties dreaded the nominations process—dreaded it so much, in fact, that despite all their bold words early on about democracy and the popular choice (and despite investments in digital technology and polling staff), most of the parties tried pretty hard to avoid primary elections as a way of deciding on their candidates. In some cases that avoidance was complete: the Jubilee party gave direct nominations to all those who will stand in its name. Other parties held some primaries—Ruto’s United Democratic Alliance (UDA) seems to have managed most—but in many cases they turned to other methods.

That is because of a complicated thing about parties and elections in Kenya. It is widely assumed—and a recent opinion poll commissioned by South Consulting confirms this—that when it comes to 9 August most voters will decide how to cast their ballot on the basis of individual candidates and not which party they are standing for. Political parties in Kenya are often ephemeral, and people readily move from one to another. But that does not mean that political parties are irrelevant. They are symbolic markers with emotive associations – sometimes to particular ideas, sometimes to a particular regional base. ODM, for example, has been linked both with a commitment to constitutional reform and with the Luo community, most notably in Nyanza. So the local politician who wants to be a member of a county assembly will be relying mostly on their personal influence and popularity—but they know that if they get a nomination for a party which has that kind of emotive association, it will smoothen their path.

Disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out.

This means that multiple candidates vie for each possible nomination slot. In the past, that competition has always been expensive, as rival aspirants wooed voters with gifts. It occasionally turned violent, and often involved cheating. Primary elections in 2013 and 2017 were messy and chaotic, and were not certain to result in the selection of the candidate most likely to win the general election. From the point of view of the presidential candidates, there are real risks to the primary elections their parties or coalitions oversee: the reputational damage due to chaos and the awareness that local support might be lost if a disgruntled aspirant turns against the party.

This helps to explain why in 2022 many parties made use of direct nominations—variously dressed up as the operation of consensus or the result of mysterious “opinion polls” to identify the strongest candidate. What that really meant was an intensive process of promise-making and/or pressure to persuade some candidates to stand down. Where that did not work, and primaries still took place, the promise-making and bullying came afterwards—to stop disappointed aspirants from turning against the party and standing as independents. The consequence of all that top-down management was that the nominations saw much less open violence than in previous years.

So who won, and who lost, at the national level?

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates. That brings us to the big national winners and losers of the process. Odinga—and his ODM party—have come out rather bruised. They have been accused of nepotism, bribery and of ignoring local wishes. This is a particularly dangerous accusation for Odinga, as it plays into popular concerns that, following his “handshake” with President Kenyatta and his adoption as the candidate of the “establishment”, he is a “project” of wealthy and powerful individuals who wish to retain power through the backdoor after Kenyatta stands down having served two-terms in office. In the face of well-publicised claims that Odinga would be a “remote controlled president” doing the bidding of the Kenyatta family and their allies, the impression that the nominations were stage-managed from on high in an undemocratic process was the last thing Azimio needed.

Moreover, perhaps because Odinga seems to have been less active than his rival in personally intervening to mollify aggrieved local politicians, the ODM nominations process seems to have left more of a mess. That was compounded by complications in the Azimio la Umoja/One Kenya Alliance Coalition Party (we’ll call it Azimio from now on, for convenience). Where Azimio “zoned”—that is, agreed on a single candidate from all its constituent parties—disappointed aspirants complained. Where it did not zone, and agreed to let each party nominate its own candidate for governor, MP and so on, then smaller parties in the coalition complained that they would face unfair competition come the general election. That is why the leaders of some of these smaller groups such as Machakos Governor Alfred Mutua made dramatic (or theatrical, depending on your view) announcements of their decision to leave Azimio and support Ruto.

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates.

So Ruto looks like a nomination winner. But his success comes with a big price tag. His interventions to placate disgruntled aspirants involved more than soothing words. A new government will have lots of goodies to distribute to supporters—positions in the civil service and parastatals, diplomatic roles, not to mention business opportunities of many kinds. But the bag of goodies is not bottomless, and it seems likely that a lot of promises have been made. Ruto’s undoubted talents as an organizer and deal-maker have been useful to him through the nominations—but those deals may prove expensive for him, and for Kenya, if he wins the presidential poll.

Money, politics, and the cost of campaigns

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword. In the short term, many of them will have saved considerable money: depending on exactly when the deal was done, they will have been spared some days of campaign expenses—no need to fuel cars, buy airtime for bloggers, pay for t-shirts and posters, and hand out cash. But that will be a brief respite. The disappointed rivals who have gone independent will make the campaigns harder for them—and likely more expensive. The belief that they were favoured by the party machinery may mean that voter expectations are higher when it comes to handouts and donations on the campaign trail. And the fact they were nominated rather than selected by party members may undermine their grass-roots legitimacy.

