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Winter Is Coming: Why Our National Debt Is Illegitimate, Unjust and Unsustainable…and Why We Should Be Worried

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Greece teaches us, if we will listen, that the time is likely to come when Kenya will be unable to pay government workers’ salaries and will not be able to fund essential public services, such as security. At this point, the Government of Kenya will be forced to take on yet more borrowing to prevent a mass uprising. These “rescue packages” will be offered on grossly usurious terms, terms that the government will have no choice but to accept.

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Winter Is Coming: Why Our National Debt Is Illegitimate, Unjust and Unsustainable…and Why We Should Be Worried
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Recently the matter of Kenya’s national indebtedness has gained wide coverage in the media, not least in a presidential roundtable with the press on December 28th, 2018. In my opinion, our nation is grossly indebted, and in fact we are in a de facto state of emergency as far as our nation’s finances are concerned. I hope to demonstrate this fact below, and to suggest what options we have for dealing with our indebtedness.

Several indicators for measuring national indebtedness exist, such as Debt-to-Gross Domestic Product (Debt:GDP), debt per capita, etc. Probably the most widely-used indicator is the Debt:GDP ratio. This particular metric is so obfuscatory and misleading that it is not inconceivable that it was actually developed to mask the truth about national indebtedness the world over.

When we as individuals want to borrow salary-backed loans from banks, the banks attempt to assess our ability to pay off these loans by reviewing our payslips, sometimes going back 3 to 6 months. This effort is calculated to answer just one question: what is our take-home pay? In doing this, the banks are assessing our credit-worthiness, which helps to reduce the risk of default.

At the national level, however, this abundance of caution is thrown to the wind. The use of the Debt:GDP ratio to measure national indebtedness means that a country’s ability to take on more debt is assessed on the basis of its GDP. At an individual level, such an assessment would approximate assessing our ability to pay off salary-backed loans based on our gross pay. In fact, it is much worse: it is more like assessing an individual’s ability to pay off a loan based on how much revenue he generates for his employer. Even if such a company is just breaking even, the revenue an employee earns his employer must necessarily exceed his salary, or else that organisation would be unable to meet its operational costs, such as rent, electricity and other office expenses. Put another way, the revenue an employee generates pays a lot more than his salary). Since GDP attempts (poorly) to measure the total value generated by all the economic activity in a nation, to use it as a basis for measuring whether a country has room to borrow is patently unwise simply because not all the value created in a nation’s economy is available to pay a nation’s debt.

The revenue employees generate and the value an economy generates (GDP) are analogous in that both are measures of value created. However, whereas the revenue produced by employees accrues directly to their employers’ GDP, it does not so directly accrue to a nation. For example, after a loaf of bread has been produced in a country, that loaf is not submitted to the government, yet its production adds to the nation’s GDP. For this reason, even a revenue-based definition of employees’ income does not properly approximate the absurdity of using GDP as a measure of national income on which to assess indebtedness because not all of GDP accrues to the nation as income.

By masking true indebtedness, therefore, the Debt:GDP ratio encourages wanton borrowing. This works in favour both of fiscally irresponsible (or worse, corrupt) governments and of predatory lenders…

What is the net effect of all this? The more broadly a lender can define a borrower’s income, the larger the proportion of that borrower’s true income that will flow out as loan repayments, and the more the borrower’s assets stand at risk of repossession as collateral. This is what has happened to us as a nation. When we consider further stratagems like rebasing our GDP, which had the effect of increasing our GDP by 25% at a stroke, it can be seen that by nominally increasing our GDP the illusion was given that our nation was able to take on even more borrowing than before, opening the gates to yet more lending.

By masking true indebtedness, therefore, the Debt:GDP ratio encourages wanton borrowing. This works in favour both of fiscally irresponsible (or worse, corrupt) governments and of predatory lenders, both private and multilateral (the line between private and multilateral lenders is far thinner than is generally believed). We do not pay debt out of GDP. We pay debt out of our national revenues. The more revealing and honest measure would be debt-to-national revenue. For the same reasons of honesty and clarity, it is prudent to narrow the definition of national revenue down further to tax revenue, thereby eliminating grants, donations, monies realised from the sale of public assets, and other incidentals from the discussion.

The problem – from the viewpoint of irresponsible governments and predatory lenders, of course – is that once we do so, the scales will fall off our eyes and it becomes apparent just how much of our nation’s money is going towards servicing our debt. According to the national Treasury, our national debt, which stood at Sh1.894 trillion in the financial year (FY) 2013, had grown to Sh5.047 trillion by the end of FY 2018, a growth of 269 per cent.

In 2013, however, the government collected a total of Sh754.2 billion in taxes. The implication is that our Debt:Tax ratio stood at a whopping 251 per cent in that year. By 2018, although revenue collections had grown to Sh1.47 trillion, our debt had grown much faster, so much so that our Debt:Tax ratio in the FY 2018 stood at 343 per cent.

Our GDP in 2013, according to the same report, was Sh4.496 trillion, meaning our Debt:GDP ratio was 42.1 per cent in 2013. In 2018, our GDP was Sh8.845 trillion. (This suggests that our GDP has been growing at a compounded annual growth rate of 14.49 per cent, which would be news to most Kenyans; the effect of rebasing our GDP can now more clearly be seen.) These figures imply our Debt:GDP ratio in FY 2018 was 57 per cent.

In 2013, however, the government collected a total of Sh754.2 billion in taxes. The implication is that our Debt:Tax ratio stood at a whopping 251 per cent in that year. By 2018, although revenue collections had grown to Sh1.47 trillion, our debt had grown much faster, so much so that our Debt:Tax ratio in the FY 2018 stood at 343 per cent. In other words, if the Government did nothing else but pay off our national debt – if it did not pay teachers, doctors, nurses, the army, and the police; if it did not provide medical supplies; if it bought no textbooks; if it did not construct one metre of road or railway; if it did not construct one hospital room or classroom or police post – it would take us about three and a half years to pay off the national debt.

Table 1: Kenya's Debt:GDP vs Debt:Tax ratio, FYs 2013 - 2018

Table 1: Kenya’s Debt:GDP vs Debt:Tax ratio, FYs 2013 – 2018

This situation is untenable. National Treasury data indicates that in FY 2018 we spent Sh459.4 billion servicing our debt. By that measure, debt repayment was the single largest item in our nation’s expenditure, exceeding our expenditure on transport infrastructure (Sh225 billion), health (Sh65.5 billion) or education (Sh415.3 billion). In other words, we are spending more paying off our debt than we are spending providing good transport for our people and good treatment for our sick – combined.

A day of reckoning is soon coming for our beloved country, on which day we shall realise that indeed, as per the Holy Writ, “…the borrower is slave to the lender”, and that debt (even if the money is used well, let alone if it is actively misused as we have done) is the tool of the neo-colonialist. It will become starkly apparent that by a system of multilateral and international debt, there is a sense in which foreign powers have been able to be perhaps as extractive of our nation’s wealth as they were when they were in power as our colonial masters. There is in fact a very real sense in which the colonial powers never really left. The only major change is that China is now on the list of our foreign masters.

