A wide tarmac road winds around the freshwater Lake Naivasha, about a hundred kilometers away from the capital city of Nairobi. A stream of heavy traffic manoeuvres from one side of the road to the other in order to avoid the large potholes – sometimes half a meter deep. Drivers of matatus (minibuses) often prefer the dirt tracks on either side of the road, where the chance of a tyre blowout is less likely. Occasionally, individuals are spotted putting their lives at risk pushing a wheelbarrow with stones onto the road to seal a pothole.
The condition of Moi South Lake Road stands in contrast with the well-paved roads that branch from it and lead into fenced compounds manned by armed guards. The flag of Dutch professional football club, Feyenoord, flutters behind one of those gates. The flower farms that are nestled in between Moi South Lake Road and Lake Naivasha are mostly owned by Dutch farmers and appear to be in perfect condition.
In the Netherlands, rose cultivation has decreased spectacularly in recent decades. Between 2000 and 2019, the area under rose cultivation in the Netherlands dropped from 932 hectares to 200 hectares. Many Dutch growers moved their companies to African countries such as Kenya and Ethiopia. Labour, energy, water and land prices are lower in Eastern Africa than the Netherlands and the Eastern Africa climate is favourable for rose cultivation. Roses thrive in sunlight and warmth. The cut flower has since become the largest export product in Kenya and the sector offers work to 500,000 Kenyans. However, the flower industry in Kenya has faced criticism in recent years due to poor working conditions, the large-scale use of toxic pesticides, and the negative impact on the environment, including the pollution of Lake Naivasha.
In light of these past controversies, a new one arises: Flower companies are avoiding their tax liability in Kenya, the Dutch investigative journalism platform Investico revealed. A search through registrations and annual reports show us how flower companies are evading local taxes through export companies in the Netherlands and trusts located in tax havens such as the Cayman and British Virgin Islands, Liechtenstein and Jersey. Others sell their revenue to sister companies in Dubai for an artificially low price, which means that profits do not fall at the Kenyan farm, but at a foreign entity where the profit tax is also much lower than in Kenya.
Of the 32 companies we investigated, of which at least 13 have Dutch origins, 45 per cent can be linked to tax havens. Almost all Dutch growers who went to Kenya transferred part of their business to a Dutch company. Companies that set up an international group of several companies can transfer and settle profits and losses within that group. This way they can ensure that the profit is as low as possible in the country with the highest tax rate. Because Kenya has a high profit tax, this model is attractive for companies that operate there. The Netherlands has tax treaties with many other countries. This makes it easier to channel money through the Netherlands to a tax haven than from Kenya.
While the growers are avoiding paying tax in a country like Kenya, where 36 per cent of the population lives in poverty, they still call their business “fair trade”. In fact, more than half of all the companies that we investigated have a Fairtrade certificate. Fairtrade, a premium label that stands for fair trade between the West and African countries, presents a blind spot for tax avoidance. “Fair trade – that is an oxymoron,” says Alvin Mosioma, director of Tax Justice Network Africa. “There is nothing fair about this trade. Not to the workers who cut the flowers, nor to the government.”
In a small hall at Oserian Primary School in Naivasha, parents scramble to get hold of plastic chairs with “Oserian Church” written on the back of the chairs. They have been borrowed from a nearby church and placed in neat rows. During this ceremony, the ten best performing students of the national exam from last year are being honoured: one of them may even join the top five hundred students in the country and soon journalists will swarm around him for soundbites. But first the school principal opens the proceedings with a prayer and in one breath he thanks God and the Oserian flower company for the brilliance of the students.
Oserian is a huge company with Dutch roots: it was founded in 1969 by ex-marine Hans Zwager and is now one of the largest exporters of roses and cut flowers in Africa. A million roses are processed every day. A portion is transported by air to Schiphol to be traded at the auction in Aalsmeer (Netherlands); the rest is delivered directly to European supermarkets such as Sainsbury’s. More than four thousand employees work at the nursery, and hundreds at the rest of Oserian’s estate.
“Fair trade – that is an oxymoron,” says Alvin Mosioma, director of Tax Justice Network Africa. “There is nothing fair about this trade. Not to the workers who cut the flowers, nor to the government.”
Oserian is the banner of the Kenyan flower industry. It puts a lot of effort into conserving wildlife and on its grounds are schools, a hospital and houses for the staff. Founder Hans Zwager was decorated by recently deceased former president Daniel Arap Moi for his pioneering work in the Kenyan horticulture industry and for socially responsible entrepreneurship.
From the Moi South Lake Road there is a view of a palace with white spiers that protrude above the tree line. It once belonged to the colonial British family Delamère and is now occupied by the Zwager family.
“Oh, you disappear in life there,” says Fredrick, 46, a former employee of Oserian, as he digs into a plate of fish. Cafe Hollywood, located a few kilometres from the flower nursery, is full in the evening. The space is heated by charcoal mounds on which freshly caught tilapias are baked. “Oserian provides all facilities. When I was on vacation, I didn’t know where to look, as if there were no more worlds outside the company.”
For nearly twenty years, Fredrick ensured that the rose buds were fertilized. He now works for himself: he repairs and rents out bicycles. Fredrick initially worked for the flower company for 12,000 Kenya shillings (around 110 euros) a month, but people with that salary were slowly being phased out, he says. New employees earn half that amount. This figure is confirmed the next morning when we chance upon a new rose cutter at Oserian and give her a lift. She confesses that she only gets 59 euros for a month’s work. A third employee, whom we speak to when we deviate from the route during a tightly guided tour of the sorting center, speaks of the same amount – which is roughly equal to the minimum wage for unskilled personnel in Kenya. However, Mary Kinyua, the administrative director of Oserian, claims that the average salary of an Oserian worker is 167 euros.
In 2017, Oserian split the company on paper in two. Some activities, such as the packing of roses, were transferred to a new company. That company is evading the sector CAO (Collective Labour Agreement) that requires a salary of 10,000 shillings (91 euros). In practice, there appears to be little difference in employees from one or the other company. In the pale-green greenhouses, which extend as far as you can see, employees of both companies interact. Both groups do not come close to the living wage calculated by Hivos in Naivasha, which is 2.852 euros per year. Nevertheless, Fairtrade currently agrees with both the minimum wage and the sector CAO.
