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DEBT, AUSTERITY AND ECONOMIC HIT SQUADS: How China and the West hoodwinked Kenya

10 min read. China has learnt from the West’s weaponisation of sovereign debt as a tool for securing the sovereign assets and acquiescence of poorer countries. By DARIUS OKOLLA

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DEBT, AUSTERITY AND ECONOMIC HIT SQUADS: How China and the West hoodwinked Kenya
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The Christian scriptures state that a good man leaves an inheritance to his children’s children. This provides a key entry point into the question of intergenerational mobility of wealth, income and opportunity.

We’ve got to admit that meritocracy is often a myth. Hard work, single-minded focus, and determination are good but are not guarantees to success. The top predictor of a child’s socio-economic class is not his personality, education, IQ, talent, or exposure: it is the parent’s socio-economic status. Researchers Amy Traub and Tatjana Meschede once demonstrated that for African-Americans, and increasingly for non-white races around the globe, going to college doesn’t close the wealth gap; neither do two-parent household set-ups, family spending cuts, or working full time. If a child is poor/middle class/rich, there is a high chance that the parents are poor/middle class /rich, respectively.

Poor people usually have roughly a 10 to 20 per cent chance of ever ending up rich in their lifetime. In fact, the common ratios tend to be between 7 and 15 per cent. In most societies, upper middle class people have a 20 per cent or so chance of ending up rich. In fact, nearly 60 per cent of all people live and die within the social class that they were in in their 20s.

Let’s admit it: the rags-to-riches story tends to be anything but. Yes, there is always a tycoon who started on the streets and became a billionaire but that is the exception, not the rule. A huge proportion of those born into poverty will live and die poor. Contrary to what you keep hearing, education is great but it is not an equaliser; rich kids with low IQs graduate in higher numbers than poor kids with high IQs. It is family incomes, not merit, that primarily determines university enrolment, graduation, and future incomes.

The ability to generate a transformative kind of wealth within one’s lifetime is possible but neither normal nor possible for the majority of the population; usually, it takes about three to four generations of industrious heirs to achieve it. That’s the reason the good book instructs us that a good man leaves an inheritance for his children and his children’s children. The forces at play are referred to as the principles of inherited (dis)advantages.

Ethnicity of capital

Intergenerational mobility tends to be stubbornly calcified, which is a key reason why the deity prioritises the need for one to leave an inheritance for one’s progeny. Wealth is known to stay within certain families for between 500 and 800 years, as studies have demonstrated in Florence, England and ancient China. Capital is quite loyal to filial ties but most importantly, it manifests certain logic and sensibilities, including developing its nature from the demographic, geographic, intellectual, historical and political contexts within which it is employed. Notably, Amy Traub and Lara Sullivan’s study of racial inequality has demonstrated that barring any historical disruptions, capital tends to remain familial, and by extension, stays ethnic.

It is the Euro-American/Christian/White capital in the West whose hegemony has driven modern civilisation since the Renaissance – that’s the bane of global capitalism. This capital is decidedly white, decidedly male, decidedly Christian, decidedly elitist, and notably racist in its sensibilities, a persona it picked from its most famous brawling pioneers like Adam Smith, the rogue Commodore Vanderbilt, and the choleric John Rockefeller. Capitalism, as an initially Western logic, therefore, ought to be examined within the context of its interaction with global economic history, especially the rise of nation-states and slavery.

In Workers of the World: Essays Toward a Global Labor History, economic historians Kenneth Pomeranz and Marcel van der Linden have shown that, viewed from a global perspective, capitalism is notably discovered to have grown on the backs of slavery. The 18th century global oppressive structures that birthed racism and slavery were also central to the invention of the Industrial Revolution, especially the spectacular American capitalism.

It is the Euro-American/Christian/White capital in the West whose hegemony has driven modern civilisation since the Renaissance – that’s the bane of global capitalism. This capital is decidedly white, decidedly male, decidedly Christian, decidedly elitist, and notably racist in its sensibilities…

The American capitalistic experiment took shape in the 1820s just as one of its would-be patriarchs, Cornelius “Commodore” Vanderbilt, turned 26 and for the next 150 years it delivered a year-on-year wage rise, including surviving the infamous American Civil War of 1861-1865. However as the economy entered the 1960s, the rise of automation, women pouring into the workplace after the sexual revolution, the rise of immigration, and employers moving production abroad stalled this capitalist experiment.

The combination of technology and outsourcing production abroad gave American capital a velocity and agility that gave rise to the possibility of accelerated capital flight, as happened in the 1997 Asian financial crisis. In the 60s, Euro-American capital also learned that it could use debt as a tool for diplomacy and coercion on the global stage.

Of jackals and hit men

John Perkins, who authored the famous book Confessions of an Economic Hit Man, begins his narration in Quito, Ecuador. He then journeys us through half a dozen countries, painting tragic pictures of once thriving metropoles turned into volatile and crumbling credit-opoles by the vultures from Washington. He writes:

“Despite the fact that the money is returned almost immediately to corporations that are members of the corporatocracy (the creditor), the recipient country is required to pay it all back, principal plus interest. If an economic hit man (EHM) is completely successful, the loans are so large that the debtor is forced to default on its payments after a few years. When this happens, then like the Mafia we demand our pound of flesh. This often includes one or more of the following: control over United Nations votes, the installation of military bases, or access to precious resources such as oil or the Panama Canal. Of course, the debtor still owes us the money—and another country is added to our global empire.”

Weaponisation of sovereign debt as a tool for oppression emerges as an almost accidental discovery borne of the post-World War I world as the gold standard drew to a close, having dominated global commerce in late 19th and early 20th century. The increasing societal complexity occasioned by industrialist Henry Ford’s assembly line, the World War I military economy and the stock market boom exposed the limited monetary policy options that the gold standard could avail to 20th century governments. Under the gold standard, Central Banks often could only respond to economic downturns with spending cuts and raising interest rates, hoping that labour wage and commodity prices would drop low enough for the economy to self-correct.