We have already seen multilateral lenders like the International Monetary Fund (IMF) force our government to impose VAT on fuel. This is not the first time this happened. In 2013, when our debt was less than half what it is now, the IMF backed changes in our VAT law that would have imposed VAT on milk and medicines, claiming that “…the changes in the law [would] put Kenya in line with other modern VAT regimes in the world by simplifying the way it operates while reducing the number of exempt items.” Although the Cabinet did not impose VAT on milk and medicines, other items, such as textbooks, periodicals and magazines, did not escape the taxman’s levy. The press reported that our national port in Mombasa was used as a security for the loan that was used to construct the Standard Gauge Railway (SGR). These are not isolated bellwethers of the dire situation our country finds herself in: the Daily Nation recently reported that we will require Sh1.04 trillion to service our debt in FY 2020. Where will it come from?

We must now examine possible solutions to what is clearly a monumental problem. The truth is this: debt can be dealt with either by paying it, or by not paying it. National debt can be repaid through austerity programmes and/or by the realisation of collateral. A nation may avoid repayment by pursuing debt forgiveness; defaulting on our sovereign debt; and/or overseeing a managed default on our sovereign debt.

Options for paying our national debt

Austerity programmes

Since the national debt can only be paid out of taxes, an escalation of the national debt can only result in an austerity programme. Austerity is a term that follows a very well-worn path of giving nasty, anti-common man policies honourable names (this is what is called “Economese”). Simply put, austerity necessitates the redirection of large portions of tax receipts away from normal government expenditure (including mission-critical social expenditure like health and education, and away from development expenditure) in an effort to pay off the debt. The Merriam-Webster dictionary describes austerity as “enforced or extreme economy”.

The fact that Kenya is – whether it has publicly announced it or not – well up the austerity road is evidenced by the earlier observation that debt repayment is the single largest item in our nation’s budget. By the time our lenders and leaders decide to announce that we are in an austerity programme, we will have been in one for years.

To examine where this road leads, we must turn to Greece. That nation has been locked in austerity’s deathly embrace for the better part of a decade. An Al Jazeera article notes that the austerity programme in Greece was occasioned by over-borrowing (sound familiar?) in the years leading up to the global financial crisis, which was exacerbated by a rise in rates occasioned by that crisis. In order to keep paying government salaries and finance public services, Greece had to accept an initial loan of EUR110 billion from its Eurozone partners and the IMF. To pay off this loan, the country was compelled to institute radical austerity measures. How did that go?

In August 2018, the Guardian summarized Greece’s experience thus:

The European Union, the European Central Bank and the International Monetary Fund loaned Greece a total of €289bn ($330bn) in three programmes, in 2010, 2012 and 2015.

The economic reforms the creditors demanded in return brought the country to its knees with a quarter of its gross domestic product (GDP) evaporating over eight years and unemployment soaring to more than 27%.

The fundamental contradictions between the envisaged outcomes of austerity and its outcomes in reality are also the reason we find multilateral lenders talking out of both sides of their mouths, first imposing these programmes, and then sheepishly admitting that they have not worked. The IMF, for example, actually produced a report stating that it made notable failures on its first rescue package to Greece.

Greece teaches us, if we will listen, that the time is likely to come when Kenya will be unable to pay government workers’ salaries and will not be able to fund essential public services, such as security. At this point, the Government of Kenya will be forced to take on yet more borrowing to prevent a mass uprising. These “rescue packages” will be offered on grossly usurious terms, terms that the government will have no choice but to accept. Then, in a strange twist of irony, the very people upon whom the initial injustices were visited will do the lenders’ marketing for them by way of a civil uprising. From then on, our nation’s expenditure will be “supervised” by these lenders, not to help the Kenyan people, but to ensure that these lenders are paid. These are doomsday scenarios, and I find it difficult to even write them. Yet it can get worse – and has, elsewhere in the world.

Realisation of collateral

Realisation of collateral is a method of debt payment that is as old and as basic as Shylocks. It is difficult to recall a time when national debt was collateralised to the extent that has happened in the recent past. It appears that the realisation of collateral appears to be the favoured method of China for collecting debt. For our case study on this, we must turn to the nation of Sri Lanka, as the New York Times reported:

Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes.

Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Mr. Rajapaksa.

…Mr. Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December [2017].

There are examples closer to home. In December 2018, the US National Security Advisor, John Bolton, sensationally claimed that China was about to take over the Zambia Electricity Supply Corporation (ZESCO), which is Zambia’s version of Kenya Power & Lighting Company, before KenGen and Ketraco were hived off. Although this rumour was strongly refuted by Zambia’s presidential spokesman, Mr Amos Chanda, Mr Chanda did admit that Zambia owes China US$3.1 billion in debt. In Africa that kind of statement from that kind of person often means the figure is much higher; indeed, some sources have placed the figure at US$6.4 billion.

In 2017, Zambia’s police force had to scrap plans to hire eight Chinese nationals following a public outcry. Zambians were concerned about having to salute a Chinese national in their own country. It is also true that in November 2018 police arrested over 100 residents in Kitwe (the country’s second-largest city) who were protesting the alleged sale of the Zambia Forestry and Forest Industries Corporation (ZAFFICO). There is a possible sub-plot here: Mr Bolton’s claim may mean that the IMF and Western allies are worried that they are losing their grip on the Zambian nation to China.

Options for not paying our national debt

In advocating for the non-payment of national debt I am not advocating injustice or dishonesty for this reason: “The government” is not a nebulous entity separate from the people. The government is the people. When the government borrows, it is the people who are borrowing; when the government pays, it is the people who must pay; indeed, it is their taxes that are used to pay.

As can be seen from the foregoing, over-borrowing, poor governance and/or the mismanagement of public funds can lead to adverse effects, not on “the government”, not on the lenders – even private lenders – but on the people. The stark truth is that austerity rarely, if ever, aids recovery – unless by recovery we mean the recovery of lenders’ money.

As can be seen from the foregoing, over-borrowing, poor governance and/or the mismanagement of public funds can lead to adverse effects, not on “the government”, not on the lenders – even private lenders – but on the people. The stark truth is that austerity rarely, if ever, aids recovery – unless by recovery we mean the recovery of lenders’ money. Austerity is a creditor-oriented policy, not a people-oriented policy, and it fails because cuts in government spending result in reduced consumption, unemployment and lower tax receipts. Yet tax receipts are what are needed in order to pay off the debt. The realisation of collateral (the other solution) is nothing but the seizure of a people’s land

There exists, therefore, a moral case for non-payment, which is this: that the betrayal of a people by its ruling class through the accumulation of a debt whose benefits the people never realised should not be visited upon the class of the ruled, who pay the debt. On this point, therefore, I am advocating for justice, not injustice; and for honesty, not dishonesty.

Debt forgiveness

Debt forgiveness is not a new concept; it is in fact a biblical concept. The concept of Jubilee meant that every 50 years, during the eponymously-named Jubilee year, all debts were written off, all enslavement ended, and everyone was allowed to return to whatever ancestral lands that they might have had to give up because of an inability to pay back debt. A thorough examination of the wisdom and justice of this law would take up a solid chapter in a good book; suffice it to say that it acted like a legislated revolution, resetting the kind of gross national inequalities that US Senator Bernie Sanders is grappling with – for the price of a trumpet blast.

Our gross national indebtedness means – or rather, dictates – that we pursue debt forgiveness, because we simply cannot pay back everything we have borrowed. The problem is that we are not considered a poor country any more – not even a low-income country. We are now a middle income nation, and precedent shows that debt forgiveness is the preserve of highly indebted poor countries. Our pleas for debt forgiveness, therefore, are quite likely to fall on deaf ears. Further, a significant portion of our national debt is owed to China and China, Sri Lanka might whisper, is not a nation one asks for forgiveness.