Dutch flower farmers moved to Africa because of the prosperity that was promised. But in Kenya that landscape has since changed considerably; flower cultivation is also in decline there. “My sixteen hectares in the Netherlands yields more than the seventy in Kenya,” says flower farmer Arie van den Berg, who is farming both in the Netherlands and in Kenya. Dutch roses in Europe are still available for a few euros every Valentine’s Day at the florist, but African roses are sold at Lidl (a European supermarket chain) for a dumping price of 1.99 euros per bunch. Sometimes auction prices are so low that it is more beneficial to destroy a load of roses than having to pay for the flight costs to send it to the auction in the Dutch Westland that revolves around horticulture.
Competition is increasing worldwide and African countries are trying to outdo each other: Ethiopia has begun to compete by offering so-called tax holidays – and there is no question of a minimum wage at all. Another problem is the tax, which is high in Kenya for foreign entrepreneurs: the corporation tax is 37.5 per cent. In a market where every cent counts, some companies do everything they can to get out of that tax burden.
A few years ago, in 2012, Oserian FC and Karuturi Sports football teams, sponsored and named after two competing rose nurseries, competed against each other in the Premier League, the highest football division in Kenya. The “derby of Naivasha” was a crowd puller. Barely two years after this high point, fortunes took a dramatic turn and the players of Karuturi Sports had to hang up their boots in 2014. The Karuturi site has since been abandoned. The vacant greenhouses stretch hundreds of meters. The iron structures occupy one’s view for as far as the eye can see, interrupted only by the occasional individual plucking a stray rose from the wild growing plants in the abandoned greenhouses.
Dutch flower farmers moved to Africa because of the prosperity that was promised. But in Kenya that landscape has since changed considerably; flower cultivation is also in decline there.
Five years after the bankruptcy, a former employee still lives in a hut at the entrance of the company premises – hoping that he will be paid the three-month wages that he is owed, plus his accrued pension. “In the last months before the nursery closed, the working conditions were terrible. There was no longer any protection against the pesticides and the face masks we had on were not even really suitable for dust, let alone poison,” he says.
But the closure of Karuturi was not due to its pesticide use. The company was found guilty of evading more than 18 million euros in taxes. Although Karuturi and the tax authorities came to a settlement of 4 million euros, it turned out to be enough to bankrupt the company. Roses were systematically exported at an extremely low price to their own company in Dubai, from where they were further distributed throughout the market. The Kenyan branch turned into a loss, while the branch turned green figures in the Emirates. But Karuturi paid no tax on this profit: the United Arab Emirates have no income, profit, or dividend taxes and no import duties on transit goods. While 37.5 per cent tax is charged in Kenya, tax in Dubai is 0 per cent.
Dubai is a new tax haven. Free zones, where the official language is English and foreign entrepreneurs may be the full owners of a company, are advancing. Three Dutch nurseries in Kenya have already found a home in the Emirates, according to various annual reports from the Dutch Chamber of Commerce, including the large Oserian, which opened a logistics center, Airflo FZE (Free Zone Enterprise), at Dubai airport.
In addition to low taxes, Dubai offers far-reaching confidentiality to business owners: annual reports are not mandatory and requesting them is impossible. That is why we cannot verify whether Oserian applies the same rulebook as Karuturi. Karuturi was ultimately unsuccessful because it had to disclose more information as a listed company in India. The Dutch companies do not have to disclose financial records to the public because they are not registered on the stock exchange.
We track the offshore trade and walk of Dutch companies for the first time via the FlowerCompanies.com database, founded by a Dutch entrepreneur. Out of 21 African companies, the country of establishment does not state Kenya or Ethiopia, but the Cayman Islands, a sunny place, but without a single mega farm.
“No idea why this is, how crazy. This is a bug in the website,” the founder says when we have him on the line. After a few hours, the addresses were removed from the website, but we discovered through other means that the majority of those companies do indeed have branches in tax havens such as the Cayman Islands. It is more difficult to prove that they pay little or no tax in Kenya.
By law, all Kenyan residents have the right to request data from government agencies and private companies. Because we are not Kenyan residents, a tax law student in Nairobi helped us to view annual reports of Dutch growers in Kenya. During his first visit to the Kenya Chamber of Commerce, he was summoned to communicate his choices via the internet. During his second visit, he was only given an empty file. During his third visit, he finally got the Oserian file. He paid more than six euros for inspecting it.
Taking photos is not allowed at the Chamber of Commerce and security cameras dissuade visitors from doing so. Our “informant” is reluctant to use a hidden camera. Calling the Netherlands, he browses through the book, which contains an independent Deloitte audit, in which Oserian’s revenue for 2013 is estimated at 2.7 million euros. Below the line, only 3,910 euros of profit remains on their own financial statements, of which Oserian paid just under 1,041 euros to the tax authorities.
We wrote, in accordance with the law, a letter to the Kenya Chamber of Commerce, asking for copies of the file – but the papers that the Kenyan student saw a few days before suddenly got “lost”. The company also refuses to transfer any information about its finances.
The Zwager family, owner of Oserian, built a whole web of companies around the nursery that together cover the entire chain, from breeding to sales and distribution. A company in the Netherlands is concerned with “sales and marketing of cut flowers”. The Dutch company of Peter Zwager generated a gross turnover of 47 million euros in 2010. Most employees, according to the LinkedIn reference, simply work from Kenya. That cannot be otherwise, because there are no workplaces in Amsterdam: the company was transferred to Align trust office.
The ultimate stakeholder in all these “Dutch” companies is Mavuno Group Holding Company Establishment, a trust in tax haven Liechtenstein, which is again managed by a trust office. No country in Europe charges as little tax as Liechtenstein, and above all, it is not open to public scrutiny. The only two shareholders that we identify are a company at the same address in the principality, and one near the picturesque harbour of Road Town, the capital of the British Virgin Islands, which in turn owns a whole range of companies, including a Florida real estate company.
Other branches of Oserian also end up vanishing in the smoke of vague shareholders and directors on tropical islands where neither annual reports nor ultimate owners are made public. We identify New Zealand, the Bahamas and Jersey.
“We do not sell anything in Liechtenstein, we do not trade there, we certainly do not get a tax advantage there – it is just a trust,” explains administrative director Mary Kinyua. “The owner of Oserian, Peter Zwager, puts his assets in.” When asked why Oserian in Kenya only makes about 2,000 euros in profit, she has no answer.
