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A President, His Generals and a Buccaneer: Vincent Miclet’s Angolan (Mis)Adventures

In Le Monde, Vincent Miclet alleged he was the victim of a cabal of corrupt Angolan generals. He painted himself as the king of imports in Angola, in partnership with the then Minister of State and Presidential Security Chief, General Manuel Hélder Vieira Dias Júnior “Kopelipa”.

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A President, His Generals and a Buccaneer: Vincent Miclet’s Angolan (Mis)Adventures
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When Le Monde profiled the African-born businessman Vincent Miclet in November 2018, it called him the “Gatsby” of Francophone Africa. The inference was clear: opulence and decadence combined in a single name.

Gatsby was the fatally-flawed character in F. Scott Fitzgerald’s novel, The Great Gatsby, whose fabulous wealth was obtained through mysterious – and possibly illegal – means and whose machinations led to his downfall. Vincent Miclet was presented as somewhat exotic: a slick, fifty-something millionaire playboy, born and educated at Baccalaureate level in Africa, his business acumen, in his own words, “self-taught”. In a self-serving interview with Le Monde, Miclet hoped to portray himself as a business genius cheated by Angola’s corrupt generals. (However, the businessman did not respond the questionnaire sent to him for this article.)

Buddies and bribes

According to Liberation, Miclet owes his business success to a combination of showy connections and bribery (in French: “Bling Bling et Bakchichs). It was thanks to his French-African connections that Miclet expanded his business interests across Africa, launching him to number 180 on France’s rich list. And, as Miclet himself told Le Monde, “In Africa, you can’t do business without paying commission (baksheesh).” And he proudly admitted that his personal commission on deals was 30 per cent.

For 20 years Vincent Miclet had operated under the radar. However, a relationship with a French reality TV celebrity in 2013 propelled him onto France’s gossip pages. They gleefully documented this divorcé’s life of luxurious excess during his four years with glamorous Ayem Nour, with whom he fathered a son. Pictures of the couple showed a man in his early fifties with plump unlined features, streaky blonde highlights, and a receding hairline.

After the split from Ayem Nour (which he publicly and unchivalrously blamed on his interfering mother-in-law, Farida), he sold their vast villa in the Dordogne for nearly 30 million euros. The sumptuous Moroccan palace he calls home is reputed to rival that of the King of Morocco. It’s where he played host to the notorious Alexandre Benalla, the former bodyguard of French Prime Minister Emmanuel Macron, who was fired after he violently attacked the May 1st protesters.

How did the son of non-profit workers become so rich and well-connected? Born in modest circumstances to French non-profit volunteers in Chad, Miclet portrays himself as a self-made business genius – but many suspect that his good fortune can be attributed to modern-day buccaneering.

According to Le Libre Penseur, Miclet’s French-African network was built on connections to the Masons and Corsican MafiosiLibération reported that Miclet hired Benalla as a bodyguard for the mother of his child and then engineered a new career for him via another friend, the veteran French-African business fixer Philippe Hababou Solomon. Miclet is also reported to have been the link between Benalla and Marc Francelet, another interesting Frenchman whose criminal record seems to have presented no obstacle to his security connections.

How did the son of non-profit workers become so rich and well-connected? Born in modest circumstances to French non-profit volunteers in Chad, Miclet portrays himself as a self-made business genius – but many suspect that his good fortune can be attributed to modern-day buccaneering.

After his school days in Africa, Miclet set up his first company, Cash Distribution (a cargo transport company) in 1984. He was 19. Within five years he had entered the food supply business, expanding from dried fish to oil, tomatoes and rice – allegedly becoming the number one importer of rice to Congo.

His entry into Angola is said to have come about thanks to the Féliciaggi family connections (the Féliciaggis had connections to Congo, the Corsican mafia and the disgraced former French Interior Minister Charles Pasqua).

