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Customers, Not Patients: The Nairobi Women’s Hospital Saga

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How did a hospital dedicated to women’s health end up being managed like a cut-throat business where those seeking medical attention are treated like customers rather than patients, and where the bottom line is more important than healthcare?

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Customers, Not Patients: The Nairobi Women’s Hospital Saga
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From Nairobi, Dr. Felix Wanjala texts the following on a work Whatsapp group: “Team, let’s ensure we don’t let the team down…let’s meet our target.”

Without context, this might appear like a harmless motivational speech from a boss to his subordinates. But the context here is this: Dr. Wanjala is the CEO of Nairobi Women’s Hospital (NWH). In the message immediately before that, he had forwarded a text listing the admission numbers across all the hospital’s branches in the country. “We have the numbers as follows at this hour,” the CEO wrote to his employees, and then listed admissions totaling 288 across the hospital group.

The target, and the context of the war cry not to let the rest of the team down, he went on, was to have 22 more admissions. To do this, the CEO recommended that his team, based at one of NWH’s two branches in Nakuru (called Nakuru Hyrax), “start with looking for referrals”, not miss “any opportunity”, and be “very vigilant in casualty.

In multiple texts covering different days in 2017 and 2018, the Whatsapp group resembled a trading floor, with Dr. Wanjala and his Chief Operations Officer, Eunice Munyingi, pushing employees to work harder to increase admissions. On the first day of July, for example, Eunice wrote in reply to the nurse in charge of the hospital chain: “Let us increase speed 2 admissions against 13 discharges at this hour not good.”

Two minutes later, the CEO added, “It’s our striking time. Let’s intensify our effort…replace all discharges by 6pm.”

Five days later, at 7:28 p.m., the COO told to the Nakuru branch staff to “get 3 admissions by 9pm.

Several interviews with whistleblowers describe a corporate culture of being pushed to meet admission targets. “Although it was not said explicitly,” one former member of the NWH said, “the implication was that doctors and nurses in particular had to find reasons to admit patients to meet the hourly and daily targets, even if those reasons were an absolute lie.”

Another added that there was a financial reward paid to clinical officers for each admission; but they still had to write down why they were admitting each patient. This meant they had to get creative to meet targets, both personal ones and those of their employer.

Origins

Founded two decades ago by a young gynaecologist called Dr. Sam Thenya, Nairobi Women’s Hospital began with a unique specialisation. The focus of its first branch in Hurlingham was solely obstetrics and gynaecological services, meaning its primary clients were women. It became particularly known for its Gender Violence Recovery Center (GVRC), a charitable arm that serves survivors of sexual and domestic violence.

I was working in a hospital and I had pitched this idea to the CEO of that hospital, but he wasn’t very keen on the idea of taking in abused women for free,” the hospital’s founder told Business Daily in November 2016.

One time he told me that if I thought the idea would work then I should go ahead and open my own hospital because it wasn’t going to work at that hospital and right there I thought to myself, ‘Why not?’”

So at the age of 31, Dr. Sam Thenya took up his boss’s challenge.

The thing that drove him to start the hospital when he had no money, he told the interviewer, was a “certain trigger, madness or passion”. His singular goal, despite the challenges almost as soon as he started, was to build one of the most familiar, respected private hospitals in the capital city.

“Although it was not said explicitly,” one former member of the NWH said, “the implication was that doctors and nurses in particular had to find reasons to admit patients to meet the hourly and daily targets, even if those reasons were an absolute lie.”

For the hospital to survive without taking in more investors or money, it needed to scale up fast, and build solid revenue streams that included donor funding for its GVRC charity. It also had to wade through the rough early 2000s, as Kenyan systems tried to reset themselves.

In 2003, for example, the hospital’s banker, Daima Bank, collapsed. Dr. Thenya, still in the early years of his project, heard the devastating news while he was fuelling his car at a petrol station. “We had just issued suppliers cheques,” he said in the interview.

Despite such and other challenges, Dr. Thenya and the hospital he built surged on.

He transformed from a practising gynaecologist to an entrepreneur. He also sold the hospital for a fortune, and was on his way out as the founding CEO. Although he stayed on after resigning as CEO, his armophous role as Director of Strategy didn’t mean much.

In a scenario that exemplifies the fine line between private healthcare as a business and a service, Dr. Thenya had to fight with politicians, including President Uhuru Kenyatta, and technocrats who had demanded the release of patients (alive or dead) over bills.

Once, he told the interviewer, the President called him and told him someone had sent him an e-mail that the body of his/her mother was being held hostage by NWH over unpaid bills.

Sam, what do we do?” the President asked.

Your Excellency, the bill has to be paid,” Dr. Thenya answered.

After the President said he would pay the bill, and asked the body be released while he did it, Dr. Thenya replied, “I need some proof of payment of some pre-payment today.

If you want me to release it today,” he went on, “then pay today.”

By this point, a lot had changed.

Born in Nyakihai, Murang’a, in 1968, a much younger Sam Thenya had wanted to be a pilot. But he became a doctor instead. As a young doctor in training, he led a strike at Nyeri Provincial General Hospital in the early 1990s. The issue, which was fixed because of the strike, was bad working conditions for medical practitioners.

I am not one who stands by and watches things deteriorate,” he told an interviewer in 2011.

What finally drove him to ask his boss to start a wing for victims of sexual violence, and doing it himself when he was challenged, was meeting the victim of a brutal gang rape. Battered, violated, and in need of urgent medical care, she did not have money to pay for admission.

I paid for her admission and closely monitored her progress.”

The past

As a young doctor, Dr. Sam Thenya was unstoppable in his mission to build Nairobi Women’s Hospital. In October 2000, a hospital called Hurlingham Hospital was on auction for unpaid debts. Dr. Thenya approached the auctioneers with a promise to buy the hospital. It was an attractive deal for both sides: the auctioneers would get rid of an asset few can or want to buy, and the young doctor could build a hospital from scratch.

But there was one problem, a big one. He had no money.

The most he could raise was half a million shillings, which he did by selling his wife’s car. He needed 17 million more, so he got other investors to put in the money and take a share of the repainted hospital’s ownership.

In the world of modern finance, this seemingly brilliant financing strategy has a name. It is called a leveraged buyout (LBO). It works exactly how Dr. Thenya did it: you buy a company by taking in debt and giving up equity, which means you do not need a single coin to start whatever enterprise you want to start. The assets of the thing you are buying, with money that is not yours, serve as the collateral in case the enterprise doesn’t prosper.

The most famous LBO in the world is the hostile takeover of an American company called RJR Nabisco. In 1989, the executives of the conglomerate, which sold tobacco and food products, including the world famous Oreo cookies, started an unstoppable process to acquire the entire company at $75 a share.