A note of caution must here be sounded: only 15 or so years ago, Zambia had its debts wiped clean under the IMF’s Heavily Indebted Poor Countries scheme. The same country then took “less than a decade” to run up fresh debt of 59 per cent of GDP, buying million-dollar fire engines and constructing roads twice as expensive as those of her neighbours.

A strategy of debt forgiveness is, therefore, useless in the absence of enforced legislation to ensure that future over-indebtedness and/or wastage is prevented. A law preventing the government from tying up more than 10 per cent to 15 per cent of the average tax collected in the previous five years on debt servicing would be a very good place to start. The laws preventing wastage and theft of what we actually do borrow do exist, but require radical enforcement.

Default on sovereign debt

There exist exceptional circumstances in which nations default on their national debt. These times are usually presaged by significant external shocks or political ones, such as when Fidel Castro took over in Cuba in 1959, and simply defaulted on outstanding Cuban debt. The bonds on which he defaulted are in default to date.

Reference is often made to the Argentinian default (and one must be specific) of 2001. In 1998, Argentina’s economy entered a deep recession. The IMF’s by now predictable solution, of course, was austerity. Over the course of the following two years, it became increasingly clear that the toxic mix of an artificially fixed exchange rate, a steadily worsening balance of payments deficit (imports exceeding exports) and mounting debt, among other factors, meant that Argentina would never be able to pay off its debt.

Then the people began to protest, with increasing vociferousness, against austerity. When in December 2001 the IMF realised that default could not be avoided, it held back previously promised “support” so that the government was left without any external funding. Bank runs and riots followed: at one point the country had five presidents in ten days. Finally, on December 24, the country defaulted on a US$ 100 billion debt. This led to a social crisis of epic proportions, characterised not least by rampant unemployment.

Sovereign defaults of this nature tend to be devastating and ought to be avoided. The social cost ends up being far too high, even if one is a Castro leading a non-conformist Cuba. Firstly, in order to teach other would-be defaulters a lesson, lenders make an example out of one. Secondly, the world has become too interconnected for us to make ourselves a pariah state for any length of time: globalisation is a source of many ills, but it can help us as well, for we have a surplus of labour that we can offer the world (among other competitive advantages).

Managed default on sovereign debt

The way we might want to do it is the way Ecuador did it between 2007 and 2009. The then President Rafael Correa stopped payments on bonds that the country had taken out, and established a “debt audit commission” to conduct an audit on the country’s debt, which at the time was using up 38 per cent of the government’s budget. The purpose of this audit was to establish the “legitimacy” of the debt.

This was a brilliant first step. Firstly, it brought to the forefront the moral injustice of a people’s having to pay loans from which they never benefitted. Secondly, the reason given for the initial default was a moral one, as opposed to a financial one (even though the financial reasons lurk menacingly in the background). The genius behind the debt audit was that it was for establishing the morality (and not merely the affordability) of the public debt. Such a debt audit commission in Kenya – objective, apolitical (in a local sense), staffed with technically qualified, patriotic individuals and with an ability to trace the flows of borrowed funds – would likely produce spectacular results.

The way we might want to do it is the way Ecuador did it between 2007 and 2009. The then President Rafael Correa stopped payments on bonds that the country had taken out, and established a “debt audit commission” to conduct an audit on the country’s debt, which at the time was using up 38 per cent of the government’s budget. The purpose of this audit was to establish the “legitimacy” of the debt.

Ecuador’s debt audit commission found that the debt was illegitimate based on the manner in which negotiations were conducted. (The reasons for which debt can be illegitimate are myriad: here in Kenya, the factors would range from non-existence of the assets ostensibly purchased with the debt, overpricing of assets that do exist, payment of bribes and kickbacks, and lack of public participation and parliamentary approval, etc.) Arising from the stopped payments, and from the public establishment of the illegitimacy of the debt, the value of the bonds on the open market plunged. The Government of Ecuador then tendered to repurchase the bonds at 30 cents on the dollar. On the basis of the auction results, the government then offered to buy back the bonds at 35 cents on the dollar, expecting to retire at least 75 per cent of the bonds. Ninety-one per cent of the bonds were so retired in June 2009, that the government paid off its public debt for about a third of what it was worth and, according to President Correa, saved US$ 300M (Sh30 billion) per year in interest payments.

The Ecuadorian solution has an elegance that only simplicity gives. However, its success needs to be assessed against the backdrop of an important contextual factor: the retirement of the country’s debt happened at a time when markets were in the throes of the global financial crisis. Investors, therefore, were under pressure to liquidate their assets. Further, how successful this method would be as regards Chinese debt is anyone’s guess: simple and easy are vastly different things.

That said, the process presents a blueprint for any government that is ready and willing to ease the burden of over-indebtedness and is an option and a strategy this country should pursue – before it’s too late.

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The author is a Christian, a patriot and a financial professional. He tweets at @Chrenyan

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What Ails the Cashew Nut Sector in Kenya?

The lack of a focused policy since the 1990s has pushed the cashew nut sector into perennial decline. The sector’s disintegration started when the state-owned Kenya Cashewnut factory ollapsed in 1997 – a time when the political environment was not inclined to rescue a sector that had been a lifeline for thousands of Kenya’s coastal residents.

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What Ails the Cashew Nut Sector in Kenya?
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Lake Kenyatta Cooperative Society (LKCS) in Mpeketoni in Lamu – perhaps the only remaining cooperative society in Kenya’s coast region formed by cashew nut farmers in the 1970s – once collected 9,000 metrics tonnes of cashew nuts from its members during the sector’s heydays in the 1980s. Currently, despite boasting a membership that has stretched to over 6,000, the cooperative does not expect to collect anything beyond 300 tonnes this year. This is the volume it managed to collect in the last calendar year.

From a peak harvest of over a total of 36,000 tonnes in the late 1970s, when the cashew nut sector was at its highest peak, the sector is today struggling to even produce 11,000 tonnes.

Cashew nut farming and processing was once a thriving undertaking in Kenya. After nationalising the economy shortly after independence, the government of Jomo Kenyatta took full control of the cashew nut sector, which was dominated by Mitchell Cotts, a shipping giant. In 1975, the government formed Kenya Cashewnut Limited (KCL) and established a large-scale processing factory in Kilifi, with a capacity to process 15,000 metric tonnes of cashew nuts per year.

The National Cereals and Produce Board (NCPB), one of the shareholders of the newly created KCL, was granted legal monopoly to buy all the cashew nuts from farmers. Other shareholders of KCL were the Industrial and Commercial Development Corporation (ICDC), the Industrial and Development Bank (IDB) and the Kilifi District Cooperative Union (KDCU).

Farmers were organised into many cooperatives across the coast – big ones such as LKCS and KDCU and also small ones. To be able to pay farmers in time for cashew nuts collected, KCL pre-financed NCPB. The factory would determine its raw material requirements and the excess would be exported in shell to India. Essentially, the factory guaranteed a stable farm gate price and provided a predictable and reliable market.

In post-independence Kenya, market stability saw the sector expand production from about 5,000 tonnes in 1965 to over 36,000 tonnes in the late 1970s and early 1980s. In 1982, KCL made a net profit of Sh26 million (US$325,000), up from Sh3 million (US$37,500) in 1975 – nearly a ten-fold increase in just seven years.

At its peak, the KCL cashew nut factory employed over 4,000 people. During this period, coastal residents were able to send their children to good schools, raise their incomes, and develop local micro-economies.