“This is super signing. It is very clear that we are trying to evade taxes here,” says Vincent Kiezebrink of the Research Foundation for Multinational Enterprises (SOMO) when we present the drawn-up corporate structure of Oserian. “It looks like she can try to get the most out of it,” he chuckles. “All tax ports come by. You don’t need so many havens to evade tax. Many large companies nowadays invest in their public image: they no longer settle in the Bahamas but in lesser known tax havens such as Ireland or Cyprus, because they still claim to levy about 15 per cent tax. I do not see that consciousness here. It would not surprise me if this company thinks: ‘The closer to zero, the better.’”
We wrote, in accordance with the law, a letter to the Kenya Chamber of Commerce, asking for copies of the file – but the papers that the Kenyan student saw a few days before suddenly got “lost”.
A world full of crafty lawyers and accountants unfolds around emigrating farmers who show them around in Kenya and, where necessary, help them with agricultural land and tax constructions. The fulcrum in this is the law firm Raffman Dhanji Elms & Virdee based in Nairobi. On its website, the law firm states: “The Firm has been heavily involved in advising the flower and horticultural industries over the last decade in particular with foreign investment into this country and the methods to acquire land and the corporate structures required. This has led to joint ventures between Kenyan and overseas investors and the protecting and balancing of the respective interests.”
Controversial city lawyer Guy Spencer Elms was one of the three names given to us. He was once infamously associated with a multitude of corruption scandals in Kenya. Nonetheless, he has never been convicted and maintains in his defence of a plot by a criminal cartel to always paint his image in a bad light. Guy Spencer Elms says he arranges the tax planning of various Dutch nurseries himself, and he also helps farmers with agricultural land transactions. When we present him with the offshore constructions, he says: “People immediately think of something bad like hearing about a trust in Liechtenstein or the British Virgin Islands, but often it is just a way of’ estate planning. Trusts are not necessarily a bad thing “.
“Tax is Life!” reads the slogan celebrating 100 years of income tax in Kenya. The luxurious Safari Park Hotel in Nairobi is the location of the tax conference organised by the University of Nairobi. Joan, a student, takes a credit note from her bag, and points to the 16 per cent VAT. “This is why I think tax is so important. Taxes can pull Kenya out of the mud,” she says.
Students speak of tax obligations in glowing terms; they see it as the future. Where that change must take place is something that everyone agrees with: the government. Tax guru Attiya Waris, a professor of tax law, points out the loopholes in tax collection throughout Africa. According to the OECD, Africa misses 46 billion euros in tax revenues every year from evasive multinationals. The United Nations estimates that amount to be 92 billion euros. Waris did research for a long time on flower companies in the country. “Kenya transfers its land to foreign companies, but the profit they make falls elsewhere. It is not a win-win situation,” she says.
Other branches of Oserian also end up vanishing in the smoke of vague shareholders and directors on tropical islands where neither annual reports nor ultimate owners are made public. We identify New Zealand, the Bahamas and Jersey.
The Dutch company Berg Roses received 1.8 million in income tax with retroactive effect. The company was accused by the Kenyan tax authorities of conspiring with its parent company in the Netherlands. The Kenyan branch would sell most of its flowers for extremely low prices to the parent company in the Netherlands so that the profit is not realised in Kenya, but in the Netherlands.
The lawsuit is still ongoing because Van den Berg challenged the matter. “We ensure that we make fifty percent profit in Kenya and fifty percent in the Netherlands. We think that is fair. If we lose this case, it will be the death blow for our company.” Van den Berg knows of companies that channel the profit away to offshore trusts and, according to him, we never hear about it.
“Not only in the sector, but also in government is it only in terms of profit, not what is good for the country,” says tax expert Waris at the end of the celebration. She pulls her colourful scarf a little tighter around her shoulders and continues in a whisper when a duo of armed guards walk past. It should be a moral obligation to pay taxes in a country whose land, water and people you use, she says.
But monitoring the flower industry often leaves much to be desired because business and the political elite are intertwined – a euphemism for corruption. That became clear, for example, in the Paradise Papers – leaked files from the law firm Appleby – which show that Sally Jemngetich Kosgei, the former Head of Civil Service, and owner of a flower nursery in Kenya, bought a luxurious apartment in London through an offshore company based in Mauritius. Kosgei told the International Consortium of Investigative Journalists (ICIJ) that she bought the apartment with her personal funds.
Fair trade organisations do not see tax ethics as their responsibility. The cover page of a recent issue of Fairtrade International is adorned with a photo of the Waridi Limited nursery, which is almost entirely in the hands of a company in the Virgin Islands. Almost all Dutch nurseries in Kenya are in possession of the Fair Trade quality mark, which stands for good conditions.
According to the OECD, Africa misses 46 billion euros in tax revenues every year from evasive multinationals. The United Nations estimates that amount to be 92 billion euros.
“Oserian sells 14 per cent of its production as a Fair Trade rose,” says Tara Scally, the spokesperson for Fair Trade Netherlands. Part of the proceeds from Fair Trade roses, which are often more expensive, are returned to a pot that employees of the farm can dispose of themselves: for example, they invest it in education or in the salary of a doctor.
Fairtrade’s focus is on the position of farmers and workers, says Scally. Tax constructions are not part of this. Moreover, tax research requires a lot of specialist knowledge and financial resources, she adds. She fears that companies will no longer participate in the programme if they are required to disclose what is in their books. “The consequence may be that workers lose part of their income. We would rather not see that.”
A ridiculous line of reasoning, counters Alvin Mosioma, founder and director of Tax Justice Network Africa. “Wear a Fair Trade label while not paying your taxes? That is an oxymoron.” Mosioma regards Fair Trade as a marketing gimmick:
“People don’t buy a rose with blood on it. Social responsibility is part of the brand of these companies. They build hospitals, schools. That gives the consumer who buys such a rose a good feeling – the idea that they are making a contribution to the development of such a country. Nothing is further from the truth. These people work under very precarious conditions for a minimum wage. It is rather paternalistic: you give them jobs, and a school. But you also buy people around with it. They are happy with such an investment. ‘Look,’ they say to the government, ‘this company takes care of us, the government does not do that’. No, that’s because the government has no money for that, and also because the same companies are engaged in aggressive tax evasion.”