The events that followed that ignition are covered in Barbarians at the Gate: The Fall of RJR Nabisco, book (and movie) written by two American journalists. It covers the executives’ plan to buy out other shareholders, and the marathon that began when other groups of people joined in on the race to acquire one of the biggest companies in the world. One of them finally won, by offering a price higher, by $15 a share, than the management team’s offer.

But the best of this story is that none of them, even the executives who wanted to buy a company for $25 billion, actually had the money. They didn’t need to. In the great game of modern finance where money is an idea, one person quoted in the book says, you need more money to start a shoeshine store than you do to buy a 2 billion-dollar company.

The gist is to start what is called, in modern finance, a fundless fund –simply a corporate body that on the one hand promises to and negotiates to buy something, while asking for money from those who have it to complete the deal. For investors with vast amounts of money on hand, this is an investment for which they expect to see profits.

In the world of modern finance, this seemingly brilliant financing strategy has a name. It is called a leveraged buyout (LBO). It works exactly how Dr. Thenya did it: you buy a company by taking in debt and giving up equity, which means you do not need a single coin to start whatever enterprise you want to start.

Dr. Thenya gave up 40 percent of NWH’s ownership to the investors who gave him the $50 million (in total) to buy the assets of Hurlingham Hospital, and to repaint it afresh as Nairobi Women’s Hospital. As the new hospital grew on the back of its reputation as a niche healthcare provider, Dr. Thenya progressively bought out the investors, and by the late 2000s, owned the entire thing.

As they left, presumably after making a profit, Dr. Thenya expanded his enterprise just in time. The 2008 financial crash was wreaking havoc in Western markets, starting first in the mortgage industry and eventually spreading its tentacles to the heart of multiple economies. For private equity funds, which had had their best years right before the crash, it was time to find other markets to play in.

In 2009, Dr. Sam Thenya acquired Masaba Hospital in Adams Arcade, and turned it into the second Nairobi Women’s Hospital branch. By the end of the next decade, there would be a total of nine Nairobi Women’s Hospitals: four in the capital city and the metropolis; two in Nakuru; and one each in Naivasha, Meru, and Mombasa.

From a single hospital in Hurlingham, Nairobi Women’s Hospital was one of the fastest-growing hospital chains in Kenya by the mid-2010s. But things had changed. In the first decade, Dr. Thenya had quit practising to concentrate on the business side of his hospital.

I realised that I was not giving my patients full attention because I was often caught up in strategy meetings,” he said in later years, “[so] I had to choose between expanding the hospital and practising.”

And in several transactions beginning in 2010, he had progressively sold his ownership stake in the hospital to the successor of leveraged buyouts in modern finance; a similar but differently named structure called a private equity fund.

The present

private equity (PE) firm is a leveraged buyout by another name, with very few significant differences. Simply, you get money from wealthy individuals and organisations, such as pension funds and charities, and buy attractive companies. Then you restructure them by cutting costs, expanding as fast as possible, extracting as much revenue as you can, and then selling them for a profit.

The basis of this model of financing is to buy and sell, as opposed to keeping an investment in perpetuity. So PE firms strip their new companies of any sellable assets, change the management, reduce costs by firing professionals and employing cheaper labour, pay executives bonuses for meeting targets, and once the company is attractive enough on paper, sell it to someone else. That new buyer is often just another PE firm.

In the complicated structures of global commerce, private equity funds are used to finance rapid expansion, which increases the value of the assets. Investors, who include funds of funds, where one investment fund invests in another investment fund, expect a return in investment. And investment funds get money by promising exactly that.

PE funds themselves make money in two ways: by charging an annual management fee of the money they have been trusted with, calculated as a percentage, and by taking a cut of the profits they make when they sell the companies they buy. So their primary motivation is to get more investor money, and to restructure companies as fast as possible to attract a higher price than they bought it for.

One of the things PE funds do when they acquire a company is to transition it from a founder-run company into a corporate body that can attract a higher price. This is exactly what happened at Nairobi Women’s Hospital from the first funding round in 2010, where Dr. Sam Thenya’s ownership systematically reduced as the new owners’ ownership stake increased.

In the midst of the “Africa Rising” narrative, and from the ashes of the 2008 global crisis, billionaires and institutional investors in the West turned their investment focus on Africa. The continent’s young population offered an attractive proposition for profit-making ventures; it was expected that not only would these younger Africans be richer than their parents, and willing to spend more on everything, but that there were no modern legal or regulatory structures in place to halt corporate raids of existing companies. And by the time they came, several rounds of investors would have already made enough profits.

In 2010, Dr. Sam Thenya got $2.66 million for part of his stake in the hospital. The buyer, The Abraaj Group, which would collapse in 2018 amidst investigations that its founder and executives had stolen investor funds, was founded by a Pakistani based in Dubai. In addition to Nairobi Women’s Hospital, it also acquired all or parts of other Kenyan companies: Java House (100%); Brookside Dairy (10%); and Seven Sea Technology (21%).

But its most prominent purchases were in private healthcare, where it bought 18 clinics and 10 major hospitals. In addition to its stake in Nairobi Women’s, it also bought part of Avenue Group Hospital, Ladnan Hospital, and Metropolitan Hospital.

Three years later, Abraaj bought more of Nairobi Women’s with a partner PE firm called Swedfund. The Swedish government describes Swedfund, which it funds and owns, as a “development financier and development cooperation actor”; but it works in basically the same way privately-owned PE firms do.

The objective of the Africa Health Fund is to increase access to affordable and quality health-related goods and services for those at the bottom of the income pyramid,” Swedfund said in a press release dated 22nd November 2013. “At the same time it hopes to provide investors with good long term financial returns.

This dual-purpose fit into Dr. Thenya’s founding principles, which had been to build a hospital that offered services to abused women for free, while offering other medical and surgical services at a fee. Swedfund, which said it “put a high emphasis on environmental, social and governance issues”, and other investors were investing in the hospital to fund its expansion.

In 2010, Dr. Sam Thenya got $2.66 million for part of his stake in the hospital. The buyer, The Abraaj Group, which would collapse in 2018 amidst investigations that its founder and executives had stolen investor funds, was founded by a Pakistani based in Dubai.

From a single branch, Nairobi Women’s Hospital had expanded to three hospitals: one in Adams Arcade founded in 2009, another in Ongata Rongai founded in 2011, and the Nakuru branch which followed a year later. It also had two medical centers in Kitengela and Eastleigh, both opened in 2012, and two more branches, in Mombasa and Kisumu, on the way.

This was all, the Swedish state investor said, “part of a the grand plan to expand further in the country and the Eastern African region by 2016; and subsequently into the rest of Africa.”

The thoroughfare

While the source of Swedfund’s finances is obvious, the source of The Abraaj Group’s funds is a more interesting story because it led to its death in 2018, and the arrest of its top executives.