According to Liberation, “It was the Corsican connection that led Miclet directly to Angola, where a general close to the president opened the doors to juicy business deals supplying contracts.”

By 1995, he was already reported as partnering with China to supply food and uniforms to the Angolan Armed Forces before diversifying into international logistics and construction. He also went into a joint venture with the French company Necotrans to establish and operate a port terminal in the Angolan capital, Luanda, which, he boasted, was the largest refrigeration plant in Africa.

So what went wrong? Why was he forced to make a hasty exit from Angola amid complaints of undelivered goods and missing millions?

Victim or villain?

In Le Monde, Vincent Miclet alleged he was the victim of a cabal of corrupt Angolan generals. He painted himself as the king of imports in Angola, in partnership with then Minister of State and Presidential Security Chief, General Manuel Hélder Vieira Dias Júnior “Kopelipa”.

In 2011, President Dos Santos received intelligence that Tajideen was suspected of funding a terrorist organisation. He summoned the Presidency’s Civilian and Military Chiefs of Staff (Carlos Feijó and General Kopelipa, respectively) to draw up a plan to buy out Kassim Tajideen and expel him from Angola.

He wasn’t lying; his pre-eminence in the import sector came about because the Angolan élite needed a straw man when they ousted the previous “king of imports”, the Lebanese businessman, Kassim Tajideen. Tajideen (currently serving a prison term in the USA) was the majority owner of the Arosfran Group of companies, (amongst them Afribelg, Golfrate and Muteba), which together imported $50 million-dollars-worth of foodstuffs per month, that is $600 million a year.

In 2011, President Dos Santos received intelligence that Tajideen was suspected of funding a terrorist organisation. He summoned the Presidency’s Civilian and Military Chiefs of Staff (Carlos Feijó and General Kopelipa, respectively) to draw up a plan to buy out Kassim Tajideen and expel him from Angola.

Feijó and Kopelipa came up with a scheme to create a new company that they named Nova Distribuidora Alimentar e Diversos, Lda (NDAD), which aimed to buy out the entire assets of the Arosfran Group in Angola (including 170 warehouses) for $150 million. Another of President Dos Santos’s close associates, General Leopoldino Fragoso do Nascimento “Dino”, obtained a personal loan of $150 million to this end from the Angolan Investment Bank (Banco Angolano de Investimento, BAI).

Several highly-placed sources told Maka Angola that Feijó and Kopelipa co-opted Vincent Miclet and his secretary, Adélia Bandeira El-Bichuti, into lending their names to the company to mask the involvement of politically-exposed persons. Miclet omits this detail from his account. He says he negotiated directly with Kassim Tajideen’s lawyer, Rui Ferreira, for the buy-out.

Yet by 2011 Ferreira had left his legal practice upon being appointed President of the Constitutional Court (today he is Supreme Court President). Questioned by Maka Angola, Judge Ferreira justified his role, denying a conflict of interest (which would have been contrary to Angolan law): It’s true that I was across the sale of the Arosfran Group to NDAD in 2011 and that I had a semi-supervisory role in the process,” he stated. “As is well known, I was a lawyer in private practice for 23 years, between 1985 and 2008. And during that time, I was the legal consignor for a number of the companies in the Arosfran Group, including Golfrate and Afribelg, which belonged to Kassim Tajideen. Back then it was the largest organisation in the field of food distribution in Angola, in particular for essentials.”

However, upon his appointment to the Constitutional Court, Rui Ferreira ceased to represent his previous clients. When the Angolan President decided Kassim Tajideen had to be forced out of Angola, his Chiefs of Staff consulted Judge Ferreira, as he recalls: “They [Carlos Feijó and General Kopelipa] approached me to request my assistance on a matter of national interest. Because of the trust and respect I’d established with Tajideen over the many years of our previous professional relationship, they sought my help to persuade him to agree to an exit deal.They argued that this was a delicate matter of exceptional national interest in that a quick agreement needed to be reached, without dispute, so as not to affect essential food supplies.”