In 1946, the political economist John Maynard Keynes resolved that both the headquarters of the World Bank and the International Monetary Fund, which he had helped found, shouldn’t be on American soil. His reservations over the location of the two institutions got torpedoed, as Washington had already secured a dozen allies to sway the vote on the matter in its favour. His death six weeks later set the Bretton Woods institutions firmly on US soil, inevitably rendering the two organisations and their nearly one dozen financial arms as American appendages rather than the global institutions that Keynes has envisaged.

Two years earlier, at the Bretton Woods Conference of July 1944, Keynes’s squabbles with US Treasury official Harry Dexter White had ended in surprising mutual agreement regarding the creation of new post-war institutions for regulating international flow of capital, prohibiting arbitrary currency alterations, stabilising exchange rates, and facilitating international financial cooperation.

Together they built a closely monitored international financial system with post-war reconstruction institutions for capital and currency regulations that replaced the uncoordinated system of the pre-1930s, actions that globally centered the US financial system, laying the groundwork for the rise of economic hit men and the debt tentacles.

By the time journalist Water Isaacson and historian Evans Thomas published their famous book The Wise Men: Six Friends and the World They Made in 1986, the two institutions’ debt arrangement with Kenya – predicated on structural adjustments – was already six years in the making and was creating negative economic effects in Nairobi. The “wise men” comprised six shadowy foreign policy wonks in Harry Truman’s government beginning in 1945 just as the Cold War was reshaping the global hegemonies and reorienting geostrategic loyalties. The six, in typical wise men lore, brought forth hegemonic gifts, not in the strain of gold, myrrh, and frankincense but NATO the Marshall Plan and, alongside Dexter and Maynard, the World Bank. The modern-day pragmatic internationalism, non-partisanship, and America’s aversion to ideology exemplified in catch-phrases such as “for the greater good” reflect some of the hallmarks of their beliefs. The legacy of the six men, namely, Dean Acheson, George Kenna, John McCloy, Robert Lovett, Averell Harriman, and Charles Bholen, played the handmaiden to capitalism’s inherent need for eternal global expansion.

From Kenya, with love

Perkins-esque economic hitmanship in Kenya started in 1980 with a $55 million Structural Adjustment Credit (SAC) by the World Bank, which rose to a $130.9 million loan in 1983. The next six years dragged in three sectoral adjustment loans (SECAL): 1986 Agriculture ($60 million), 1988 Industry ($165.7 million), and 1989 Finance ($231.3 million) to complement the two previous structural adjustment programs (SAPs).

While Kenya didn’t cede any particular strategic assets to the Western oligarchs, the 1971-1972 oil prices shocks had created the perfect opportunity for the West to rope in Kenya into its sphere, away from Soviet influence. SAPs constitute a raft of policy decisions, including market liberalisation, price decontrols, and budget cuts. SAC is the monetary incentive granted to a government to implement SAPs. Sectoral adjustment loans is a credit facility extended to a specific sector of the economy and pegged on the government agreeing to implement SAPs in that particular industry or sector.

These were followed by three more SECALs in the 1990s: 1991 Export Development ($149.1 million), 1991 Agriculture II ($75 million), and 1992 Education ($100 million). The disastrous 1996 SAC I ($126.8 million) drew the most anger from the Kenyan public, having been incorrectly tied to some of the economic tailspins unleashed by Kamlesh Pattni’s Goldenberg scandal. SAPs’ drastic economic impact skyrocketed interest on debt payment from 8.3 per cent between 1964 and 1969 to 23 per cent in 1995/96 and 25 per cent in 1997/98, the debt having grown by 362 per cent, from $36.7 billion in 1990 to $169 billion in 1998.

Curiously, the most famous studies on Kenyan SAPs by Ikiara (1990), Swamy (1994), and Ihonvbere (1996) on the effects of the economic hit jobs notoriously ignored the social effects that SAPs had unleashed. The neoliberal cuts in welfare spending, price decontrols, market liberalisation, and budget cuts strangled the health, education and social services sectors, which led to a significant decline in the quality of basic services available to ordinary wananchi. Three decades later, Kenya is yet to fully recover from the debilitating effects of SAPs.

Enter the Red Brigade

French political economist Eric Toussaint, in his report, “Debt as an Instrument of the Colonial Conquest of Egypt, aptly observed that “in the case of Egypt and Tunisia, the European powers used debt as their most powerful weapon for ensuring domination, leading to the total submission of previously independent states”. China, a rising economic power throughout the 1990s and 2000s, would learn and perfect the West’s weaponisation of debt through economic hitmanship.

As of 2007, the People’s Republic of China had a massive financial muscle of $1.4 trillion in currency reserves and a $200 billion sovereign wealth fund, which grew to $3.44 trillion and $810 billion, respectively, by 2013. This financial war chest would come in handy in China’s Belt and Road Initiative.

French political economist Eric Toussaint…aptly observed that “in the case of Egypt and Tunisia, the European powers used debt as their most powerful weapon for ensuring domination, leading to the total submission of previously independent states”. China, a rising economic power throughout the 1990s and 2000s, would learn and perfect the West’s weaponisation of debt through economic hitmanship.

The Belt and Road Initiative encompasses an overland route through Eastern Europe as well as the ports of Quanzhou in eastern China, Kuala Lumpur, Colombo, Gwadar in the Middle East, Mombasa, Djibouti, the Suez Canal, Piraeus, and ends in Venice. In a typical Merchant of Venice fashion, Beijing lends money for unviable infrastructure projects that inevitably precipitate a default. And like Shakespeare’s Tubal, it comes to claim its pound of flesh structured as 60-90-year port leases, as has happened to the port of Djibouti and Hambantota port in Sri Lanka.

In March of 2018, the think tank Centre for Global Development (CGD), in a report titled “Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective, determined that eight countries (Montenegro, Laos, Mongolia, Pakistan, Kyrgyzstan, Tajikistan, Mongolia, and Djibouti) were likely to default on their debt obligations to China. Tellingly, all these countries lie on the Belt and Road Initiative’s route.

