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OL’ MAN RIVER AND THE DAM STATE: Why the High Grand Falls Dam project is a bad idea

14 min read.

In this second part of a three-part series, PAUL GOLDSMITH explains why, instead of being a solution to the problem of food insecurity, big dam projects and large-scale irrigation schemes in Kenya end up causing more problems than they solve due to a combination of mismanagement, corruption and a top-down approach that fails to take into consideration the environment and the livelihoods of local populations.

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OL’ MAN RIVER AND THE DAM STATE: Kenya’s misguided Big Water policy
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The various feasibility studies and state policy documents supporting the revival of the High Grand Falls Dam project on the Tana River conform to what economists refer to as path dependency – or how a set of decisions for any given circumstance is limited by the decisions made in the past, even though past circumstances may no longer be relevant.

The QWERTY keyboard is the classic example of this pathway effect. It was designed to prevent typewriter keys from striking each other and sticking. A clever solution at the time, the un-ergonomic keyboard survives as the default for our computers and phone keypads decades after the demise of the typewriter because changing it would create greater problems.

Conceptually, path dependence interfaces with other properties of systems such as convergence, probabilities, and the jargonistic but useful property termed ergodicity. Economists define ergodicity as the ability to eventually shake free from the influence of a past state. Non-ergodic practices, in contrast, risk the problem of becoming locked in, as demonstrated by the rapid fall of Nokia when it dismissed touchscreens as a “gimmick” and lost out on the growing smartphone market.

The path dependency Illuminated by this particular case highlights a wide set of institutional practices and incentives that contribute to many of Kenya’s latest large infrastructure projects. The empirical evidence demonstrating that large infrastructure projects do not benefit the poor is not a concern in President Uhuru Kenyatta’s Big 4 policy environment. Rather, it’s a case of “the bigger the better” when it comes to Kenya’s administrative gatekeepers, tenderpreneurs, and decision makers. Endemic corruption and the ballooning national debt are consequences of this non-ergodic mindset.

Feasibility studies and invisible stakeholders

The upper Tana became the main provider of Kenya’s electricity after independence, a role that began with the construction of Sagana in 1956 and expanded by the commissioning of the Kindaruma (1968), Kamburu (1974), Masinga (1981), Kiambere (1988), and completion of the original Gitaru (1999) dams. None of these projects generated significant controversy at the time. Adding another electricity-generating station to the chain would appear to be a straightforward proposition, but it is not.

The 2016 Environmental and Social Impact Assessment of the High Grand Falls Dam project commissioned by the National Environment Management Authority (NEMA) confirms that the majority of people that will be negatively affected by the project live in areas historically neglected by the government. The report’s two-page summary of the project area’s socio-economic characteristics observes that the corresponding “low level engagement has left the communities to develop at their own pace. Some of the communities in the region are very conservative and continue with retrogressive practices that are inimical to development”.

The upper Tana became the main provider of Kenya’s electricity after independence, a role that began with the construction of Sagana in 1956 and expanded by the commissioning of the Kindaruma (1968), Kamburu (1974), Masinga (1981), Kiambere (1988), and completion of the original Gitaru (1999) dams. None of these projects generated significant controversy at the time. Adding another electricity-generating station to the chain would appear to be a straightforward proposition, but it is not.

The assessment document is rich in technical details but bypasses critical socio-economic and cultural issues. For the inhabitants of Kenya’s remote margins, it is the latest example of the dirigisme underpinning Kenya’s post-independence tradition of social exclusion.

Whether by design or omission, the negation of local histories and indigenous knowledge traditions effectively functions to render excluded minority communities invisible when it comes to development planning. Once an area is targeted for an external investment or development project, the commissioning of the feasibility study reinforces the established trajectory without exploring the negative social implications of the environmental impacts and other related factors.

The various feasibility studies commissioned in support of the Magogoni port and the Lamu Port South Sudan-Ethiopia Transport (LAPSSET) corridor, the Roola Project Memorandum of Understanding with Kuwait that preceded it, and the study supporting the allocation of the Tana Delta land for sugar production all conformed to this model. The original Mutonga-Grand Falls feasibility study, to its credit, documented the negative environmental impacts downstream, but otherwise skirted the social and economic consequences for the local stakeholders.

OL’ MAN RIVER AND THE DAM STATE: Kenya’s misguided Big Water policy

Read also: OL’ MAN RIVER AND THE DAM STATE: Kenya’s misguided Big Water policy

There is much to be said for sticking to what works, but the opposite principle applies in the case of the government’s Expanded National Irrigation Programme (ENIP) goal of expanding the 165,833 hectares under irrigation in 2011 to 1.2 million hectares by the year 2030. Most of the land to be developed in order to meet this 600 per cent increase is located in the country’s Arid and Semi Arid Lands (ASAL) zones. The performance of Kenya’s large irrigation projects has not been impressive and several of them are very expensive white elephants.

The ENIP contribution to the proposed strategy is based on an in-depth study of the water resources available in the Tana and Athi river basins. A Food and Agricultural Organisation (FAO) overview of the strategy outlines the formidable technical challenges involved, such as the high level of water losses due to evapotranspiration in the reservoirs and in the channels proposed to convey water to other sites. Kenya currently uses over 69 per cent of its limited developed water resources on irrigation. The share of Kenya’s water diverted to irrigation will rise to 89 per cent with implementation of the ENIP-driven food security strategy, which does not factor in growing industrial and urban demand.

The High Grand Falls Dam project is the main engine of this plan that, among other things, aims to redirect water to the Galana River to ensure sufficient water for the dysfunctional Galana-Kulalu scheme that is scheduled to eventually cover a colossal 1.7 million acres. The NEMA assessment document also mentions the construction of another channel transferring water to the Waso Nyiro, but does not explain why.

The water problem is emblematic of the formidable challenges facing society across system scales. The high stakes posed by the global population-natural resource equation explain why the private sector and governments alike are extolling the virtues of innovation, disruption, and creative problem solving. The dam is, in contrast, a Red Ocean project predicated on the giganticism embraced by the Vision 2030 and LAPSSET agendas.

The larger problem with the High Grand Falls Dam Assessment Study is what is not reported, like the cutting-off of the Tana for 32 months and the consequences for the ecology and downstream communities. The study does refer to the increased incidence of human-crocodile conflict (their words, not mine) and includes a list of preventative measures that can be taken to reduce it, but otherwise lacks mention of any planned mitigations downstream, or the prospects for the intensifying resource conflicts that John Allen Namu documented in The End of the River series screened on NTV.

The study does, however, pay lip service to the impact on the residents of Tharaka, who were the only grassroots stakeholders consulted. The study team convened five meetings in Tharaka attended by 857 local participants. According to the document, “there is a general acceptance of the project by the majority of the communities living in the area”.

The larger problem with the High Grand Falls Dam Assessment Study is what is not reported, like the cutting-off of the Tana for 32 months and the consequences for the ecology and downstream communities. The study…lacks mention of any planned mitigations downstream, or the prospects for the intensifying resource conflicts…

One can question the extent of the information communicated in these briefings; summaries of the discussion include miscellaneous details, like an announcement that title deeds are ready for Kamanyaki, an area that will be under water if the project goes forward. There is also no reference in the document to consultation with other communities; it renders the stakeholders in Garissa, Tana River, and Lamu counties invisible. My contacts downstream, including a local MP, verify the lack of consultation and report a general perception of confusion over the dam project.