Judge Ferreira’s former client, Kassim Tajideen, was suspicious that the Angolan government was trying to oust him without payment and the President’s envoys needed Ferreira to serve as an unofficial go-between, simply to reassure Tajideen that he would be fully compensated. In these circumstances, said Rui Ferreira, “I agreed. Because it was a request from my country’s government which considered that I was uniquely placed to help them resolve this process, which was in the national interest.” He emphasised that there was no remuneration or other benefit to him and justified his role as an act of patriotism and good citizenship.

“I did what I did. It was nothing more than an unpaid ‘good offices mission’ required of me by my country’s government in the national interest,” he explained. “Both parties accepted that this was a ‘good offices mission’ and welcomed it. I did not act (in an official capacity as lawyer) for either party, but simply as a facilitator of the agreement.”

Miclet and NDAD

The contract for the sale of all the Arosfran Group’s assets was signed on 7 June 2011 by Kassim Tajideen and Vincent Miclet, the latter signing in his capacity as a “partner and manager of NDAD”. Out of the $150 million bank loan obtained by General Dino, two-thirds ($100 million) was paid directly to Kassim Tahjideen in September 2011 to compensate him for his expulsion from Angola. (He is banned from returning to Angola for a period of 20 years.)

As for the other part of the BAI loan ($50 million), well, it simply vanished.

Rui Ferreira admits that he was kept in the dark on the finer points of the deal: “Only some months later, after the fact, and without my being officially informed, did I hear on the grapevine who the real owners of NDAD were.” He names no names but sources have told Maka Angola that the real owners were Generals Kopelipa and Dino.

For his part Kopelipa’s erstwhile civilian colleague at the Office of the President categorically denies any involvement in NDAD. “The fact someone worked or held a senior position in the Office of the Presidency doesn’t mean they automatically enjoy illicit advantages of any kind,” said Carlos Feijó. (That was his only government role, from 2010 to 2012, after which he returned to the private sector and academic life. He’s currently a tenured Professor of Law at Agostinho Neto University.)

Feijó confirmed to Maka Angola that the expulsion of Tajideen and the compulsory purchase of the Arosfran Group were the result of a United Nations subpoena received by the Foreign Ministry of Angola regarding Tajideen’s links to Hezbollah. “I immediately advised [the President] that we must comply without hesitation. My understanding, from the constitutional and legal point of view, was that the Angolan State could not directly intervene and confiscate [the business] as we have no law providing for confiscation of assets unless there has been a guilty verdict in a court of law.”

“At the same time”, said Feijó, “we had to be cognisant of the fact that the Arosfran Group was the main operator in the import and sale of the vast majority of foodstuffs, in particular what we refer to as the ‘essential basket of goods’, and that any action taken against Arosfran could have a grave impact on the inflation rate which we were at pains to control.”

For these reasons, it was believed that the best solution would be to find a private Angolan-owned company to acquire the real estate and assets of the commercial companies in the Arosfran Group.

According to Carlos Feijó, “As General Dino led Kero [a supermarket chain] and had knowledge and experience of the market, he was charged with finding a financial solution, which involved taking out a loan from the BAI.” “Dino arranged the BAI financing. I was not part of what followed. The rest is a private matter which had nothing to do with me.”

Why Vincent Miclet? Because General Kopelipa already knew him from his role as a conduit for Chinese supplies to the Angolan military. Feijó says it was because they already had a business relationship that Miclet was chosen to act as the head of the Arosfran Group.

“All I know is that, from a business point of view, there was a decision to set up an Angolan commercial company and use that for the subsequent acquisition of the Arosfran Group”, explained Feijó. “There was a legitimate contract of sale and purchase of the Arosfran Group’s real estate and assets,” he added.

Why Vincent Miclet? Because General Kopelipa already knew him from his role as a conduit for Chinese supplies to the Angolan military. Feijó says it was because they already had a business relationship that Miclet was chosen to act as the head of the Arosfran Group.