Others may experience a similar delayed effect. Among the short-term losers of the nominations will have been some of the “goons” who have played a prominent physical role in previous nominations: their muscular services were largely not required (although there were exceptions). The printers of posters and t-shirts will similarly have seen a disappointing nominations period (although surely they will have received enough early orders to keep them happy, especially where uncertainty over the nomination was very prolonged). The providers of billboard advertising may have seen a little less demand than they had hoped for, although they too seem to have done quite well from selling space to aspirants who—willingly or not—did not make it to the primaries. But where the general election will be fiercely contested, entrepreneurs will likely make up any lost ground as the campaigns get going. In these cases, competition has been postponed, not avoided.

Those in less competitive wards, constituencies or counties—the kind in which one party tends to dominate in the general election—are unlikely to be able to make up for lost time. These “one-party” areas may be in shorter supply in 2022 than in the past, due to the way that the control of specific leaders and alliances over the country’s former provinces has fragmented, but there will still be some races in which it is obvious who will win, and so the campaigns will be less heated.

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword.

More definite losers are the parties themselves. In some ways, we could say they did well as institutions, because they were spared the embarrassment of violent primaries. But the settling of many nominations without primaries meant not collecting nomination fees from aspirants in some cases, and refunding them in others. That will have cost parties a chunk of money, which they won’t get back. That may not affect the campaigns much—the money for campaigns flows in opaque and complex ways that may not touch the parties themselves. But it will affect the finances of the parties as organizations, which are often more than a little fragile.

Are the losers actually the biggest winners?

Some losers, however, are really big winners. Think about those candidates who would not have won competitive primaries but were strong enough to be able to credibly complain that they had been hard done by due to the decision to select a rival in a direct process. In many cases, these individuals were able to extract considerable concessions in return for the promise not to contest as independents, and so disrupt their coalition’s best laid plans. This means that many of the losers—who may well have been defeated anyway—walked away with the promise of a post-election reward without the expense and bother of having to campaign up until the polls.

It is hard not to suspect that some of them might feel a little bit relieved at this out-turn. In fact, some of them may have been aiming at this all along. For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome. Instead of spending the next three months in an exhausting round of funerals, fund-raisers and rallies, constantly worrying about whether they have enough fifty (or larger) shilling notes to hand out and avoiding answering their phones, they can sit back and wait for their parastatal appointment, ambassadorship, or business opportunity.

For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome.

For these individuals, the biggest worry now is not their popularity or campaign, but simply the risk that their coalition might not win the presidential election, rendering the promises they have received worthless. Those whose wishes come true will be considerably more fortunate—and financially better off—than their colleagues who made it through the nominations but fall at the final hurdle of the general election.

Separating the winners of the nominations process from the losers may therefore be harder than it seems.

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Politics

Asylum Pact: Rwanda Must Do Some Political Housecleaning

Rwandans are welcoming, but the government’s priority must be to solve the internal political problems which produce refugees.

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The governments of the United Kingdom and Rwanda have signed an agreement to move asylum seekers from the UK to Rwanda for processing. This partnership has been heavily criticized and has been referred to as unethical and inhumane. It has also been opposed by the United Nations Refugee Agency on the grounds that it is contrary to the spirit of the Refugee Convention.

Here in Rwanda, we heard the news of the partnership on the day it was signed. The subject has never been debated in the Rwandan parliament and neither had it been canvassed in the local media prior to the announcement.

According to the government’s official press release, the partnership reflects Rwanda’s commitment to protect vulnerable people around the world. It is argued that by relocating migrants to Rwanda, their dignity and rights will be respected and they will be provided with a range of opportunities, including for personal development and employment, in a country that has consistently been ranked among the safest in the world.

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives. Therefore, most Rwandans are sensitive to the plight of those forced to leave their home countries and would be more than willing to make them feel welcome. However, the decision to relocate the migrants to Rwanda raises a number of questions.

The government argues that relocating migrants to Rwanda will address the inequalities in opportunity that push economic migrants to leave their homes. It is not clear how this will work considering that Rwanda is already the most unequal country in the East African region. And while it is indeed seen as among the safest countries in the world, it was however ranked among the bottom five globally in the recently released 2022 World Happiness Index. How would migrants, who may have suffered psychological trauma fare in such an environment, and in a country that is still rebuilding itself?

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives.

What opportunities can Rwanda provide to the migrants? Between 2018—the year the index was first published—and 2020, Rwanda’s ranking on the Human Capital Index (HCI) has been consistently low. Published by the World Bank, HCI measures which countries are best at mobilising the economic and professional potential of their citizens. Rwanda’s score is lower than the average for sub-Saharan Africa and it is partly due to this that the government had found it difficult to attract private investment that would create significant levels of employment prior to the COVID-19 pandemic. Unemployment, particularly among the youth, has since worsened.