Spatially, Tharaka is one of the most remote areas of Kenya. Its remoteness is not a function of distance, but of the area’s isolation. The roads are challenging and it is not on the way to anywhere else. So the only reason you will find yourself in towns like Marimanti, Chiakariga, or Gatunga is because you have an important reason for visiting. As the Assessment Study observes, the locals have been developing at their own pace; what it does not say is that the residents of Tharaka seem to be okay with this, and are keen on finding their own solutions, like the modified female rites of passage based on piercing the ears of young girls in place of the “retrogressive” tradition of female circumcision.

Once upon a time I conducted a survey on the state of education, health, and access to water that took me to every sub-location of Tharaka. The residents at that time were highly independent and probably the most land-paranoid community in the country. The area can prosper with greater exploitation of the local rivers for irrigation, but this has been slow coming due to internal social factors linked to the use of communal resources. The High Grand Falls Dam blueprint, in contrast, requires the relocation of 4,500-plus displaced households to a large-scale irrigation scheme outside their home county.

I find it very difficult to see the residents assenting to the planned mitigations, especially without monetary compensation, which according to recent reports in the press has been scrapped due to inflated claims and other problems common to projects that require resettlement and compensation.

Maybe the lack of attention to these issues does not matter. In a study entitled Watered Down? A review of social and environmental safeguards for large dam projects, the authors of one of the studies report that “the implementation of systematic procedures to reveal social priorities is still very unusual in developing countries” and that “it has been estimated that environmental and social safeguard processes derived from public consultations have been implemented in only 10–15% of new hydropower projects around the world”.

A case of too much electricity?

This brings us to the objectives justifying the displacement of Tharaka households and the other social and ecological negatives that will be caused by the 32-month hiatus in the river’s flow. The benefits covered in the Assessment Study are the generation of 700 megawatts of electricity, the creation of a large 5.6 billion cubic metre reservoir that the project’s designers claim will be used to irrigate 200,000 hectares of cropland, and enhanced management of the river’s flow to control flooding. These plans represent the culmination of the pathway beginning with the development of the Tana’s hydroelectricity capacity that projected 11 dams in total. But things have changed since the project was first proposed in the mid-1990s.

Kenya’s national electricity strategy seeks to diversify the nation’s power sources. But hydroelectric generation already provides the greater portion of Kenya’s electricity, and is subject to increased uncertainty over the long run due to factors of climate change and degradation of the country’s water catchment areas.

Moreover, like the controversial coal-generated electricity plant proposed in Lamu, this latest energy investment comes at a time when the region’s electricity supply is outstripping demand. Several new power sources, such as the Lake Turkana Wind Farm, the three Gibe dams on the lower Omo River, and the Bujagali, Isimba, and Karuma dams in Uganda, will add to the region’s growing electricity surplus.

Kenya is blessed with an abundant but largely untapped capacity for wind and solar power, and costs have come down. The wind and solar projects now being planned or under construction at this early point in the sector’s development will add another 1,000 megawatts to the grid. In addition, Kenya is contracted to buy 400 megawatts of power from Ethiopia, but the government appears to be delaying the connection, ostensibly due to the problems of marketing the existing supply, even though in 2015 a contract to build supply lines was signed with a Chinese contractor.

The numerous problems of mismanagement and consumer exploitation that are endemic in Kenya’s state-controlled electricity sector highlight the real priority, which is the need to extend connections to the large numbers of Kenyan households that do not have access. This is being addressed through a mix of off-grid, mini-grids, and connections to conventional sources.

A history of failed irrigation projects

No one contests the need to enhance Kenya’s national food security. However, the prioritisation of large-scale irrigation schemes in order to justify the High Grand Falls Dam is considerably more problematic than the power generation that was the original Mutonga-High Falls project’s primary driver.

The record of Kenya’s large irrigation schemes ranges from poor to disastrous, sprinkled with a few qualified successes. The Perkerra, Kanu plains, Mwea-Tebere, Hola, Bura, and Galana schemes have all experienced serious problems. Even the one success story, the Mwea scheme, was on the brink of collapse by the early 1990s when it was managed by the National Irrigation Board. Militant protests by the scheme’s residents who fought and defeated the police trying to block a demonstration led to the liberalisation of the Board’s marketing monopsony. This was followed by the still ongoing and controversial privatisation of the scheme’s land holdings.

The record for sustained mismanagement belongs to the ill-fated Bura irrigation scheme. The world’s most expensive irrigation project at the time it was christened in 1977, it quickly turned into a black hole for the World Bank, the Government of Kenya, and the pastoralists-turned-farmers who settled there. Writing in 2008, three decades after its inception, one researcher described the conditions on the scheme as:

The area is now reminiscent of a ghost town. Huge water towers stand abandoned in the scrubby landscape; irrigation canals stretch across tens of miles, overgrown with thorny vegetation; and a fenced-in vehicle parking lot contains dozens of rusting Land Rovers and large farm machinery. Housing units built for mid-level project staff as well as the villas for the resident managers stand abandoned, dilapidated, and looted. Only people with nowhere left to go remain on the project site.

The former pastoralists who settled on the Bura scheme have survived as subsistence farmers assisted by famine relief provided by the World Food Programme. They draw their water from a murky irrigation pond they share with livestock. The award for the ultimate cosmic insult, however, goes to the nearby Hola Irrigation Scheme. During the mid-1990s the Tana changed course, leaving expensive industrial pumps beached next to the old riverbed.

The record of Kenya’s large irrigation schemes ranges from poor to disastrous, sprinkled with a few qualified successes. The Perkerra, Kanu plains, Mwea-Tebere, Hola, Bura, and Galana schemes have all experienced serious problems. Even the one success story, the Mwea scheme, was on the brink of collapse by the early 1990s.

Indigenous production systems developed important social risk-spreading strategies and cultural resilience for coping with climatic uncertainty and periodic but unpredictable extreme environmental events – an orientation that most developmental interventions lack. The Japan-supported Tana Delta Rice Production scheme, for example, started well but went belly up after the 1998 El Nino rains destroyed the main canals. Power surges disabled the large German-built milling complex. Rice production continued on a reduced scale and the problems could have been fixed, but the government withdrew its funding in 2001 due to massive corruption.

The last time I visited the scheme, monkeys were roaming the impressive but incapacitated processing plant while an old smoke-belching mill next to it laboured to turn the small harvest of mpunga into mchele. A number of local and international agribusiness organisations stepped into the gap by lobbying the government in order to establish sugar and jatropha plantations. A large area was allocated to a British firm to implement a biofuel scheme, but like the plans for sugar, it failed to take off due to widespread local opposition.

As one report declared, “The Tana Delta could house a museum featuring failed projects”. The report traced the poor record of top-down projects in the Tana Delta to the failure to take the local people and the environment into account. Research undertaken by Nature Kenya established that the value generated by local agricultural and livestock producers considerably exceeds projected returns to sugar monoculture and the other capital-intensive ventures.

Environmental impact on the Tana Delta

In 2012 the Tana Delta became a Ramsar site, which recognised its status as one of the world’s important wetlands. A case study by the International Union for Conservation of Nature (IUCN) reports that the dam’s impact on the Delta will result in the reduction in the area and composition of floodplain grasslands, lowered surface and groundwater sources, loss of fertile riverbank sediment depositions, reduction in swamps, ox-bow lakes and seasonal water bodies, the deterioration of riverine forest areas due to senescence, and the degradation of the mangroves that include two species unique to the Tana Delta environment. The ecosystem hosts many other rare and endangered species, but the main casualty may be the over one million people who depend on the river’s flooding regime for their livelihoods and the 2.5 million head of livestock who depend on the water and pasture. The project will also jeopardise the growing number of riverside farms in Garissa that use the river for irrigation, who will lose out when the project redirects Tana River water to the Athi-Galana in order to support the government’s latest water grabbing experiment – the US$3 billion Galana-Kulalu project.

