Connect with us

Politics

Zimbabwe Dared to Be Free, Then the Military Arrived

What has emerged since that “military-assisted transition” is a Zimbabwe that is now policed by the military. Democratic-constitutional institutions have been subverted and the rule of law has been shredded. The dominant political class has become a network of very powerful military elites, or what can be referred to as military-nationalists.

Published

on

Zimbabwe Dared to Be Free, Then the Military Arrived
Download PDFPrint Article

In the late afternoon of the 21st November 2017, Zimbabweans went ecstatic on the streets. The celebrations went global and stretched from the green lawns of the imposing Rainbow Towers in central Harare, through the dusty streets of urban ghettos and snaked through several capitals of the world. Robert Gabriel Mugabe, three months shy of his 93rd birthday, had handed in his resignation to the Speaker of Parliament in a joint session of the House of Assembly and the Senate. Outside the joint seating that was considering an impeachment motion, citizens draped in the Zimbabwe flag danced, played drums and whistled. Cars blasted their horns and one longtime activist, Vimbai Musvaburi, shed tears in an interview with the BBC, saying, “It felt like a prison had been opened”. The 37-year rule of one of Africa’s authoritarian leaders was folded into history with military tanks, soldiers and army vehicles stationed across the country. It was no mean feat.

What has emerged since that “military-assisted transition” is a Zimbabwe that is now policed by the military. Democratic-constitutional institutions have been subverted and the rule of law has been shredded. The dominant political class has become a network of very powerful military elites, or what can be referred to as military-nationalists.

In the early 1980s, when he was Prime Minister, Mugabe had attempted to build a socialist one-party state. In the late 1980s, he brutalised the opposition and swallowed it through the Unity Agreement of 1989. Zimbabwe become a de jure one-party state. In the 1990s, the labour movement protested against increasing levels of taxation. When civil society mobilised for constitutional reform, Mugabe simply subverted the process. In the 2000s, the major opposition, the Movement for Democratic Change (MDC), was subjected to heinous brutality, with Mugabe boasting that “we have degrees in violence”. The elections were brazenly rigged and this culminated in the Government of National Unity (GNU) from 2008 till 2013. In that fateful month of November 2017, the “Ides of March” finally knocked on the Blue Mansion of the ageing president and the system finally burst open and turned its brutal fangs on its “Godfather”.

Exit Robert Gabriel Mugabe, enter the military-nationalists

What has emerged since that “military-assisted transition” is a Zimbabwe that is now policed by the military. Democratic-constitutional institutions have been subverted and the rule of law has been shredded. The dominant political class has become a network of very powerful military elites, or what can be referred to as military-nationalists. This class is composed mainly of men (and a few women) who constituted the military ranks of the national liberation movement in the 1960s and 70s. When they took over power in November 2017, they quickly dispatched out-of-state structures, the “old guard nationalists” who did not have any military training.

In post-colonial independent Zimbabwe, the military-nationalists operated behind the political throne under a shadowy state-security structure called the Joint Operation Command (JOC) comprising the military, intelligence services, police and the prison services. In the 2000s, especially since the violent election of 2008, the military assumed a much more political role. This came to a head when they marched onto the streets and forced Mugabe out. With the threads of state power in their hands, the military-nationalists have become the final arbiters of political and electoral contests. In that matrix of state and national political power, the general election of 2018 was just a fig leaf over a very patent fact – the new sheriff in Harare is a military junta with swanky imported suits.

New rhetoric and old Mugabe-like tactics

The new president has fanned out his strategies, jumping onto Facebook and Twitter, giving more interviews and also paying lobbyists in Washington DC to do the regime’s bidding. After his first inauguration, President Emmerson Mnangagwa wrote in the New York Times, that:

I am working toward building a new Zimbabwe: a country with a thriving and open economy, jobs for its youth, opportunities for investors, and democracy and equal rights for all… There are voices both at home and abroad who have sought to convince the world that nothing has changed in Zimbabwe. I refute those unfair and unfounded claims and commit that we are bringing about a new era of transparency, openness and commitment to the rule of law.

Many months later, in another opinion article in The Guardian, Mnangagwa stated that “the role of opposition leader is critical to democracy’s function” and that “the incoming administration will be weaker if not held to the checks and balances that parliament provides”.

In the face of a severe socio-economic crisis, Zimbabwe’s political rulers have resorted to Mugabe-like tactics, blaming “enemies” in the West and accusing the opposition of being “saboteurs”. That crisis boiled over in the second week of January 2019 as citizen anger over a 150 per cent fuel price increase led to a national shutdown called by the labour movement.

However, as Zimbabwe’s political economy continues its downward descent, the narrative has shifted back to the Mugabe years type of blame-shifting and brinkmanship. The “new rulers” have been very quick to jump into a worldwide public relations exercise that has come at a heavy price to the truth and to the public purse. The propaganda has also been Pan-African in its reach; the government has dispatched envoys to the African Union (AU), the Southern Africa Development Community (SADC), and strategic countries like Kenya, South Africa and Botswana, arguing that Zimbabwe’s economic crisis has been as a result of sanctions, especially those imposed by the US.

NO COUNTRY FOR OLD MEN: Hope and fear in Zimbabwe

Read Series: Zimbabwe

In the face of a severe socio-economic crisis, Zimbabwe’s political rulers have resorted to Mugabe-like tactics, blaming “enemies” in the West and accusing the opposition of being “saboteurs”. That crisis boiled over in the second week of January 2019 as citizen anger over a 150 per cent fuel price increase led to a national shutdown called by the labour movement. Street barricades went up in urban areas, police had running battles with young people, wide-scale looting took place, and economic activity came to a standstill. The government response was a nationwide ruthless military crackdown. The army was accused of rape, opposition activists were abducted and rights groups, such as Amnesty International (AI) and Human Rights Watch (HRW), recorded 17 deaths from gunshot wounds.  The Internet was shut down and, in a leaked document, the government blamed “hostile intelligence services”, “regime change agents”, and “unfriendly civil society organisations”. The ruling class has simply re-dusted the old script of seeing local and international enemies all around.

The president boasted at a political rally in the local language, Shona, saying, “tirikuvazvambura” and “vari kuzvamburika”, meaning “we are beating them up brutally” and they “cannot resist that brutality”. Not less than five opposition Members of Parliament (MPs) have been arraigned before the courts for “subversion”, “inciting violence” and “treason”. To sum up the type of military-state/party machinery that the ruling strata is building, we have to turn to that theoretician and practitioner of the African revolution, Frantz Fanon, in his seminal book, The Wretched of The Earth, where he put it more succinctly:

There exists inside the new regime, however, an inequality in the acquisition of wealth and in monopolization. Some have a double source of income and demonstrate that they are specialized in opportunism. Privileges multiply and corruption triumphs, while morality declines. Today the vultures are too numerous and too voracious in proportion to the lean spoils of the national wealth. (1963:171).