Because PE funds run multiple projects at any one time, they structure them as independent funds with their own fund managers. The specific one that invested in private healthcare in Kenya beginning in the late 2000s was called The Abraaj Growth Markets Health (Africa) Fund. It got its $1 billion to invest in Kenya and other countries from multiple sources, the most prominent being the Bill & Melinda Gates Foundation and the World Bank’s private equity fund, the International Finance Corporation (IFC).

The second deal, which reduced Dr. Thenya’s ownership even further, was worth $6.5 million.

The Dubai-based Abraaj Group, founded a year after Dr. Thenya started Nairobi Women’s, was a renowned investor in multiple sectors across the continent. By the time it collapsed in 2018 amidst a dispute with its investors, the Bill & Melinda Gates Foundation had initiated an audit into how its money in the healthcare fund had been used; it had invested an estimated Sh320 billion in 80 transactions across Africa.

Through the fund, part of which the PE firm’s founder, a Pakistani man called Arif Naqvi, was accused of misusing, Abraaj owned private hospitals in Kenya, Nigeria, and Pakistan. In April 2018, around the same time the screenshots of the Nairobi Women’s Hyrax Whatsapp group were revealed, Naqvi was arrested in Britain on a US warrant.

Naqvi had resigned from Abraaj the month before investigators found evidence that he had defrauded investors in two ways: by inflating the price of assets, which included Nairobi Women’s Hospitals and several other Kenyan private healthcare providers, and misappropriating the fund.

The scandal made headlines around the world, as many other similar investment structures had ridden on the Africa Rising wave and bought many companies, in many countries, on the continent. Meanwhile, The Abraaj Group was closed and its assets stripped for parts by other PE firms. A British firm took over its stakes in Brookside Dairy and Java; an American PE firm called TPG acquired the healthcare fund, which counted among its assets several Kenyan hospitals. TPG then renamed the fund the Evercare Health Fund to avoid the negative reputation of its former name and manager.

These high finance events and deals all took place outside of Kenya, but in the end TPG owned Nairobi Women’s Hospital and several other private hospitals in the country.

Meanwhile, Arif Naviq remains in the UK, and not by choice. Last May, after he had spent a year in custody, he was granted a record $20 million bail. By October, he was also being investigated for bribing Pakistani politicians.

While this complicated game of international finance was happening, the private hospitals in Kenya were still operational, and still working to make profits for the fund, as their investors sorted a new PE firm to “buy” and run them.

In a text forwarded to the Nakuru Hyrax staff on 11th September 2018, CEO Dr. Felix Wanjala outlined the revenues so far, and the targets he expected them to contribute during the course of that day. The Nairobi Women’s Hospital group was making Sh12.81 million a day against a target of Sh15.47 million, and cumulatively was Sh33 million off a total target of Sh170 million.

Team this revenue is too low for the numbers that we have, are we billing,” he posed to the staff.

The shift from Dr. Thenya’s ownership and leadership to the PE funds had launched what was typical corporate behaviour after acquiring a new asset. Nairobi Women’s Hospital had, over time, stopped hiring medical officers (MOs), professionals in waiting who are mostly post-graduate students, to serve outpatient patients. It had instead turned to hiring young clinical officers (COs), who (at the time) only had a diploma earned after three years of training, to do the job.

To staff its rapid expansion, Nairobi Women’s was now depending on COs to serve patients who were not already admitted in the hospital. It was also encouraging them, according to multiple insiders, to meet admission and revenue targets, which were analysed every hour of every day, day and night. While the hospital still hired specialists, it hired less than it required (because MOs demand better salaries) and gave clinical officers the job of determining which patient needed to be admitted. It also gave the COs a financial incentive, at one point 710 shillings per patient they admitted.

This structure meant that while COs would find and push for admissions, even (and especially when) they were unnecessary, more qualified medical officers would only encounter the patients when they had already been admitted, and were already paying for the bed, food, tests, and medicines. They were already, in lingo used frequently in the leaked Whatsapp group messages, customers.

Nairobi Women’s Hospital had, over time, stopped hiring medical officers (MOs) to serve outpatient patients. It had instead turned to hiring young clinical officers (COs), who (at the time) only had a diploma earned after three years of training, to do the job.

Once they were in the hospital, the top management of Nairobi Women’s encouraged the staff, everyone in the Whatsapp group, medical and non-medical staff included, to keep them admitted for longer.

In another text, for example, CEO Dr. Felix Wanjala asked his staff “how did we end up at 18 discharges from 10 planned.” The text included an emoji of a sad face, suggesting he was unhappy with the situation. His COO, Eunice Munyingi, then asked someone called Victoria to answer the CEO. Victoria then passed the question to two other people, before the CEO responded “Vikki calm down…we expect better performance in future. Obviously this is not good for us.”

Medical officers and other specialists who worked at Nairobi Women’s at the time describe multiple instances of being pushed to keep patients for longer than necessary. In a text sent at 8:04 am on 11 November 2018, COO Eunice Munyingi told the staff to “lock discharges at 7” and to “…kindly start now.

This meant that if you were admitted at this particular Nairobi Women’s Hospital, and should have been released to go home, the decision of whether to let you go was based on revenue and admission targets, not on your health. In the texts, the senior executives ask staff to post hourly updates of the branch’s status, specifically how many people are being served and how much money was made, and cheer them on in language a media practitioner described as “better suited for a trading floor than a hospital management team”.

Courtesy of SHOWTIME

The comparison to a trading floor is poignant, because insiders describe an internal system that fits the script of the popular TV series Billions, with a CEO-COO dynamic similar to that of the characters Bobby Axelrod and Mike “Wags” Wagner in the show.

The similarities with a fictional TV show do not end there because the two characters run a ruthless private equity firm that buys companies, restructures them by any means necessary, legal or otherwise, and sells them over for a profit.

Like a PE firm and any modern enterprise, the top management of Nairobi Women’s also kept tabs on its reputation online. In one screenshot from 2017, the then clinical services in-charge, Victoria Wawira, posted a screenshot of a Facebook post written by a woman who had commented on their hurry to admit her child. Whenever she took her daughter to the hospital, “…The doc sees her and immediately its admission no second thought about medication,” she’d written on a Nakuru Country Mums group on Facebook.

In follow-up messages, Victoria told two clinical officers that the post was “trending on FB” and that they should “vet admissions”. In any other context, this would mean that the two COs should make sure they were admitting only patients who needed to be admitted. But in this particular context, it meant one thing – that they should check that they didn’t admit potentially problematic patients who would be suspicious of the need for them to move from outpatient to inpatient.

Medical officers and other specialists who worked at Nairobi Women’s at the time describe multiple instances of being pushed to keep patients for longer than necessary. In a text sent at 8:04 a.m on 11 November 2018, COO Eunice Munyingi told the staff to “lock discharges at 7” and to “…kindly start now.

Bad publicity meant not just harm to the hospital’s reputation, but it could also hurt the bottom line if future buyers, well-meaning investors, and nosy reporters found the posts and figured out how Nairobi Women’s was achieving its spectacular service and revenue targets.