The IMF’s Wenjie Chen and Roger Nord articulated this in their ominous report “China and Africa: Crouching Lion, Retreating Dragon?that showed that in just a few years Beijing has become, by far, the largest source of (bilateral) loans, lending over $96 billion to sub-Saharan African countries (excluding South Africa).

Today, China controls 72 per cent of Kenya’s bilateral debt or 10 per cent of its total debt. Interestingly, the nearly Sh450 billion Standard Gauge Railway (SGR) loan accounts for a majority of the credit facility that’s maddeningly accompanied by exorbitant interest rates.

All this is happening against a backdrop of increasing economic hardship across the country. A June study estimated the number of starving Nairobi residents to be 900,000 out of a total population of 4 million, while in March 2018 Kenya got ranked as having one of the highest numbers of extremely poor people at – 6th in Africa and 8th in the world. Compound this with the World Bank’s latest report that estimated the number of starving Kenyans to be 17.4 million and the Kenya National Bureau of Statistics (KNBS) figure of 16.4 million starving Kenyans out of an estimated population of 49 million people, and you have an economically strained population. The infrastructure binge hasn’t translated to a notable rise in personal incomes for the struggling majority.

In 2013, Kenya owed China about $630 million, a figure that had risen to $5.57 billion (Sh.557 billion) by May 2018. Meanwhile, the country paid back Sh435.7 billion in the 2016/17 financial year, followed by another Sh870 billion, or over 60 per cent of its tax revenue, in the 2017/18 period – a figure that’s expected to reach Sh1 trillion in the 2018/19 period.

Meanwhile, the best case scenario for revenue collection stands at Sh1.3 trillion. The Treasury has just revealed that the government expects to collect Sh2.3 trillion by 2022, an unrealistic and highly optimistic figure, given that the country will be borrowing at least a trillion shillings a year from 2019 through 2024 to compensate for falling revenues occasioned by capital flight and the collapse of over 2.2 million small and medium enterprises (SMEs) between 2012 and 2016 alone. The 2016 National Micro, Small and Medium Enterprises (MSME) Survey found that half a million MSMEs die every year in Kenya due to high operating costs, declining incomes and losses incurred by business, which suggests that the Kenyan economy is not doing well at all.

A struggling economy and a debt estimate of between Sh9 trillion and Sh10 trillion by 2022 – equivalent to 120 per cent of the current 8.65 trillion GDP – is the more likely scenario. There’s no doubt that servicing this debt will be a headache for the government and defaults aren’t a far-fetched possibility.

Meanwhile, the best case scenario for revenue collection stands at Sh1.3 trillion. The Treasury has just revealed that the government expects to collect Sh2.3 trillion by 2022, an unrealistic and highly optimistic figure, given that the country will be borrowing at least a trillion shillings a year from 2019 through 2024 to compensate for falling revenues occasioned by capital flight and the collapse of over 2.2 million SMEs between 2012 and 2016 alone.

And China, just like it did in Djibouti, Zambia and Hambantota, will seek to extort a lease for strategic assets as a trade-off, key among them being the port of Mombasa that lies on the Silk Belt and Road route.

For a deeply religious country, we overlooked one of the core verses in Proverbs 13:22 about generational wealth. We have auctioned our children’s and their children’s coastal (and strategically important) inheritance for a worthless piece of rail. Future generations will pay dearly for this mistake.

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Darius Okolla is a writer and a social commentator based in Nairobi, Kenya.

Politics

Xenophobia in South Africa: A Consequence of the Unfinished Business of Decolonisation in Africa

8 min read. The recent Afrophobic attacks in South Africa are symptoms of a deeper problem that has its roots in the Berlin Conference of 1884-1885.

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Xenophobia in South Africa: A Consequence of the Unfinished Business of Decolonisation in Africa
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South Africa has consistently experienced cyclical xenophobic flaring that has dented its image in Africa and in the world. The country continues to receive a high number of both documented and undocumented migrants as it has become a top destination in South-to- South migration. Beyond its geographical proximity to other African states, the current migration patterns have to be understood as a consequence of history and as such the xenophobic flaring has to be read as an unfinished business of decolonisation in Africa.

History created two processes that shaped Africa’s politics and economies, even up to today, creating a complex conundrum for our policy makers. Firstly, the Berlin conference created artificial borders and nations that remain problematic today. These borders were not fashioned to address the political and economic interests of Africans but the imperial powers of Europe. Institutions and infrastructure were created to service the imperial interests, and this remains the status quo despite more than four decades of independence in Africa. Secondly, Cecil John Rhodes’ dream of “Cape to Cairo” became the basis upon which the modern economy was built in Africa. This created what the late Malawian political economist, Guy Mhone, called an enclave economy of prosperity amidst poverty, and resultantly created what Mahmood Mamdani termed the bifurcated state, with citizens and subjects.

A closer look at the African state’s formation history provides insights on the continuities of colonial institutions and continuous marginalisation of Africans as the state was never fashioned to address their political and economic interests from the beginning.

Drawing on classical African political economists, this article argues that, unknowingly, the South African government and in particular, the African National Congress (ANC) leadership, a former liberation movement, have fallen into the trap of the logic of the underlying colonial epistemologies informing migration debates in Africa. The Afrophobic attacks in South Africa fly in the face of Africa’s founding fathers, such as Nkrumah, Nyerere, Machel, Kaunda and Mandela, and of the African Union’s dream of a borderless African economy and society.

In his essay “In Defence of History”, Professor Hobsbawm challenges us to read history in its totality:

However, the new perspectives on history should also return us to that essential, if never quite realisable, objective of those who study the past: “total history”. Not a “history of everything”, but history as an indivisible web in which all human activities are interconnected.