Dwindling fortunes

Those heydays didn’t last for long though. In the 1980s, President Daniel arap Moi and his cronies started engaging in rent-seeking from parastatals in order to sustain a regime that was under threat.

By 1989, KCL got caught up in governance and financial challenges, and in February 1990, it rendered a large chunk of its employees jobless. At the same time, powdery mildew disease (PMD), which had not been witnessed before, hit crop yields and production. The resultant dwindling economic fortunes of KCL meant that it could not provide extension services to the cashew nut farmers, which spelt doom for the sector.

In post-independence Kenya, market stability saw the sector expand production from about 5,000 tonnes in 1965 to over 36,000 tonnes in the late 1970s and early 1980s. In 1982, KCL made a profit of Sh26 million (US$325,000), up from Sh3 million (US$37,500) in 1975 – nearly a ten-fold increase in just seven years.

When the disastrous 1990s’ World Bank-led Structural Adjustment Programmes (SAPs) hit the country, they found an already struggling cashew nut sector. By November 1992, the Parastatal Reform Programme Committee (PRPC) recommended the sale of 65 per cent of the shares the government held in KCL through NCPB, ICDC and IDB.

The PRPC recommended that Kilifi District Cooperative Union (KDCU), the owner of the remaining 35 per cent of the shares, be granted pre-emptive rights to buy the 65 per cent government shares. A parliamentary committee would later discover that partly due to the high cost involved in buying these shares, the three main directors of the KDCU had decided to strike a deal with some of President Moi’s closest business friends.

A Ministry of Agriculture report in 2009 noted that with a value of Sh141.2 per share, the 65 per cent share of the government was valued at Sh78 million (US$1.34 million). Debts acquired by the KCL in previous years that were owed to NCPB, ICDC, the Treasury, and the Italian government amounted to over Sh118 million (US$2.03 million). The company also owed Sh33 million (US$0.56 million) in redundancy payments to former employees. In total, the KDCU would have had to invest roughly US$4 million to finance the acquisition of the company – money it did not have. This is how private money was used to buy government shares in KCL.

In 2000, the Public Investments Committee (PIC) recommended that the factory be handed back to the farmers. The same year, a subsequent cashew nut report tabled in Parliament by PIC noted that the factory’s shares were illegally acquired by Moi’s cronies, including the president’s personal secretary, Joshua Kulei, who was accused of having defrauded the farmers.

A Ministry of Agriculture report in 2009 noted that the actual majority shareholders had the KDCU appoint themselves as the management agents of the factory, which was renamed Kilifi Cashew Nut Factory Limited (KCFL), and which was under the management of P.K. Shah, who took complete de facto control of the day-to-day business of the factory.

In 1996, the KDCU received a loan of Sh2 million (US$ 35,000) from its main owner, Kenya Plantations and Products Limited, to purchase raw cashew nuts (RCN) – which it secured with its 23 per cent shares, valued at a much higher Sh28.07 million in 1992 – as collateral for the loan. When it failed to pay back the loan, these shares were transferred to private investors.

Eventually, in 1997, KCL collapsed under its financial and operational burden. Unable to service an outstanding loan of about Sh95 million, Barclays Bank placed the factory under KPMG- managed receivership in 2000, and on 8 May 2002 sold all its assets, including the plant and machinery, to Millennium Management Limited (MML) for Sh58 million (US$ 0.97)

In just a few years, the marketing monopoly that the NCPB enjoyed and the logistical machinery it had put in place to procure cashews came a cropper. The board completely withdrew from marketing cashew nuts. This decision led to the disappearance of key functions, such as financing cooperatives and reliably supplying KCL with affordable raw cashew nuts.

The lack of a focused policy in the last three decades has pushed the cashew nut sector into a perennial multi-year production and profit decline. The sector’s decline and disintegration started when the state-owned KCL collapsed in 1997 – a time when the political environment was not inclined to rescue a sector that had been a lifeline for thousands of Kenya’s coastal residents.

New players  

With the stake of the factory diminished, and the end of its monopoly in cashew nut matters, exporters of raw cashew nuts emerged. These exporters were able to offer significantly higher and faster payments due to the high rebates they enjoyed for exporting raw materials that would in turn create jobs in the importing countries.

By buying through middlemen – who became the sector’s main players – the new market structure undermined the role of cooperative societies that had enjoyed state-sanctioned market support. They could not survive and all but collapsed.

The first main processor, Wondernut Ltd, came into the country in 2003. Kenya Nut Company (KNC), owned by Pius Ngugi, and Equatorial Nuts, owned by Peter Munga, which predominately deal in macadamia nuts from the Mount Kenya region where their factories are based, made forays into processing cashew nuts as well.

In just a few years, the marketing monopoly that the NCPB enjoyed and the logistical machinery it had put in place to procure cashews came a cropper. The board completely withdrew from marketing cashew nuts. This decision led to the disappearance of key functions, such as financing cooperatives and reliably supplying KCL with affordable raw cashew nuts.

With the Kilifi Cashew Nut Factory (partially revived by MML) and the later entry of another Central Province macadamia processor, Jungle Nuts, the number of active cashew processors in Kenya had expanded to five.

Even so, these five processors had to compete with the well-established exporters of raw, unprocessed nuts who had gained favour with farmers due to their market flexibility and higher prices. In the 2007/8 season, for instance, exporters of raw cashew nuts went on a buying spree that saw the share of processed export nuts drop by over 20 per cent that season. This posed a huge threat to local processors.

Despite a total ban on the export of raw cashew nuts in 2009 (which nut processors had called for) the industry has gone horribly wrong in the last decade. In their call to the government to ban exports, the nut processors argued that the ban would allow them an opportunity to gather enough harvest to enable them to utilise their excess installed processing capacity.

A baseline survey that had been done on the crop in 2009 by the Institute of Development and Business Management Services (IDS) on behalf of the Micro Enterprises Support Programme Trust (MESPT), a value chain government initiative, had revealed a sector reeling in distress.

This is the situation that the sector found itself in 2009 when the Nut Processors Association of Kenya (NutPAK) – the result of processors pulling together resources – was formed to lobby for the industry’s protection, with a keen focus on the export ban.

Despite a total ban on the export of raw cashew nuts in 2009 (which nut processors had called for) the industry has gone horribly wrong in the last decade. In their call to the government to ban exports, the nut processors argued that the ban would allow them an opportunity to gather enough harvest to enable them to utilise their excess installed processing capacity.

William Ruto, the current Deputy President who was then the Minister of Agriculture, met stakeholders in the cashew nut industry at Pwani University in Kilifi in March 2009. He ordered a Cashew Nut Revival Task Force (CNRTF) on 9 April 2009 to submit a report by the end of April and to come up with recommendations on measures to be taken to revive the cashew industry. John Safari Mumba, the former Managing Director of KCL and former MP for Bahari Constituency, and then the Chairman of the Kenya Cashew Growers Association, led the four-member task force.

When the task force finally submitted its report based on views it received from various players, it recommended banning the export of raw nuts.

That same year, Ruto heeded their call and pronounced an export ban on RCN after the four-member task force hastily collected views from the industry’s key players. On 16 June 2009, barely one month after the task force’s report had been submitted, Ruto published “The Agriculture (Prohibition of Exportation of Raw Nuts) Order, 2009” banning the export of raw cashew and macadamia nuts.

The government also announced that all nuts would be sold through the NCPB, which was then struggling to buy maize from farmers. It would later sell the produce to processors.