Despite the accolades Rwanda has received internationally for its development record, Rwanda’s economy has never been driven by a dynamic private or trade sector; it has been driven by aid. The country’s debt reached 73 per cent of GDP in 2021 while its economy has not developed the key areas needed to achieve and secure genuine social and economic transformation for its entire population. In addition to human capital development, these include social capital development, especially mutual trust among citizens considering the country’s unfortunate historical past, establishing good relations with neighbouring states, respect for human rights, and guaranteeing the accountability of public officials.

Rwanda aspires to become an upper middle-income country by 2035 and a high-income country by 2050. In 2000, the country launched a development plan that aimed to transform it into a middle-income country by 2020 on the back on a knowledge economy. That development plan, which has received financial support from various development partners including the UK which contributed over £1 billion, did not deliver the anticipated outcomes. Today the country remains stuck in the category of low-income states. Its structural constraints as a small land-locked country with few natural resources are often cited as an obstacle to development. However, this is exacerbated by current governance in Rwanda, which limits the political space, lacks separation of powers, impedes freedom of expression and represses government critics, making it even harder for Rwanda to reach the desired developmental goals.

Rwanda’s structural constraints as a small land-locked country with no natural resources are often viewed as an obstacle to achieving the anticipated development.

As a result of the foregoing, Rwanda has been producing its own share of refugees, who have sought political and economic asylum in other countries. The UK alone took in 250 Rwandese last year. There are others around the world, the majority of whom have found refuge in different countries in Africa, including countries neighbouring Rwanda. The presence of these refugees has been a source of tension in the region with Kigali accusing neighbouring states of supporting those who want to overthrow the government by force. Some Rwandans have indeed taken up armed struggle, a situation that, if not resolved, threatens long-term security in Rwanda and the Great Lakes region. In fact, the UK government’s advice on travel to Rwanda has consistently warned of the unstable security situation near the border with the Democratic Republic of Congo (DRC) and Burundi.

While Rwanda’s intention to help address the global imbalance of opportunity that fuels illegal immigration is laudable, I would recommend that charity start at home. As host of the 26th Commonwealth Heads of Government Meeting scheduled for June 2022, and Commonwealth Chair-in-Office for the next two years, the government should seize the opportunity to implement the core values and principles of the Commonwealth, particularly the promotion of democracy, the rule of law, freedom of expression, political and civil rights, and a vibrant civil society. This would enable Rwanda to address its internal social, economic and political challenges, creating a conducive environment for long-term economic development, and durable peace that will not only stop Rwanda from producing refugees but will also render the country ready and capable of economically and socially integrating refugees from less fortunate countries in the future.

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Beyond Borders: Why We Need a Truly Internationalist Climate Justice Movement

The elite’s ‘solution’ to the climate crisis is to turn the displaced into exploitable migrant labour. We need a truly internationalist alternative.

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Beyond Borders: Why We Need a Truly Internationalist Climate Justice Movement
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“We are not drowning, we are fighting” has become the rallying call for the Pacific Climate Warriors. From UN climate meetings to blockades of Australian coal ports, these young Indigenous defenders from twenty Pacific Island states are raising the alarm of global warming for low-lying atoll nations. Rejecting the narrative of victimisation – “you don’t need my pain or tears to know that we’re in a crisis,” as Samoan Brianna Fruean puts it – they are challenging the fossil fuel industry and colonial giants such as Australia, responsible for the world’s highest per-capita carbon emissions.

Around the world, climate disasters displace around 25.3 million people annually – one person every one to two seconds. In 2016, new displacements caused by climate disasters outnumbered new displacements as a result of persecution by a ratio of three to one. By 2050, an estimated 143 million people will be displaced in just three regions: Africa, South Asia, and Latin America. Some projections for global climate displacement are as high as one billion people.

Mapping who is most vulnerable to displacement reveals the fault lines between rich and poor, between the global North and South, and between whiteness and its Black, Indigenous and racialised others.

Globalised asymmetries of power create migration but constrict mobility. Displaced people – the least responsible for global warming – face militarised borders. While climate change is itself ignored by the political elite, climate migration is presented as a border security issue and the latest excuse for wealthy states to fortify their borders. In 2019, the Australian Defence Forces announced military patrols around Australia’s waters to intercept climate refugees.

The burgeoning terrain of “climate security” prioritises militarised borders, dovetailing perfectly into eco-apartheid. “Borders are the environment’s greatest ally; it is through them that we will save the planet,” declares the party of French far-Right politician Marine Le Pen. A US Pentagon-commissioned report on the security implications of climate change encapsulates the hostility to climate refugees: “Borders will be strengthened around the country to hold back unwanted starving immigrants from the Caribbean islands (an especially severe problem), Mexico, and South America.” The US has now launched Operation Vigilant Sentry off the Florida coast and created Homeland Security Task Force Southeast to enforce marine interdiction and deportation in the aftermath of disasters in the Caribbean.