It is when we read history in its totality that we are able to make connections about the relations between the past, present and future. Looked at closely, the current xeno/Afro-phobia insurrections engulfing South Africa have to be read within the totality of history. Therefore, this piece argues that the xeno/Afro-phobia flarings that have been gripping South Africa ever since 2008, and which have cast South Africa it in bad light within the African continent, are contrary to the ethos of Pan-Africanism and are largely a product of the history of the scramble and partition of Africa at the Berlin Conference of 1884-1885.

Whose borders? Remembering the Ghosts of Berlin

By the beginning of the 1870s, European nations were in search of natural resources to grow their industries and at the same expand markets for their products. This prompted strong conflict amongst European superpowers and in late 1884, Otto von Bismarck, the then German Chancellor, called for a meeting in Berlin of various representatives of European nations. The objective was to agree on “common policy for colonisation and trade in Africa and the drawing of colonial state boundaries in the official partition of Africa”.

The xenophobic/Afrophobic attacks in South Africa fly in the face of Africa’s founding fathers, such as Nkrumah, Nyerere, Machel, Kaunda and Mandela, and of the African Union’s dream of a borderless African economy and society.

At the end of the Berlin Conference, the “European powers had neatly divided Africa up amongst themselves, drawing the boundaries of Africa much as we know them today”. It was at this conference that European superpowers set in motion a process that set boundaries that have continued to shape present-day Africa. Remember that there was no King Shaka, Lobengula, Munhumutapa, Queen Nzinga, Emperor Haile Selassie, Litunga of Barotseland among many other rulers of Africa at this conference. There was Otto von Bismarck, King Leopold II and their fellow European rulers who sat down and determined borders governing Africa today.

This is the epistemological base upon which current “othering” within citizenship and migration policies are hinged. This colonial legacy has its roots in the Berlin Conference of 1884-1885, where major European powers partitioned Africa amongst themselves and formalised it with the current borders that have largely remained intact and the basis of the modern state in post-colonial Africa. Therefore, policies on identity, citizenship and migration in Africa have been largely informed by modern nation-state forms of territoriality drawn from remnants of colonial policies. These have tended to favour the elites and modernised (privileged, intelligentsia, government officials and business) at the expense of the underclass in Africa, who form the majority.

Most of the institutions and policies characterising the post-colonial African state are bequeathed by legacies of colonialism, hence the need for African states to listen to the wisdom of Samir Amin and “delink from the past” or bridge Thabo Mbeki’s “two nations” thesis and create a decolonised Africa where Africans will be no strangers.

Africa’s citizenship and migration policies remain unreformed and informed by colonial epistemology and logics. The partitioning of Africa into various territories for European powers at the Berlin Conference means most of the present-day nation-states and boundaries in Africa are a product of the resultant imperialist agreement. The boundaries were an outside imposition and split many communities with linguistic, cultural and economic ties together. The nation-state in Africa became subjugated by colonial powers (exogenous forces) rather than natural processes of endogenous force contestations and nation-state formation, as was the case with Europe.

Stoking the flames

African communities are burning from Afrophobia/xenophobia, and at times this is sparked by Africa’s elites who make reckless statements based on the logics of the Berlin Conference. Africa’s poor or the underclass are the most affected, as these xeno-insurrections manifest physically and violently amongst poor communities. Among elite communities, it manifests mostly in subtle psychological forms.

South African leaders continue to be oblivious to the crisis at hand and fail to understand that the solution to the economic crisis and depravity facing the South African citizenry can’t easily be addressed by kicking out foreigners. In 2014, prominent Zulu King Goodwill Zwelthini had this to say and the whole country was caught up in flames:

Most government leaders do not want to speak out on this matter because they are scared of losing votes. As the king of the Zulu nation, I cannot tolerate a situation where we are being led by leaders with no views whatsoever…We are requesting those who come from outside to please go back to their countries…The fact that there were countries that played a role in the country’s struggle for liberation should not be used as an excuse to create a situation where foreigners are allowed to inconvenience locals.

After a public outrage he claimed to have been misquoted and the South African Human Rights Council became complicit when it absolved him.

Towards the South African 2019 elections, President Cyril Ramaphosa also jumped onto the blame-the-foreigner bandwagon by stoking xenophobic flames when he said that “everybody just comes into our country…” Not to be outdone, Johannesburg Mayor, Herman Mashaba, has been on the blaze, blaming foreigners for the rise in crime and overcrowded service delivery.

On the other hand, Minister Bheki Cele continues to be in denial as he adamantly characterises the current attack on foreigners as acts of criminality and not xenophobia. Almost across the political divide there is consensus that foreigners are a problem in South Africa. However, the exception has been the Economic Freedom Fighters (EFF) that has been steadfastly condemning the black-on-black attacks and has characterised them as self-hate.

Whither the Pan-African dream?

In his founding speech for Ghana’s independence, Kwame Nkrumah said, “We again rededicate ourselves in the struggle to emancipate other countries in Africa; for our independence is meaningless unless it is linked up with the total liberation of the African continent.”

This speech by President Nkrumah set the basis upon which Ghana and some of the other independent African states sought to ensure the liberation of colonised African states. They never considered themselves free until other Africans were freed from colonialism and apartheid. Tanzanian President Julius Nyerere had this to say:

I reject the glorification of the nation-state [that] we inherited from colonialism, and the artificial nations we are trying to forge from that inheritance. We are all Africans trying very hard to be Ghanaians or Tanzanians. Fortunately for Africa, we have not been completely successful. The outside world hardly recognises our Ghanaian-ness or Tanzanian-ness. What the outside world recognises about us is our African-ness.

It is against this background that countries like Zimbabwe, Namibia and South Africa benefitted from the solidarity of their African brothers as they waged wars of liberation. Umkhonto weSizwe, the African National Congress’ armed wing, fought alongside the Zimbabwe People’s Revolutionary Army to dislodge white supremacist in Southern Rhodesia. And Nigeria set up the Southern Africa Relief Fund that raised $10 million that benefitted South Africans fighting against the apartheid regime. The African National Congress was housed in neighbouring African countries, the so-called frontline states of Zambia, Zimbabwe, Mozambique, Lesotho and Tanzania. In some cases, these countries had to endure bombings and raids by the apartheid regime.