The chaos, and reasons why we seek medical attention, meant patients caught up in this great game of corporate greed, and trusting their doctors to know what was best to restore their health, did not know better. They would have sell assets, sacrifice savings, hold fundraisers both online and offline, and do whatever was necessary to pay their hospital bills, without ever knowing that they had been unsuspecting victims of the vagaries of modern finance, and the focus on Africa that followed the 2008 financial crisis.

In Part II, the author examines how we let this happen, how other hospitals do it too, and how other countries have warded off the barbarians at the gates.

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Owaahh is the pseudonym of a blogger based in Nairobi

Politics

Has COVID-19 Sparked Another Revolution in Zanzibar?

The novel coronavirus pandemic has had one unexpected effect in Tanzania: it has emboldened Zanzibaris’ relentless struggle for self-determination.

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Has COVID-19 Sparked Another Revolution in Zanzibar?
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The union between Tanganyika and Zanzibar – the contentious two-tier government system that Tanzania adopted – has been riddled with a number of complaints (commonly referred to in Kiswahili as kero za muungano or grievances of the union) right from its formation on April 22, 1964. None of these complaints, however, have been nearly as controversial as Zanzibar’s de facto inability to enter into international agreements. (Zanzibar’s failed attempt in late 1992, for instance, to unilaterally join the Organisation of Islamic Cooperation (OIC) almost broke the union.) However, the desire among Zanzibaris to have this arrangement overturned across the political spectrum has never wavered and nothing could have demonstrated the arrangement’s detriments to Zanzibar’s development as much as the COVID-19 pandemic.

There is no shortage of literature on the history of the union between Tanganyika and Zanzibar, especially on its motivations. Various people, including journalists, historians, and social scientists, have tried to document the historical development regarded by some as one of the most enduring legacies of Mwalimu Julius Nyerere, the co-founding father of the modern Tanzanian state.

I’m too young to claim any expertise on the subject of the union (which, really, is older than my father), but as I write this I can vividly picture my high school history teacher, a blackboard behind his back, haranguing the class on how the union was conceived for the Zanzibaris’ own benefit, mainly security, and especially in preventing the return of the “Arab Sultanate” that had been overthrown in 1964. Only later would I come to learn other motivations behind the union: first, an attempt by Mwalimu to realise the Pan-Africanist dream, and second, a deliberate effort by the world’s only superpower, the United States, in the midst of Cold War politics, to prevent the emergence of “another Cuba” in the region.

How the union came about 

People who are not familiar with Tanzania’s political system should understand that Tanzania’s union is a two-tier government system where there’s the semi-autonomous government of Zanzibar, known as the Revolutionary Government of Zanzibar, currently under President Ali Mohamed Shein, which handles all non-union matters, and the union government, known as the Government of the United Republic of Tanzania, currently under President John Magufuli, which, contentiously, handles both union and non-union matters.

The uniting of two distinctly divergent people, both culturally (predominantly Muslim Zanzibar versus largely Christian Tanganyika) and ideologically (progressive Zanzibar versus conservative Tanganyika) took place at breakneck speed, hardly three months after the controversial Zanzibar Revolution of January 12, 1964.  This denied the people from both sides of the union any chance to express their views on the decisions made by their leaders, leaving some sceptical observers doubtful of the union’s true intentions and thus laying a fertile ground for the disagreements that were to follow.

In the rush to realise the union, the Articles of the Union – the treaty that effected the union of Tanganyika and Zanzibar – ended up being ratified only by Tanganyika’s Parliament on April 26, 1964, contrary to the initial agreement that the union also had to be ratified by the Zanzibar Revolutionary Council that was formed immediately after the revolution and which functioned both as a legislative and executive arm of the state.

What’s worse, nobody has ever seen the original copy of the Articles of the Union that carries the signatures of the founding fathers Mwalimu Julius Nyerere and Sheikh Abeid Aman Karume, the first president of Zanzibar. This is one of the thorniest issues in the whole discourse on the union between Tanganyika and Zanzibar.

In the rush to realise the union, the Articles of the Union – the treaty that effected the union of Tanganyika and Zanzibar – ended up being ratified only by Tanganyika’s Parliament on April 26, 1964, contrary to the initial agreement that the union also had to be ratified by the Zanzibar Revolutionary Council…

But that’s not the only thorny issue; the other is the arbitrary increase in the number of issues handled by the union, something that makes Zanzibar progressively less autonomous while increasing the powers of its partner, Tanganyika (which, to the Zanzibaris’ chagrin, now functions as Tanzania). This enables the government to meddle in Zanzibar’s local affairs, the most notorious form of meddling being deciding which political party will lead in the isles. This complicates the archipelago’s efforts in defining its developmental path as well as dealing with issues of immense significance to its people, as the COVID-19 experience has demonstrated.

While Zanzibar is expected to handle the health of its people on its own, in the process of doing so it cannot ask for regional or international support.  This is because, according to the Constitution, health is a non-union matter but regional and international cooperation is a union one. This unfortunate arrangement has naturally meant that were Zanzibar in need of any support from, say, the World Health Organization (WHO), or from any other potential donor in its efforts to fight against the COVID-19 pandemic, or to carry out any development initiative, it has to request it through the union government, which reserves the sole right to decide whether the request can go forward. Nothing makes Zanzibaris as disillusioned about the union as this arrangement does, and it is against this background that several demands for the restructuring of the union have been made.

Two very different approaches 

Regarding COVID-19, right from the beginning, Zanzibar, a country of about 1.3 million people, and characterised by a strong communal spirit, took what seemed to be a completely different approach from that of the government of John Magufuli in its efforts to deal with the pandemic. It first reported cases on the isles on March 19, a time when the union government was still trying to figure out how to confront the public about the deadly virus, choosing instead to deny the people important information. As soon as it started to confirm its first coronavirus case, Zanzibar issued an update to its citizens and the world in general on the status of the pandemic there, earning it some admiration from some of Tanzania’s health experts.

On March 21, the Zanzibar government suspended all international flights entering the isles, a decision followed almost three weeks later, on April 13, by its union counterpart. Zanzibar even went one step further in an attempt to contain the spread of the pandemic by shutting down all 478 tourist hotels on the isles. This significantly affected its tourism sector, the lifeblood of the archipelago’s economy, which accounts for almost 80 per cent of its annual foreign income.

Almost a week after the union government announced, on April 28, that only 16 people had died of COVID-19, Zanzibar released an update showing that 32 people had died of the disease, something that made critics question the union government’s figures.