A case study by the International Union for Conservation of Nature (IUCN) reports that the dam’s impact on the Delta will result in the reduction in the area and composition of floodplain grasslands, lowered surface and groundwater sources, loss of fertile riverbank sediment depositions, reduction in swamps, ox-bow lakes and seasonal water bodies, the deterioration of riverine forest areas due to senescence, and the degradation of the mangroves that include two species unique to the Tana Delta environment.

The Tana Delta and riverine zones are crucial dry season reserves that attract other herders from as far as Wajir and southern Somalia during drought years. Over 100,000 Pokomo depend on recession agriculture, and there are 50,000 freshwater fishermen working in the Delta. However, none of these facts have stopped the authors of the High Grand Falls Dam Assessment Study from claiming that the project is necessary for securing the productivity of land in the Tana Delta.

The record of flawed interventions on the coast, including the nearby Magarini settlement scheme, did not augur well for the government’s one-million-acre Galana-Kulalu irrigation scheme. Observers questioned the prospects for the proposed public-private partnership when it was launched in 2014. The scheme did not disappoint. Production has been dismal, funds have vanished, and in 2016 a group of parliamentarians called for the suspension of the scheme, citing mismanagement and inflated costs. In September of 2018, the press reported that the National Cereals and Produce Board received maize valued at Sh35 million from the scheme, a paltry return to an enterprise that four years after its launch has spent Sh7.3 billion to bring only 5,000 acres under cultivation.

Analysis of the technical, administrative, and tenure-related issues besetting Magarini and other schemes in Kwale and Lamu show that they have neither alleviated the coast’s land problems nor have they advanced Kenya’s agricultural development. The Galana-Kulalu scheme is the latest contribution to a policy pathway littered with numerous such developmental disasters. Massive amounts of funds have evaporated under the hot African sun; and in an area inhabited by minority communities, these disasters have been a recipe for political tensions, conflict, and corruption.

Irrigation launched Kenya’s lucrative horticultural export industry. Private farms are perhaps the best example of irrigation’s commercial potential, but most of the produce is exported. Irrigation will also have to make a growing contribution to food security over time and prospects for expanded medium- and small-scale irrigation based on water user associations are positive. But at this point, farmers using the common jua kali overhead sprinklers and appropriate technologies like the ApproTec treadle-pedal pump have probably made a greater contribution to domestic food security.

Irrigation presently consumes 69 per cent of Kenya’s water. An analysis of scale, control and success in Kenyan irrigation attributes the problems of schemes to bureaucratic control, and found that state mismanagement is a more important factor than scale. Expanding the unexploited potential for land under irrigation will depend upon sorting out a matrix of technological, social, and environmental issues influencing agricultural output and efficiency. The High Grand Falls project and documents supporting it do not provide answers.

The elephants in the room

There are two elephants in this room. The first is the nexus between climate change and the availability of water. A hydrological analysis of the impact of climate change on the Tana Basin indicates that levels of rainfall across the basin will increase, but so will the variation and episodes of extreme precipitation and drought. Its impact will also vary across the region’s ecological zones, increasing the problematic consequences for ASAL areas. Despite the overall increase in rainfall, the authors underscore that the real challenge will be the need for those managing water resources to adapt to the new climate regime with its extremes of drought and flooding. This is a serious game changer.

The other elephant is the state. The record of mismanagement, graft, and poorly designed interventions make it easy to critique the Kenya state’s record of bungling and impunity in this sector. But the fact remains, for the bureaucrats who harvest the extra allowances and other perks these projects generate, Big Water is a magic bullet that will resolve Kenya’s food security equation. For the political decision makers at the top of the food chain, it is a convenient source of patronage and rents.

Although the case for expanded water storage requires a sustained long-term strategy, it is hard to take projects like the High Grand Falls Dam seriously when a Permanent Secretary goes on record to justify the project by stating the dam will form ”a small lake, introducing fishing to the communities around it, and tourism”. He clearly did not read the reviews on TripAdvisor about the state of the Masinga dam resort. A fraction of the dam’s price tag would go a long way towards improving water security across Kenya’s water-stressed regions by creating many “small lakes” where rainfall collects.

There are many other alternatives to centralised water storage. According to the author of an Oxford University Business School study of large dam projects, “Many smaller, more flexible projects that can be built and go online quicker, and are more easily adapted to social and environmental concerns, are preferable to high-risk dinosaur projects like conventional mega-dams.”

Big Water is just another variation on Big Infrastructure, but with much greater potential for blowback in this case due to the number of Kenyans facing lost livelihoods and displacement. The cash-strapped Jubilee government is clearly locked into a dead-end developmental pathway that is damming up its citizens’ problem-solving energies and capacity for developing social and technological solutions.

An analysis of pathway dependency offers two pieces of advice about escaping the “entrapment basin” like the one luring state policymakers and planners into the cul- de-sac reviewed here. The first is that those managing the system require external agency to change. The second is that instead of making choices that often turn out to be wrong, policy makers should improve the informational basis for choices that can be made by private parties and government agencies.

Big Water is just another variation on Big Infrastructure, but with much greater potential for blowback in this case due to the number of Kenyans facing lost livelihoods and displacement.

Unlike the case in the 1990s, there is now a large base of information and analysis on the issues interfacing with the High Grand Falls project, but the dam state will need a push if it is to play a role in rationalising the process.

In 1988, opposition to Hungary’s Nagyramos Dam provoked citizens to defy their Communist government for the first time, triggering the succession of events leading to the collapse of the Eastern Block governments in 1989. Maybe the High Grand Falls project will be the tipping point catalysing a coalition of local and external forces, like India’s Save Narmada Movement, that will lead to a more viable policy framework for managing the Tana Basin’s waters and the larger region they support.

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Dr. Goldsmith is an American researcher and writer who has lived in Kenya for over 40 years.

Politics

No War, No Peace: Life and Death in Eritrea

Thirty years after Eritrea gained independence from Ethiopia, there has hardly been any meaningful development in this small nation in the Horn of Africa. On the contrary, the government’s authoritarian policies have undermined democracy and forced young people to flee the country.

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No War, No Peace: Life and Death in Eritrea
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Eritrea was an Italian colony from 1890 to 1941. Following the defeat of Italian forces by the Allied Forces during World War Two, Britain occupied Eritrea until its federation to Ethiopia in 1952. However, by 1962 Emperor Haile Selassie had annexed Eritrea, declaring that it was part of Ethiopia, and in this way ending the federation.

In 1961, a year before the annexation, the Eritrean Liberation Front (ELF) started an armed struggle for independence from Ethiopia. The armed struggle continued for 30 years against successive Ethiopian regimes until 1991, when the Eritrean People’s Liberation Front (EPLF), who had replaced the ELF, defeated the Ethiopian forces in Eritrea. Eritrea became formally independent following a United Nations-supervised referendum in 1993.

From the beginning, the EPLF (now the People’s Front of Democracy and Justice – PFDJ)’s strategy for achieving liberation and national unity was for it to dominate all social, political, and economic spaces. The PFDJ implemented a highly centralised and opaque two-track system of administration: an unseen, powerful inner circle of elites; and public structures that projected an image of egalitarian self-sufficiency. This centralised and opaque model of governance continues today.

