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The History and Uncertain Future of Macadamia Farming in Kenya

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The macadamia sector in Kenya faces many challenges that can be overcome through supportive policies and regulations.

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The History and Uncertain Future of Macadamia Farming in Kenya
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The Government in Kenya issued a blanket ban on the export of raw nuts in 2009 to allow local processors to gather enough materials for job creation in this labour intensive sector.

However, both the county and national governments have consistently failed to put in place all the necessary measures to support the macadamia sub-sector, which is rapidly emerging as an alternative cash crop to the declining coffee and tea sectors in the Mt. Kenya region. The crop has gained traction to non-traditional growing areas such as the Rift Valley and Western regions.

Although the macadamia nuts sub-sector has grown on its own since the ban was put in place, fears are now emerging that the country is likely to lose its grip on this niche market to new entrants due to the low quality of the nuts we have been producing.

In 2009, when Kenya banned the export of raw nuts, it had a firm grip on this niche market. There were only four other nut producing countries in the world –  Australia, South Africa, Kenya and Hawaii in the United States, with Kenya supplying about 20 per cent of the total global demand.

Between 90 and 95 per cent of Kenya’s macadamia is produced for export. Key export destinations for Kenyan macadamia are the US, the European Union, Japan, China, Hong Kong and Canada. This year, demand for Kenya’s macadamia globally declined by 40 per cent, according to the processors’ estimates, partly due to the COVID-19 pandemic.

New entrants who threaten Kenya’s global market include China, Guatemala, Malawi, Vietnam, Colombia, New Zealand, Mozambique, Brazil, Paraguay and Swaziland. In total, 15 countries in the world have joined the producing club in the last decade.

With funding and support of the Chinese government, the International Macadamia Research and Development Center, established in Lincang, China, now holds more market potential for macadamias than any other country on the planet, recording an 11-fold increase in macadamia consumption between 2012 and 2018.

A global macadamia nut symposium held in China two years ago, which was poised to be held in Kenya next year but cancelled due to the COVID-19 pandemic,  noted that as the global macadamia industry continues to grow, the need to deliver exceptional quality nuts will be more critical than ever.

The Nut Processors Association of Kenya (NutPAK)’s Chief Executive Officer, Mr Charles Muigai, said that this is where the biggest challenge for Kenya’s market competitiveness in the global arena lies because farmers are not faithful to producing quality nuts due to the low support the sector receives from the government and other actors.

With funding and support of the Chinese government, the International Macadamia Research and Development Center, established in Lincang, China, now holds more market potential for macadamias than any other country on the planet, recording an 11-fold increase in macadamia consumption between 2012 and 2018.

Value Chain Analysis for Macadamia Nuts from Kenya 2020, a report of the Netherlands’ Centre for the Promotion of Imports from Developing Countries, cited climate change, the impact of pests and diseases, poor good agricultural practices (GAP), lack of access to inputs, use of unsuitable or old macadamia varieties and immature harvesting as Kenya’s main undoing.

At a critical point of transition, following the ban, there was no functioning formal association of macadamia farmers. In 2009, the Ministry of Agriculture (MOA) initiated the creation of Macadamia Growers Association of Kenya (MGAK), which has remained without an office or a budget.

The macadamia sector, unlike tea and coffee, has evolved without any regulation or policy support from the government. The only main intervention was in 2009, when a ban was effected and again in 2018 when the ban was anchored in legislation.

History of macadamia farming in Kenya 

The production of macadamia nuts in Kenya traces its history from 1944 when a European settler called Bob Harries introduced the crop from Australia in his estate near Thika town for ornamental and household consumption purposes.

He would, two decades later, found Bob Harries Ltd. to invest in the widespread expansion of the crop by introducing two key macadamia types – M. Integrifolia and M. Tetraphylla – and other hybrids from Hawaii and California.

In 1968, he grafted his own seedling nurseries to create a source for non-African estate owners and African smallholder farmers in Central Kenya’s coffee growing zones, namely, Embu, Meru, Kirinyaga and Thika.

He also initiated a campaign to have the government commercialise the crop. A feasibility study carried out in 1974 by the Food and Agricultural Organisation (FAO) that gave a nod to the viability of the sector convinced the government to support macadamia processing and marketing.

The government facilitated the creation of a joint venture between Japanese investors led by Yoshiyuki Sato and a Kenyan, Pius Ngugi, in setting up the Kenya Nuts Company (KNC), which today still runs the factory in Thika.

Sato had founded and run a textile factory in Nairobi since 1960 while Ngugi, a large-scale macadamia and coffee farmer from Thika, was in search of a market for his nuts.

The company would build a modern processing plant and establish its own macadamia plantations at an initial nuclear farm of about 400ha. It also set up a nursery for the propagation of adapted and grafted seedlings to supply out-growers.