The difference in the approaches to dealing with the COVID-19 pandemic has more to do with the attitude of their respective leaders. While President Shein appreciated the magnitude of the pandemic right from the beginning, and thus took strong measures to contain it, his union counterpart, President Magufuli, on the other hand, did not view the pandemic as a threat. He even advised Tanzanians to go on with their business. While Shein’s government was postponing a major religious event to contain the spread of the fatal virus, the union government organised one. While Shein used every opportunity to urge people to protect themselves against COVID-19 by regularly washing their hands, using sanitisers and wearing masks (even making the latter directive mandatory, with he himself wearing it to set an example to his people), his union counterpart never wore one and was busy advising people to use steam inhalation therapy, saying it cures the disease in spite of health experts advising otherwise. In other words, while Zanzibar’s approach to COVID-19 was informed by the archipelago’s authorities’ willingness to trust science, Magufuli’s approach was informed by something quite the opposite: superstition and quackery.

These steps notwithstanding, there are limits to Zanzibar’s efforts to dealing with the priorities of its people, as highlighted above, thanks to both the current structure of the union as well as clientelism that characterises Zanzibar’s ruling elites, which tend to see their union counterparts (who happen to belong in the same party, the ruling Chama cha Mapinduzi [CCM]) as their patrons and thus are only free to pursue a particular path only to the extent that their patrons on the mainland can allow them. For example, Zanzibar stopped issuing updates on the COVID-19 trend shortly after the union government did so in the wake of the temporal closure of the national laboratory where COVID-19 tests used to be conducted to pave way for an investigation following allegations, among many others, that the lab’s technicians were conspiring with “imperialists” to portray Tanzania negatively by releasing more positive COVID-19 cases.

In other words, while Zanzibar’s approach to COVID-19 was informed by the archipelago’s authorities’ willingness to trust science, Magufuli’s approach was informed by something quite the opposite: superstition and quackery.

To understand this complexity, one must understand how political leadership has always been obtained in Zanzibar, or, to put it differently, how CCM has always ended “winning” elections in the archipelago: it’s through a sponsorship from the union government and its security apparatus.  Following pressure from the union government, for example, Zanzibar’s electoral body was forced to annul the 2015 election results for the president of Zanzibar and members of the House of Representatives, the archipelago’s legislative body, after initial results had shown that CCM, which has ruled both Zanzibar and the mainland since independence, had lost to the isles’ main opposition party, the Civic United Front (CUF). This has forced the Zanzibar government, which the opposition in Tanzania deems to be “illegitimate”, to feel like it has a debt to pay to the union government. (Jecha Salim Jecha, the then chair of the Zanzibar electoral body who was responsible for the 2015 annulment of the isles’ election, surprised many in Tanzania and beyond when he became one of more than a dozen CCM members who have declared their intention to run for the isles’ presidency on the party’s ticket.)

Zanzibar’s relatively better performance in fighting COVID-19 earned it some praise in the court of public opinion, with some even organising online fundraising to support the country in its war against the deadly virus. The seriousness shown by Zanzibar’s political leadership during the pandemic also made the archipelago a potential beneficiary of a number of international rescue aid packages available for needy countries, such as the International Monetary Fund (IMF)’s COVID-19 Emergency Financial Assistance. But that never happened, thanks to the current structure of the union. Apparently, the union government applied for the IMF’s rescue package but it was denied on several grounds, including the government’s decision to give inaccurate statistics on the budget it claimed to have spent in dealing with the COVID-19. The IMF’s Tanzania representative, Jens Reinke, told African Business that “the government doesn’t see the crisis as that big an issue” (Tanzania was ultimately able to secure about $14.3 million debt relief from the IMF’s Catastrophe Containment and Relief Trust to cover the country’s debt service from June 10 to October 13.)

The Black Lives Matter movement might have popularised the phrase “I can’t breathe”, but it did not coin it. Neither did George Floyd, the unarmed black man who said these words when his neck was under the knee of a white police officer. Zanzibaris used the phrase long before it became a global rallying cry for racial justice. The only difference is that they have been using it in the plural form, “We can’t breathe”, or “Hatupumui” in Kiswahili.

Zanzibaris have for years been demanding for the restructuring of the union. They want a three-tier government system (that is, the government of Zanzibar, of Tanganyika and that of the United Republic) so that they can have more room than they have now to decide their own affairs and direct their own development path. The union government has deployed every available weapon in its arsenal to quash these demands, even arresting the movement’s leaders, and detaining them over trumped-up terrorism charges. Tanzania’s resolve to not let Zanzibaris “breathe” has turned it into a de facto occupying force in the archipelago that imposes its will on the people of Zanzibar and interferes in every aspect of the people’s lives. As shown above, it even decides which political party can govern the isles.

The COVID-19 pandemic has taught us numerous unforgettable lessons. However, the most important of these lessons for Zanzibaris is that they can be better off without the union as it is currently constituted. It is not an overstatement, therefore, to conclude that the disease has strengthened their resolve to achieve the right to self-determination.

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The Mushrooming of Car Boot Sales in These Corona Times

Many middle class Kenyans are converting their car boots into mini fruit and vegetable markets. In these times of coronavirus, car boot sales have become an adaptation mechanism: they give people an opportunity to earn some hard cash and maintain their sanity.

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The Mushrooming of Car Boot Sales in These Corona Times
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Amos Waweru is your typical consultant: he always carries his laptop and speaks the language of consultancy – strategic objectives, writing proposals, project management, conducting feasibility studies, etc. An enterprise development consultant for the last 15 years, Waweru’s consultancy portfolio includes consulting for international NGOs, both in Kenya and abroad “but that is when the going was good”. Now, thanks to COVID-19, things are different. “It is really tough now and I have had to make adjustments,” said the consultant.

With three teenage children, all in high school, dwindling consultancy work in the last two years, and now the lockdown, which has halted his work to a near standstill for the last three months, Waweru had to make some tough decisions. One of them was converting his Japanese-made vehicle into a car boot sales market. “I stayed at home for one full month the whole of April, without work, with a lot of time on my hands, and simply immobile – three things that I was not used to having in plenty”.

Waweru, a resident of Ruiru, conducted preliminary research among the women who sell vegetables at Ruiru’s open-air market. “Where do they get their vegetables, what types of vegetables do people prefer, how are they priced, so that with this information, I could work out the logistics of starting my own little vegetable market from the boot of my car,” said the consultant. The coronavirus has taken everyone by surprise and upturned many people’s sources of income, throwing people completely off-balance, observed Waweru.

Waweru had cultivated the high-flier image of a successful consultant who occasionally travels abroad. So he was initially bothered by what his peers would think of him selling vegetables from his car off a busy thoroughfare. “I’m very well-known in my church community and in my residential area of Membley, to be truthful, I was a tad worried of my image and whether it wasn’t going to suffer. I was afraid my esteem among my community would diminish”, said the consultant.

When deciding which types of vegetables he should be selling, Waweru found that leafy green vegetables were most in demand. So the next thing he did was to look for a strategic location to park his vehicle and start his business. “I did a little feasibility study around my location and found a bustling stage where the Eastern bypass and Kamiti Road intersect. Already, there were other people selling foodstuff off their vehicles and I decided to join them.” (This intersection is popularly known as the “OJ Connection” – people drop off as others board boda bodas or matatus to their various destinations.)