Since liberation, PFDJ has banned all opposition parties and treats all non-mass-movement organisations (i.e. independent civil society) with suspicion; hence there are no independent national civil society organisations in the country. Without any consultation, the PFDJ has nationalised all land; it has established a unitary form of government, and it has changed the administrative boundaries within the country. Despite these totalitarian tendencies, in 1994, the PFDJ, as the Provisional Government of Eritrea, set up the Constitutional Assembly to draft the Constitution. The task was completed in 1997. But the Constitution remains unimplemented.

Border dispute

In 1998, hostilities and war between Eritrea and Ethiopia resumed over border demarcation issues, particularly in the town of Bademe. By December 2000, the two countries signed the Algiers Peace Agreement and established the Eritrea Ethiopia Border Commission (EEBC) to determine the limits of their shared border.

The EEBC delivered its border decision on 13th April 2002, placing the town of Bademe, the flashpoint of the border conflict, on the Eritrean side. The Ethiopian government contested the allocation of Bademe to Eritrea. Therefore, a situation of “no war, no peace” ensued between the two countries as President Isaias Afewerki refused any dialogue on the issue because the parties had agreed that the decision of the EEBC was final and binding.

President Isaias Afwerki, who is also the chair of the PFDJ, took advantage of the strained relationship with Ethiopia to:

  1. indefinitely postpone the implementation of the 1997 Constitution as well as the general elections;
  2. arrest and disappear dissenters, especially University of Asmara students and the members of the government known as G15 who promoted a democratisation process (2001);
  3. close the independent media and arrest journalists (2001);
  4. abolish the Eritrean National Assembly (i.e. the Eritrean Parliament) (2002);
  5. maintain a high level of militarisation of the country.

To maintain a high level of militarisation, the government vertically integrated the National Service to the National Development Programme (i.e. the Warsay Yikaalo National Development Programme) and to Education. This integration allows the Eritrean government to move students into the National Service and the National Development Programme from high schools (i.e. Grade 12) and indefinitely extends the period of service of the conscripts, hence taking full control over the working population.

In 1998, hostilities and war between Eritrea and Ethiopia resumed over border demarcation issues, particularly in the town of Bademe. By December 2000, the two countries signed the Algiers Peace Agreement and established the Eritrea Ethiopia Border Commission (EEBC) to determine the limits of their shared border.

Through the integration of the National Service into the Warsay Yikaalo National Development Programme and Education, the government has limited the citizenship rights of conscripts who while in service cannot: legally obtain a mobile phone or SIM card; get or renew a business licence; access land; and access travel documents and exit visas. Deserters or objectors are denied any rights and cannot access state services. Thus, the official Eritrean concept of citizenship is intrinsically linked to conscription and the fulfilment of National Service duties.

The National Service is a combination of military training and civil service, working for little pay in non-military activities such as agriculture, the construction of roads, houses and buildings and mining. The Warsay National Development Programme relies on the deployment of te National Service (Warsay) and defence personnel (Yikaalo) as a labour force. The programme operates under the umbrella of the Ministry of Defence.

Since 2003, the government has closed the University of Asmara (the only university in the country). It has also required that all Eritrean students complete Grade 12 at the Sawa military training camp. Students who have not completed their final year of secondary school at Sawa and have not sat for the National School Certificat, cannot access college education. The PFDJ has replaced Asmara University with regional colleges, which are administered jointly by an academic director and a military director.

National Service conscripts work for an indefinite period on development projects, the administration of ministries and local authorities, as well as in PFDJ-owned businesses. Such work is carried out for very little pay and in conditions that a UN Commission of Inquiry on Human Rights in Eritrea described as “forced labour”.

The Eritrean authorities’ control over the people includes the restriction of movement both internally and externally. Therefore, all Eritreans aged five and above cannot leave the country without an exit visa. The government will not issue an exit visa to any Eritrean above the age of five, irrespective of their situation (i.e. family reunification, health, etc.)

The government’s control over the Eritrean people is a political, social and economic process of deprivation and human rights violations for which it refuses to take any responsibility. It is systematically impoverishing the population. Therefore, Eritrean youth face having to choose between the life of slave labour or exile. They describe their situation as slavery: “[The] situation in Eritrea and long time ago with slaves is the same. We build the houses of the elites without money. We work on farms of government officials for no money. If you are educated, they deploy you to anywhere…for a short time, you can tolerate it…but this is for life.”

Faced with accusations of human rights violations, the government reverts to “threat” mode. It labels any reference to human rights violations as “lies” and “ploys” of its enemies to undermine the state. The PFDJ Head of Political Affairs, Mr Yemane Gebreab, dismissed the findings of the Commission of Inquiry on Human rights by saying: “….[it is] really laughable……There is no basis to the claims of the Commission of Inquiry…”

The Eritrean authorities’ control over the people includes the restriction of movement both internally and externally. Therefore, all Eritreans aged five and above cannot leave the country without an exit visa.

In addition to taking control over the working population, the government also took control of the economic sectors, including finance, import and export, transport and construction. It has achieved control over the economic sphere through a process of unfair competition with private business, facilitated by the fact that it does not pay taxes and does not comply with labour, environmental, and other regulatory requirements. Also, as the regime has control over the working population, it has unlimited access to a large pool of free labour, effecting a net transfer of the workforce away from the private sector. This policy of moving human resources to labour sites identified and controlled by the government has crippled the private sector, especially the agricultural industry, which still relies to a large extent on subsistence farming.

The government’s control and domination of the economy have not increased economic activity or productivity. The economy is stagnating, further weakening the private sector and restricting economic opportunities for Eritreans.

Notwithstanding PFDJ’s rhetoric, Eritrean youth experience the state as an albatross around their necks. They understand the state in terms of spy networks; as a human rights violator curtailing civil, political, and economic rights and as the as the source of torture and deprivation. They see it as the source of all restrictions and deprivations. This is the reason why they flee the country.

Peace Agreement with Ethiopia and its aftermath

In April 2018, the Ethiopia Prime Minister Abiy announced the acceptance of the EEBC decision, in particular the allocation of the flashpoint town of Bademe to Eritrea. In this way, he started a process that led to the signing of the Ethiopia Eritrea Peace Agreement in July 2018, thus ending two decades of “no war, no peace”. The land borders opened to much jubilation in 2018. However, by April 2019, the Eritrean government had closed them all. So far, the only achievements of the Peace Agreement are the reopening of embassies and telecommunication lines and the resumption of flights.

The signing of the Peace Agreement immediately raised expectations that there would be a normalisation of relations between the two states. It also raised expectations regarding reforms within Eritrea that would lead to a reduction in the number of Eritrean youth fleeing the country. Soon after the signing of the Peace Agreement, the Eritrean Catholic priest Aba Teklemichael pointed to the sweeping reforms implemented by Prime Minister Abiy in Ethiopia, and urged the Eritrean government to also undertake necessary reforms in Eritrea and to democratise the government. By Easter 2019, the Eritrean Catholic bishops were also calling for a constitutional government and the rule of law. They also encouraged the government to release political prisoners and start a process of reconciliation within the country. However, to date there have been no reforms in the country, a state of affairs confirmed by the UN Special Rapporteur on Human Rights in Eritrea who at the start of this year reported that she had: “ ……no tangible evidence of a meaningful and substantive improvement in the situation of human rights in Eritrea”.

The signing of the Peace Agreement immediately raised expectations that there would be a normalisation of relations between the two states. It also raised expectations regarding reforms within Eritrea that would lead to a reduction in the number of Eritrean youth fleeing the country.