This article was previously published in the Dutch language in the Netherlands in the following papers/ online: (frontpage) daily paper Trouw, weekly paper De Groene Amsterdammer and online investigative journalism platform Investico.
A Dictator’s Guide: How Museveni Wins Elections and Reproduces Power in Uganda
Caricatures aside, how do President Yoweri Museveni and the National Revolutionary Movement state reproduce power? It’s been 31 years.
Recent weeks have seen increased global media attention to Uganda following the incidents surrounding the arrest of popular musician and legislator, Bobi Wine; emblematic events that have marked the shrinking democratic space in Uganda and the growing popular struggles for political change in the country.
The spotlight is also informed by wider trends across the continent over the past few years—particularly the unanticipated fall of veteran autocrats Muammar Gaddafi in Libya, Hosni Mubarak in Egypt, Yaya Jammeh in Gambia, and most recently Robert Mugabe in Zimbabwe—which led to speculation about whether Yoweri Museveni, in power in Uganda since 1986, might be the next to exit this shrinking club of Africa’s strongmen.
Yet the Museveni state, and the immense presidential power that is its defining characteristic, has received far less attention, thus obscuring some of the issues at hand. Comprehending its dynamics requires paying attention to at-least three turning points in the National Resistance Movement’s history, which resulted in a gradual weeding-out of Museveni’s contemporaries and potential opponents from the NRM, then the mobilisation of military conflict to shore up regime legitimacy, and the policing of urban spaces to contain the increasingly frequent signals of potential revolution. Together, these dynamics crystallised presidential power in Uganda, run down key state institutions, and set the stage for the recent tensions and likely many more to come.
From the late 1990s, there has been a gradual weeding out the old guard in the NRM, which through an informal “succession queue,” had posed an internal challenge to the continuity of Museveni’s rule. It all started amidst the heated debates in the late 1990s over the reform of the then decaying Movement system; debates that pitted a younger club of reformists against an older group. The resultant split led to the exit of many critical voices from the NRM’s ranks, and began to bolster Museveni’s grip on power in a manner that was unprecedented. It also opened the lid on official corruption and the abuse of public offices.
Over the years, the purge also got rid of many political and military elites—the so-called “historicals”—many of whom shared Museveni’s sense of entitlement to political office rooted in their contribution to the 1980-1985 liberation war, and some of whom probably had an eye on his seat.
By 2005 the purge was at its peak; that year the constitutional amendment that removed presidential term limits—passed after a bribe to every legislator—saw almost all insiders that were opposed to it, summarily dismissed. As many of them joined the ranks of the opposition, Museveni’s inner circle was left with mainly sycophants whose loyalty was more hinged on patronage than anything else. Questioning the president or harboring presidential ambitions within the NRM had become tantamount to a crime.
By 2011 the process was almost complete, with the dismissal of Vice President Gilbert Bukenya, whose growing popularity among rural farmers was interpreted as a nascent presidential bid, resulting in his firing.
One man remained standing, Museveni’s long-time friend Amama Mbabazi. His friendship with Museveni had long fueled rumors that he would succeed “the big man” at some point. In 2015, however, his attempt to run against Museveni in the ruling party primaries also earned him an expulsion from both the secretary general position of the ruling party as well as the prime ministerial office.
The departure of Mbabazi marked the end of any pretensions to a succession plan within the NRM. He was unpopular, with a record tainted by corruption scandals and complicity in Museveni’s authoritarianism, but his status as a “president-in-waiting” had given the NRM at least the semblance of an institution that could survive beyond Museveni’s tenure, which his firing effectively ended.
What is left now is perhaps only the “Muhoozi project,” a supposed plan by Museveni to have his son Muhoozi Kainerugaba succeed him. Lately it has been given credence by the son’s rapid rise to commanding positions in elite sections of the Ugandan military. But with an increasingly insecure Museveni heavily reliant on familial relationships and patronage networks, even the Muhoozi project appears very unlikely. What is clear, though, is that the over time, the presidency has essentially become Museveni’s property.
Fundamental to Museveni’s personalisation of power also has been the role of military conflict, both local and regional. First was the rebellion by Joseph Kony’s Lord’s Resistance Army in northern Uganda, which over its two-decade span enabled a continuation of the military ethos of the NRM. The war’s dynamics were indeed complex, and rooted in a longer history that predated even the NRM government, but undoubtedly it provided a ready excuse for the various shades of authoritarianism that came to define Museveni’s rule.
With war ongoing in the north, any challenge to Museveni’s rule was easily constructed as a threat to the peace already secured in the rest of the country, providing an absurd logic for clamping down on political opposition. More importantly, the emergency state born of it, frequently provided a justification for the president to side-step democratic institutions and processes, while at the same time rationalising the government’s disproportionate expenditure on the military. It also fed into Museveni’s self-perception as a “freedom fighter,” buttressed the personality cult around him, and empowered him to further undermine any checks on his power.
By the late 2000s the LRA war was coming to an end—but another war had taken over its function just in time. From the early 2000s, Uganda’s participation in a regional security project in the context of the War on Terror, particularly in the Somalian conflict, rehabilitated the regime’s international image and provided cover for the narrowing political space at home, as well as facilitating a further entrenchment of Museveni’s rule.
As post-9/11 Western foreign policy began to prioritise stability over political reform, Museveni increasingly postured as the regional peacemaker, endearing himself to donors while further sweeping the calls for democratic change at home under the carpet—and earning big from it.
It is easy to overlook the impact of these military engagements, but the point is that together they accentuated the role of the military in Ugandan politics and further entrenched Museveni’s power to degrees that perhaps even the NRM’s own roots in a guerrilla movement could never have reached.
The expulsion of powerful elites from the ruling circles and the politicisation of military conflict had just started to cement Musevenism, when a new threat emerged on the horizon. It involved not the usual antagonists—gun-toting rebels or ruling party elites—but ordinary protesters. And they were challenging the NRM on an unfamiliar battleground—not in the jungles, but on the streets: the 2011 “Walk-to-Work” protests, rejecting the rising fuel and food prices, were unprecedented.
But there is another reason the protests constituted a new threat. For long the NRM had mastered the art of winning elections. The majority constituencies were rural, and allegedly strongholds of the regime. The electoral commission itself was largely answerable to Museveni. With rural constituencies in one hand and the electoral body in the other, the NRM could safely ignore the minority opposition-dominated urban constituencies. Electoral defeat thus never constituted a threat to the NRM, at least at parliamentary and presidential levels.