To the best of his recollection, Vincent Miclet and his secretary, Adélia Bichuti, drew up the inventory and valuation of the Arosfram Group based on consultations with Rui Ferreira who had worked with the Group: “To clarify, I mean Rui Ferreira’s private law firm, because I must emphasise that I have no knowledge of whether he was still a partner in that law firm.”

However, once other lawyers took over to draw up the agreement documentation, he says neither he nor General Kopelipa and Dino played any further part in the negotiations. “I must emphasise that I did not see either of the Generals (Kopelipa and Dino) involved in the negotiations. I would say that General Dino’s role was only to arrange the financing.”

Once there was agreement for the sale of the Arosfran Group, the Interior Minister drew up the order to expel Kassim Tajideen from Angola and ban his return. Tajideen was subsequently found guilty of money laundering and funding Hezbollah and was ordered to pay a $50 million fine. He is currently serving a five-year prison sentence in the United States of America.

Some months later, President Dos Santos replaced Carlos Feijó and by 2013 the latter had returned to his private legal practice and took no further part in public life. His subsequent role was in his capacity as head of a private law firm after he was contacted to “try to resolve a situation in which NDAD was in technical bankruptcy, without the wherewithal to pay off the contracted loan”. From 2013, Feijó’s legal firm supplied a lawyer on monthly retainer to NDAD.

Documents received by Maka Angola show that NDAD was bankrupt and incapable of honouring its commitments. At this juncture, General Dino then reappeared to organise the restructuring of the formal shareholder composition of NDAD, with legal assistance from the office of Carlos Feijó.

The remaining $50 million of the debt to Kassim Tajideen was paid off towards the end of 2013, largely thanks to a second loan of $45 million obtained from Banco Privado Atlântico (the BPA, since renamed Millenium Atlântico), also arranged by General Dino.

In Feijó’s view, the relationship with Miclet had broken down due to the poor financial situation. He said there was a loss of confidence (in Vincent Miclet) and an erosion of trust between the various parties involved in the creation of NDAD and the takeover of the Arosfran Group. The reason given was Vincent Miclet’s “erratic management” of NDAD and the lack of clarity regarding conflicting interests between NDAD and Miclet’s company Angodis, which also supplied the Angolan Armed Forces.

“The issues between Vincent Miclet, Kopelipa and Dino resulted in General Dino submitting a criminal complaint to the DNIAP [Direcção Nacional de Investigação e Acção Penal – the National Directorate for Criminal Investigation and Action]. I didn’t see it necessarily as a criminal situation but rather a civil matter which could be resolved through the courts,” said Feijó.

Adieu, Vincent

On February 25, 2015, measures were put in place to rescind the 80 per cent stock quota allocated in the name of Vincent Miclet and the 20 per cent quota in the name of Adélia El-Bichuti and re-allocate them instead to Paulo César Rocha Rasgado (80 per cent) and Samora Borges Sebastião Albino (20 per cent) both of whom were frontmen for General Dino. The process made no reference to any compensation or payment to the outgoing “partners”. After all, they were not the real owners.

However, Vincent Miclet then demanded a pay-off of $56.6 million as “recompense for the acquisition of merchandise by three of his companies” – Pointpark Limited (registered in Dubai), Taycast Investiment Limited (also registered in Dubai) and Angodis – Angola Distribuição, Lda.

The already murky situation was further complicated by grave doubts about the legality of the transactions between them. The contract to supply the Defence Ministry was not with Angodis but his other firm Pointpark; however, Angodis received payments on Pointpark’s behalf.

There is documentary evidence that nefarious schemes were afoot. For example, on 30 May 2015 Angodis wrote to General Kopelipa and the then Defence Minister, Cândido Van-Dúnem, to effect the return of $64 million “received in error”. Maka Angola has not been able to verify whether the sum was, in fact, returned.