The population of cashew nut trees then stood at about 2 million, with 20 per cent of them beyond the production age and more trees projected to graduate to the unproductive age bracket in just a couple of years. Inadequate crop husbandry, the IDS study further revealed, saw farmers exploit less than a half of the total crop’s potential.

A disorganised nut market that followed the exit of KCL and the coming up of new entrants (largely exporters of RCN who relied mainly on brokers), affected the growth of the crop’s production and productivity since these traders would only emerge during the harvest season and did nothing to promote the crop. The exporters of RCN shifted base to neighbouring Tanzania, one of the world’s leading producers of cashew nuts that exports most of its nut produce raw.

Cashew nut woes

Fast forward to the 2010s. A statistic by the Nut and Oil Directorate shows that the area under cashew nut production went down from 28,758 hectares in 2015 to 21,284 hectares in 2016. Production also declined from 18,907 tonnes to 11,404 tonnes in the same period, with the value of the crop recording Sh398 million compared to Sh506 million in 2015. This was attributed to crop neglect and logging of cashew nut trees for charcoal and to pave way for other crops.

In the absence of farmers’ groups, a poorly structured NCBP and lack of enough collection centres in the cashew catchment areas, NCPB was not able to buy the nuts, so middlemen continue to dominate the scene to date.

To address these shortcomings, the sector’s stakeholders, led by the Provincial Director of Agriculture, formed a multi-sectoral task force to lead in revitalising the sector. Its other members included NutPAK, Cashew Nuts Growers Association and Kenya Agricultural Research Institute (KARI), which was to lead in production expansion.

The task force set out a cashew nuts revival programme that included increased production, streamlining the marketing system to rid the sector of middlemen and setting up minimum farm gate prices, among other measures. However, due to financial challenges, especially for the growers association, the team’s initiatives were not realised.

In the absence of farmers’ groups, a poorly structured NCBP and lack of enough collection centres in the cashew catchment areas, NCPB was not able to buy the nuts, so middlemen continue to dominate the scene to date.

The matter was made worse in 2013 when the agriculture function was devolved and the task force initiatives lost the support of the Ministry of Agriculture, which dealt a devastating blow to its programmes. Unfortunately, the foundation it had sought to build since 2010 was not transitioned to county governments in cashew catchment areas after devolution.

The county governments have continued to under-fund the cashew nut sector and lack strong policy guidelines to promote the sector. Last year, Kwale County allocated only Sh1.5 million to promote procurement of cashew seedlings in a programme that was being funded by the European Union (EU) to increase production in Lamu, Kwale and Kilifi counties. The EU injected Sh240 million through Ten Senses Africa, which was meant to plant 333,333 trees in each of the three cashew-producing counties.

The main processors have scaled down operations in the cashew nut sector. Most of them are located in the Mount Kenya region, where they have mainly focused on macadamia nuts. The ban on the export of raw cashew nuts favoured the macadamia sector, which has recorded a five-fold increase to reach a production of 50,000 metric tonnes per year.

The industry has thus been left to new entrants but there are strong indications that it still has potential, if well supported. In 2019, for instance, the total estimated area under cashew growing was reported to be 22,686 hectares, which is a marginal improvement from the 22,655 hectares reported in 2018, due to efforts to plant new seedlings.

The sector’s revival

The COVID-19 pandemic has simply worsened the cashew export market. This decline has been exacerbated by rare new pests, and a disorganised free-for-all market that has dampened supplies for cashew cooperatives and nearly sealed the sector’s fate.

LKCS’s chairman, David Njuguna, doubts that the cooperative will be able to offer a farm gate pre-2019 price of Sh30 a kilo once the farmers dispose of the harvest they are still hoarding. According to his estimates, a highly compromised cashew nut quality this year means that farmers will only be able to recover 34 per cent from their entire harvest. This can be attributed to poor crop husbandry, thanks to the low price the crop has been fetching, thus denying farmers the capacity to profitably commercialise the sector.

Mumba led a task force in 2009 that formulated seven clear recommendations that were to be carried out before the ban was effected:

  1. To revive the cashew nut industry, the Ministry of Agriculture should first establish a cashew nut revitalisation desk with immediate effect to coordinate the task report’s recommendations;
  2. The ministry should with immediate effect establish a regulatory apex body for the development of the cashew nut industry to be named the Kenyan Cashew Nut Development Authority (KECADA);
  3. KECADA should initiate the process of formulating a cashew nut policy independent from other crops;
  4. Immediately following the formation of KECADA, regulation for a minimum farm gate price should be put in place;
  5. The government, in conjunction with KECADA, should establish funds to support farm input subsidies, as well as guarantees for public-private partnerships financing cashew farmers;
  6. Former farmers’ cooperatives should be revived; and
  7. Most importantly, only once these recommendations have been put in place (particularly the minimum price), should the government consider implementing an export ban on raw cashew nuts, which should be reviewed regularly regarding its effects.

By putting together the right structures and policies, both the national and county governments can bring this important cash crop back to its former glory.

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Why Cash Transfers Are an Efficient Method of Reducing Food Insecurity

With high levels of mobile phone and internet penetration, coupled with advanced digital technologies in the financial sector, Kenya has favourable conditions for cash transfers to the most vulnerable populations. However, corruption and lack of reliable data on beneficiaries can derail efforts to make all Kenyans food secure during and after the COVID-19 pandemic.

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Why Cash Transfers Are an Efficient Method of Reducing Food Insecurity
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As governments across the globe continue to grapple with the economic effects of COVID-19, many are faced with the additional burden of guaranteeing food security for millions of their citizens. Restrictions in movement and other social distancing measures adopted to contain the spread of the virus have put a significant strain on food supply chains, both at production and distribution links. As a result of this, millions have been pushed to the brink of hunger. The United Nations estimates that up to 265 million people will face acute food shortage by December 2020, a sharp increase from earlier predictions of 135 million people. A disproportionate share of these people live in low- and middle-income countries where shock-responsive social safety nets are inadequate or poorly managed.

In Kenya, long before the World Health Organisation (WHO) declared COVID-19 a global pandemic, an estimated 1.3 million Kenyans were already facing acute food shortage as a result of prolonged droughts, extended long rains well into the harvesting season and a locust infestation not witnessed in a decade.

On 13th March, after the country reported its first case of the virus, the government instituted containment measures in the interest of public health. This further disrupted food supply chains and consequently put a strain on the country’s food systems. Stay at home advice, a night curfew, closure of non-essential social spaces and social distancing requirements have reduced economic activity resulting in job and income losses. The resultant reduced household purchasing power further propelled more households into crisis food shortage.

Further, and with schools closed, millions of students who benefit from school feeding programmes are losing out on this benefit, with parents having to fully take on an all-day feeding responsibility. The World Food Programme (WFP) now projects that a total of 5 million Kenyans will require food and livelihood assistance as a result.

Three months into the pandemic, we can already see a deacceleration of philanthropic acts to provide food supplies to the most vulnerable populations compared to the early days of the pandemic, an indication that private charity, while important, is not adequately prepared to address the need and is not sustainable. Given the uncertainty of when a vaccine will get to the market and when we will see the resumption of normalcy, it is expected that millions will require food assistance and government and private philanthropy will need to better coordinate this assistance and ensure that households remain food secure during this pandemic.

Food packages vs cash transfers

According to the Kenya Food Security Steering Group, despite the adverse climatic shocks, Kenya’s food availability remains stable as a result of a favourable harvest due to above average short rains towards end of the year in most agricultural areas. COVID-19, however, presents a challenge of affordability for many households, who no doubt will require food assistance.