Taken together then, this deliberate rhetoric of a “new dispensation”, “open for democracy”, “second republic”, on the one hand, and a deliberate crackdown on the opposition, restricting the democratic space and subverting the institutions established by the Constitution of 2013, on the other, are designed to keep the military-nationalists in charge of the party and the state machinery, and by implication, to maintain their hold on Zimbabwe’s national treasury and natural resources.

The Minister of Finance, Professor Mthuli Ncube, admitted that the budget suffered as a result of runaway expenditure and mismanagement. The minister did not disclose that the excessive borrowing has been a blank cheque to fund the decadent lifestyles of those in political office.

Zimbabwe’s melting political economy: The ambers underneath

To get a sense of how Zimbabwe has fallen from glory, one has to look at the historic Gross Domestic Product (GDP) and per capita figures over time compared to Kenya. At the end of 1970s, Kenya’s GDP was estimated at US$2.9 billion, with a population of about 14 million and Zimbabwe’s’ GDP was US$3.5 billion with a population of 7 million. Fast forward to 2017 and Kenya’s GDP now stands at almost US$75billion and Zimbabwe’s GDP stands at a mere US$17billion.  In Harare, one can contrast sewage flowing openly in the ghettos and the sprawling green lawns and well-paved streets in North Harare, which is full of Beverley Hills-type mansions. Over the past 40 years, Zimbabwe’s export industries have been decimated, infrastructure has decayed, agricultural production has collapsed and there have not been any major capital projects to revive the economy. State-owned companies, in railways, transport like airlines, agriculture, mining and the list goes on, have been systematically looted. The political economy collapse has resulted in mass emigration of both skilled and unskilled labour and a severe social crisis of poverty

The Minister of Finance, Professor Mthuli Ncube, admitted that the budget suffered as a result of runaway expenditure and mismanagement. The minister did not disclose that the excessive borrowing has been a blank cheque to fund the decadent lifestyles of those in political office. The Reserve Bank of Zimbabwe (RBZ) dished out loans in excess of US$1.2 billion to elite-linked companies, and state-owned companies raked billions in debt and all this has been transferred to the Treasury. Calls for a national debt audit were rejected. The public financial management system is deliberately in shambles, the public tendering system directly feeds into the pockets of the political elites and the Public Service Commission (PSC) has been used to employ thousands of “youth officers” who are effectively a notorious party militia known as “green bombers”. Foreign and domestic debt has gone out of control; 90 per cent of expenditure is on salaries and allowances for government workers. Foreign currency reserves have dried and Zimbabwe cannot access credit lines from international financial institutions. The new minister has proposed selling off state enterprises that formed the bedrock of Zimbabwe’s pre-independence industrial base, and it is highly likely that these public assets will be doled out cheaply to feed a crony capitalist class linked to political power. In a word, Zimbabwe’s political economy collapse is self-inflicted.

Austerity for citizens and a Thatcherite largesse for the elites

 The Minister of Finance, in the latest budget statement, proposed what he called “Austerity for Prosperity”. He argued that Zimbabwe “needs pain” before the economy becomes productive, just like a patient who needs surgery. The Treasury chief has introduced a 2 per cent tax, has increased fuel prices by almost 150 per cent, is trying to liberalise the foreign currency market, has introduced a local “virtual” currency called RTGS dollars, has hiked custom excise duty and has demanded that all car imports be paid for in foreign currency. The dramatic effect has been to feed inflation upwards, erode income for workers, and scare away investors. The prices of basic commodities have spiraled out of control and all major trade unions have already engaged in some strike action or are in the process of organising one. Here are the words of the Treasury chief:

The only way to a stronger economy is to restructure, rebuild and reform. This plan involves some painful measures to get our national budget under control. These measures will be felt by all of us, but are unavoidable if we want to get our economy back on track. These measures are those of a doctor performing a life-saving operation. They cause pain, but the pain is the only thing that will lead to a recovery. As Margret Thatcher once said, “Yes, the medicine is harsh, but the patient requires it in order to live. (Speech by Professor Mthuli Ncube)

The 2 per cent tax has been bringing in over $100 million a month. Stretched to a year, that is a whopping $1.2billion extracted from financial transactions with no relationship to the productive capacity of the economy. The political economy meltdown has been compounded by a drought that has led the United Nations to issue a special food appeal:

Nearly 5.3 million people in Zimbabwe are estimated to be in urgent need of humanitarian assistance and protection during the 2018/2019 lean season (October – April) and beyond. …In addition, 1.5 million people in urban areas, including major towns and secondary cities, are estimated to be facing severe food insecurity, while people in multiple locations across the country are faced with acute shortages of essential medicines. (UN Office for the Coordination of Humanitarian Affairs, February, 2019)

This is against loud sloganeering statements that Zimbabwe’s “command agriculture” system run by a former air marshall has been a success. The Minister of Finance had to admit that Zimbabwe’s chaotic land reform programme resulted in land becoming a “dead asset” and this is despite the government setting up a National Land Commission that has remained largely moribund as a matter of design because the military-nationalists continue parceling to each other, for free, the country’s most productive land.

We need to understand the character of the political economy emerging in the post-Mugabe era in order to grasp how the state machinery is being fashioned. Firstly, the military-nationalists are now in charge of the ruling party machinery. There is a preponderance of retired army personnel in the running of the party, including the electoral campaign of July 2018, which was run by the retired Major-General Engelbert Rugeje.

Crony capitalism, the military class and state authoritarianism

We need to understand the character of the political economy emerging in the post-Mugabe era in order to grasp how the state machinery is being fashioned. Firstly, the military-nationalists are now in charge of the ruling party machinery. There is a preponderance of retired army personnel in the running of the party, including the electoral campaign of July 2018, which was run by the retired Major-General Engelbert Rugeje.

Secondly, the cabinet is dominated by ex-military generals who executed the coup of November 2017, including the Vice-President (General Chiwenga), the Minister of Agriculture (Air Marshall Perence Shiri), and the Minister of Foreign Affairs (General Sibusiso Moyo). The president announced the retirement of four generals who played a critical role in the coup but they were immediately deployed to diplomatic postings.

Thirdly, the military elites have been deployed to the criminal justice system, including no less than 100 “special prosecutors”, which the Supreme Court declared as unconstitutional.