It seems fair to say that the arrangement between Miclet’s companies and the Angolan Defence Ministry were not entirely above board. One of the best documented examples of theft by Miclet’s companies was that they devised a strategy to hold back a proportion of the supplies delivered to the Angolan Armed Forces.

In his written reply to Angodis, dated July 18, Lieutenant-General Francisco Firmino Jacinto (Director of the National Directorate for Administration and Finance at the Defence Ministry) begins by explaining the [erroneous] transfers as having been a “budgetary manoeuvre…to avoid their having to withdraw this amount from the Finance Ministry”.

It seems fair to say that the arrangement between Miclet’s companies and the Angolan Defence Ministry were not entirely above board. One of the best documented examples of theft by Miclet’s companies was that they devised a strategy to hold back a proportion of the supplies delivered to the Angolan Armed Forces. Paperwork prepared by senior officials working for Angodis, Pointpark and NDAD show that between 2011 and 2013 Miclet’s companies kept back $20 million of food that was already paid for.

Everyone wanted a piece of the pie

Vincent Miclet committed his version of events to paper in a report for the then President José Eduardo dos Santos, a copy of which was obtained by Maka Angola. In it, he says negotiations [to acquire the Arosfran Group] began in April 2011 and were chaired by “Mr Rui Ferreira, in the presence of the interested parties”.

He went on to state: “On April 7, 2011, Mr Rui Ferreira drew up and signed a contract for the sale and purchase of the fixed and liquid assets of the commercial branch of the Arosfran Group.” He said that initially the Group had demanded $327.3 million but eventually settled for $144.5 million.

Further: “On April 5, 2011, on ‘orders from above’ [generally understood as coming from the Angolan President], the BAI bank granted a loan for the purpose of payment for the contractually agreed price for the parcel of assets as signed by the parties, with the transfer taking effect on July 20, 2011 of US $100 million to the Alicomerce company.”

Miclet said that thereafter he used his own funds to restructure the company and pay for imports. But his summary of events gives the game away when he refers to an intervention by the President’s sister, Marta dos Santos, being interpreted as “treachery” by the “partners” (Generals Kopelipa and Dino). The fact is that they were the real owners of NDAD, not Miclet. He simply lent his name to the enterprise and ‘managed’ the company on their behalf until it was more or less bankrupt and they lost faith in him.

Why was NDAD was in such financial distress? Perhaps because the key figures were bleeding the company dry. Although NDAD reported profits of $1.5 million in its first year of operation, former employees agreed that there was no transparent accounting system in place. Indeed, NDAD’s accounts were handled by Adélia Bandeira, an accountant with Miclet’s firm, Angodis. A former NDAD executive told us: “We [NDAD staffers] had no means of knowing the day-to-day financial situation of the firm.”

With NDAD nominally under new “management”, things came to a head in August of 2013 when Miclet flew his private jet to Luanda for the transfer or powers to Paulo Rasgado and Samora Albino. His jet was prevented from leaving. A furious Miclet blamed General Dino.

As his price for stepping away from NDAD, Miclet is said to have demanded compensation of $82.5 million, which he claimed was the value he had injected into the restructuring of the business and its import activities. After an audit by Deloitte, his erstwhile “partners” offered him a sweetener of $26 million, which Miclet rejected.

In spite of his ouster, Miclet tried to regroup, in particular via his new oil and gas venture, Petroplus Overseas. But according to African Intelligence (IOL 814) his firm has “lost the lion’s share of its portfolio” in Gabon as well as its permits in Mali. Having taken so much of the pie over the past couple of decades, it appears Vincent may have bitten off more than he could chew.

*D. Quaresma Santos contributed to the English version of this report.

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Marques de Morais, Angola’s leading anti-corruption advocate, is winner of the Allard Law School 2015 Prize for International Integrity and the Transparency International Integrity Prize.

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
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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?”

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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.

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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.

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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.

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

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