Waweru had cultivated the high-flier image of a successful consultant who occasionally travels abroad. So he was initially bothered by what his peers would think of him selling vegetables from his car off a busy thoroughfare.

The leafy vegetables Waweru started with included indigenous vegetables like kahurura, kunde, managu, terere, thoroko and osuga. “The market women told me they buy the vegetables from some Ruiru farmers who farm along the Ruiru River. I didn’t know there’s a lot of vegetable farming specialising in indigenous vegetables going on around Ruiru town.” After his interest in vegetable farming was aroused, Waweru also discovered that on the fringes of Tatu City, the mega real estate project coming up on the outskirts of Ruiru town, “there are huge farms where some people have been growing tomatoes on a large scale”.

Waweru set up camp at OJ Connection, but not for long. “I was always looking for better strategic selling areas, because, somehow, I wasn’t persuaded OJ was the best location for me.” He found one at Kimbo, next to the General Service Unit (GSU) Recce Squad command post, on Kiganjo Road, off the Thika superhighway. (The Recce squad is a paramilitary force that is specially trained in dealing with terrorism and other security-related emergencies.) The consultant’s gut feelings on change of location paid off: “I’d been doing brisk business at OJ, but I began doing even brisker business at Kimbo.” Waweru’s image worries have dissipated; he is making some money “to basically pay my bills and fuel the car”.

The car boot sales allowed Waweru to deal with two things: “earn some little money, to be honest it’s really nothing – it is from car boot to mouth”, and even more critical, deal with the problem of staying idle at home. “It was driving me crazy and I found myself picking quarrels with everyone. I cannot remember the last time I was marooned in the house for this long. I needed to get out, meet my friends, have a drink and just be out there.” As he was accustomed to, he carries his laptop with him and keeps himself busy, working on business proposals to potential clients as he waits for his customers.

The Kimbo-Recce Squad junction has become a beehive of activity: We counted more than 20 car boot sales vehicles. “A new vehicle has been pitching camp every week since I came here,” explained Waweru. “Somehow, it has become a magnet for people with cars to experiment with selling a variety of foodstuff from the boots of their cars.” The consultant said that at first the paramilitary personnel were apprehensive about people bringing their cars so close to their camp, but they became more relaxed about it, but warned the car boot sellers not to encroach too near the camp’s gate.

“This coronavirus pandemic has driven people to try out different and several possibilities of finding coping mechanisms of staying economically afloat as they strive to deal with the bad times”, said Waweru. “Yet the crux of the matter is that the coronavirus has just been the catalyst: the economic downturn began with President Uhuru’s second term. I’ll be open with you – President Uhuru’s years have been the worst for my consultancy. I’ve suffered greatly because I cannot even begin to compare his tenure with President Kibaki’s. During Kibaki’s time, I made good money and built myself.”

Some of the additional 20 or so cars that have since followed Waweru to Kimbo belong to teachers, a travel consultant and two matatu owners. At Kimbo they have created a car boot sales mini-market, selling everything from arrowroots, cabbages, eggs, onions, rice (of the pishori type) and tomatoes.

High school teacher Njenga teaches at a school in Kalimoni. After staying at home for a month and after realising there might be no prospect of returning to school sooner, he started thinking of what to do with the extra time that had been created for him. “We are still getting our pay, so compared to other professionals who may have lost their jobs or face a pay cut, we teachers have so far been spared both,” commented the teacher.

“But not used to being idle and immobile, the coronavirus lockdown was driving me nuts – I’ve never stayed at home from morning till evening, day-in day-out, weeks on end. I felt I was beginning to lose my marbles and I needed to be active and breathe out.” As a day school teacher, he and his wife, who is also is a secondary school teacher, had started a side hustle (a popular Kenyan cliché to mean an income-generating project for extra cash). They had invested in a 1000-chicken hatchery. “Instead of waiting for customers to come and collect their eggs at home, we used our car to market the eggs and even attract new customers,” explained the couple.

For some people, the coronavirus pandemic could as well be a blessing in disguise. “From our car boot sale at Kimbo, we’ve been doing good business. In a just a short time, we’ve been pushing between 10 to 20 trays of eggs in a day,” said the teachers. “I mean, before coronavirus, we only depended on our traditional customary clients. Now we’ve created a new market and hope to expand it. A tray of eggs consists of 30 eggs, so, even on a bad day, the Njengas can sell upwards of 300 eggs from their vehicle. At between Sh280 and Sh300 per tray, the teachers can make up to between Sh2,800 and Sh3,000 a day. “If you remove our expenses, we can’t complain too much.”

The other teacher, a lady who also teaches in a high school, has also been selling eggs. “There are enough customers to share, so it’s not a problem that I and my fellow teachers are selling the same thing in the same place. It’s a market of varieties. Let the customers have their say”. She also keeps a poultry farm where she rears chickens for eggs. The pandemic, opined the teacher, had opened her eyes to pursuing an infinite possibility: of selling her eggs from her car. “Even after the crisis is over, I’ll not stop my car boot sale. I’ve already seen the future and I like what I’ve seen: the car boot sale is a niche I had not contemplated. I’m not letting it go”.

For some people, the coronavirus pandemic could as well be a blessing in disguise. “From our car boot sale at Kimbo, we’ve been doing good business. In a just a short time, we’ve been pushing between 10 to 20 trays of eggs in a day,” said the teachers.

Two things have worked in favour of the teachers: The fact that they teach in day schools, which means they don’t have to stay in school all day, and they have not been paying cess to Kiambu County Government. Depending on the nature of business and what you are selling, the county government levies between Sh25 and Sh100 per trader per day.

A county official told me that for now, during the pandemic, they had decided not to charge the car boot sales traders. “We’ve understood the prevailing extraordinary situation to mean that the people are trying make ends meet.”

Just further afield, from where Waweru’s car was, Ben Kungu’s Toyota Hiace, complete with the tracking aerial aloft, was full of fruits and vegetables. Kungu had plucked off the seats of the vehicle to free space for his new venture. A travel and tours consultant, Kungu was hit hard. “Everything ground to a halt and I couldn’t get jobs for my ‘Shark’ [what the Toyota Hiace is popularly called].” His van then was essentially grounded and Kungu was out of a job. What to do in the prevailing circumstances? He decided to go to Ruiru’s open-air market, buy foodstuffs in bulk and in wholesale for resale. “It was both to make some money to fuel the vehicle and for my sanity. I felt like I was going crazy staying at home all day with nothing to do.”

Next to Kungu’s “Shark” were two other vans: the long-distance matatu shuttles known as “Box” because of their shape. When President Uhuru pronounced the cessation of movement in April, many long-distance shuttles that travelled outside of Nairobi County found themselves locked out of work. The owners of these two shuttles said that instead of parking them, like some of their compatriots had done, they decided to convert them into car boot sales markets and sell mostly cabbages from south Kinangop. “Once the cessation ceases, we shall resume our shuttle travel work. For now, let us make use of the vehicles in the most practical way we know how.”