Fourthly, the military elites have also become discreet silent partners in enterprises that do business with the state. They have entered into agreements with foreign corporates and have access to mining concessions, thus effectively becoming a state-backed surrogate business class of the buccaneer type.

The business interests of the military class stretch back to the civil war in the Democratic Republic of the Congo, where a UN investigation unearthed the plundering of natural resources. In the report, “The Expert Panel Reports on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo”, the findings of the investigation were presented. This report was presented to the UN Security Council. Here is an excerpt:

The key strategist for the Zimbabwean branch of the elite network is the Speaker of the Parliament and former National Security Minister, Emmerson Dambudzo Mnangagwa. Mr Mnangagwa has won strong support from senior military and intelligence officers for an aggressive policy in the Democratic Republic of the Congo…Other prominent Zimbabwean members of the network include Brigadier General Sibusiso Busi Moyo, who is Director General of COSLEG. Brigadier Moyo advised both Tremalt and Oryx Natural Resources, which represented covert Zimbabwean military financial interests in negotiations with State mining companies of the Democratic Republic of the Congo. Air Commodore Mike Tichafa Karakadzai is Deputy Secretary of COSLEG, directing policy and procurement. He played a key role in arranging the Tremalt cobalt and copper deal. Colonel Simpson Sikhulile Nyathi is Director of defence policy for COSLEG. The Minister of Defence and former Security Minister, Sidney Sekeramayi, coordinates with the military leadership and is a shareholder in COSLEG. (United Nations, S/2002/1146)

Having learnt these tactics and with the war in the DRC cooling off, the same military network turned its eyes to Zimbabwe’s economy. The military, police, intelligence and political players muscled into lucrative farming land, rich diamond fields and gold concessions. (Chinese companies often have military representatives on their boards.) Jabusile Shumba summed up how Zimbabwe’s military class has spread its tentacles in the country’s political economy in his book, Zimbabwe’s Predatory State: Party, Military and Business (UKZN Press, 2018).

The business interests of this predatory class are highly speculative and very non-industrial, meaning that the structure of the post-colonial economy has continued to rely on raw exports (like tobacco) and on exploiting natural resources (like minerals). Effectively, there is no skill development or technological transfer.

Secondly, this form of crony-capitalism is ecologically destructive. In Zimbabwe there have been heated debates as Chinese mining companies have been eying vast swathes of land, including nature reserves. In some cases, they use ecologically-destructive mining methods and zero land rehabilitation after mining is done.

Fourthly, by deliberately prioritising military-linked business interests (especially in mining, agriculture and hotels), a new form of an unaccountable “shadow state” is emerging, with access to state and private resources.

Thirdly, Chinese state-related corporates are entering into agreements that are loading the public with huge debt, especially in energy and other infrastructure projects. The loan collateral, interest payment and conditions are always shrouded in secrecy and the return on investment is dubious, if not extortionist. And as a matter of common practice, these deals are not open to public scrutiny and accountability.

Fourthly, by deliberately prioritising military-linked business interests (especially in mining, agriculture and hotels), a new form of an unaccountable “shadow state” is emerging, with access to state and private resources.

Constitutionalism and the Pan-African liberation promise

Looked at broadly, Zimbabwe’s recurring crisis can be viewed as the collapse of the Pan-African project of national liberation. At the core of that crisis is the non-fulfilment of Africa’s very agonising de-colonisation project in which state power and its institutions were supposed to be fashioned to serve the goal of social and economic emancipation and not the accumulation projects of a limited elite.

Military-nationalists in Zimbabwe, authoritarian leaders and politico-dynasties (in Kenya, for example) are making peaceful electoral political change almost impossible. This is dangerous because Africa’s population is growing younger and their exclusion from the political economy is breeding an explosive concoction of youthful disenchantment. The rise of Julius Malema in South Africa, Bobby Wine in Uganda and the popularity of Nelson Chamisa in Zimbabwe point to this disconnect between those with political and economic power, who are usually older, and the younger citizens who feel excluded, almost like non-citizens.

The Kenyan political analyst Nanjala Nyabola has brilliantly exposed this disconnect in a book called Digital Democracy: Analogue Politics: How the Internet Era is Transforming Politics in Kenya. Her analysis can be generally extended to the rest of Africa, including Zimbabwe. We Africans need to be brutally honest with ourselves. As the de-colonisation leader Amilcar Cabral said, “Claim no easy victories and tell no lies.” In the wake of the military crackdown, Fadzai Mahere, a young advocate, activist and political contestant summed it up well:

The wounds afflicting injured survivors may one day heal. But our politics will remain toxic as long as the military is at the centre of it. Any dialogue about the future must involve concerted, concrete plans to demilitarize Zimbabwean politics. Only then can the promise of a new Zimbabwe truly blossom. (The Guardian, 26.01.2019).

The post-colonial trajectory of coercion, corruption and a development impasse can only begin to be settled, not only through the implementation of the Constitution of 2013 and respect for democratic institutions, but most importantly through a genuine process of national peace-building and de-polarising of state-social relations. This means a return to the Pan-African liberation project of transformation based on building political economies that place people at the centre and disciplines state power when it becomes recalcitrant and captured by a few.

Avatar
By

Tinashe L. Chimedza studied social inquiry in Australia. He is an Associate Director at the Institute for Public Affairs in Zimbabwe (IPAZIM - http://www.ipazim.org), and co-edits Gravitas, a monthly political economy bulletin of IPAZIM.

Politics

Fire and Chaos: Mathare’s Chang’aa Problem and the Optics of Policing

In the 1980s and 1990s parts of Mathare gradually became the epicenter of the large scale production and distribution in Nairobi of chang’aa and a booming local economy emerged that has since become a major source of contestation between the police and the residents.

Fire and Chaos: Mathare’s Chang’aa Problem and the Optics of Policing
Download PDFPrint Article

On Tuesday 2 April 2019, social workers, youth group members, activists and friends, all residents of Mathare in Nairobi, hurdled together on the top floor of the Macharia building near the Olympic petrol station at Juja road as they watched in horror, as two schools were set alight by police. Thick, black smoke circled up and soon blanketed the entire valley. Alongside the two schools, another thirty or so houses quickly burned down to ashes in the raging fire. People raced to quell the fire with buckets of water, but were blocked by police in their tracks. Furious shouts filled the air as licking flames destroyed what residents had built over decades; businesses, schools and homes, all gone in minutes.