The ongoing peace process is not transparent; it has mostly remained an elite political level agreement unable to deliver on the economic front or to resolve the issue of Bademe as both Prime Minister Abiy and President Isaias Afewerki have marginalised the Tigray People’s Liberation Front (TPLF) for political motives. The Eritrean government has increasingly identified the Tigray State and the Tigray People’s Liberation Front (TPLF) as an existential threat to Eritrea, thus justifying the maintenance of a high level of militarisation. Consequently, Eritrean youth continue to flee the country. In 2018, UNHCR ranked Eritrea as the ninth-largest refugee-sending state in the world.

Ailing health sector

The totalitarian agenda of the Eritrean government did not spare the health sector either. The task of reconstructing the Eritrean health system after the liberation struggle and following the 1998-2000 Eritrea-Ethiopia border war was monumental. It was an undertaking that the late and former Minister of Health Saleh Meki undertook with passion, commitment, and zest from 1997 to 2009 when Ms Amina Nurhussein replaced him.

In his efforts rebuild the Eritrean health system, Saleh Meki sought to establish strategic partnerships with critical international health institutions, private practitioners, faith-based organisations, such as the Catholic Church, as well as professional members of the Eritrean diaspora. The former Minister of Health carried on with his efforts despite the enormous pressure to conform to the dictates of President Isaias Afwerki, and the concerns generated by the closure of international non-governmental organisations, as well as the restriction of movement imposed on all organisations working in the country. Against all the odds, he re-established the medical school known as the Orotta Medical School.

Saleh Meki died on 2nd October 2009. Soon after his death, all the medical missions of international organisations that he had worked so hard to bring to Eritrea ended. By 2011 the Eritrean Government forced the closure of all private medical clinics. And, by 2018 a total of 29 Catholic health facilities providing maternal and child health support and serving some of the more remote communities in the country were closed. The seizure and closure, of the Catholic health facilities was carried out in complete disregard to the health and safety of the patients, most of whom were left to fend for themselves.

There was no clear justification for the closure of the private health facilities. However, the closure of the Catholic health facilities was justified as an enforcement of the 1995 Proclamation to standardise and articulate religions institutions (Proclamation No 73 of 1995). The Proclamation prohibits religious bodies from engaging in social and welfare services. This position is contested by all faith-based organisations, especially since there was no consultation in the development of the law. The Eritrean Catholic bishops’ communication with the government on the seizure and closure of their health facilities point out that the facilities operated by abiding with all the requirements of the Ministry of Health.

Poor COVID-19 response

The closure of health facilities has reduced the number of available beds and the overall capacity of the health system. Hence, Eritrea, with a score of 0.434, was ranked 182nd out of 189 countries by the 2019 Human Development Index. The low Human Development Index combined with a hospital bed capacity of 7 beds for 10,000 people, and no available data as to the number of health professionals (i.e. doctors and nurses) available per 10,000 people, suggests that the situation might be even more dire. And the poor connectivity of the country (i.e. mobile phones, internet, broadbands) means that the country’s capacity to deal with pandemics such as COVID-19 is low.

The low capacity of the Eritrean health system to deal with the COVID-19 pandemic was also of concern to the diaspora Eritrean Healthcare Professionals Network (EHPN), which urged the Eritrean government to immediately implement the World ealth Orbanization (WHO) and Centre for Disease Control (CDC) guidelines and advisories to contain the pandemic. EHPN expressed concern that the country lacks the necessary prerequisites to implement hygiene measures because: “There is a shortage of water, disinfectants, laboratories that carry out diagnostic tests and medical professionals, including nursing and technical staff. There is also a lack of functioning intensive care units with adequate ventilation equipment needed to properly treat patients. The reality is that many Eritreans will not be able to seek and obtain medical treatment in their homeland or neighbouring countries. In short, the Eritrean health system is not adequately prepared for COVID 19.”

Fears regarding the poor state of the Eritrean health system were further heightened when the Eritrean government refused COVID-19 emergency supplies donated by the Chinese billionaire Jack Ma and his Alibaba Group. Mr Hagos “Kisha” Gebrehiwet, the head of Economic Affairs in the ruling PFDJ, justified the rejection of Jack Ma’s donation by saying that it was unsolicited.

The government’s willingness to reject donations has, however, launched a COVID-19 appeal among citizens. The appeal is remarkable for the lack of information as to how the funds raised will be used. There is no single COVID-19 emergency response bank account designated for the appeal; hence, in the diaspora, funds are collected in different foreign bank accounts set up by Eritrean embassies. Consequently, there is a real danger that the funds will never enter the country and will disappear into the government’s opaque offshore financial system. Also, there is no information as to how the Ministry of Health will use the funds. Reports by Eritrean human rights activists say the appeal is coerced, confirming the lack of transparency and accountability of the fundraising process.

There is also no transparency in the COVID-19 data that the Eritrean government is providing. It reported the first four COVID-positive cases on the 21st and 23rd of March. One patient was an Eritrean national resident in Norway, and the other three positive patients were Eritrean nationals returning from Dubai. Because of these events, by 26th March, the government banned all commercial passenger flights for two weeks. It also closed schools. And, by 1st April, it imposed COVID-19 lockdown measures.

Fears regarding the poor state of the Eritrean health system were further heightened when the Eritrean government refused COVID-19 emergency supplies donated by the Chinese billionaire Jack Ma and his Alibaba Group. Mr Hagos “Kisha” Gebrehiwet, the head of Economic Affairs in the ruling PFDJ, justified the rejection of Jack Ma’s donation by saying that it was unsolicited.

The lockdown measures did not include the closure of the Sawa military training camp or the release of political prisoners. The government has recently released 27 Christian prisoners, who were imprisoned without charge or trial for as long as sixteen years. Their release is conditional on their family lodging their property deeds with the government as a guarantee that the people released will not leave the country.

While maintaining a strict lockdown, the Eritrean government has allowed mass gatherings to celebrate the graduation of the 33rd round of Sawa military training camp graduates as well as the transfer of Grade 12 conscripts to the facility.

From 1st April to 18th April, the Eritrean government reported 39 COVID positive cases, all linked to Eritreans visiting or returning from their travels. Then, for two months, there were no new cases reported. After that, the number of COVID-positive cases increased, and by the 12th of October, Eritrea reported a total of 414 COVID-positive patients and 372 recoveries.

Though the government makes repeated references to quarantine centres, it has not shared a list of the centres, their location or capacity. It is also not reporting the daily number of COVID tests. Nor has it reported any COVID-related deaths or any community transmission of the virus. It continues to attribute all the new COVID cases to Eritreans returning through “irregular land and sea routes” from Ethiopia, Sudan, Djibouti and Yemen. But there is no explanation as to why so many nationals are travelling despite the government’s strict lockdown procedure that prohibits all movement between towns and that restricts te movement of any vehicles, including buses and taxis, which require movement permits. Such permits are not easy to obtain.

Finally, there are only five incidents of Ministry of Information reporting the number of individuals tested or in quarantine:

  1. 3,000 quarantined – 8th May 2020;
  2. 5,270 quarantined – 3rd June 2020;
  3. 7,158 nationals returned through irregular land and sea routes. Not clearly stated but the implication is that they were all quarantined – 14th June 2020;
  4. 18,000 citizens allegedly returned through irregular land and sea routes. This movement occurred in the last four months. Again, not clearly stated but the implication is that they were all quarantined – the 12th October 2020;
  5. 41,100 tests – 12th October 2020.

In a recent report, the Eritrean Ministry of Information asserted that the rate of COVID infection in the country was “a paltry 0.02%”, based on one (1) positive result during 4659 random tests done in Asmara”. The data shared by the government (41,100 tests and 414 COVID-positive cases) suggests that the rate of infection is just 1 per cent.