However, how can governments, development agencies and philanthropists provide this assistance in a manner that provides choice, flexibility, and dignity to those that need it and in line with their individual circumstances?

Three months into the pandemic, we can already see a deacceleration of philanthropic acts to provide food supplies to the most vulnerable populations compared to the early days of the pandemic, an indication that private charity, while important, is not adequately prepared to address the need and is not sustainable.

How do we put people at the centre of this assistance by not only providing food, but promoting financial inclusion of the poorest and most vulnerable during this pandemic? How do we ensure that the nutritional needs and requirements of the vulnerable are not generalised and reduced to a few food and other household items? How do we move away from paternalistic tendencies that have long viewed hunger as a question of charity rather than one of justice? Who decides what food items a given household requires in comparison to the rest?

These questions require reflection on the forms and manner in which food assistance can be provided. Should we provide households with food packages or should we provide cash transfers?

In determining a suitable approach, we will need to be cognisant of the unique challenges COVID-19 throws into this long-standing debate of food packages vs cash transfers in development circles. Firstly, and from an epidemiological standpoint, there is a need to reduce social contact as much as possible to ensure food distribution does not become a conduit for virus transmission. Secondly, it is worth noting that the pandemic is causing involuntary stay-at-home, therefore disengaging many from meaningful economic activities, and thereby creating COVID-induced dependency.

This group is particularly of concern given that there is no telling how long they will require assistance even when restrictions are eased. As such, cash transfers remain a lifeline for many as they allow people to navigate through the pandemic and rebuild their lives after the crisis. Thirdly, given the reduced household purchasing power and the resultant decreased demand in household and food items, cash transfers can be an effective tool in turning food need into an effective food demand to sustain supply chains, particularly among downstream smallholder farmers. This, however, needs concerted efforts to ensure distributional links, particularly to small open-air markets, as a majority of lower-income households in urban areas depend on these markets for their food supplies.

Interventions to ensure that households remain food secure will, therefore, need to provide households with flexibility and choice in determining food and other household items that meet their unique circumstances. Choice will need to be devolved to the household level and not left to the imaginations of benefactors – government or private.

Cash transfers have proven to do exactly this by increasing household expenditure, particularly food expenditure, thereby enabling households to meet their unique and diverse dietary requirements, improved health and nutritional outcomes and other outcomes, such as savings and investments. The 2015/16 Kenya Integrated Household Budget Survey (KIHBS), for instance, shows that food remains a high expenditure item at the household level, with 33.5 per cent of cash transfers received from within Kenya used on food items, only preceded by education, at 44.6 per cent.

However, food consumption is higher in rural households compared to education spending, at 38.9 per cent and 38.2 per cent, respectively. Further, the survey shows a higher proportion of food expenditure in female-headed households compared to male headed households, especially in the rural areas, at 41.8 per cent and 35.2 percent, respectively.

In addition to providing beneficiaries with choice, cash transfers have a positive spillover effect of stimulating local markets to the benefit of downstream local producers and retailers. However, in determining amounts for disbursement, it is worth ensuring these are informed by household food consumption rates to sufficiently cover food needs.

Granted, food packages bear the benefit of cushioning beneficiaries against commodity price spikes, especially where markets are disintegrated and retail prices are vulnerable to erratic price changes. But on the flip side, they often limit dietary diversity and may fail to respond to disparate nutritional needs across households, especially those with infants, young children, lactating mothers, pregnant women, and the elderly. Food packages normally contain food items with long shelf life (i.e. cereals, rice, maize, wheat flour, salt, cooking oil and other household items), often leaving out short shelf life items, such as milk and other dairy products, that have essential nutrients for household members with unique nutritional requirements.

The 2015/16 Kenya Integrated Household Budget Survey (KIHBS), for instance, shows that food remains a high expenditure item at the household level, with 33.5 per cent of cash transfers received from within Kenya used on food items, only preceded by education, at 44.6 per cent.

Administratively, food packages present logistical challenges in distribution, and depending on the approaches of distribution, may be inconsistent with measures to curb the further spread of the virus. For instance, social distancing measures require minimal social contact, yet distribution of food packages require social proximity, which makes these packages possible conduits for virus transmission.

Additionally, food packages are prone to mismanagement by those responsible for distribution. When factored in, the cost of corruption may significantly impact the overall cost of food distribution. For instance, a 2011 World Bank review of India’s Public Distribution System (PDS) showed that 58 per cent of food did not reach the intended beneficiaries.

In contrast, because cash transfers are distributed through mobile money, not only are the administrative costs of this form of assistance reduced, but cash transfers provide a transparent framework for distribution, thereby minimising misappropriation.

Cash transfers have their limitations too. Targeting of the most deserving beneficiaries may be a challenge where accurate identification and validation of beneficiaries is hampered by lack of reliable data.

Strong digital infrastructure

Kenya’s ICT sector has rapidly grown over the years, placing the country’s mobile phone and internet penetration at 91 per cent and 84 per cent, respectively, which is above Africa’s average of 80 per cent and 36 per cent, respectively. Although variations exist in mobile ownership between rural and urban populations, at 40 per cent and 60 percent respectively, Kenya still fairs relatively well in reaching rural populations. On the gender front, more females (10,425,040) than males (10,268,651) own a mobile phone, according to the 2019 Kenya Population and Household Census.

Kenya’s digital payment infrastructure is equally advanced, making it a global leader in mobile money usage. Data from the Central Bank of Kenya shows that as by December 2019, there were 58 million active mobile money accounts and 242,275 mobile money agents across the country. In 2019, Kenyans transacted a total of Sh4.35 trillion (almost half the country’s GDP) through their mobile phones. According to the KIHBS 2015/16, mobile money transfer was used more by households in rural areas compared to those in urban areas, at 46.2 per cent and 38.9 per cent, respectively, an indication of the effectiveness of mobile money- enabled cash transfers in reaching the most vulnerable.

To further deepen reach and ensure vulnerable populations, such as the elderly, women and remote populations, are reached, there is a need for the government and mobile phone operators to temporarily relax the know-your-customer requirements, and ensure all targeted individuals/household are facilitated to access cash transfers through mobile money.

These advancements provide a strong digital infrastructure that when effectively deployed can support a massive cash transfer programme to ensure households are adequately cushioned during this pandemic. Given the time lag in collecting socio-economic data at the national level, a lag that may not quickly correspond to the changing socio-economic characteristics of the population, data from mobile and internet usage offer a quick and verifiable option of targeting the most vulnerable and therefore making them food insecure.

In 2019, Kenyans transacted a total of Sh4.35 trillion (almost half the country’s GDP) through their mobile phones. According to the KIHBS 2015/16, mobile money transfer was used more by households in rural areas compared to those in urban areas, at 46.2 per cent and 38.9 per cent, respectively…

Combined, mobile phone use and historical mobile money transactions provide massive data, which when carefully analysed, prove a useful resource for assessing the socio-economic standing of individuals, and therefore accurately determining individuals who most qualify for assistance.

Additionally, technology offers a robust and trusted framework that when optimally utilised limits leakages that are often associated with traditional methods of cash disbursement. For one, they make visible households that qualify for cash transfers and when disbursements are due. The predictability they offer also enables households to know when to expect cash and therefore plan better for both food and other household expenditure.