But now the protesters had turned the tables, and were challenging the regime immediately after one of its landslide victories. The streets could not be rigged. In a moment, they had shifted the locus of Ugandan politics from the rural to the urban, and from institutional to informal spaces. And they were picking lessons from a strange source: North Africa. There, where Museveni’s old friend Gaddafi, among others, was facing a sudden exit under pressure from similar struggles. Things could quickly get out of hand. A strategic response was urgent.
The regime went into overdrive. The 2011 protests were snuffed out, and from then, the policing of urban spaces became central to the logic and working of the Museveni state. Draconian laws on public assembly and free speech came into effect, enacted by a rubber-stamp parliament that was already firmly in Museveni’s hands. Police partnered with criminal gangs, notably the Boda Boda 2010, to curb what was called “public disorder”—really the official name for peaceful protest. As police’s mandate expanded to include the pursuit of regime critics, its budget ballooned, and its chief, General Kale Kayihura, became the most powerful person after Museveni—before his recent dismissal.
For a while, the regime seemed triumphant. Organising and protest became virtually impossible, as urban areas came under 24/7 surveillance. Moreover, key state institutions—the parliament, electoral commission, judiciary, military and now the police—were all in the service of the NRM, and all voices of dissent had been effectively silenced. In time, the constitution would be amended again, by the NRM-dominated house, this time to remove the presidential age limit—the last obstacle to Museveni’s life presidency—followed by a new tax on social media, to curb “gossip.” Museveni was now truly invincible. Or so it seemed.
But the dreams of “walk-to-work”—the nightmare for the Museveni state—had never really disappeared, and behind the tightly-patrolled streets always lay the simmering quest for change. That is how we arrived at the present moment, with a popstar representing the widespread aspiration for better government, and a seemingly all-powerful president suddenly struggling for legitimacy. Whatever direction the current popular struggles ultimately take, what is certain is that they are learning well from history, and are a harbinger of many more to come.
The Enduring Blind Spots of America’s Africa Policy
America should move way from making the military the face of its engagement with Africa and instead invest in deepening democracy as a principled approach rather than a convenient choice.
While Donald Trump’s administration completely neglected America-Africa relations, the blind spots bedeviling America’s Africa policy preceded his 2016 election. Correcting the systemic flaws of the past 30 years will require a complete rethink after the controversial President’s departure.
To remedy America’s Africa policy, President Joseph Biden’s administration should pivot away from counterterrorism to supporting democratic governance as a principal rather than as mere convenience, and cooperate with China on climate change, peace, and security on the continent.
America’s Africa policy
America’s post-Cold War Africa policy has had three distinct and discernible phases. The first phase was an expansionist outlook undergirded by humanitarian intervention. The second was nonintervention, a stance triggered by the experience of the first phase. The third is the use of “smart” military interventions using military allies.
The turning point for the first phase was in 1989 when a victorious America pursued an expansive foreign policy approach predicated on humanitarian intervention. Somalia became the first African test case of this policy when, in 1992, America sent almost 30,000 troops to support Operation Restore Hope’s humanitarian mission which took place against the background of the collapse of the Somalia government in 1991.
On 3-4 October 1993, during the Battle of Mogadishu, 18 US servicemen were killed in a fight with warlords who controlled Mogadishu then, and the bodies of the marines dragged through the streets of Mogadishu. The media coverage increased pressure on the politicians and six months later America withdrew from Somalia — a case of the New World Order meeting the harsh reality of civil conflict.
The chastening experience resulted in America scaling back its involvement in internal conflicts in far-flung places. The result was the emergence of the second phase — non-engagement when Rwanda’s Genocide erupted in 1994 and almost a million people died in 100 days revealed the limitations of over-correcting the Somalia experience. This “non-interference” phase lasted until the twin Nairobi and Dar es Salaam US embassy bombings by Al Qaeda in 1998.
This gave way to the third phase with the realisation that the new threat to America was no longer primarily from state actors, but from transnational non-state actors using failing states as safe havens. The 2002 National Security Strategy states: “the events of September 11, 2001, taught us that weak states . . . can pose as a great danger to our national interests as strong states.”
Counterterrorism training and equipping of African militaries is the central plank of this new security policy. As a result, counterterrorism funding has skyrocketed as has America’s military footprint in Africa. As a result, Africa has become the theatre in which the Global forever War on Terror is fought.
The counterterrorism traps
The reflexive reaction to the events of September 11 2001 spawned an interlocking web of covert and overt military and non-military operations. These efforts, initially deemed necessary and temporary, have since morphed into a self-sustaining system complete with agencies, institutions and a specialised lingo that pervades every realm of America’s engagement with Africa.
The United States Africa Command (Africom) is the vehicle of America’s engagement with the continent. Counterterrorism blurred the line between security, development, and humanitarian assistance with a host of implications including unrelenting militarisation which America’s policy establishment embraced uncritically as the sine qua non of America’s diplomacy, their obvious flaws notwithstanding. The securitisation of problems became self-fulfilling and self-sustaining.
The embrace of counterterrorism could not have come at a worse time for Africa’s efforts at democratization. In many African countries, political and military elites have now developed a predictable rule-based compact governing accession to power via elections rather than the coups of the past.
“Smart” African leaders exploited the securitised approach in two main ways: closing the political space and criminalising dissent as “terrorism” and as a source of free money. In Ethiopia, Yonatan Tesfaye, a former spokesman of the Semayawi (Blue) Party, was detained in December 2015 on charges under Article 4 of Ethiopia’s Anti-Terrorism Proclamation ((EATP), arguably one of the the country’s most severe pieces of legislation. But Ethiopia has received millions of dollars from the United States.
The Department of Defense hardly says anything in public but gives out plenty of money without asking questions about human rights and good governance. Being a counterterrorism hub has become insurance policy against any form of criticism regardless of state malfeasance.
Egypt is one such hub. According to the Congressional Research Service, for the 2021 financial year, the Trump Administration has requested a total of US$1.4 billion in bilateral assistance for Egypt, which Congress approved in 2018 and 2019. Nearly all US funding for Egypt comes from the Foreign Military Finance (FMF) account and is in turn used to purchase military equipment of US origin, spare parts, training, and maintenance from US firms.