“It was both to make some money to fuel the vehicle and for my sanity. I felt like I was going crazy staying at home all day with nothing to do.”

In Uthiru, an old trading centre off Nairobi-Nakuru highway, I met John Ndung’u. Ndung’u was donning a blue coat, and dusting off sweet potatoes that were spread in the boot of his car. “These sweet potatoes are the best in the market because they are from Kisii – sweet potatoes from this region are good because they remain dry and tough and are not watery,” said the former taxi driver. “They are fresher because I catch them from my supplier before he deposits the load at Marigiti Market in the city centre.” Trucks full of farm suppliers from north and central Rift Valley and western region pass outside Uthiru.

People nowadays prefer sweet potatoes to bread in the morning, said Ndung’u. “Bread has become expensive, but more fundamentally, the sweet potato is nutritious, very fulfilling and is good for school-going children. And there are more than one ways of preparing the sweet potato: you can roast it, you can boil it, you can even fry it, more like potato chips, all to create different tastes of this tasty African tuber crop.”

Ndung’u is the chairman of the Muthiga taxi drivers association. Muthiga, which is seven kilometres from Uthiru, is a popular meat-eating and beer-drinking joint. It has become so popular that it is referred to as Nairobi’s Kikopey. Kikopey is the famous mouth-watering, meat-eating stop on the same highway, but 120km away in Gilgil, Nakuru County. Ndung’u told me the coronavirus crisis had caught his members completely off-guard. Patronised by the moneyed wannabe who live around Muthiga and the adjoining areas of Kinoo, Kikuyu, Magina, Muthure, Sigona and Uthiru, Muthiga is busiest in the evenings and at night, making taxi-driving a profitable venture.

With the president’s announcement of the quasi-lockdown and curfew, taxi drivers in Muthiga became redundant. They had to quickly think of what to do next, what with families to cater for. “We decided, for those who were interested, to temporarily convert our cabs into car boot markets, as we study the effects of this coronavirus and what those effects portended for our business in the coming days,” explained Ndung’u.

If you take a quick tour of the highway from Uthiru, all the way to Regen and Rungiri, you will see saloon vehicles parked besides the highway, with open boots selling all manner of foodstuffs. “Beginning from Corporation, 87, Kinoo, Muthiga, Regen, Rungiri, all the way to Kikuyu town, most of the vehicles you will see are taxi drivers of our association,” said Ndung’u. The cab driver said if the lockdown and the curfew are lifted tomorrow, he would immediately go back to what he knows best: taxi driving.

But Monica Wangari – who I found selling bananas, avocadoes, pineapples and pumpkins in Thindigwa, a splashy middle-class residential area off the busy Kiambu Road – was not sure whether she would go back to her old job. “I was an insurance agent, working for one of the biggest insurance companies in Nairobi. Then coronavirus happened. Heads of department were asked by the MD to select which people should be laid off. I happened to be one of the people who were picked,” said Wangari.

Her family type car is a Vox Noah. Now, she wakes up in the morning, goes to Marigiti Market in downtown Nairobi, buys her foodstuff and parks her Noah on the dusty road that cuts across Thindigwa. “I couldn’t stay in the house. I tried in the first few weeks. I thought I was going to run mad.” At first, she had sought to sell off her wares on the Eastern bypass on the way to Windsor Hotel, “but I found there were too many vehicles and the competition was very stiff, so I opted to park in my hood,” said Wangari.

If you take a quick tour of the highway from Uthiru, all the way to Regen and Rungiri, you will see saloon vehicles parked besides the highway, with open boots selling all manner of foodstuffs.

Not far from where Wangari was parked, I met Catherine Nyawira. A professional cateress, her outside catering business was doing fine until coronavirus come knocking. “My vehicle was for delivering supplies. Little did I know I would convert it to car boot market.” Like Wangari, she opted to sell fruits, but with a bias towards pumpkins. “My pumpkins are from Meru, they are best: they are sweet and dry. Good for mothers weaning their babies off breast milk and for babies generally.” The coronavirus had hit her business hard, said Nyawira. “This is the new reality and it’s survival of the fittest.”

For Kennedy Kiarie from Kiambu town, this new reality is very real. He had been working in the hospitality industry as a sales and marketing executive for a leading hotel in Nairobi. Then coronavirus came. Hotels and restaurants were forced to close down. It was only a matter of time before the workers were asked to go home. He was one of the many employees who was asked to leace. His teacher wife’s salary couldn’t take care of the family and so he decided to convert their family car into a car boot sale market. Unlike Wangari, he does not fear the competition on the Eastern bypass: he has been selling fruits and vegetables just after the roundabout on the road heading to Windsor Hotel since April.

As a full-time Uber cab driver, Kimondo had to contend with the ever-increasing competition from traditional taxi cabs as well from other taxi apps. Yet he was not prepared for coronavirus. When it landed in Kenya, it hit him real hard. He found that he could not cope anymore: his clients had dwindled to zero. “With people not travelling, many cab drivers were rendered jobless, I being one of them,” said Kimondo. Kimondo is now growing vegetables like sukuma wiki and spinach in his small plot in the Mushrooms area, just behind Thindigwa. “I didn’t need to think twice. Once my cab business tumbled, I turned to my car and went off to sell my wares on the Eastern bypass on your way to Windsor Hotel”.

In these times of coronavirus, car boot sales have become an adaptation mechanism: they give people an opportunity to earn some hard cash and maintain their sanity. One could also surmise that the car boot market has in the short-term become an integral part of the food distribution network, ensuring that people living under COVID-19 and curfew still get their food supplies.

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It’s Our Turn to Eat: Cousin of Kenya’s President Has Stake in Sportpesa Betting Firm

The Kenyatta family business, managed by one the president’s brothers, has sprawling interests across the Kenyan economy, and as Faull and Wafula reveal, the presidency has increased their stake in the economy.

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It’s Our Turn to Eat: Cousin of Kenya’s President Has Stake in Sportpesa Betting Firm
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A cousin of President Uhuru Kenyatta has quietly accumulated a financial stake in SportPesa’s controversial gambling empire, Finance Uncovered can reveal.

The finding — discovered in details buried in corporate filings in Kenya, the UK and the Isle of Man — came as the president signed a law to axe a 20% excise duty on bets staked, a levy that contributed to SportPesa’s withdrawal from its lucrative Kenyan market last year.

The proposal to drop the duty was included as an amendment to the Finance Bill, which had been passed by the National Assembly last week. The final hurdle to it becoming law was the president’s assent on Tuesday night.

A cousin of President Uhuru Kenyatta has quietly accumulated a financial stake in SportPesa’s controversial gambling empire, Finance Uncovered can reveal.