Constraints

Effective mobile-enabled cash transfer programmes rely on rich verifiable data that accurately capture the changing socio-economic positions of citizens. Employment and income status of citizens need to be regularly updated to ensure they accurately capture the most deserving. While the government has over the years invested in collecting socio-economic data through the national census, most recently during the 2019 Kenya Population and Household Census, as well as digital registration of citizens during the Huduma Namba registration, there is a need to build on to these databases, and regularly update the same for purposes of establishing robust social welfare systems.

COVID-19 and its impact on household well-being is perhaps bringing to the fore the value of big data in building such systems and cushioning livelihoods through evidence-based social protection policies, particularly as far as these policies are meant to guarantee household food security. The ability of applying these lessons will determine how prepared governments are in fighting the next pandemic and food security challenges, especially as climate change continues to threaten food security systems.

In the immediate term, and as the government props up its cash transfer programme, there is a need for community-based participatory approaches in assessing the most vulnerable and needy households to ensure efficient utilisation of funds. Relying on community social capital is an effective way of determining households that were vulnerable prior to COVID-19 and those that have become dependent as a result of the pandemic.

Corruption

A pandemic itself, corruption is a systemic problem in Kenya, with proven ability to cripple noble initiatives aimed at benefiting the poor. Worse, this problem has significantly reduced trust levels between the government and citizens and has limited citizens’ participation in governance matters. There is, therefore, a need to build safeguard measures in cash transfer programmes to minimise avenues for leakages. This should include digitised and transparent targeting criteria, citizen-led participatory monitoring and oversight, as well as effective complaint mechanisms.

Corruption thrives in information asymmetry. Therefore, automated platforms that make information accessible to the public on who qualifies for transfers, how much they are eligible for, and the frequency of distribution (with all data privacy protocols observed) provide a better bet in bridging this gap.

Information and communication technologies (mobile-enabled transfers coupled with digitised social safety net frameworks) have the potential effect of limiting the discretionary powers of public officers in determining who benefits. This reduces human intervention in the process, thereby limiting opportunities for cash diversion for personal gain. The technologies, when properly managed, can also minimise political manipulation, capitalisation and clientelism to the advantage of the political class. This, however, is dependent on a strong commitment by the government in ensuring cash for disbursement is made available in the first instance. More importantly, citizens will need to push for structured collective social accountability mechanisms, such as social audits and citizens reports, and will need to actively participate in holding public officials accountable.

Corruption thrives in information asymmetry. Therefore, automated platforms that make information accessible to the public on who qualifies for transfers, how much they are eligible for, and the frequency of distribution provide a better bet in bridging this gap.

Given the uncertainty of COVID-19’s staying power, and its disruption to food supply chains, there is no doubt that food security will remain a key concern that requires better coordinated approaches in feeding those who are most vulnerable. The approaches and manner in which this is done will need to take into consideration the unique challenges the pandemic presents.

With advanced digital technologies, particularly in the financial sector, Kenya is well ahead of many countries in the developing world and well prepared to deepen cashless assistance as it works to contain the spread of the disease. Perhaps this is the litmus test for the government’s ability to rise up to the challenge of walking the talk on ensuring its food security and nutrition commitment under the Big Four Agenda.

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Curfews, Lockdowns and Disintegrating National Food Supply Chains

The disruption of national food supply chains due to COVID-19 lockdowns and curfews has negatively impacted market traders, but it has also spawned localised – and more resilient – supply chains that are filling the gap in the food system.

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Curfews, Lockdowns and Disintegrating National Food Supply Chains
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Our stomachs will make themselves heard and may well take the road to the right, the road of reaction, and of peaceful coexistence…you are going to build in order to prove that you’re capable of transforming your existence and transforming the concrete conditions in which you live.” – Thomas Sankara, assassinated leader of Burkina Faso

 On July 6, 2020, Kenya’s President Uhuru Kenyatta announced phased reopening of the country as the government moved to relax COVID-19 restrictions. That day found me seated in a fishmonger’s stall in Gikomba market, located about five kilometres east of Nairobi’s Central Business District (CBD) and popularly known for the sale of second-hand (mitumba) clothes. The customer seated next to me must have received a text message on her mobile phone because she began howling at the fishmonger to tune in to the radio, which was playing Benga music at the time. It was a few minutes after 2 p.m.

“I order and direct that the cessation of movement into and out of the Nairobi Metropolitan Area, Mombasa County and Mandera County, that is currently in force, shall lapse at 4:00 a.m. on Tuesday, 7th July, 2020,” pronounced the president on Radio Jambo.

The response to this news was cathartic. The female customer, on hearing the words “cessation of movement shall lapse” ululated, and burst out in praise of her God – “Nyasaye” – so loudly it startled the fishmonger. The excited customer jumped on her feet and started dancing around the fish stalls, muttering words in Dholuo. Nyasacha, koro anyalo weyo thugrwok ma na Nairobi, adog dala pacho. Pok a neno chwora, chakre oketwa e lockdown. Nyasacha, iwinjo ywak na. Nyasacha ber.” Oh God, I can now leave the hardship of Nairobi and go back to my homeland. I have not seen my husband since the lockdown measures were enforced. Oh God, you have heard my prayers. Oh God, you are good to me.

“She, like most of us are very happy that the cessation measures have been lifted. Life was becoming very hard and unbearable,” said Rose Akinyi, the fifty-seven year old fishmonger, also known as “Cucu Manyanga” to her customers because of her savvy in relating to urban youth culture. “Since the lockdown, business has been bad. Most of my customers have stopped buying fish because they have either lost their sources of income while others have been too afraid of catching the coronavirus that they have not come to make their usual purchases,” explained Akinyi.

Gikomba market is also Nairobi’s wholesale fish market.  Hotels, restaurants, and businesses flock there to purchase fresh and smoked fish from Lake Victoria and Lake Turkana. But with the government regulations to close down eateries, fish stocks have been rotting, lamented Akinyi. She has had to reduce the supply of her fish stocks in response to the low demand in the market.

“With the re-opening of the city, I plan to travel to my home county of Kisumu and go farm. At least this way I can supplement my income because I don’t see things going back to normal anytime soon,” she explained.

Two days later, I found my way to Wakulima market, popular known as Marikiti. The stench of spoilt produce greets you as you approach the vicinity of the market, Nairobi’s most important fresh produce market. News of the president’s announcement had reached the market and the rush of activity and trade had returned.

Gikomba market is also Nairobi’s wholesale fish market.  Hotels, restaurants, and businesses flock there to purchase fresh and smoked fish from Lake Victoria and Lake Turkana. But with the government regulations to close down eateries, fish stocks have been rotting, lamented Akinyi.

“Since the lockdown, business has been dire to say the least,” complained one Robert Kharinge aka Mkuna, a greengrocer and pastor in a church based in Madiwa, Eastleigh. Robert, who sells bananas that he gets from Meru County, noted that “business has never been this bad in all my twenty years as a greengrocer. Now, I’ve been forced to supplement my income as a porter to make ends meet. Before COVID-19, I would sell at least 150 hands of bananas in a day. Today, I can barely sell five hands,” he explains.

Robert, who is also a clergyman, leans on his faith and is hopeful that things will get back to normal since the cessation of movement has been lifted. He also hopes that the county government of Nairobi will finally expand the Marikiti market to cater for the growing pressure of a city whose population is creeping towards five million.

A short distance from Robert’s stall and outside the market walls stands Morgan Muthoni, a young exuberant woman in her early twenties selling oranges on the pavement. Unable to find space in the market, she and a number of traders have opted to position themselves along Haile Selassie Avenue, where they sell produce out of handcarts.