Another country that is a counterterrorism hub in the Horn of Africa is Ethiopia. For the few months they were in charge, the Union of Islamic Courts (ICU) brought order and stability to the country. Although they were linked to only a few of Mogadishu’s local courts, on 24 December 2006, Ethiopia’s military intervened in Somalia to contain the rise of Al Shabaab’s political and military influence.
The ouster of the ICU by Ethiopia aggravated the deep historical enmity between Somalia and Ethiopia, something Al Shabaab — initially the youth wing of the ICU — subsequently exploited through a mix of Somali nationalism, Islamist ideology, and Western anti-imperialism. Al Shabaab presented themselves as the vanguard against Ethiopia and other external aggressors, providing the group with an opportunity to translate their rhetoric into action.
Ethiopia’s intervention in Somalia could not have taken place without America’s blessing. The intervention took place three weeks after General John Abizaid, the commander of US forces from the Middle East to Afghanistan, met with the then Ethiopian Prime Minister Meles Zenawi. The intervention generated a vicious self-sustaining loop. Ethiopians are in Somalia because of Al Shabaab, and Al Shabaab says they will continue fighting as long as foreign troops are inside Somalia.
America has rewarded Ethiopia handsomely for its role as the Horn of Africa’s policeman. In both Ethiopia’s and Egypt’s case, on the score of human rights and good governance, the net losers are the citizens.
In keeping with the War on Terror being for forever, and despite departing Somalia in 1993, America outsourced a massive chunk of the fight against Al Shabaab to Ethiopia primarily, and later, to AMISOM. America is still engaged in Somalia where it has approximately 800 troops, including special forces that help train Somalia’s army to fight against Al Shabaab.
America carried out its first drone strike in Somalia in 2011 during President Barack Obama’s tenure. Under the Trump administration, however, the US has dramatically increased the frequency of drone attacks and loosened the oversight required to approve strike targets in Somalia. In March 2017, President Trump secretly designated parts of Somalia “areas of active hostilities”, meaning that the high-level inter-agency vetting of proposed strikes and the need to demonstrate with near certainty that civilians would not be injured or killed no longer applied. Last year, the US acknowledged conducting 63 airstrikes in the country, and in late August last year, the US admitted that it had carried out 46 strikes in 2020.
A lack of transparency regarding civilian casualties and the absence of empirical evidence that the strikes lead to a reduction in terrorism in Somalia suggest that expanding to Kenya would be ill-advised. The US has only acknowledged having caused civilian casualties in Somalia three times. Between 2016 and 2019, AFRICOM failed to conduct a single interview with civilian witnesses of its airstrikes in Somalia.
Despite this level of engagement, defeating Al Shabaab remains a remote possibility.
Containing the Chinese takeover
The Trump Administration did not have an Africa policy. The closest approximation of a policy during Trump’s tenure was stated in a speech delivered by John Bolton at a Conservative think tank decrying China’s nefarious activities in Africa. Even with a policy, where the counterterrorism framework views Africa as a problem to be solved by military means, the containing China policy views African countries as lacking the agency to act in their own interests. The problem with this argument is that it is patronising; Africans cannot decide what is right for them.
Over the last decades, while America was busy creating the interlocking counterterrorism infrastructure in Africa, China was building large-scale infrastructure across the continent. Where America sees Africa as a problem to be solved, China sees Africa as an opportunity to be seized.
Almost two years into the Trump administration, there were no US ambassadors deployed in 20 of Africa’s 54 countries even while America was maintaining a network of 29 military bases. By comparison China, has 50 embassies spread across Africa.
For three consecutive years America’s administration has proposed deep and disproportionate cuts to diplomacy and development while China has doubled its foreign affairs budget since 2011. In 2018, China increased its funding for diplomacy by nearly 16 per cent and its funding for foreign aid by almost 7 per cent.
As a show of how engagement with Africa is low on the list of US priorities, Trump appointed a luxury handbag designer as America’s ambassador to South Africa on 14 November 2018. Kenya’s ambassador is a political appointee who, when he is not sparring with Kenyans on Twitter, is supporting a discredited coal mining project.
The US anti-China arguments emphasize that China does not believe in human rights and good governance, and that China’s funding of large infrastructure projects is essentially debt-trap diplomacy. The anti-China rhetoric coming from American officials is not driven by altruism but by the realisation that they have fallen behind China in Africa.
By the middle of this century Africa’s population is expected to double to roughly two billion. Nigeria will become the second most populous country globally by 2100, behind only India. The 24-country African Continental Free Trade Agreement (AfCFTA) entered into force on 30 May 2019. AfCFTA will ultimately bring together all 55 member states of the African Union covering a market of more than 1.2 billion people — including a growing middle class — and a combined gross domestic product (GDP) of more than US$3.4 trillion.
While Chinese infrastructure projects grab the headlines, China has moved into diversifying its engagement with Africa. The country has increased its investments in Africa by more than 520 per cent over the last 15 years, surpassing the US as the largest trading partner for Africa in 2009 and becoming the top exporter to 19 out of 48 countries in sub-Saharan Africa.
Some of the legacy Chinese investments have come at a steep environmental price and with an unsustainable debt. Kenya’s Standard Gauge Railway is bleeding money and is economically unviable.
A fresh start
Supporting democratic governance and learning to cooperate with China are two areas that will make America part of Africa’s future rather than its past.
America should pivot way from making the military the most visible face of its engagement with Africa and instead invest in deepening democracy as a principled approach rather than a convenient choice.
Despite the elegy about its retreat in Africa, democracy enjoys tremendous support. According to an Afro barometer poll, almost 70 per cent of Africans say democracy is their preferred form of government. Large majorities also reject alternative authoritarian regimes such as presidential dictatorships, military rule, and one-party governments. Democracy, while still fledgling, remains a positive trend; since 2015, there have been 34 peaceful transfers of power.
However, such positive metrics go hand in hand with a worrying inclination by presidents to change constitutions to extend their terms in office. Since 2015, leaders of 13 countries have evaded or overseen the weakening of term limit restrictions that had been in place. Democracy might be less sexy, but ignoring it is perilous. There are no apps or switches to flip to arrest this slide. It requires hard work that America is well equipped to support but has chosen not to in a range of countries in recent years There is a difference between interfering in the internal affairs of a country and complete abdication or (in some cases) supporting leaders who engage in activities that are inimical to deepening democracy.