By 1975, the company was processing nuts from its own estate as well as from other out-growers. It enjoyed a monopoly purchase right for in-shell nuts, sourcing 90 per cent of these from 140 smallholder coffee cooperative societies, as well as 47 additional buying centres.

Farmers delivered the harvest to cooperatives and collection centres and got a receipt with a pre-agreed price per kilogram. KNC would then collect the nuts when enough quantity has been bunched, and transfer the payments to the cooperative banks, where farmers collected cash by producing their receipts. Cooperative would earn a 10 per cent commission.

Japan continued to support the macadamia sector for over twenty years, culminating in the construction of the National Horticultural Research Centre where agronomists focused more on grafted seedling varieties. KNC multiplied these in their nurseries and by the time the Japanese left in 1997, it had distributed over 1.5 million seedlings.

Like the cashew sector, the macadamia sector was also affected by the liberalisation of economy. Being part of the private sector, KNC could not be privatised, which salvaged it from the decay that followed the cashew sector.

However, liberalisation accelerated domestic competition. In 1994, Peter Munga, the Equity Bank founder, opened a macadamia processing factory called Farm Nut Co. in Maragua, Muranga district. He had made some foray into buying coffee from farmers and realised that they were also selling macadamia at low prices. He decided to venture into marketing and processing the nuts.

Unlike his well-established rival, his firm lacked logistical infrastructure and links to cooperatives. The idea of brokers, who had played a marginal role by only collecting macadamia from distant locations, came in handy. With the entry of Farm Nut, the role of middlemen became predominant.

Like the cashew sector, the macadamia sector was also affected by the liberalisation of economy. Being part of the private sector, KNC could not be privatised, which salvaged it from the decay that followed the cashew sector.

Essentially, brokers would go directly to the farmers, offer better and direct prices than the cooperatives had done. Consequently, this significantly reduced farmers’ transaction costs of bringing nuts to collection centres as well as collecting their payments from banks.

Also, reduced volumes from the cooperatives increased processors’ transactional costs. It became more convenient for them to deal with the middlemen, and by the early 2000s, the cooperatives’ role in the macadamia supply chain diminished.

In the early 1990s and when the macadamia prices passed Sh30 mark per kilo in 1997, farmers in Central Kenya became more interested in macadamia farming due also to a fall in coffee prices. Production multiplied five-fold within six years only, crossing the 10,000 tonnes threshold in 1998.

The Chinese connection 

A dramatic shift in the industry would come in the early 2000s when China became a mass consumer of the nuts. The emergence of a growing middle class in China with an appetite for in-shell nuts and container ships increasingly docking in Mombasa, demanding to return with loaded cargo, tempted Chinese traders to venture into the export of raw macadamia nuts from the country.

The first Chinese in-shell exporter was a Mr Yang who contracted brokers in Embu in 2004. They transversed the region with loudspeakers mounted on their vans offering Sh40 (US$ 0.48) – twice what processors had offered. They would a year later spread tentacles to Meru, where they remained for close to five years.

Local processors would buy nuts mainly from Kiambu, Muranga, Kirinyaga, and Nyeri, where Kikuyu processors had established processing units and created networks with local communities who they hired for factory jobs. This helped to lock the Chinese out of these regions.

Estimates by the USDA Foreign Agricultural Service indicated that nearly 60 per cent of macadamia had been exported in-shell in 2008, implying that exporters had been able to purchase most of the crop from Embu and Meru. This posed a huge threat, bringing processors together to push the government to ban the export of raw nuts that finally came on 16th June 2009.

With the exit of the Chinese, and the creation of a processors’ and farmers’ associations, there was hope that the industry would get organised and get the necessary support.

Far from it. Both the farmers and processors would soon be left to their own devices, competing among each other to fight the Chinese who were still smuggling nuts out of Kenya. However, the competition and the need to create more volume saw processors heighten production five-fold in the last decade to reach close to 50,000 metric tonnes last year. They also grew in number from 5 to over 30, a move that saw farmers get an unprecedented Sh200 a kilo despite complains emerging that the quality did not justify this price.

This year, the sluggish global demand has driven processors away from the field, leaving behind brokers who are buying the nuts for as low as Sh50 a kilo. Joshua Muriira, the Chairman of the Meru Macadamia Farmers Association, said that the absence of processors is deliberate since they have conspired to offer Sh85 a kilo and it has nothing to do with the COVID 19.

The idea of an export ban has failed to fade away in Meru and Embu, where people still believe that were the Chinese buyers still available, things would be different. They started protesting from the onset when the prices dropped from a high of Sh100 a kilo to between Sh40 and Sh60 after the Chinese exit.