This criminal act of arson by police of a part of a Nairobi neighborhood took place on the third day of a raid against the local alcohol economy, spearheaded by the notorious ‘killer cop’ Rashid. This police officer gained notoriety after being filmed executing two teenagers on a busy street in Eastleigh in broad daylight on 31 March 2017. Ironically, the raid against the local alcohol economy in Mathare under his command started exactly two years later, on Sunday 31 March 2019. In between, Rashid has killed, maimed and harassed many people, especially young and poor men, in Mathare and beyond, and with absolute impunity.

Subsequently, Rashid was free to walk into Mathare on the aforementioned Sunday while guiding a troop of police officers down the valley where they barged into homes and bars to destroy alcohol and other belongings of local business owners and their employees. Shockingly, the Pangani OCS (Officer Commanding Police Station) and the Area Chief both claimed to ‘have had nothing to do with the raid’, despite eyewitnesses who stated that regular police and AP officers and equipment (such as a well-known land rover used by AP) were employed during the raid. Residents wondered how a full-blown war be waged on residents for days by police without the police officers in charge ‘having nothing to do with it’?

As early as 1930s, women who settled in abandoned parts of the quarry that later came to be known as Mathare earned money through sex work and selling home-brewed alcohol such as busaa and chang’aa

That first Sunday night of fear chaos and gunshots transpired without dead bodies, but many had lost weeks of work and earnings, and others nursed bruises and deep cuts from trying to defend homes and properties from the pillaging police. One of us found his grandmother crying on Monday morning; a woman who has distilled and sold alcohol for more than four decades and has raised her children, grandchildren and great grandchildren while doing so. The police had poured her kangara, the distilling mixture, which had been almost ready for cooking. She lost 4000 shillings, her monthly earnings, and was left in deep debt. Thousands of small business owners and their employees and tens of thousands of their dependents suffered the same fate. On Monday, all the jiko’s (‘kitchens’) near the river remained closed; no one could work while the police patrolled in search of alcohol and production tools to destroy. This went on for yet another day and night, until on Tuesday tensions between angry residents and police culminated into protests by alcohol distillers.

History of the local alcohol economy

To understand the impact of this crackdown on people living and working in Mathare, a brief insight into the history of the alcohol economy is crucial. As early as 1930s, women who settled in abandoned parts of the quarry that later came to be known as Mathare earned money through sex work and selling home-brewed alcohol such as busaa and chang’aa. This area was wedged in by several military and police bases, and the influx of soldiers during the war period (1940-45) attracted a growing number of women in search of work. These women were among the many young people who were forced to leave their homesteads in the colonial confinements of people called ‘Native Reserves’ in the rural areas following soil erosion, population pressures and the demand for ‘hut tax’ (which had to be paid in cash to the colonial government). Even if women comprised the majority of residents in Mathare from the onset, men increasingly migrated to live here—often after being chased from colonial settler farms when mechanization of farm work took hold during the late 1930s. Following these and other developments, Mathare became the nexus of urban resistance against the colonial government and formed an important node in the Kenya Land and Freedom Armies (KLFAs)—also known as ‘Mau Mau’.

After independence in 1963, alcohol production and distribution remained a home-based economy, and houses often doubled as bars where alcohol and sexual services were sold. It was not until the 1980s and 1990s that parts of Mathare (especially the following villages: Bondeni, Shantit and Mabatani) gradually became the epicenter of the largescale production and distribution in Nairobi of chang’aa. According to several bar owners we spoke with, the influx of rural-urban migrants during this period boosted the selling of chang’aa to unprecedented levels. Also, they soon found that the profit margins for chang’aa were much higher than for instance busaa, and soon multiple cooking sites emerged along the banks of the Mathare river. Profit margins have fallen significantly since the 1990s, following a convergence of rising food prices (especially a type of molasses called ngutu) and increasing demands for police bribes since the 2000s. Still, the local alcohol economy sustains thousands of people in Mathare directly and is fundamental to most other economic activities located here.

For example, a major shortage of firewood often plagues adjacent neighborhoods, but every other small business on Mau Mau Avenue in Bondeni, a neighborhood in Mathare, sells large quantities of this wood. These firewood sellers have arrangements with construction companies for frequent early morning deliveries. Old wood from scaffolding at construction sites is transported to the area in trucks so large they can barely enter the ghetto. Every day, these trucks drop off mountains of firewood intended to fuel the widespread and constant distillation of alcohol at the sites near the river. At the same time, young men in search of work hang around these businesses from sunrise to midday to help offload the bulks of firewood and chop them into smaller pieces in return for a small stipend. Suffice to say that thousands more depend indirectly on the alcohol economy in Mathare. All this provides some insight into the abrupt devastation to the livelihoods of thousands and thousands of people caused by frequent crackdowns on the local alcohol economy by police.

After independence in 1963, alcohol production and distribution remained a home-based economy, and houses often doubled as bars where alcohol and sexual services were sold. It was not until the 1980s and 1990s that parts of Mathare (especially the following villages: Bondeni, Shantit and Mabatani) gradually became the epicenter of the largescale production and distribution in Nairobi of chang’aa

After days without work and consequently food, alcohol distillers took to Juja road on Tuesday morning, 2 April 2019, to protest the illegal and violent raid by police. The few media outlets describing the protests squarely blamed ‘angry youth’ for starting the fire. Nothing could be further from the truth. We have spoken to many eyewitnesses who saw police officers deliberately setting the houses and schools alight. The so called ‘angry youth’ were alcohol distillers who had not earned a living for three days. These (mostly) men who make on a good day, Kshs 300 for 10 hours of backbreaking work, barely enough to provide for a family of four. These families do not have any savings to rely on when work is disrupted by state violence, and the illegal raid by police had left hundreds of families hungry for days. This provoked husbands, fathers and brothers to take to street and fight for their families, and they burned tires on the road to underscore their demand to work by blocking traffic.

As has been witnessed by several people, during the ensuing fracas one officer carelessly threw one of the burning tires into a row of make-shift houses and carpentry workshops along Juja road, all constructed of highly flammable materials. Other eyewitnesses saw police officers violently dispersed people trying to stop the fire from reaching the labyrinth of homes, businesses and schools down the street leading into Mabatini, thus effectively enabling the fire to destroy several houses and properties. Teargas was lobbed at the crowds of people who had gathered with buckets of water trying to rescue their homes and belongings. The teargas canisters further ignited the fire as residents watched their schools and homes burn to the ground.