African communities are burning from Afrophobia/xenophobia, and at times this is sparked by Africa’s elites who make reckless statements based on the logics of the Berlin Conference.

The attacks on foreign nationals who are mostly African and black by black South Africans and the denial by South African government officials that the attacks are not xenophobic but criminal are attempts to duck a glaring problem that needs urgent attention. It is this denialism from authorities that casts aspersions on the Pan-African dream of a One Africa.

Glimmers of hope

All hope is not lost, as there are still voices of reason in South Africa that understand that the problem is a complex and economic one. The EFF has also managed to show deep understanding that the problem of depravity and underdevelopment of Black South Africans is not caused by fellow Africans but by the skewed economic system. Its leader, Julius Malema, tweeted amidst the flaring of the September 2019 xenophobia storm:

Our anger is directed at wrong people. Like all of us, our African brothers and sisters are selling their cheap labour for survival. The owners of our wealth is white monopoly capital; they are refusing to share it with us and the ruling party #ANC protects them. #OneAfricaIsPossible.

Yet, if policy authorities and South Africa’s elites would dare to revisit the Pan-African dream as articulated by the EFF Commander-in-Chief Julius Malema, they may be able to exorcise the Ghosts of Berlin.

Signs of integration are appearing, albeit slowly. East African countries have opened their borders to each other and allow free movement of people without the need for a visa. Kenyan President Uhuru Kenyatta has even gone further to allow people from Tanzania and Uganda to work and live in Kenya without the need for a visa. In addition, Rwanda and Tanzania have abolished work permit fees for any national of the East African Community. Slowly, the Ghosts of Berlin are disappearing, but more work still needs to be done to hasten the process. The launch of the African Union passport and African Continental Free Trade Area (AfCFTA) offers further hope of dismantling the borders of the Berlin Conference. South African authorities need to look seriously into East Africa and see how they can re-imagine their economy.

Towards the South African 2019 elections, President Cyril Ramaphosa also jumped onto the blame-the-foreigner bandwagon by stoking xenophobic flames when he said that “everybody just comes into our country…”

The continuous flow of African migrants into South Africa is no accident but a matter of an economic history question. Blaming the foreigner, who is an easy target, becomes a simple solution to a complex problem, and in this case Amilcar Cabral’s advice “Claim no easy victories” is instructive. There is the need re-imagine a new development paradigm in South Africa and Southern Africa in general to address questions of structural inequalities and underdevelopment, if the tide of migration to Egoli (City of Gold) – read South Africa- is to be tamed. The butchering of Africans without addressing the enclavity of the African economy will remain palliative and temporary. The current modes of development at the Southern African level favour the growth of South African corporates and thus perpetuate the discourse of enclavity, consequently reinforcing colonial and apartheid labour migration patterns.

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Politics

Gambling Against the Kenyan State

7 min read. After spending several months with gamblers in Kenya, Mario Schmidt finds that many see their activity as a legitimate and transparent attempt to make ends meet in an economy that does not offer them any other stable employment or income.

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Gambling Against the Kenyan State
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In the period from June to August this year Kenyan gamblers were hit by a wave of shocking news. Only a couple of weeks after Henry Rotich, Kenya’s National Cabinet Secretary, proposed a 10% excise duty on any amount staked in betting in order ‘to curtail the negative effects arising from betting activities’, the Kenyan government decided to shut down several betting companies’ virtual mobile money wallet systems because of alleged tax evasion. As a consequence, gamblers could no longer deposit or withdraw any money. This double attack on the blossoming betting industry has a background both in Kenya as well as elsewhere. Centered around the capitalist conundrum to realign the moral value of hard work and the systemic necessity to make profit, states tend to combine moral attacks on gambling (see the case of Uganda) with attempts to raise revenues. The vice of gambling turns into a virtue as soon that it raises revenue for the state.

It is also gambling’s allegedly nasty character which made the term a prime metaphor for the excesses of finance capitalism as well as for the pitiful status of the economies of neoliberal Africa characterized by rampant inequalities. Social scientists, politicians as well as journalists portray financial capitalism as a place where, in the words of George Paul Meiu, ‘gambling-like speculation and entrepreneurialism replace labour’ and the ‘magical allure of making money from nothing’, as Jean and John Comaroff have written, has seized the imagination of a vast majority of the population. Faced with a dazzling amount of wealth showcased by religious, economic and political leaders alike, young and unemployed men increasingly put their hopes on gambling. Trying to imitate what they perceive as a magical shortcut to unimaginable wealth, so the story goes, they become foolish puppets of a global capitalist system that they often know little about and have to face the dire consequences of their foolish behaviour.

After spending several months with gamblers both in rural as well as urban Kenya, I can only conclude that this story fails to portray reality in its complexity (see Schmidt 2019). While it is undeniable that some gamblers attempt to imitate the acquisition of a form of wealth that they perceive as resulting from a quick-to-riches scheme, a considerable number of Kenyan gamblers do not. In contrast, they portray and enact gambling as a legitimate and transparent attempt to make ends meet in an economy that does not offer them any other stable employment or income.

Narratives about betting leading to poverty, suicide and alcoholism neglect the fact that the majority of young Kenyan gamblers had already been poor, stressed and under extreme economic pressure before they started gambling, or, as a friend of mine phrased it succinctly: ‘If I don’t bet, I go to bed without food every second night, if betting does not go well, I might sleep without food two days in a row. Where’s the difference?’ Gambler’s betting activities therefore cannot be analyzed as a result of a miserable economic situation alone. Such a perspective clearly mutes the actors’ own view of their practices. They see betting as a form of work they can engage in without being connected to the national political or economic middle class or elite, i.e. without trying to enter into opaque relationships characterized by inequality. In other words, I interpret gambling as directed against what gamblers perceive as a nepotistic and kleptocratic state capitalism, i.e. an economy in which wealth is not based upon merit but upon social relations and where profit and losses are distributed in a non-transparent way through corruption, inheritance and theft.