The COVID lockdown in Eritrea, like in other countries, has brought economic activities to a standstill. The difference between Eritrea and other countries is that the Eritrean economy was already on its knees before the lockdown and the Eritrean government has not made any attempt – beyond extorting donations from its citizens – to alleviate the suffering of the people with economic support packages. Consequently, Eritreans are hungry and desperate and have started to ignore strict lockdowns. They are on the streets selling all kinds of goods. Women are out in the streets, making tea and cooking food for sale. Family and friends describe Asmara, the capital city, as full of mobile tea shops.

In a recent report, the Eritrean Ministry of Information asserted that the rate of COVID infection in the country was “a paltry 0.02%”, based on one (1) positive result during 4659 random tests done in Asmara”. The data shared by the government (41,100 tests and 414 COVID-positive cases) suggests that the rate of infection is just 1 per cent.

The Eritrean Afars have, through the Red Sea Afar Human Rights Organisation (RSAHRO), issued a press statement, describing their situation under lockdown as a: “… siege imposed by the Eritrean regime on the citizens of the region.”. They warn of the danger of hunger in their area. They also describe confiscation of boats, camels and supplies by the military, closed health centres, unprepared quarantine centres, as well as lack of medical supplies. The human rights organisation also accuse General Tekle Manjus of confiscating trucks of emergency food sent from Asmara for distribution among the Afar.

The Afar coastal area is not the only area in danger of hunger. The information from Eritrea is that hunger is very real all over the country. The government media and social media accounts do not report the danger of hunger or any of the difficulties that the people are facing during this COVID-19 emergency. Their postings give the impression that Eritrea is doing just fine.

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The Search for a Puppet Chief Justice

The emotional energy invested in controlling the recruitment of the next Chief Justice could turn out to be a source of great frustration when administrative fiat and bench-fixing do not deliver the anticipated results.

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The Search for a Puppet Chief Justice
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Anxiety over who will replace Chief Justice David Maraga exploded into the public domain on Friday, October 16, 2020, when a member of the Judicial Service Commission (JSC) alleged a plot to delay the recruitment process. Macharia Njeru, one of the two representatives of the Law Society of Kenya (LSK) to the JSC, claimed in a public statement that the Chief Justice and a few others were “hellbent on derailing the orderly recruitment of his successor and leaving the institution of the Judiciary in a crisis of leadership”.

LSK immediately dissociated itself from Macharia’s position and asserted that the “state capture of the Judiciary and the Judicial Service Commission would not be executed through its representatives”.

The parliamentary Justice and Legal Affairs Committee had earlier failed to prevail on Justice Maraga to take early terminal leave, and subsequently published a proposal to change the law on when to begin recruitment of a new Chief Justice. The Chief Justice will officially retire on January 12, 2021, when he turns 70, but he is expected to take leave on December 15, 2020.

Powerful individuals in the country’s politics cannot wait to see Justice Maraga’s back because of his surprising show of spine. On September 1, 2017, the mild-mannered and soft-spoken jurist led a four-judge majority of the Supreme Court to annul the presidential election in a decision that reverberated across the globe. Last month, Justice Maraga advised the President to dissolve Parliament for failing enact laws to increase representation of women in national elected leadership on the strength of a High Court declaration and six petitions.

Between the two monumental decisions, the Chief Justice has called out the President over judiciary budget cuts, disregard for court orders and verbal attacks on the institution he leads.

Justice Maraga’s name conjures up odium and foreboding in state organs at the executive and legislative levels, expressed through punitive budget cuts in the Judiciary, disregard of courts’ authority, and derisive rhetoric. None of these backhanded actions have brought the politically powerful any satisfaction, hence the abiding desire to find a more user-friendly Chief Justice.

Vacancies in the Judiciary can only be advertised fourteen days after they open up, according to the law, which means that the Chief Justice, who also chairs the JSC, plays no role in recruiting his successor. Previously, individuals in the presidency unsuccessfully sought to influence who becomes Chief Justice since the Constitution of Kenya, on its promulgation in 2010, retired Justice Evan Gicheru in February 2011. At the time, President Mwai Kibaki nominated the Court of Appeal’s Justice Alnashir Visram for Chief Justice without inviting applications or conducting interviews. He was countermanded by the newly-constituted JSC, which then conducted one of the most brutal public interviews for the position before choosing civil society icon and law scholar Willy Mutunga.

Justice Maraga’s name conjures up odium and foreboding in state organs at the executive and legislative levels, expressed through punitive budget cuts in the Judiciary, disregard of courts’ authority, and derisive rhetoric.

Dr Mutunga’s transparent recruitment freed him from the usual baggage that would accompany a political appointment to lead the transformation of the judiciary into an independent, publicly accountable institution [Full disclosure: I was communication advisor in the Office of the Chief Justice from 2011 to 2015]. By the time Dr Mutunga chose to retire a year early in June 2016, he had trebled the number of judges to increase efficiency, built confidence and secured the highest funding ever for the institution. He also ring-fenced decisional independence that would enable courts to act as a check on executive and legislative power.

After the Supreme Court upheld the 2013 presidential election, an internal corruption investigation in the Judiciary sucked the institution into a confrontation with the National Assembly, which petitioned the President to appoint a tribunal to investigate six members of the JSC. A five-judge High Court bench neutered the tribunal before it could sit and presented the first contest between Dr Mutunga and President Uhuru Kenyatta.

President Kenyatta would play possum with a list of 25 judge nominees presented to him by the JSC, first appointing 11 and then keeping the other 14 in abeyance for a year. An amendment to the law to require the JSC to send the President three names from which he could choose the Chief Justice was struck down on account of unconstitutionality.

When Dr Mutunga wanted to retire, the President declined to meet him, and the Speaker of the National Assembly refused to respond to his request to address Parliament. By the time interviews for Dr Mutunga’s replacement began in September 2016, the Executive was disoriented and unable to muscle its substantial vote strength in the JSC for a single candidate.

Although the presidency nominates two non-lawyers as members of the JSC in addition to the Attorney General and a nominee of the Public Service Commission, thus controlling 36 per cent of the vote, the Judiciary has five members – the Chief Justice as chair and one representative each for the Supreme Court, the Court of Appeal, the High Court and the magistrates – and has 45 per cent voice. The Law Society of Kenya’s two representatives – 18 per cent – provide an important swing vote for the Executive or the Judiciary whenever there is no consensus.

Justice Maraga of the Court of Appeal emerged as the dark horse in the three-month search for the Chief Justice on the strength of his electoral law jurisprudence. Earlier attempts to name Supreme Court judge Jackton Ojwang as acting Chief Justice were abandoned. Justice Ojwang trailed fellow Supreme Court judge Smokin Wanjala, Kenyan-American law professor Makau Mutua, and constitutional law expert Nzamba Kitonga.

When Dr Mutunga wanted to retire, the President declined to meet him, and the Speaker of the National Assembly refused to respond to his request to address Parliament.

The Supreme Court’s annulment of the presidential election in September 2017 produced voluble complaints from President Kenyatta, who threatened unspecified action against the Judiciary. The independence of the Judiciary, represented in the person of the Chief Justice, has clearly rankled President Kenyatta and his supporters. He subsequently began a systematic reorganisation of the Executive’s representatives to the JSC by picking a judiciary insider, Court of Appeal president, Kihara Kariuki, to replace Attorney General Githu Muigai. Even before the terms of public representatives Winnie Guchu and Kipng’etich Bett were midway, he recalled them and replaced them with Prof Olive Mugenda and Felix Koskey. And then he declined to gazette the re-election of Mohammed Warsame as Court of Appeal representative to the JSC. Judge Warsame was finally seated without re-taking oath courtesy of a court decision that obviated the need for his election to be gazetted. He joined the judiciary column led by the Chief Justice, Deputy Chief Justice Philomena Mwilu, who had been elected to represent the Supreme Court, and Justice David Majanja, who represents the High Court.