The processors blamed the poor prices on brokers and the resultant high share of immature nuts. A narrative was also pushed that if they started selling the nuts to processors directly – rather than via brokers – good prices would return.

After the first ban in 2009, the Chinese would a year later successfully lobby the new agriculture minister, Sally Kosgei, to lift the ban on raw nut exports for three months on 28 May 2010. The official rationale for the lifting the ban was “to facilitate the mop-up of the excess raw nuts with farmers”.

On 15 December 2010, when Kosgei yet again decided to lift the ban (Gazette notice No. 16229) for a period of over six months until 30 June 2011, quoting the same rationale, this time, NutPAK successfully challenged this in the High Court on 21 December 2010.

It was only in 2016 that the MP for Maragua, a region not known to produce macadamia in plenty, introduced a motion against the ban in Parliament, arguing it was hurting farmers. The house’s agriculture committee rejected the petition on the grounds that it was not in the interests of the industry.

There was evidence of continued presence of the Chinese in Kenya, even after the ban. On February 2017, seven Chinese macadamia buyers were arrested in Meru for allegedly doing business in the country without the required licences and documents. Embu and Meru farmers protested against their arrest in March 2017.

On one occasion, during the gubernatorial party primaries for the 2017 election, the gubernatorial candidate for Embu, Senator Lenny Kivuti, used the opportunity and joined the protests in Mutunduri in Embu North sub-county, accusing his opponent and current governor, Martin Wambora, of colluding with the domestic processor, Privam Nuts, and saying it was wrong for the police to “harass the foreigners because the latter were offering a better price to the farmers”.

On February 2017, seven Chinese macadamia buyers were arrested in Meru for allegedly doing business in the country without the required licences and documents. Embu and Meru farmers protested against their arrest in March 2017.

There were protests against the ban throughout 2018. In late January 2018, prior to the legal opening of the harvesting season on 20 February, the government, through the Nuts and Oil Crop Directorate, again arrested and deported eleven Chinese macadamia buyers in Meru who were buying at the stellar price of Sh170, and whose arrest was by opposed by several Meru MPs, farmers and brokers.

Areas of intervention 

The main opportunity for yield improvement, according to the Centre for the Promotion of Imports from Developing countries report, lies with supporting extension service providers, such as the Kenya Agriculture and Livestock Organisation (KALRO) and the Agriculture and Food Authority (AFA), to increase farmers’ capacities and to multiply and disseminate high-yielding macadamia seedlings that are suited to the different macadamia growing regions of Kenya.

There are two main areas of intervention for quality improvement. The first involves supporting processors who wish to obtain loans to buy crops in advance, thereby addressing farmers’ need for quick cash. The second is the implementation of region-relevant harvesting moratoria.

Upstream traceability of Kenyan macadamia is severely challenged by the large number of smallholder farmers and independent buying agents. Small plantations typify Kenya’s production system as opposed to other producers like China, South Africa and Australia, which have large plantation farming. Around 200,000 small farms in Kenya currently produce an estimated 42,500 tonnes of in-shell nuts.

Adopting traceability systems, some of which are part of mobile cash applications, could help in addressing this problem.

There are two main areas of intervention for quality improvement. The first involves supporting processors who wish to obtain loans to buy crops in advance, thereby addressing farmers’ need for quick cash. The second is the implementation of region-relevant harvesting moratoria.

Moreover, support should go to the creation of a registry of farmers, including data such as landholding size and age, number of macadamia trees and macadamia varieties and traders. This registry should be governed and accessed by members of the sector’s associations and AFA.

Communication and dialogue among macadamia stakeholders is lacking. Often, conflicting interests among actors lead to rivalry.

To address this, sector associations should establish, adopt and enforce codes of conduct to regulate the practices of sector players. Dialogue and transparency should be the ruling principles of this code of conduct. Moreover, all actors should discuss a multi-stakeholder strategy to address the challenges facing the macadamia sector.

Although some processors have links to European markets, the notion prevails among EU buyers that Kenyan macadamia nuts are of inferior quality. Moreover, processors regard the EU market regulations as more stringent than those of the US.

To address poor EU market access, the creation and marketing of a Kenyan macadamia brand should be explored.

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The writer is a consulting editor of a freight magazine.

Politics

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.

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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.

The purge

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.

Exporting peace?

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.

Policing protest

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.

This post is from a new partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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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.

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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.

Drone attacks 

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.

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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.

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Hijacking Kenya’s Health Spending: Companies Linked to Powerful MP Received Suspicious Procurement Contracts
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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.

Number of Suppliers Allocated BPAAlthough 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.

Credit: Edin Pasovic/OCCRP

Credit: Edin Pasovic/OCCRP

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.

Family LinksMrs 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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