“When President Uhuru announced the cessation of movement in April, our businesses were gravely affected,” Muthoni says as attends to customers. “I get my oranges from Tanzania and with the lockdown regulations, therefore, produce hasn’t been delivered in good time despite what the government has been saying. Before COVID-19, I would get oranges every two days but now I have to wait between four and five days for fresh produce. My customers aren’t happy because they like fresh oranges and I’m now forced to sell them produce with longer shelf life.”

COVID-19 vs the Demand and Supply of Food
With the prior government lockdowns in Nairobi and Mombasa’s Old Town, which have large populations and are key markets for various food products, the government had to ensure that people in those areas were not cut off from essential goods and services. It was also the mandate of the government to shield farmers and manufacturers of the goods from incurring heavy losses because of the restrictions. Despite good attempts by the authorities to introduce measures that allowed the flow of goods to populated areas affected by the lockdown, there were several reports of police harassment.

“Truck drivers are complaining that they are been harassed by the police for bribes at the police stops, which is gravely affecting our businesses. The police, with their usual thuggery, are using this season of corona to mistreat and extort truck drivers to pay bribes in order to give them way at police checks even if they have adhered to the stipulated regulations,” complained Muthoni.

The movement of goods is further complicated by the disjointed health protocols. “We also hear that because Magufuli’s Tanzania has a different policy towards COVID-19, trucks drivers are taking longer at the border because they need to be tested for coronavirus before they are allowed to pass. But we don’t know how true these reports are. For now, we believe that things will get better since the cessation has been lifted. If God is for us, who can be against us?” Muthoni concludes.

Divine intervention is a recurring plea in these distressed economic times, but unlike Muthoni and Robert, who remain hopeful, this is not the case for Esther Waithera, a farmer and miller based in Mwandus, Kiambu, about 15 kilometres from Nairobi. Kiambu, with its fertile rich soils, adequate rainfall, cool climate, and plenty of food produce, is a busy and bustling administrative centre in the heart of Kikuyuland.

After the president’s announcement of the quasi-lockdown and curfew, Waithera has been spending her afternoons selling fresh produce from her car that is parked opposite Kiambu mall on the weekends and in Thindigwa, a splashy middle-class residential area off the busy Kiambu Road, on weekdays.

“Before COVID-19, I used to supply fresh farm produce to hotels and restaurants across the city. But now I have been forced to sell my produce from my car boot because if I don’t, my produce will rot in the farm. My husband runs the family mill and even that has been doing badly since the coronavirus came to plague us. We have had to decrease our milling capacity and the cost of maize flour to adjust to new market prices as demand reduces.”

After the president’s announcement of the quasi-lockdown and curfew, Waithera has been spending her afternoons selling fresh produce from her car that is parked opposite Kiambu mall on the weekends and in Thindigwa, a splashy middle-class residential area off the busy Kiambu Road, on weekdays.

Maize is Kenya’s staple food and Kenyans rely on maize and maize products for subsistence but, “Kenyans are going hungry and many households are skipping meals to cope with these harsh times,” explains Waithera.

Waithera, who is a mother of three children, doesn’t seem hopeful about the future. “This government that we voted for thrice has let us down. They have squandered the lockdown and have caused economic harm without containing COVID-19. Now we are staring at an economic meltdown, a food crisis and a bleak future for our children.”

A devout Christian of the evangelical persuasion, Waithera deeply believes that “God is punishing the country and its leaders for its transgressions because they have turned away from God and taken to idol worship and the love for mammon”. And like the biblical plagues, “the recent flooding, the infestation of desert locusts and the corona pandemic are all signs from God that he has unleashed his wrath on his people unless we repent our wrongdoings and turn back to God”, laments a bitter Waithera.

For Joyce Nduku, a small-scale farmer and teacher based in Ruiru, this new reality has provided her with opportunities for growth. She acknowledged that her sales have increased during the COVID-19 pandemic, saying, “I now have more customers because there are not enough vegetables available in the market from upcountry”.

Localised and more resilient food systems

At a time when regular food supply chains have not been assured, some food markets have closed, mama mbogas (women vegetable vendors) are out of business, and the cessation of movement is deterring travel, Nduku attributes her increased food production to meet the growing demand to a business model that lays emphasis on a localised food system and short food supply chains.

Approaching food production through a localised food system, she says, “gives me local access to farm inputs”.

She adds, “I get my manure from livestock keepers within my locale and my seeds from local agrovets. I have direct access to my consumers, removing middlemen who expose my produce to unsafe and unhygienic handling and high logistical and transport costs. Hence I’m able to increase the access to safe and affordable food.”

Agriculture, forestry and fishing’s contribution to GDP in 2019 was 34.1 per cent, according to the Kenya National Bureau of Statistics’ Economic Survey 2020. Another 27 percent of GDP is contributed indirectly through linkages with other sectors of Kenya’s economy. The sector, the survey revealed, employs more than 56 percent of the total labour force employed in agriculture in 2019. It also provides a livelihood (employment, income and food security needs) to more than 80 percent of the Kenyan population and contributes to improving nutrition through the production of safe, diverse and nutrient dense foods, notes a World Bank report.

Yet, in a matter of weeks, Nduku tells me, “COVID-19 has laid bare the underlying risks, inequities, and fragilities in our food and agricultural systems, and pushed them close to breaking point.”

These systems, the people underpinning them, and the public goods they deliver have been under-protected and under-valued for decades. Farmers have been exposed to corporate interests that give them little return for their yield; politicians have passed neoliberal food policies and legislation at the peril of citizens; indigenous farming knowledge has been buried by capitalist modes of production that focus mainly on high yields and profit; and families have been one meal away from hunger due to untenable food prices, toxic and unhealthy farm produce and volatile food ecosystems.

Nduku firmly believes that the pandemic has, however, “offered a glimpse to new, robust and more resilient food systems, as some local authorities have implemented measures to safeguard the provision and production of food and local communities and organisations have come together to plug gaps in the food systems.”

Food justice

Many young Kenyans have also emerged to offer leadership with more intimate knowledge of their contexts and responded to societal needs in more direct and appropriate ways. If anything, Nduku tells me, “we must learn from this crisis and ensure that the measures taken to curb the food crisis in these corona times are the starting point for a food system transformation”.

The sector, the survey revealed, employs more than 56 per cent of the total labour force employed in agriculture in 2019. It also provides a livelihood (employment, income and food security needs) to more than 80 per cent of the Kenyan population…

To achieve the kind of systematic transformation Kenya needs, we must “borrow a leaf from Burkina Faso’s revolutionary leader Thomas Sankara”, Nduku adds. Sankara emphasised national food sovereignty and food justice, advocated against over-dependence on foreign food aid, and implemented ecological programmes that fostered long-term agro-ecological balance, power-dispersing, communal food cultivation, and the regeneration of the environment, which remain powerful foundations for food justice today.

Indeed, we must also not rely on discrete technological advances or conservative and incremental policy change. We must radically develop a new system that can adapt and evolve to new innovations, build resilient local food systems, strengthen our local food supply chains, reconnect people with food production, provide fair wages and secure conditions to food and farm workers, and ensure more equitable and nutritious food access for all Kenyans.

Importantly, Nduku emphasises, “We must start thinking about the transformation of our food systems from the point of view of the poorest and those who suffer the greatest injustice within the current framework of our food systems.” This will provide a much more just, resilient and holistic approach to food systems transformation.

This article is part of The Elephant Food Edition Series done in collaboration with Route to Food Initiative (RTFI). Views expressed in the article are not necessarily those of the RTFI.

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