Fears have been rife that the election of the magistrates’ representative to replace Chief Magistrate Emily Ominde in December and the replacement of LSK woman representative Mercy Deche could provide an opportunity for the Executive to support pliant candidates, in addition to Macharia Njeru.

It is likely that urgent attempts to start the Chief Justice’s recruitment could exclude the two representatives of the magistrates and the LSK, thus denying the panel two critical voices. Voting strength in the JSC could also be significantly altered if some of the commissioners apply for the Chief Justice’s position. For one, it is not clear if the 62-year-old Deputy Chief Justice Philomena Mwilu, who already represents the Supreme Court in the JSC, will act as chairperson of the commission once Justice Maraga leaves.

Although voting is an important factor in choosing the next Chief Justice, qualification is probably more important. And the public scrutiny candidates are subjected to, complete with court oversight when required, means that a naked attempt to install a puppet would backfire.

Political horse-trading with Parliament is a necessity for nominees to the position of Chief Justice and Deputy Chief Justice to be confirmed during vetting. Often, politicians view the Chief Justice’s position as one of the spoils to be traded during ethno-regional deal-making. So far, the Chief Justice’s position has been occupied by a kaleidoscope of Kenyans – including many ethnic and religious colourations.

The law only provides for the Deputy Chief Justice to act as Chief Justice “[i]n the event of the removal, resignation or death” and only for a period not exceeding six months pending the appointment of a new one. It remains to be seen if legal experts will argue that retirement is not equivalent to removal, resignation or death. Should Justice Mwilu also throw her hat in the ring for the top job, she would not be able to cast a vote as a JSC member.

Another JSC member who has to weigh between voting and chasing the job is 66-year-old Justice Kihara Kariuki, believed to be a front-runner to succeed Chief Justice Evan Gicheru in 2011 but has bided his time, rising to President of the Court of Appeal before accepting to serve as Attorney General. Meanwhile, Justice Mwilu has been embroiled in petitions seeking her removal from office since the Supreme Court annulled the presidential election. Two years ago, the Director of Public Prosecutions and the Director of Criminal Investigations launched a highly publicised effort to arrest and charge her with corruption before the High Court discharged her and advised that complaints against her be first have been processed through the JSC. Justice Mwilu has since tied the JSC in legal knots over the involvement of the Attorney General and one other member in hearing the complaint against her, claiming that they have shown bias.

Although the Constitution allows a Chief Justice to serve for a maximum of 10 years, the practice so far has been to choose individuals who are close to the retirement age, with the effect that those chosen preside over only presidential petitions from one election cycle before they reach the retirement age of 70. If appointments continue to be short-term to limit the pain individuals can inflict on the institution, candidates in their mid-60s appear to be chosen to navigate the 2022 election and leave before the 2027 one.

Although voting is an important factor in choosing the next Chief Justice, qualification is probably more important. And the public scrutiny candidates are subjected to, complete with court oversight when required, means that a naked attempt to install a puppet would backfire.

Although the Supreme Court’s Justice Smokin Wanjala gave a good showing at the 2016 interviews and was ranked second, his age – 60 – means that if appointed, he would hold the job for 10 years. Law scholar Makau Mutua, 62, who was ranked third in the 2016 interviews for Chief Justice, could also give the job another try, as would former Attorney General Githu Muigai, who would similarly be hampered by fears of serving out the 10 years in the post.

The Executive’s frustration with the Judiciary has been expressed as blame for the slow pace of corruption cases, where the courts are criticised for not pulling their weight to deliver quick convictions. The most evident sign of frustration has been the President’s refusal to appoint 41 individuals nominated by the JSC as Court of Appeal and High Court judges. The law does not permit the JSC to reconsider its nominees after the names have been submitted to the President, except in the case of death, incapacity or withdrawal of a nominee. Last week, judge designate Harrison Okeche died after a road traffic accident before he could be sworn in because the President has not published the names as expected. It remains to be seen how the JSC responds.

Chief Justices chair the Judicial Service Commission, and preside over the Supreme Court, which decides the presidential election petitions. Besides the very constrained and collegial power in these two sites, the Chief Justice also exercises administrative power in empanelling High Court benches for constitutional references, and posts judges – powers shared with the President of the Court of Appeal and the Presiding Judge of the High Court.

A Chief Justice cannot direct judicial officers – from the lowliest magistrate to the Supreme Court judge – on how to decide a matter. Much of the power she or he wields is moral and symbolic. The emotional energy invested in controlling the recruitment of the next Chief Justice could turn out to be a source of great frustration when administrative fiat and bench-fixing do not deliver the anticipated results for those seeking a puppet Chief Justice.

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African Continent a Milking Cow for Google and Facebook

‘Sandwich’ helps tech giants avoid tax in Africa via the Netherlands and Ireland.

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Algorithmic Colonisation of Africa
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Google’s office at the airport residential area in Accra, Ghana, sits inside a plain white and blue two-storey building that could do with a coat of paint. Google, which made more than US$ 160 billion in global revenue in 2019, of which an estimated US$ eighteen billion in ‘Africa and the Middle East’, pays no tax in Ghana, nor does it do so in most of the countries on the African continent.

Google Street View of the building registered as Google's office in Accra

Google Street View of the building registered as Google’s office in Accra

It is able to escape tax duties because of an old regulation that says that an individual or entity must have a ‘physical presence’ in the country in order to owe tax.  And Google’s Accra office clearly defines itself as ‘not a physical presence.’ When asked, a front desk employee at the building says it is perfectly alright for Google not to display its logo on the door outside. ‘It is our right to choose if we do that or not’. A visitor to the building, who said she was there for a different company, said she had no idea Google was based inside.

Facebook is even less visible. Even though practically all 250 million smartphone owners in Africa use Facebook, it only has an office in South Africa, making that country the only one on the continent where it pays tax.

Brick and mortar

The physical presence rule in African tax laws is ‘remnant of a situation before the digital economy, where a company could only act in a country if it had a “brick and mortar” building’, says an official of the Nigerian Federal Inland Revenue Service (FIRS), who wants to remain anonymous. ‘Many countries did not foresee the digital economy and its ability to generate income without a physical presence. This is why tax laws didn’t cover them’.

Tax administrations globally have initiated changes to allow for the taxing of digital entities since at least 2017. African countries still lag behind, which is why the continent continues to provide lucrative gains for the tech giants. A 2018 PriceWaterhouseCoopers report noted that Nigeria, Africa’s largest economy, has seen an average of a thirty percent year-on-year growth in internet advertising in the last five years, and that the same sector in that country is projected, in 2020, to amount to US$ 125 million in the entertainment and media industry alone.

‘Their revenue comes from me’.

William Ansah, Ghana-based CEO of leading West African advertising company Origin 8, pays a significant amount of his budget to online services. He says he is aware that tax on his payments to Facebook and Google escapes his country through what is commonly referred to as ‘transfer pricing’ and feels bad about it. ‘These companies should pay tax here, in Ghana, because their revenue comes from me’, he says, showing us a receipt from Google Ireland for his payments. During this investigation we were also shown an advert receipt from a Nigerian Facebook ad that listed ‘Ireland’ as the destination of the payment.

Like Google, Facebook does not provide country-by-country reports of its revenue from Africa or even from the African continent as a whole, but the tech giant reported general revenue of US$ sixty billion as a whole from ‘Rest of the world’, which is the world minus the USA, Canada, Europe and Asia.