The current modes of chang’aa production in Mathare may occur without a license and may not adhere to regulations, but that does not warrant such a violent and criminal crackdown by police

Distraught, many slept outdoors in the cold on Tuesday night. The fire also destroyed the electricity supply line and the ensuing blackout increased insecurity. One resident recounted that, “For nights, gun shots have become our ringtone.” Another lamented, “We live in a war(zone), but nobody cares.” As Mathare endured this terror for three days and nights, residents watched in disbelief as the evening news headlines either ignored their plight and the criminal acts by police or apportioned the blame decidedly on them using the pejorative ‘angry youth’ frame. Mathare residents were profiled as criminals and the local alcohol economy as illicit and dangerous. Indeed, misconceptions about Mathare and local industries persist. For example, chang’aa was legalized in September 2010 and is not an ‘illicit brew’. The current modes of chang’aa production in Mathare may occur without a license and may not adhere to regulations, but that does not warrant such a violent and criminal crackdown by police. If the production is not up to standard, why not encourage or enable owners, distillers and sellers to obtain licenses and invest in improved production? The answer is simple: too many people high-up in police and government ‘eat’ from the industry as it is.

The Culture of Policing In Mathare

Everyone living and working in Mathare is familiar with the daily routine of police visiting the distilling sites and bars where alcohol is produced and sold to solicit bribes. For each drum of kangara, the police receive at least 200 KES. Let us assume that there are seven distilling sites (we don’t disclose any specific details for security reasons) which have the capacity to process seven drums simultaneously, meaning there are 7 fires operative at each site at all times. Each drum takes three rounds to cook and each round takes 1 hour (45 minutes to distill and 15 minutes to cool). So seven sites and seven fires operating for 24 hours can process 392 drums of distilling mixture per day. For each drum, police receive Kshs 200 and the figure adds up to an average of kshs 70 000 per day and in excess of Kshs 2 million per month. This is a conservative estimate since it does not include the bribes police take from bars and alcohol distributors, and it does not include police officers who run their own alcohol operations. And the number of drums along the riverside also vary immensely. Sometimes, a jiko can have 15 or 20 fires operating at once, while at other times only three or four. The above calculations, though based on thorough research, only serve to give an indication of police involvement and investment in the alcohol industry in Mathare. Considering this, why then does the police initiate a raid to clamp down on the very industry that ‘feeds’ them?

A first part of the answer pertains to internal divisions within police. Police does not entail a homogenous entity, and rumors have it that Rashid and his team were eventually stopped by other police officers in the course of the week because they saw their avenues to ‘easy money’ destroyed. That, at least to some measure, explains why on Thursday the raid was abruptly halted. What’s more, crackdowns on the alcohol economy are not uncommon, despite the entanglement of police in this business. In July 2015, Mathare residents lived through a similar period of police terror which left two people dead and thousands people without work for weeks. Many believe that such attacks are often triggered by a desire of particular police units or individual officers to show, as one resident put it to us, “the ‘higher ups’ that they are doing their ‘job’ and/or deserve promotion”. This time too, many residents believe the notorious Rashid went out of his way to impress in the incoming Inspector General Mutyambai. A resident shared with us that in his view Rashid demonstrated his exceptional cruelty during the course of the raid by forcing a customer of a local bar to drink bleach while he compared bleach to chang’aa. The young punter barely survived this ordeal.

The police officer mentioned here is not the only one. Similar notorious policemen who are known to execute and torture mainly young and poor men frequently patrol most informal urban settlements in Nairobi. According to several of our fellow activists, these plain cloth police officers, called ‘killer cops’ or maspiff by some, are not part of regular police units that are locally known to be connected to specific police stations and which patrol Mathare and surrounding neighborhoods on a daily basis. They told us that these police officers operate under the direct command of the County Criminal Investigations Officer (CCIO). Several (non-state) security groups in Mathare that work together with these police officers revealed to us that several of them also enjoy substantial support by influential business owners, for instance in Eastleigh. The exact operational and support structures of these ‘killer cops’ and how they collaborate with regular police units remain somewhat opaque to local activists and residents, but all agreed that these plain cloth police officers enjoy considerable power and are able to kill with impunity through their powerful back-up.

When considering the relative opacity of their operations, the public visibility of these police officers in Mathare (and other urban settlements) is indeed rather astounding. They are also not a recent phenomenon. Most Mathare residents above 25 years old can easily recall the cruel reign of different ‘killer cops’ as far back as the late 1990s, such as the ruthless Habel Mwareria a.k.a. ‘Tyson’ in early 2000s who was also popularly dubbed ‘the Ghost’ because he often seemed to materialize out of thin air when- and wherever problems occurred. He killed suspects without asking questions, in front of people and in broad daylight and would vanish as rapidly as he had appeared. He was later promoted to the ATPU ( Anti Terrorism Police Unit).

Nevertheless, the ‘killer cops’ gained new strength in popular discourse when in April and May 2017 alleged police officers calling themselves ‘Hessy’ became rapidly infamous by posting pictures on different Facebook pages, under this name, of suspected ‘thugs’ before and after they purportedly shot them. Speculations continue to the date about who or what ‘Hessy’ really is. Some people claim it started with an actual police officer who was shot in the leg and while he was recovering home in the month of April 2017 he started this network of ‘Hessy’s’ on Facebook. This is substantiated to some extent by the fact that there is an infamous police officer who is nicknamed Hessy and who is known to kill mostly young male crime suspects in Kayole. Others say that one officer or a group of police officers from different police stations in Eastlands chose this name because of the reputation of this particular police officer. Others state that the different ‘Hessy’ and adjacent pages on Facebook were not created by one or more police officers, but by a team of bloggers working in collaboration with specific ‘killer cops’. The ‘Hessy’ and adjacent pages (such as Nairobi Crime Free and Dandora Crime Free) soon gained a massive following online and continue to be a topic of intense debate offline, for instance among residents in Mathare.

Local Dynamics and the Future of Chang’aa

Police violence in Mathare, such as extra-judicial killings and illegal raids on people’s livelihoods, are enabled by a combination of factors. In contrast to the knee-jerk homogenization and criminalization of ghetto residents, for instance in mainstream media in Kenya, people inside Mathare are equally divided about the use of (criminal) violence by police. Police use such local divisions inside this neighborhood to push their own agenda. For instance, they work together with residents, popularly dubbed informers or watihaji, who are paid by police for information on people, business activities and other developments locally. This explains how police were able to find the entrance to the jiko’s at the river or the places where bars are located.

However, the incentives of informers to tell on their neighbors often go beyond merely monetary motivations or concerns about crime. Local competition or revenge plays a big role as well. Police also depend too much on such secondary and often faulty intelligence because the local turnover of police, following frequent transfers, is quite high thus limiting the time police have to understand local dynamics. As a result, local informer-networks have some power to manipulate police behavior towards their own agendas. To illustrate, sometimes ‘killer cops’ like Rashid parade a suspect throughout Mathare and when they receive calls from as little as three informers confirming the identity of the suspect, the suspect is taken to a backstreet and executed. Our fellow activists have documented several cases that follow this pattern.