Before I substantiate this assumption, let me briefly offer some background information on the boom of sports betting in Kenya which can only be understood if one takes into account the rise of mobile money. The mobile money transfer service Mpesa was introduced in 2007 and has since changed the lives of millions of Kenyans. Accessible with any mobile phone, customers can use it to store and withdraw money from Mpesa agents all over the country, send money to friends and family members as well as pay for goods and services. A whole industry of lending and saving apps and sports betting companies has evolved around this new financial infrastructure. It allows Kenyans to bet on sports events wherever they are located as long as they possess a mobile phone to transfer money to a betting company’s virtual wallet.

Gamblers can either bet on single games or combine bets on different games to increase the potential winning (a so-called ‘multi-bet’). Many, and especially young, male Kenyans, bet regularly. According to a survey I conducted last November around a rural Western Kenyan market centre 55% of the men and 20% of the women have bet in the past or are currently betting with peaks in the age group between 18 and 35. This resonates with a survey done by Geopoll estimating that over 70% of the Kenyan youth place or have placed bets on sport events.

Both journalistic and academic work that understand these activities as irresponsible and addictive had previously primed my perception. Hence, I was surprised by how gamblers frame their betting activities as based upon knowledge and by how they enacted gambling as a domestic, reproductive activity that demands careful planning. They consider betting as a meticulously executed form of work whose attraction partly results from its detachment from and even opposition to Kenyan politics (for example, almost all gamblers avoid betting on Kenyan football games as they believe they are rigged and implicated in local politics). Put differently, the gamblers I interacted with understand their betting activities as directed against a kleptocratic capitalist state whose true nature has been, according to my interlocutors, once more revealed by the proposal to tax gambling in Kenya.

Two of my ethnographic observations can illustrate and substantiate this claim, the first being a result of paying close attention to the ways gamblers speak and the second one a result of observing how they act.

Spending my days with gamblers, I realised that they use words that are borrowed from the sphere of cooking and general well-being when they talk about betting in their mother tongue Dholuo. Chiemo (‘to eat’), keto mach (‘to light the fire’), mach mangima (‘the fire has breath’, i.e. ‘is alive’) and mach omuoch (‘the fire has fought back’) are translations of ‘winning’ (chiemo), ‘placing a multi-bet’ (keto mach), ‘the multi-bet is still valid’ (mach mangima) or ‘the multi-bet has been lost’ (mach omuoch). This interpenetration of two spheres that are kept apart or considered to be mutually exclusive in many descriptions of gambling practices sparked my interest and I began to wonder what these linguistic overlaps mean for a wider understanding of the relation between gambling and the ways in which young, mostly male Kenyans try to make ends meet in their daily lives.

While accompanying a friend of mine on his daily trips to the betting shops of Nairobi’s Central Business District, I realized that the equation between gambling and reproductive work, however, does not remain merely metaphorical.

Daniel Okech, a 25-year-old Master of Business Administration worked on a tight schedule. When he did not have to attend a university class during the mornings which he considered not very promising anyway, he worked through websites that offered detailed statistical data on the current and past performances of football teams and players. These ranged from the English Premier League to the football league of Finland (e.g. the website FootyStats). He engaged in such meticulous scrutiny because he considered the smallest changes in a squad’s line-up or in the odds as potentially offering money-making opportunities to exploit. Following up on future and current games, performances and odds was part of Daniel’s daily work routine which was organized around the schedules of European football leagues and competitions. The rhythm of the European football schedule organized Daniel’s daily, weekly and monthly rhythms as he needed to make sure to have money on the weekends and during the season in order to place further bets.

Even though betting is based upon knowledge, habitual adaptations and skills, it rarely leads to a stable income. With regard to the effects it has, betting appears to be almost as bad as any other job and Daniel does not miscalculate the statistical probabilities of football bets. He knows that multi-bets of fifteen or more rarely go through and that winning such a bet remains extraordinarily improbable. What allows gamblers like Daniel to link betting with ‘work’ and the ‘reproductive sphere’ is not the results it brings forward. Rather, I argue that the equation between the ‘reproductive sphere’ and betting is anchored in the specific structure between cause and effect the latter entails.

What differentiates gambling from other jobs is the gap between the quality of one’s expertise and performance and the expected result. For young men in Nairobi, one could argue, betting on football games is what planting maize is for older women in arid areas of Western Kenya in the era of global climate change: an activity perfected by years of practice and backed up by knowledge, but still highly dependent on external and uncontrollable factors. Just like women know that it will eventually rain, Daniel told me that ‘Ramos [Sergio Ramos, defender from Real Madrid] will get a red card when Real Madrid plays against a good team.’

For young men who see their future devoid of any regular and stable employment betting is not a ‘shortcut’ to a better life, as often criticized by middle-class Kenyans or politicians. It is rather one of the few ways in which they can control the conditions of their type of work and daily work routine while at the same time accepting and to a certain extent even taming the uncontrollability and volatility of the world surrounding them.

Gamblers do not frame their betting activities in analogy with the quick-to-riches schemes they understand to lie behind the suspicious wealth of economic, political and religious leaders. While religious, economic and political ‘big men’ owe their wealth to opaque and unknown causes, gambling practices are based upon a rigid analysis of transparent data and information. By establishing links between their own life and knowledge on the one hand and football games played outside the influence of Kenyan politicians and businessmen on the other, gamblers gain agency in explicit opposition to the Kenyan state and to nepotistic relations they believe to exist between other Kenyans.