The president’s crucial decision is being analysed closely now it has been established that Peter Kihanya Muiruri, his second cousin, has over the past 14 months acquired stakes in three companies which are part of  SportPesa’s international gambling empire.

SportPesa is the shirt sponsor of English Premier League side, Everton FC. After the government introduced taxes on bets placed by punters, and aggressively pursued gambling firms for its payment, it prompted a number of leading gambling firms to close their businesses in Kenya.

The president’s crucial decision is being analysed closely now it has been established that Peter Kihanya Muiruri, his second cousin, has over the past 14 months acquired stakes in three companies which are part of SportPesa’s international gambling empire.

The taxes were brought in to both stem rampant gambling addiction in Kenya and also raise revenue from what has rapidly become a highly lucrative business.

Now it has been axed, it could see SportPesa, whose biggest shareholder and founder is Bulgarian national Guerassim Nikolov, re-enter the Kenya sport betting market and revive the wider gambling industry.

A SportPesa revival in Kenya would also benefit a member of Kenyatta’s own family.

A presidential spokesperson did not return calls or respond to a detailed text message asking whether Kenyatta knew about his cousin’s shareholding before he signed the bill into law.

A SportPesa revival in Kenya would also benefit a member of Kenyatta’s own family

The Kenyatta family business, managed by one the president’s brothers, has sprawling interests across the Kenyan economy, and individual family members also invest widely.

Shareholdings

Finance Uncovered, working with the Daily Nation in Kenya, accessed documents filed by SportPesa companies in Kenya, the UK and the Isle of Man.

The documents show Peter Kihanya Muiruri is a shareholder in three companies linked to SportPesa:

  • The first is a 1% stake in Pevans East Africa, the company which owns SportPesa in Kenya. Muiruri appeared on the shareholder register for the first time in May 2019, shortly before a government clampdown on the betting industry began. Muiruri is now also a director of Pevans. Pevans has previously disclosed that it amassed Sh20 billion in revenues and generated gross profits of Sh9 billion (£70m) in Kenya in 2018.
  • The second stake is a 0.5% shareholding in SportPesa Global Holdings Limited (UK) – a  company that owns SportPesa’s non-Kenyan betting companies in Tanzania, South Africa, Italy and Russia. It also owns a highly profitable UK business SPS Sportsoft Ltd, which provides IT services to SportPesa sister companies, including Pevans in Kenya. Muiruri acquired the stake last November. SportPesa Global Holdings made a profit after tax of almost £12m in 2018, according to its financial statements.
  • The third is a 3% stake in SportPesa Holdings Limited (Isle of Man). This is an offshore company which receives SportPesa’s revenues from bets staked in the UK. Companies based in the Isle of Man, a small British Crown dependency and tax haven in the Irish Sea, do not have to publicly disclose their accounts so no financial information is available. Muiruri acquired the stake last December.

The value of Muiruri’s shares in the three companies is unclear, because up-to-date financial information for these companies is not available. It is also unknown at this stage how much, if anything, Muiruri paid for the shares.

SportPesa did not respond to the Daily Nation’s emailed questions.

The company was asked whether it had  lobbied the President either directly or indirectly for the reinstatement of its betting licence or any tax reductions.

The firm was also asked to disclose how much the president’s cousin paid for his shares in each of the three companies, and when he became a director in Pevans.

There is no suggestion of wrongdoing either by Muiruri or SportPesa.

Family connection

Muiruri himself is a low-key businessman. Little is publicly known about him. Muiruri’s mother is Uhuru Kenyatta’s first cousin, while his grandfather was the younger half brother of Jomo Kenyatta, Kenya’s first president.

In November 2016, President Kenyatta attended the funeral service of Muiruri’s father, the late Mzee Josphat Muiruri Kihanya, at the Holy Family Basilica in Nairobi and gave a short address. The presidency also issued a formal press statement paying tribute to the former civil servant, although it made no mention of the family connection.

SportPesa lost its betting license last July. The company announced it was withdrawing from  Kenya last September in response to what it called “the hostile taxation and operating environment in the country”. Their withdrawal led to 400 job losses and the sudden cancellation of its local sports sponsorships.

In February this year SportPesa also withdrew from its international sponsorship commitments, including a reported £9.6 million a year shirt sponsorship with Everton.

The 20% duty was only introduced last November, according to the Kenya Revenue Authority.

Tax about-turn

Reversing any betting tax was not on the cards two months ago, when the Departmental Committee on Finance and National Planning chaired by Joseph Limo published the Finance Bill for public comment on 8 May. At that stage, the bill contained no plans to tinker with any betting taxes.

Committee meeting minutes show that an obscure stakeholder group — identified only by a non-existent URL as shade.co.ke — wrote to the committee on 15 May proposing the scrapping of the 20% excise duty on bets placed. “It has made many betting firms cash strapped hence cutting down on their sponsorships to local sports clubs,” they said.

The committee agreed, noting that “the high level of taxation had led to punters placing bets on foreign platforms that are not subject to tax and thereby denying the Government revenue”.

In its justification for approving the amendment, the committee explained to the National Assembly that it would “reverse the negative effects of this tax on the industry which has led to closure of betting companies in Kenya, yet international players continue to operate”.

The committee turned down other proposals by the unidentified stakeholder group to amend other tax laws affecting betting, which included a reduction in withholding tax on players’ winnings from 20% to 10% and exempting the betting industry from digital services tax.

A gambling nation

As the committee was still considering the excise tax proposals in May, Finance Uncovered working with the Daily Nation published leaked betting revenue declaration figures from the industry for May 2019.

The data showed that punters had wagered more than Shs30bn (£234m) in just one month. SportPesa alone accounted for two-thirds of these betting revenues, according to the data which all betting firms submitted to the Betting Control and Licencing Board (BCLB).

Such huge revenues for a single month showed what is at stake for the gambling companies in Kenya.

The controversial 20% excise duty would have been levied directly on these revenues, and could — on the basis of the leaked revenue data — have been worth up to Shs72bn (£562m) in annual taxes for the Kenya Revenue Authority (KRA).

SportPesa alone accounted for two-thirds of these betting revenues, according to the data which all betting firms submitted to the Betting Control and Licencing Board

However, this was when the industry was at its peak, and before the government began its tax and regulatory clampdown last July, including suspending  the betting licences of gambling firms including SportPesa and its next biggest rival Betin.

Two other associates of the president already hold a significant chunk of equity in SportPesa both locally and internationally.

They are Paul Wanderi Ndung’u, a key fundraiser for Kenyatta’s Jubilee political party during the 2017 election (17%); and Asenath Wachera Maina (21%), whose late husband Dick Wathika is a former Nairobi mayor whom Kenyatta has described as a long-time friend.

In addition to these links, SportPesa’s Nairobi headquarters share the same office complex that also houses the Kenyatta family-owned investment holding company.

This article was first published by Finance uncovered. An investigative journalism training and reporting project.

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