Crackdowns briefly slow production but do not alter the make-up of this industry in any way, yet the Mathare residents who have for generations depend on this economy bear the brunt for the simple reality that they cannot afford to miss a day of work.

The recent raid in Mathare on the local alcohol economy stopped as suddenly as it had started and without any outcome other than destroyed livelihoods, schools and homes and injured people. Slowly, alcohol distillers went back to work on Friday and gradually the local economy picked up again. Such crackdowns have never stopped the local alcohol industry and never will. If the government wants to make the local alcohol industry safer and bring it in line with regulations, it needs to work together with business owners and their employees to develop ways to improve production standards. If alcohol consumption is the problem, why not invest in rehabilitation programs and explore underlying factors that contribute to widespread cheap alcohol consumption, such as vast unemployment and extreme stress? If the government wants people to stop working in this industry all together why not develop alternatives together with them?

Crackdowns briefly slow production but do not alter the make-up of this industry in any way, yet the Mathare residents who have for generations depend on this economy bear the brunt for the simple reality that they cannot afford to miss a day of work.

On Thursday 4 April 2019, one resident asked us: “Who is Rashid? How can he do all this, kill our young men for years, then come to destroy our work, huh? Who is he?”

“Why are there no people coming from Red Cross, or our government leaders, like when Dusit happens or Westgate? Are we not human beings?”

Continue Reading

Politics

Liberty for Whom? D-Day’s African Ghosts

Africa tends to be swept under the carpet in the memorials for the two World Wars, which are always couched in terms of, again to borrow a phrase from Trump’s speech, “the ferocious eternal struggle between good and evil” – the Germans being branded as the ultimate evil and the Allies being the forces of good.

Published

on

Liberty for Whom? D-Day’s African Ghosts
Download PDFPrint Article

Three-quarters of a century ago, hundreds of thousands of Allied troops stormed the beaches of Normandy in what was the start of a war to save Western Europe from Nazi occupation. American and European leaders gathered at the scene last week to memorialise and honour those who fell, including on the German side. The US President, Donald Trump, began his tribute to them thus: “On this day 75 years ago, 10,000 men shed their blood and thousands sacrificed their lives for their brothers, for their countries, and for the survival of liberty.”

Undoubtedly, much of that is true. From the perspective of those in occupied Europe, it was the beginning of their liberation and the defeat of fascist tyranny. It would inaugurate, for many, an era of democratic freedom and economic prosperity that was at the time unparalleled in history.

Africa tends to be swept under the carpet in the memorials for the two World Wars, which are always couched in terms of, again to borrow a phrase from Trump’s speech, “the ferocious eternal struggle between good and evil” – the Germans being branded as the ultimate evil and the Allies being the forces of good.

President Trump went on to state that “the GIs who boarded the landing craft that morning knew that they carried on their shoulders not just the pack of a soldier but the fate of the world.” This may be true, but the world is not just Western Europe; from the perspective of those on the African continent, the GIs were not there to shore up liberty and democracy, but rather to free countries that were themselves engaged in colonial plunder and occupation.

Africa tends to be swept under the carpet in the memorials for the two World Wars, which are always couched in terms of, again to borrow a phrase from Trump’s speech, “the ferocious eternal struggle between good and evil” – the Germans being branded as the ultimate evil and the Allies being the forces of good.

But there was little that was “good” about what these same countries were doing and would continue to do to the people in Africa whose land and resources they were continuing to steal and whose people they not only oppressed but also press-ganged into their wars. More than a million Africans fought in World War II – hundreds of thousands of them were sent to the front in Europe, others to India, Burma and the Pacific islands. Few understood why they were fighting, let alone why they volunteered to do it. Many died and survivors today receive nothing of the recognition and adulation bestowed on their European and American counterparts.

Now it is probably true that a world governed by the Nazis would have been much worse for Africans than the present one, so in that sense their defeat was good for the continent. But in that case, it could also be argued that the two World Wars, which exhausted the European powers and shattered the myth of white invincibility for the returning African veterans, were also good in that they paved the way for the end of colonialism. In either case, the uncontested fact would be that these were not wars to free all people but rather to determine who would be their overlords – despite the rhetoric, they were fought less for global liberation than for global domination.

David Frum, in his brilliant piece for The Atlantic, “The Ghosts of D-Day”, notes how the memory of D-Day and the liberation of Europe have been distorted in French and American imaginations. In truth, it is not just American memories that have “become more triumphalist and self-aggrandizing”. The memorials at Normandy are not so much about remembering history but rather spinning it. And within that spin, the tale of the Africans has no place – it muddies the moral waters to admit that the liberation the Allies sought did not include that of the black and brown peoples they were oppressing; that those on this continent had, and to a large extent still have, little share in the freedom that was heralded on that day.

However, what is today undeniable is that the Allies were guilty of committing, and would go on to commit, many of the same crimes that qualified the Nazis as evil – from implementing a racist occupation, to genocides, to interring entire communities in concentration camps, to jailing homosexuals, to looting cultural artefacts and art.

For Africans, the irony is that the tools for making concrete the memory of what the European nations were actually doing – the records and documents that tell the story of the occupation and the crimes that were committed against Africans – are, for the most part, either deliberately destroyed or safely hidden away in European vaults. Many were stolen at the end of the colonial occupation in an effort to maintain the fiction of its benevolence.

However, what is today undeniable is that the Allies were guilty of committing, and would go on to commit, many of the same crimes that qualified the Nazis as evil – from implementing a racist occupation, to genocides, to interring entire communities in concentration camps, to jailing homosexuals, to looting cultural artefacts and art. Yet, unlike the Germans, who have owned up to “the unforgettable rupture of civilization that [they] provoked in Europe” and to the fact that “the fallen German soldiers are resting in foreign soil not because they came as liberators to this country but as occupiers”, there has been no such admission from the Europeans with regard to their occupation of Africa. Today, they still repeat the lie that colonialism was about bringing civilization and the benefits of modernity to the primitive peoples of the continent rather than implementing a system of extraction that continues to bleed the continent to this very day.

In 2017, Bruce Gilley, a professor of political science at Portland State University, published the article, “The Case for Colonialism” (withdrawn after a public uproar and death threats), in which he argued that Western colonialism was both “objectively beneficial and subjectively legitimate”. He further advocated for “colonial modes of governance; by recolonizing some areas; and by creating new Western colonies from scratch”. While much of this has been debunked, he is hardly the only one to go public with such views. In the same year, the former leader of South Africa’s Democratic Alliance, Helen Zille, was removed from her leadership roles after she put out a series of tweets touting the benefits of colonialism.