Therefore, it is unsurprising that, in the context of the betting companies’ alleged tax evasion, many gamblers have not yet repeated the usual complaints and grievances against companies or individuals that are accused of tax evasion or corruption. While some agree that the betting companies should pay taxes, others claim that due to the corrupt nature of the Kenyan state it would be preferable if the betting companies increase their sponsoring of Kenyan football teams. No matter what an individual gambler’s stance on the accusation of tax evasion, however, in the summer of 2019 all gamblers were eagerly waiting for their virtual wallets to be unlocked so they could continue to bet against the state.

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This article has been co-published between The Elephant and Review of African Political Economy (ROAPE)

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Donald Trump: America’s ‘African Dictatorship’ Moment

8 min read. For decades, the grandiosity and excesses of Africa’s strongmen have been the subject of global ridicule and scorn. Now, under Donald Trump, Americans are finally getting a taste of what an African dictatorship looks and feels like.

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For the Love of Money: Kenya’s False Prophets and Their Wicked and Bizarre Deeds
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Am I the only one who felt a growing sense of ugly familiarity while watching the 4th of July proceedings in Washington DC? It took me a few days to fully comprehend the oddity of the spectacle. It was atavistically American: a questionable real estate mogul; fighter jets roaring overhead; fireworks blowing off with abandon as vague tenants of “bravery” were touted. One only needed to add in grandiose Lynard Skynyrd music, a screw-on plastic bottle of Bud Light (for safety) and the tossing of an American flag football to make it the most US-driven spectacle ever put on display.

Apart from an eye-rolling display of questionable Americana, the whole display struck a deeper and more sinister chord. Stop me if you’ve seen this movie before: military equipment being trucked in from all over the country to be displayed as props; invites extended mainly to party loyalists; outlandish claims of nationalistic strength in the face of unknown “threats”; and an ever-ballooning budget taken seemingly from the most needy of social programmes.

Further, the entirety of the charade was put on by a leader of questionable (at best) morals, one who openly blasts the press as anti-democratic and who is known to engage in dubious electoral practices.

Many readers within East Africa may have looked at their TV screens and thought to themselves: “It’s finally America’s turn to see this ridiculousness.” They wouldn’t be wrong. In the United States right now, the term “unprecedented” is bandied about with ferocity amongst the media, with well-established media houses with sterling reputations formed through covering the 20th century’s most brutal occurrences suddenly at a loss that anything so gauche could take shape in the form of an American leader.

When it comes down to it though, doesn’t it all reside at the doorstep of personality type?

From where I sit, it most certainly does. All of these strongmen (and they are all male) – whether they’re in power, in post-political ennui or dead – have done the exact same thing. It is different strokes painted with the same brush. Their canvas, on this occasion, is that of spectacle, of projecting something that is better, stronger (dare I say less impotent?) than themselves. It is a public display of strength, ill-needed by those who don’t secretly know that they’re inwardly weak.

Many readers within East Africa may have looked at their TV screens and thought to themselves: “It’s finally America’s turn to see this ridiculousness.” They wouldn’t be wrong. In the United States right now, the term “unprecedented” is bandied about with ferocity amongst the media…

To start with, those who have systematically oppressed and plundered a country often rub it in to commemorate their “achievements”. For example, there is still a nationally celebrated Moi Day annually in Kenya, despite the former president’s record of extrajudicial measures, devaluing of the Kenyan shilling and rampant institutional corruption. Yoweri Museveni has been “democratically” elected five times, and makes sure to always inspect military guards dressed in full pomp at major Ugandan national days and events. Rwanda’s Paul Kagame had an outright military parade during his latest inauguration in 2017. It is true, such days are often celebrated with a display of token military presence; at the inaugural “Trump Day” this past American Independence Day, an exception to the rule was not found.

A key tenet of such military-driven presidential events, at least within those run by would-be strongmen, is the heavy under-current of politicisation made more stark as the figurehead acts exceptionally stoic and well-behaved for the event. At the rally on the Fourth of July, chants of “lock her up” broke out among the crowd, and reports of minor clashes made the news. Therein, as they say, lies the key difference, the breaking point from a day of democratic celebration of national history into something more sinister. It is when the very essence of patriotism swings to identify with a single individual that the political climate can become potentially even more dangerous than it already is.

Within hours of the spectacle that put him at the centre, Trump made heavy-handed allegations of communism against his political “enemies”; within days he was saying that certain Congresswomen (all of colour) should go back to their countries of origin if they didn’t “love” the US enough. The standard, it seems, is political allegiance.

Within weeks of the Fourth of July event, Donald Trump’s supporters were chanting “send her back” at presidential rallies. These chants, while directed at all four Congresswomen, (Alexandria Ocasio-Cortez of New York, Ilhan Omar of Minnesota, Ayanna Pressley of Massachusetts and Rashida Tlaib of Michigan), were particularly poignant in the context of Ms. Omar, who was born in Somalia before fleeing to the Daadab refugee camp in Kenya, and finally resettling as a refugee in the US, where she eventually found a permanent home in Minneapolis, Minnesota. This, when seen through the lens of escalating nationalism, jingoistic tendencies towards refugees (including the abysmal treatment of migrants on the United States’ southern border with Mexico in a series of “detention facilities”), and thrown as chum to stirring crowds at politically-driven rallies, is a dangerous recipe.

The message being espoused and defended at the present by both the Trump administration and right-wing politicians loyal to it has taken root at the very celebration of American democracy itself. It is, in fact, association by patriotism. It is becoming a deeper-seated sense of national identity and the mere act of seeing such policies associated with the nation’s independence is, to put it mildly, a dangerous precedent. It is a continuation of a trend of both ramping up and normalising such attacks on what is deemed “un-American” by those currently in power. This designation, once considered “beyond the norm” within United States’ politics, has rapidly shifted towards becoming the routine.

While the rally was taking place, Trump harangued the crowd with a 45-minute all-American masturbatory salute to military hardware. He read off assorted names of different combinations of letters and numbers, each signifying a different tool of top-grade, American-made weapon of death and destruction. Fighter jets, tanks, humvees, all were given their due with a salute through the rain-soaked vista of the National Mall of Washington DC. They were each named nearly laboriously, in exquisite reverence for their ability to unleash death on vague “enemies of the state” (typically seen in the guise of unspecified foreigners in Hollywood action blockbusters).