Labour migration as climate mitigation

you broke the ocean in
half to be here.
only to meet nothing that wants you
– Nayyirah Waheed

Parallel to increasing border controls, temporary labour migration is increasingly touted as a climate adaptation strategy. As part of the ‘Nansen Initiative’, a multilateral, state-led project to address climate-induced displacement, the Australian government has put forward its temporary seasonal worker program as a key solution to building climate resilience in the Pacific region. The Australian statement to the Nansen Initiative Intergovernmental Global Consultation was, in fact, delivered not by the environment minister but by the Department of Immigration and Border Protection.

Beginning in April 2022, the new Pacific Australia Labour Mobility scheme will make it easier for Australian businesses to temporarily insource low-wage workers (what the scheme calls “low-skilled” and “unskilled” workers) from small Pacific island countries including Nauru, Papua New Guinea, Kiribati, Samoa, Tonga, and Tuvalu. Not coincidentally, many of these countries’ ecologies and economies have already been ravaged by Australian colonialism for over one hundred years.

It is not an anomaly that Australia is turning displaced climate refugees into a funnel of temporary labour migration. With growing ungovernable and irregular migration, including climate migration, temporary labour migration programs have become the worldwide template for “well-managed migration.” Elites present labour migration as a double win because high-income countries fill their labour shortage needs without providing job security or citizenship, while low-income countries alleviate structural impoverishment through migrants’ remittances.

Dangerous, low-wage jobs like farm, domestic, and service work that cannot be outsourced are now almost entirely insourced in this way. Insourcing and outsourcing represent two sides of the same neoliberal coin: deliberately deflated labour and political power. Not to be confused with free mobility, temporary labour migration represents an extreme neoliberal approach to the quartet of foreign, climate, immigration, and labour policy, all structured to expand networks of capital accumulation through the creation and disciplining of surplus populations.

The International Labour Organization recognises that temporary migrant workers face forced labour, low wages, poor working conditions, virtual absence of social protection, denial of freedom association and union rights, discrimination and xenophobia, as well as social exclusion. Under these state-sanctioned programs of indentureship, workers are legally tied to an employer and deportable. Temporary migrant workers are kept compliant through the threats of both termination and deportation, revealing the crucial connection between immigration status and precarious labour.

Through temporary labour migration programs, workers’ labour power is first captured by the border and this pliable labour is then exploited by the employer. Denying migrant workers permanent immigration status ensures a steady supply of cheapened labour. Borders are not intended to exclude all people, but to create conditions of ‘deportability’, which increases social and labour precarity. These workers are labelled as ‘foreign’ workers, furthering racist xenophobia against them, including by other workers. While migrant workers are temporary, temporary migration is becoming the permanent neoliberal, state-led model of migration.

Reparations include No Borders

“It’s immoral for the rich to talk about their future children and grandchildren when the children of the Global South are dying now.” – Asad Rehman

Discussions about building fairer and more sustainable political-economic systems have coalesced around a Green New Deal. Most public policy proposals for a Green New Deal in the US, Canada, UK and the EU articulate the need to simultaneously tackle economic inequality, social injustice, and the climate crisis by transforming our extractive and exploitative system towards a low-carbon, feminist, worker and community-controlled care-based society. While a Green New Deal necessarily understands the climate crisis and the crisis of capitalism as interconnected — and not a dichotomy of ‘the environment versus the economy’ — one of its main shortcomings is its bordered scope. As Harpreet Kaur Paul and Dalia Gebrial write: “the Green New Deal has largely been trapped in national imaginations.”

Any Green New Deal that is not internationalist runs the risk of perpetuating climate apartheid and imperialist domination in our warming world. Rich countries must redress the global and asymmetrical dimensions of climate debtunfair trade and financial agreements, military subjugation, vaccine apartheidlabour exploitation, and border securitisation.

It is impossible to think about borders outside the modern nation-state and its entanglements with empire, capitalism, race, caste, gender, sexuality, and ability. Borders are not even fixed lines demarcating territory. Bordering regimes are increasingly layered with drone surveillance, interception of migrant boats, and security controls far beyond states’ territorial limits. From Australia offshoring migrant detention around Oceania to Fortress Europe outsourcing surveillance and interdiction to the Sahel and Middle East, shifting cartographies demarcate our colonial present.

Perhaps most offensively, when colonial countries panic about ‘border crises’ they position themselves as victims. But the genocide, displacement, and movement of millions of people were unequally structured by colonialism for three centuries, with European settlers in the Americas and Oceania, the transatlantic slave trade from Africa, and imported indentured labourers from Asia. Empire, enslavement, and indentureship are the bedrock of global apartheid today, determining who can live where and under what conditions. Borders are structured to uphold this apartheid.

The freedom to stay and the freedom to move, which is to say no borders, is decolonial reparations and redistribution long due.

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