Rather than the selective and hagiographic portrayals we are treated to today, a better memorial for D-Day would be to return the colonial archives and to acknowledge the truth – the whole, unvarnished truth – about what was being defended on that day. For it surely was not the ideal of liberty for all. Importantly, this would include an acknowledgement and compensation for the Africans who were forced to fight and die in the wars that were not of their making.

Continue Reading

Politics

Another False Messiah: The Rise and Rise of Fin-tech in Africa

The rise of a global technology industry to support financial services, known as fin-tech, has grown enormously in Africa in the last decade. Across the continent, many commentators have proclaimed fin-tech as the solution to poverty and development. Examining the case of Kenya’s celebrated fin-tech model, M-Pesa, Milford Bateman, Maren Duvendack and Nicholas Loubere reveal a flawed system that is not an answer to poverty, despite the wild claims of some academic commentators. Quite the contrary, fin-tech offers Africa a further case study of how contemporary capitalism continues to under-develop Africa.

Published

on

Another False Messiah: The Rise and Rise of Fin-tech in Africa
Download PDFPrint Article

In both the global investment community and the international development community one of the most talked-about issues today is fin-tech (financial technology). Defined as ‘computer programs and other technology used to support or enable banking and financial services’, the last decade or so has seen the rise of a new global fin-tech industry, a development that is widely regarded to be positively changing the world in a variety of ways. Thanks to almost daily reports of major new investments, especially in Africa, many investment professionals are of the opinion that something akin to a new ‘gold rush’ is clearly underway. At the same time, the fin-tech model is also touted as an innovation that will greatly benefit the global poor, with enthusiastic supporters claiming that a new golden age of ‘inclusive capitalism’ is upon us.

By far the most well-known example of the fin-tech model to date is Kenya’s M-Pesa – the agent-assisted, mobile-phone-based, person-to-person payment and money transfer system. M-Pesa is widely seen as the first fin-tech institution to conclusively demonstrate that it is possible to make a profit while also very meaningfully improving the lives of the poor. Taking inspiration from M-Pesa, many in the international development community now regard the fin-tech model as a potentially game-changing private sector-funded driver of development and poverty reduction in the Global South.

In both the global investment community and the international development community one of the most talked-about issues today is fin-tech (financial technology)

In the academic community the apparent combination of poverty reduction with profit generation proved to be a very seductive pro-capitalist narrative that many mainstream economists were only too willing to engage with. The most well-known academic economists examining the impact of M-Pesa are Tavneet Suri, based at MIT, and William Jack, based at Georgetown University. With extensive funding from Financial Sector Deepening (FSD) Kenya and the Gates Foundation, since 2010 Suri and Jack have produced a series of outputs extolling the benefits of M-Pesa. Suri and Jack’s generally positive findings have resulted in mainstream media attention and large numbers of citations. This has played an important part in galvanising the international development community into supporting the fin-tech model as a development and poverty reduction intervention.

In particular, their 2016 article published in the prestigious journal Science, entitled ‘The Long-run Poverty and Gender Impacts of Mobile Money’ has played a considerable role in sparking the imagination of the international development community. This is mainly because of its sensational claim that ‘access to the Kenyan mobile money system M-PESA increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty.’ According to this article, M-Pesa was not just making profits, but the evidence seemed to show it was also making an astonishing ‘bottom-up’ development and poverty reduction contribution. This poverty reduction claim, often cited in full in media articles, quickly became the centrepiece of the evidence used by many in the international development community to justify its increasingly strong support for, and investment in, the fin-tech model.

M-Pesa is widely seen as the first fin-tech institution to conclusively demonstrate that it is possible to make a profit while also very meaningfully improving the lives of the poor.

Unfortunately, all that glitters is not gold. As we write in a Briefing just published in the ROAPE Suri and Jack’s hugely influential signature article actually contains a surprising number of errors, omissions, poor logic, and methodological flaws. Crucial labour market evaluation parameters, such as business failure (exit) and the impact of new businesses on existing ones (displacement), were entirely over-looked. The core issue of individual over-indebtedness, which in Kenya is now approaching crisis levels and which has a clear and direct link to the operation of M-Pesa, was not even mentioned as a possible downside of the fin-tech development model. For such an important and well-financed project, the methodology was also weak, diverging from many of the standard ‘best practices’ in the impact evaluation field. The important issue of causation was also raised, but in a way that we found to be questionable at best. In many ways, therefore, Suri and Jack’s analysis appears to misrepresent and vastly over-state the development impact of M-Pesa. 

Fin-tech represents a new form of resource extractivism

One of the most disturbing aspects of Suri and Jack’s flawed analysis, however, is that they completely bypass the crucial equity and distributional issues that arise from the operation of M-Pesa and other similar fin-tech corporations. This is inexcusable because there are clear warning signs today that the fin-tech model possesses the potential to extract immense value from the poorest communities in the Global South, with potentially calamitous long-term consequences. Like the gambling, sub-prime mortgage and payday loan industries in the United States and UK that before and after the financial crisis of 2008 were able to grow rich by expertly extracting massive amounts of value from the communities of the poor, one might argue that Kenya’s poorest communities are also being drained of much of their needed collective wealth.

M-Pesa has essentially perfected a form of ‘digital mining’ that captures and extracts a small tribute from each and every one of the growing number of tiny financial transactions made by the poor through the platform (which has become ubiquitous and very difficult to avoid). This includes microloans, money transfers, grant disbursement, credit card usage, pension payments, and so on. One simply cannot escape from the fin-tech ‘net’ that is gradually being lowered on to the poor. As more and more governments and elites are brought in as allies by the fin-tech industry, this value extraction process is only likely to speed up and intensify, with cash transactions being increasingly jettisoned and ever more transactions being mediated by fin-tech organisations.

M-Pesa has essentially perfected a form of ‘digital mining’ that captures and extracts a small tribute from each and every one of the growing number of tiny financial transactions made by the poor through the platform

By the same token, given the profit motive at play, it is inevitable that a range of services and products will end up being pushed on to the poor even though they largely do not need them, are not able to productively use them, or do not have any means to repay debt associated with them. The value realised through such ‘digital mining’ techniques is then extracted from the local community and deposited into the hands of the fin-tech entity’s owner(s). However, with so many fin-tech entities backed by foreign capital from the Global North, the chances are that a large proportion of this ‘digitally mined’ value will head abroad to the world’s leading investment locations.