In a more current context, this is still a practice around the region. Military honour guards are inspected in ceremony by the head of state. In fairness, despite the US press’s fervent response, America has an awkward relationship with the fetishisation of the military on every official and unofficial national occasion. Fighter jets zoom over the heads of Americans. Since the 9/11 terror attacks, we have seen the rampant rise of forced acts of patriotism, many of which later turned out to be directly sponsored by the Pentagon to the tune of millions of US dollars (furnished by the US taxpayer).  This continued to deepen the divide among the American public along the lines of military interventionism and military prioritisation. It is an underlying sentiment of “tanks are now alongside White House officials, and who are you to disagree with their patriotism?” The association, as it were, is the issue.

It is a slippery slope when the military is viewed as an extension of the leadership, rather than one that protects the national interest. All too often within strongman-type of leadership structures, the military (and their goals) become an arm of the central governmental figure, with such events as seen on the Fourth of July being a means to “stroke the ego” of the leadership.

An adept dictator always knows where their bread is buttered: the more that one inflates the importance of the military and raises its stature, the more likely the military is going be loyal to you. In a sense, the Fourth of July parade was a natural extension of Trump’s extensive rallies in support of “the troops”, “the cops” and “the brave people guarding our border from the invasion from the South”. Daniel arap Moi is a good example of this behaviour; in the post-1982 coup period, he closed ranks, gave the military more emphasis, and rewarded loyalty.

Within weeks of the Fourth of July event, Donald Trump’s supporters were chanting “send her back” at presidential rallies. These chants…were particularly poignant in the context of Ms. Omar, who was born in Somalia before fleeing to the Daadab refugee camp in Kenya, and finally resettling as a refugee in the US…

In turn, this behaviour can drive the chosen narrative of the state – that the military is way too powerful to be challenged. The story is told, played out on screen, marched in front of the masses, splashed across newspaper front pages. It helps to reinforce an idea, one of division, that of being on an opposing side from the government if you dare disagree.

Make no mistake, however ridiculous the Fourth of July show was, it was most definitely intended to be a show of strength. How could one feasibly dare to challenge the seat of power when the very entirety of military might is on public display, with guns pointed squarely into the crowd from the very basis of the Lincoln Memorial? This is not unlike the grandiose trains of government vehicles that accompany Museveni as he zips around Kampala or Uhuru Kenyatta as he delays traffic whilst travelling out to play golf on the outskirts of Nairobi. (The number of cars isn’t the point; it’s that they would crush you if you were to stand in their path.) Think what you want of Kagame’s policies and the issues surrounding democratic practices in Rwanda; only a fool would doubt his closeness to the top military brass. What Trump is engaging in now is the classic appearance of alliances – the same outer projection that any opposition’ would be met with those same large caliber guns that faced outward to the crowd. Only the obtuse would see that positioning as merely coincidental.

It isn’t a coincidence that those in the Trump administration’s camp were given prime seats at the base of the Lincoln Memorial. Those “in the know” are given strength by a sort of transitive property of influence. The man on the stage is in charge of those with the guns, and he approves of you enough to let you into the inner sanctum.

It is further not a coincidence that the “vicious, mean, hateful, disgusting democrats” weren’t even invited within shouting distance of the “in club”. They haven’t shown enough Trumpian loyalty to be positioned near the military hardware. Instead members of the Democratic Party were told to “sort themselves” and largely stayed away from the proceedings of the event at the National Mall in Washington DC that rainy evening.

The end consequences of these deepening of divisions could be seen during the event and in the immediate hours afterwards. Squabbles broke out, flag-burning protesters were angrily confronted, reports of arrests were made.

From the White House (or possibly from a late night flight down to a golf course) Trump began to launch public attacks against those who would have stood against his event, his party and his party’s party. The tirade began in public, with attacks that were based on race, classism and politics. The “haters” and “losers” were blamed, and the appearance of strength steadily deepened the already existing party line divisions.

It was in the hours after that that the evidence was most apparent that Trump had used the Fourth of July “Salute to America” as a means for further political grandstanding. The traditional 4th of July political “ceasefire” was sounded with the firing off of verbal and political shots. It was in the insults that the intended circling of the wagons became further crystallised. It was classic Trump and classic strongman – to put on the best of appearances only to sink several notches lower as soon as the cameras officially turned off.

Let’s finish with the gold standard of ridiculous self-congratulatory events – Idi Amin. Am I saying that the crimes of Idi Amin are equal to those of Trump? Obviously not, but am I comparing their gauche public tendencies and sub-par intellects? Absolutely. Amin was famous for his parades during times of extreme national duress. He continued on, medals ablaze with the military’s full might on display. Add to this his self-congratulatory nature, his vindictive political favouritism and his toxic displays of might. (Amin, it has been noted, was jealous of the then Central African Republic president, Jean-Bedel Bakassa, who visited him adorned with medals more extravagant than his own.)

As for Trump, he is not one to shy away from self-aggrandisement and self-promotion. His very own Boeing 737 is famously decked with solid gold interiors. His ego can even be described as all-consuming; it eats whatever stands in its path. It is a self-sustaining entity, a black hole from which there can be no escape. The same could be said about Amin – power went to his head, and quickly. Once it did, enemies were dispatched and invented to be dispatched.

Trump’s paranoia could be viewed as becoming extreme. There is an endless need for loyalty and deference to Trump, especially amongst his most loyal followers; the Fourth of July parade was simply the latest manifestation of it. With such parades, limits and moderation don’t typically follow suit.

There will be more events, bigger showmanship and more association with himself as the idyllic vision of America. He is filling out his strongman shows nicely now, and starting to walk around in them. He now needs feats of false strength in order to back himself up.

The key difference between Trump and Amin, of course, is that the US military is a global monolith, one that can destroy the world with the push of a red button by an orange finger.

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