Facebook revenue by user geography

Facebook revenue by user geography

Irish Double

The specific transfer pricing construction Google and other tech giants such as Facebook use to channel income away from tax obligations is called an ‘Irish Double’ or ‘Dutch Sandwich’, since both countries are used in the scheme. In the construction, the income is declared in Ireland, then routed to the Netherlands, then transferred to Bermuda, where Google Ireland is officially located. Bermuda is a country with no corporation tax. According to documents filed at the Dutch Chamber of Commerce in December 2018, Google moved US$ 22,7 billion through a Dutch shell company to Bermuda in 2017.

Moustapha Cisse, Africa team lead at Google AI

Moustapha Cisse, Africa team lead at Google AI

An ongoing court case in Ghana — albeit on a different issue — recently highlighted attempts by Google to justify its tax-avoiding practices in that country. The case against Google Ghana and Google Inc, now called Google LLC in the USA, was started by lawyer George Agyemang Sarpong, who held that both entities were responsible for defamatory material against him that had been posted on the Ghana platform. Responding to the charge, Google Ghana contended in court documents that it was not the ‘owner of the search engine www.google.com.gh’; that it did not ‘operate or control the search engine’ and that ‘its business (was) different from Google Inc’.

Google Ghana is an ‘artificial intelligence research facility’.

Google Ghana describes itself in company papers as an ‘Artificial Intelligence research facility’. It says that its business is to ‘provide sales and operational support for services provided by other legal entities’, a construction whereby these other legal entities — in this case Google Inc — are responsible for any material on the platform. Google Ghana emphasised during the court case that Ghana’s advertising money was also correctly paid to Google Ireland Ltd, because this company is formally a part of Google Inc.

Rowland Kissi, law lecturer at the University of Professional Studies in Accra describes Google’s defence in the Sarpong court case as a ‘clever attempt’ by the business to shirk all ‘future liability of the platform’. Kissi is cautiously optimistic about the outcome, though: while the case is ongoing, the court has already asserted that ‘the distinction regarding who is responsible for material appearing on www.google.com.gh, is not so clear as to absolve the first defendant (Google Ghana) from blame before trial’. According to leading tax lawyer and expert Abdallah Ali-Nakyea, if the ‘government can establish that Google Ghana is an agent of Google Inc, the state could compel it to pay all relevant taxes including income taxes and withholding taxes’.

Cash-strapped countries

Like most countries, especially in Africa, Nigeria and Ghana have become more cash-strapped than usual as a result of the COVID 19 pandemic. While lockdowns enforced by governments to stop the spread of the virus have caused sharp contractions of the economy worldwide, ‘much worse than during the 2008–09 financial crisis’, according to the International Monetary Fund, Africa has experienced unprecedented shrinking, with sectors such as aviation, tourism and hospitality hardest hit. (Ironically, in the same period, tech giants like Google and Facebook have emerged from the pandemic stronger, due to, among others, the new reality that people work from home.)

With much needed tax income still absent, many countries have become even more dependent on charitable handouts. Nigeria recently sent out a tweet to ask international tech personality and philanthropist, Elon Musk, for a donation of ventilators to help weather the COVID 19 pandemic: ‘Dear @elonmusk @Tesla, Federal Government of Nigeria needs support with 100-500 ventilators to assist with #Covid19 cases arising every day in Nigeria’, it said. After Nigerians on Twitter accused the government of historically not investing adequately in public health, pointing at neglect leading to a situation where a government ministry was now begging for help on social media, the tweet was deleted. A government spokesperson later commented that the tweet had been ‘unauthorised’.

Cost to public

The criticism that governments often mismanage their budgets and that much money is lost to corruption regularly features in public debates in many countries in Africa, including Nigeria. However, executive secretary Logan Wort of the African Tax Administration Forum ATAF has argued that this view should not be used to excuse tax avoidance. In a previous interview with ZAM Wort said that ‘African countries must develop their tax base. It is only in this way that we can become independent from handouts and resource exploitation. Then, if a government does not use the tax money in the way it should, it must be held accountable by the taxpayers. A tax paying people is a questioning people’.

‘A tax paying people is a questioning people’

Commenting on this investigation, Alex Ezenagu, Professor of Taxation and Commercial Law at Hamad Bin Khalifa University in Qatar, adds that in matters of tax avoidance by ‘popular multinationals such as Facebook and Google, it is important to understand the cost to the public. If (large) businesses don’t pay tax, the burden is shifted to either small businesses or low income earners because the revenue deficit would have to be met one way or another’. For example, a Nigerian revenue gap may cause the government to increase other taxes, Ezenagu says, such as value added tax, which increased from five to seven and a half percent in Nigeria in January. ‘When multinationals don’t pay tax, you are taxed more as a person’.

Nigeria has recently begun to tighten its tax laws, thereby following in the footsteps of Europe, that last year made it more difficult for the digital multinationals to use the ‘Irish Double’ to escape tax in their countries. South Africa, too, in 2019 tailored changes to its tax laws in order to close remaining legal loopholes used by the tech giants. These ‘could raise (tax income) up to US$ 290 million a year’ more from companies like Google and Facebook, a South African finance source said. With US$ 290 million, Ghana’s could fund its flagship free senior high school education; Nigeria could fully fund the annual budget (2016/2017 figures) of Oyo, a state in the south west of the country.

Interior view of the Facebook office in Johannesburg, South Africa

Interior view of the Facebook office in Johannesburg, South Africa

Waiting for the Finance Minister

Nigeria’s new Finance Act, signed into law in January 2020, has expanded provisions to shift the country’s focus from physical presence to ‘significant economic presence’. The new law leaves the question whether a prospective taxpayer has a ‘significant economic presence’ in Nigeria to the determination of the Finance Minister, whose action with regard to the tech giants is awaited.

In Ghana, digital taxation discussions are slowly gaining momentum among policy makers. The Deputy Commissioner of that country’s Large Taxpayer Office, Edward Gyamerah, said in a June 2019 presentation that current rules ‘must be revised to cover the digital economy and deal with companies that don’t have traditional brick-and-mortar office presences’. However, a top government official at Ghana’s Ministry of Finance who was not authorised to speak publicly stated that, ‘from the taxation policy point of view, the government has not paid a lot attention to digital taxation’.

He blamed the ‘complexity of developing robust infrastructure to assess e-commerce activity in the country’ as a major reason for the government’s inaction on this, but hoped that a broad digital tax policy would still be announced in 2020.” Until the authorities get around to this, he said he believed that, ‘Google and Facebook will (continue to) pay close to nothing in Ghana’.

Comment

Google Nigeria did not respond to several requests for interviews; Google Ghana did not respond to a request for comment on this investigation. Neither entities responded to a list of questions, which included queries as to what of their activities in the two countries might be liable for tax, and whether they could publish country by country revenues generated in Africa. When reached by phone, Google Nigeria’s Head of Communications, Taiwo Kola Ogunlade, said that he couldn’t speak on the company’s taxation status. Facebook spokesperson Kezia Anim-Addo said in an email: ‘Facebook pays all taxes required by law in the countries in which we operate (where we have offices), and we will continue to comply with our obligations’.

Note: The figure of eighteen billion US$ as revenue for Google in ‘Africa and the Middle East’ over 2019 was arrived at as follows. Google’s EMEA figures for 2019 indicate US$ 40 billion revenue for ‘Africa, Europe and the Middle East’ all together. According to this German publication, Google’s revenue in Europe was 22 billion in 2019This leaves US$ eighteen billion for Africa and the Middle East.

This article was first published by our partner ZAM Magazine.

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