The damage wrought by the Trump presidency and neo-liberal counterterrorism policies will take time to undo, but symbolic efforts can go a long way to bridging the gap.
America must also contend with China being an indispensable player in Africa and learn to cooperate rather than compete in order to achieve optimal outcomes.
China has 2,458 military and police personnel serving in eight missions around the globe, far more than the combined contribution of personnel by the other four permanent members of the UN Security Council, Russia, the US, France and Britain. China had more than 2,400 Chinese troops take part in seven UN peacekeeping missions across the continent — most notably in Mali and South Sudan. Of the 14 current UN peacekeeping missions, seven are in Africa, consuming two-thirds of the budget.
Climate change and conflict resolution provide opportunities for cooperation. Disproportionate reliance on rain-fed agriculture and low adaptation to the adverse impact of climate change make Africa vulnerable to the damaging effects of climate change, the consequences of which will transcend Africa. Through a combination of research, development, technological transfer and multilateral investment, America and China could stave off the impact of climate change in Africa.
Hijacking Kenya’s Health Spending: Companies Linked to Powerful MP Received Suspicious Procurement Contracts
Two obscure companies linked to Kitui South MP Rachael Kaki Nyamai were paid at least KSh24.2 million to deliver medical supplies under single-source agreements at the time the MP was chair of the National Assembly’s Health Committee.
Two obscure companies linked to Kitui South MP Rachael Kaki Nyamai were paid at least KSh24.2 million to deliver medical supplies under single-source agreements at the time the MP was chair of the National Assembly’s Health Committee, an investigation by Africa Uncensored and The Elephant has uncovered.
One of the companies was also awarded a mysterious Ksh 4.3 billion agreement to supply 8 million bottles of hand sanitizer, according to the government’s procurement system.
The contracts were awarded in 2015 as authorities moved to contain the threat from the Ebola outbreak that was ravaging West Africa and threatening to spread across the continent as well as from flooding related to the El-Nino weather phenomenon.
The investigation found that between 2014 and 2016, the Ministry of Health handed out hundreds of questionable non-compete tenders related to impending disasters, with a total value of KSh176 billion including three no-bid contracts to two firms, Tira Southshore Holdings Limited and Ameken Minewest Company Limited, linked to Mrs Nyamai, whose committee oversaw the ministry’s funding – a clear conflict of interest.
Although authorities have since scrutinized some of the suspicious contracts and misappropriated health funds, the investigation revealed a handful of contracts that were not made public, nor questioned by the health committee.
Mrs Nyamai declined to comment for the story.
Nyamai has been accused by fellow members of parliament of thwarting an investigation of a separate alleged fraud. In 2016, a leaked internal audit report accused the Ministry of Health — colloquially referred to for its location at Afya House — of misappropriating funds in excess of nearly $60 million during the 2015/2016 financial year. Media stories described unauthorized suppliers, fraudulent transactions, and duplicate payments, citing the leaked document.
Members of the National Assembly’s Health Committee threatened to investigate by bringing the suppliers in for questioning, and then accused Nyamai, the committee chairperson, of blocking their probe. Members of the committee signed a petition calling for the removal of Nyamai and her deputy, but the petition reportedly went missing. Nyamai now heads the National Assembly’s Committee on Lands.
Transactions for companies owned by Mrs Nyamai’s relatives were among 25,727 leaked procurement records reviewed by reporters from Africa Uncensored, Finance Uncovered, The Elephant, and OCCRP. The data includes transactions by eight government agencies between August 2014 and January 2018, and reveals both questionable contracts as well as problems that continue to plague the government’s accounting tool, IFMIS.
The Integrated Financial Management Information System was adopted to improve efficiency and accountability. Instead, it has been used to fast-track corruption.
Hand sanitizer was an important tool in fighting transmission of Ebola, according to a WHO health expert. In one transaction, the Ministry of Health paid Sh5.4 million for “the supply of Ebola reagents for hand sanitizer” to a company owned by a niece of the MP who chaired the parliamentary health committee. However, it’s unclear what Ebola reagents, which are meant for Ebola testing, have to do with hand sanitizer. Kenya’s Ministry of Health made 84 other transactions to various vendors during this period, earmarked specifically for Ebola-related spending. These included:
- Public awareness campaigns and adverts paid to print, radio and tv media platforms, totalling at least KSh122 million.
- Printed materials totalling at least KSh214 million for Ebola prevention and information posters, contact tracing forms, technical guideline and point-of-entry forms, brochures and decision charts, etc. Most of the payments were made to six obscure companies.
- Ebola-related pharmaceutical and non-pharmaceutical supplies, including hand sanitizer
- Ebola-related conferences, catering, and travel expenses
- At least KSh15 millions paid to a single vendor for isolation beds
Hacking the System
Tira Southshore Holdings Limited and Ameken Minewest Company Limited, appear to have no history of dealing in hygiene or medical supplies. Yet they were awarded three blanket purchase agreements, which are usually reserved for trusted vendors who provide recurring supplies such as newspapers and tea, or services such as office cleaning.
“A blanket agreement is something which should be exceptional, in my view,” says former Auditor-General, Edward Ouko.
But the leaked data show more than 2,000 such agreements, marked as approved by the heads of procurement in various ministries. About KSh176 billion (about $1.7 billion) was committed under such contracts over 42 months.
“Any other method of procurement, there must be competition. And in this one there is no competition,” explained a procurement officer, who spoke generally about blanket purchase agreements on background. “You have avoided sourcing.”
The Ministry of Health did not respond to detailed questions, while Mrs Nyamai declined to comment on the contracts in question.
Procurement experts say blanket purchase agreements are used in Kenya to short-circuit the competitive process. A ministry’s head of procurement can request authority from the National Treasury to create blanket agreements for certain vendors. Those companies can then be asked by procurement employees to deliver supplies and services without competing for a tender.
Once in the system, these single-source contracts are prone to corruption, as orders and payments can simply be made without the detailed documentation required under standard procurements. With limited time and resources, government auditors say they struggle especially with reconciling purchases made under blanket agreements.