What we have here, therefore, is a value extraction process that contains the potential to progressively undermine the development process in local communities in the Global South. It does this in two important ways: first, it denies the local community an extremely valuable aggregate amount of local spending power, which is instead appropriated by wealthy individuals and institutions, many of which are located abroad. This renders an important endogenous growth trajectory inactive, since it is rising local demand that often provides the initial impetus for local enterprises to emerge in order to meet this demand. Second, fin-tech institutions also starve the local (re)investment cycle by siphoning value out of the community, and thus make it more difficult for local businesses to access the meaningful amounts of capital needed to establish sustainable commercial operations. Experiences in Asia with local banking from 1945 onwards, for example, show that reinvesting/recycling the bulk of locally-generated value back into the local economy has significant potential to kick-start economic growth.

Fin-tech could, therefore, be seen as a revised version of the natural resource extraction paradigm that was largely responsible for under-developing Africa and other colonised countries over the last four centuries. The ‘resource’ increasingly being extracted from Africa today might no longer be a physical one – such as diamonds, gold, platinum, or silver -and the process might not require slavery, the employment of ultra-exploitative waged labour, or involve horrendous working conditions, but the eventual negative outcomes of ‘digital mining’ could very well be the extension and continuation of under-development.

M-Pesa thus provides us with a valuable case study of how contemporary platform capitalism operates in neoliberal Africa and how ‘digital mining’ might actually affect Kenya’s potential growth and development. In recent years, Safaricom (M-Pesa’s parent company) has become far and away Kenya’s largest company, now accounting for a massive 40% of the total stock market valuation on the Nairobi securities exchange. Safaricom is also famous for its spectacular profits. In 2019 it set a record by registering profits of around US$620 million, which would be an impressive result in even the richest countries of the Global North. To put this into perspective, this figure is slightly more than the Kenyan government spends on the entire healthcare system in the country. However, along with an additional bonus paid out in 2019 to shareholders amounting to around US$240 million, a large percentage of this US$620 million in profit was paid out as dividends to foreign shareholders. The main beneficiary was the majority shareholder (at 40%) of Safaricom, the UK multinational corporation Vodafone. Other beneficiaries are a variety of mainly foreign investors located in ‘tax-efficient’ locations (the Caribbean mainly) and who hold a 25% stake. The Kenyan government also holds a further 35% stake in Safaricom.

Fin-tech could, therefore, be seen as a revised version of the natural resource extraction paradigm that was largely responsible for under-developing Africa and other colonised countries over the last four centuries.

This demonstrates that significant value is being created by M-Pesa based on the tiny transactions of the poor, but most of it is spirited abroad via dividend payments to foreign shareholders. This helps explain why M-Pesa has become a beacon for global investors and financial institutions all seeking their own spectacular fortunes in Africa while framing their thirst for profits as altruism. Indeed, by embedding the fin-tech model in Kenya, the international development community is complicit in the establishment of a high-tech extractivist infrastructure similar to colonial-era equivalents.

‘Digital mining’ in Kenya and the foreign appropriation of the wealth generated by those languishing at the bottom of the pyramid is a less directly brutal undertaking than the value extraction process carried out in colonial times.  However, the extractivist logic, the wealth transfer, and the determination to accumulate on the back of the poor have a similar character to colonial-era economic regimes, and similar potential to seriously damage socioeconomic development in the long-term.

Furthermore, as in colonial times, a local elite has been allowed significant freedom to manage this ‘digital mining’ on behalf of the foreign owners. As with Capitec Bank in South Africa, it is no secret that the CEO and senior management at Safaricom have been able to use the company as a vehicle through which to extract fantastic rewards for themselves, enjoying Wall Street-style levels of remuneration in recent years and with several becoming multi-millionaires as a result. However, this also provides the obvious incentive to grow Safaricom as fast as possible because in that way the personal rewards attributable to those at the top are maximised. As a result, Safaricom’s CEO and other senior management have pushed growth to the limits and are now encountering problems in several areas on account of reckless over-expansion, including with regard to the company’s wilful engagement with gambling. In addition, in the early stages of M-Pesa’s growth, certain still unidentified members of the local Kenyan elite were able to secure for themselves a sizeable shareholding in Safaricom, which they later sold off for massive capital gains. Pointedly, the impact on inequality in Kenya arising from these narrow elite enrichment mechanisms has been very significant.

Despite the benefit that some individuals in poverty undoubtedly enjoy as a result of M-Pesa’s services, universal financial inclusion has come at a very high longer-term price for Kenya’s poor overall.

In short, an effective value extraction process involving ‘digital mining’ has been established in Kenya, which has been misleadingly framed by many in the international development community as contributing to ‘bottom-up’ development. This process has ensured the stratospheric enrichment of a narrow group of foreign investors, Safaricom’s own senior managers, and a section of the Kenyan elite. However, this value has effectively been appropriated from M-Pesa’s overwhelmingly poor clients via their growing bundle of tiny fin-tech-mediated financial transactions.

Despite the benefit that some individuals in poverty undoubtedly enjoy as a result of M-Pesa’s services, universal financial inclusion has come at a very high longer-term price for Kenya’s poor overall. Safaricom appears to have become a classic example of the ‘cathedral in the desert’ syndrome – a vastly profitable entity that exists only by ignoring the impoverishment it is helping to create in its wake. As fin-tech spreads across Africa, it is likely we will see similar deleterious extractionist scenarios emerging.

Might we not then consider M-Pesa to be the canary in the coalmine?

Parallels with the failed microfinance revolution?

Our analysis of Suri and Jack’s hugely influential 2016 article shows that it simply does not stand up to scrutiny. One might conjecture that this has something to do with the fact that much of the funding for their work over the past decade has come from FSD Kenya and the Gates Foundation, two of the world’s leading advocates for the fin-tech model.

In this context, it is interesting to recall how the now largely discredited microfinance movement got a game-changing boost back in the 1990s thanks to a study by two high-profile World Bank economists – Mark Pitt and Shahidur Khandker – claiming that microfinance in Bangladesh was generating major poverty reduction benefits for women Pitt and Khandker’s work was much later shown to contain many serious errors and its conclusions were unsound. Nevertheless, Pitt and Khandker’s work more than served its immediate purpose, which was to galvanise support within and around the international development community for an intervention that the World Bank desperately wanted to see go forward on ideological grounds. We might therefore pose the obvious question here with regard to the misrepresentation of M-Pesa’s impact: are Suri and Jack the new Pitt and Khandker?

 

Editors Note: This article was first posted in the Review of African Political Economy (ROAPE)

Continue Reading

Trending