The agreements were almost always followed by standard purchase orders that indicated the same vendor and the same amount which is unusual and raises fears of duplication. Some of these transactions were generated days or weeks after the blanket agreements, many with missing or mismatched explanations. It’s unclear whether any of these actually constituted duplicate payments.
For example, the leaked data show two transactions for Ameken Minewest for Sh6.9 million each — a blanket purchase order for El Nino mitigation supplies and a standard order for the supply of chlorine tablets eight days later. Tira Southshore also had two transactions of Sh12 million each — a blanket purchase for the “supply of lab reagents for cholera,” and six days later a standard order for the supply of chlorine powder.
Auditors say both the amounts and the timing of such payments are suspicious because blanket agreements should be paid in installments.
“It could well be a duplicate, using the same information, to get through the process. Because you make a blanket [agreement], then the intention is to do duplicates, so that it can pass through the cash payee phase several times without delivering more,” said Ouko upon reviewing some of the transactions for Tira Southshore. This weakness makes the IFMIS system prone to abuse, he added.
In addition, a KSh4 billion contract for hand sanitizer between the Health Ministry’s Preventive and Promotive Health Department and Tira Southshore was approved as a blanket purchase agreement in April 2015. The following month, a standard purchase order was generated for the same amount but without a description of services — this transaction is marked in the system as incomplete. A third transaction — this one for 0 shillings — was generated 10 days later by the same procurement employee, using the original order description: “please supply hand sanitizers 5oomls as per contract Moh/dpphs/dsru/008/14-15-MTC/17/14-15(min.no.6).
Reporters were unable to confirm whether KSh4 billion was paid by the ministry. The leaked data doesn’t include payment disbursement details, and the MOH has not responded to requests for information.
“I can assure you there’s no 4 billion, not even 1 billion. Not even 10 million that I have ever done, that has ever gone through Tira’s account, through that bank account,” said the co-owner of the company, Abigael Mukeli. She insisted that Tira Southshore never had a contract to deliver hand sanitizer, but declined to answer specific questions. It is unclear how a company without a contract would appear as a vendor in IFMIS, alongside contract details.
It is possible that payments could end up in bank accounts other than the ones associated with the supplier. That is because IFMIS also allowed for the creation of duplicate suppliers, according to a 2016 audit of the procurement system. That audit found almost 50 cases of duplication of the same vendor.
“Presence of active duplicate supplier master records increases the possibility of potential duplicate payments, misuse of bank account information, [and] reconciliation issues,” the auditors warned.
They also found such blatant security vulnerabilities as ghost and duplicate login IDs, deactivated requirements for password resets, and remote access for some procurement employees.
IFMIS was promoted as a solution for a faster procurement process and more transparent management of public funds. But the way the system was installed and used in Kenya compromised its extolled safeguards, according to auditors.
“There is a human element in the system,” said Ouko. “So if the human element is also not working as expected then the system cannot be perfect.”
The former head of the internal audit unit at the health ministry, Bernard Muchere, confirmed in an interview that IFMIS can be manipulated.
Masking the Setup
Ms Mukeli, the co-owner of Tira Southshore and Ameken Minewest, is the niece of Mrs Nyamai, according to local sources and social media investigation, although she denied the relationship to reporters. According to her LinkedIn profile, Ms Mukeli works at Kenya Medical Supplies Agency, a medical logistics agency under the Ministry of Health, now embroiled in a COVID procurement scandal.
Ms Mukeli’s mother, who is the MP’s elder sister, co-owns Icpher Consultants Company Ltd., which shares a post office box with Tira Southshore and Mematira Holdings Limited, which was opened in 2018, is co-owned by Mrs Nyamai’s husband and daughter, and is currently the majority shareholder of Ameken Minewest. Documents also show that a company called Icpher Consultants was originally registered to the MP, who was listed as the beneficial owner.
Co-owner of Tira Southshore Holdings Limited, Abigael Mukeli, described the company to reporters as a health consulting firm. However Tira Southshore also holds an active exploration license for the industrial mining in a 27-square-kilometer area in Kitui County, including in the restricted South Kitui National Reserve. According to government records, the application for mining limestone in Mutomo sub-county — Nyamai’s hometown — was initiated in 2015 and granted in 2018.
Mukeli is also a minority owner of Ameken Minewest Company Limited, which also holds an active mining license in Mutomo sub-county of Kitui, in an area covering 135.5 square kilometers. Government records show that the application for the mining of limestone, magnesite, and manganese was initiated in 2015 and granted in 2018. Two weeks after the license was granted, Mematira Holdings Limited was incorporated, with Nyamai’s husband and daughter as directors. Today, Mematira Holdings is the majority shareholder of Ameken Minewest, which is now in the process of obtaining another mining license in Kitui County.
According to public documents, Ameken also dabbles in road works and the transport of liquefied petroleum gas. And it’s been named by the Directorate of Criminal Investigations in a fuel fraud scheme.
Yet another company, Wet Blue Proprietors Logistics Ltd., shares a phone number with Tira Southshore and another post office box with Icpher Consultants Company Ltd., according to a Kenya National Highway Authority list of pre-qualified vendors.
Mrs Nyamai and her husband co-own Wet Blue. The consulting company was opened in 2010, the same year that the lawmaker completed her PhD work in HIV/AIDS education in Denmark.
Wet Blue was licenced in 2014 as a dam contractor and supplier of water, sewerage, irrigation and electromechanical works. It’s also listed by KENHA as a vetted consultant for HIV/AIDS mitigation services, together with Icpher Consultants.
It is unclear why these companies are qualified to deliver all these services simultaneously.
“Shell companies receiving contracts in the public sector in Kenya have enabled corruption, fraud and tax evasion in the country. They are literally special purpose vehicles to conduct ‘heists’ and with no track record to deliver the public goods, works or services procured,” said Sheila Masinde, executive director of Transparency International-Kenya.
Both MOH and Ms Mukeli refused to confirm whether the ordered supplies were delivered.
Mrs Nyamai also co-owns Ameken Petroleum Limited together with Alfred Agoi Masadia and Allan Sila Kithome.
Mr Agoi is an ANC Party MP for Sabatia Constituency in Vihiga County, and was on the same Health Committee as Mrs Nyamai, a Jubilee Party legislator. Mr Sila is a philanthropist who is campaigning for the Kitui County senate seat in the 2022 election.
Juliet Atellah at The Elephant and Finance Uncovered in the UK contributed reporting.
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