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Kulipa Ushuru Si Kujitegemea: Tax Avoidance and Evasion in Africa

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Tax avoidance, understood as the use of the so-called ‘loopholes’ in the tax legislation to reduce one’s tax payments increasingly tops news charts. The recent Pandora Papers, EU’s blacklist of 17 tax havens, Paradise Papers and the Panama Papers are among the starkest examples.

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Kulipa Ushuru Si Kujitegema: Tax Avoidance and Evasion in Africa
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Tax avoidance, tax evasion, tax heavens, illicit financial flows and global tax governance are real buzzwords that have come to dominate current international political and financial domains. Tax avoidance, understood as the use of the so-called ‘loopholes’ in the tax legislation to reduce one’s tax payments increasingly tops news charts. The recent Pandora Papers, EU’s blacklist of 17 tax havensParadise Papers and the Panama Papers are among the starkest examples. Recent waves of tax dodging scandals including those of tax evasion – the use of unlawful means to escape paying tax – pushed many governments globally towards implementing various structural changes to taxation systems. Moreover, there is a growing call towards making the ‘fight’ against the exploitation of tax regulations ‘a global effort’ and the Organisation for Economic Co-operation and Development’s (OECD), Tax Inspectors Without Borders and the Declaration on Automatic Exchange of Information are amongst the most prominent measures of this kind.

In a recent study that explored anti-fraud initiatives in nine countries on the African continent, measures to address the drainage of revenue featured strongly. What is particularly interesting is the fact that many actors, private, governmental and supranational, including those in the West, seem to be especially active in encouraging change and acting as ‘advisories’ to governments and business on the African continent. This article will use the findings of the study to outline some of the interventions, paying particular attention to the actors involved. The article will then look closer at the OECD’s initiative, and close with some questions and thoughts regarding the findings and the North-South dynamic that prevails.

According to one estimate, US$240bn is lost in tax revenue every year due to various forms of tax avoidance and evasion, with the majority of losses in low- and lower middle-income countries. As shortages in funding of developmental projects persist and countries struggle to meet the financial requirements needed to achieve Sustainable Development Goals (currently the investment gap in developing countries is around US$2.5 trillion), experts worldwide highlight that the tax loses are unjustifiable and if addressed, can be used to facilitate the delivery of the SDGs. In recent years, many initiatives emerged across the Global South to raise awareness of the problem, involving governments, supranational organisations such as EU, UNDP and OECD to name a few, businesses, and rights advocacy groups such as Tax Justice Network and others. Several countries in the Global South have been applauded for their efforts to keep up with the tax reform that prevails in parts of the Northern hemisphere.

Having looked at anti-fraud initiatives in South Africa, Ghana, Botswana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia several trends emerge, some of which were outlined in previous blogs on roape.net. One trend that has not been discussed is the nature of the initiatives aimed at tackling various forms of tax evasion and avoidance and importantly the actors that are driving these measures. The types of initiatives aimed at addressing tax loss, range, amongst others, from education-led awareness raising campaigns on the importance of tax contributions and the harm that tax evasion and avoidance has on the health of the economy, the use of automation and digital technologies to increase tax collections and to facilitate the transfer of information on local, national and global levels, amendments in the legislation, and intercountry cooperation. The actors involved include domestic and foreign governments, businesses (consultancies and banks in particular), supranational organisations, development agencies, and advocacy and civil society groups. To explore these measures further, a number of examples will be given below, paying special attention to the actors driving and implementing such initiatives.

Who is pushing for crackdowns on tax fraud?

Private businesses, especially consultancies and banks, are active advocates for lawful taxation contributions across the studied countries. For instance, Deloitte Consulting launched the Tip-Offs Anonymous Hotline both in Botswana and Malawi aimed at deterring financial fraud, including tax evasion and tax avoidance. According to the Managing Director of the Botswana Development Corporation, ‘Tip-Offs Anonymous line is put in place as a deterrent to fraud and promotes a culture of zero tolerance towards these crimes.’  In another initiative, Tallinn-based multinational company Nortal is assisting Botswana in creating a ‘new tax management solution’ which will replace the existing system entirely. Costing around €8 million, it will provide new risk management solutions and ‘should boost overall economic growth in Botswana, reduce the tax gap and increase transparency while reducing costs.’ PricewaterhouseCoopers Ghana while commenting on the Ghana’s new 2018 budget has advised the government to implement changes to strengthen revenue collection, including, among others, the use of mobile payment technology, targeting debt management, minimising the fiscal gap, and ‘increased investment in agriculture value chains and in growth enhancing infrastructure including radical structural transformation to ensure export diversification.’

Moreover, businesses are particularly active in initiating measures to address counterfeiting and substandard produce. It is important to note that counterfeiting, tax evasion and avoidance are closely interlinked. It is more difficult to obtain the legislated amount of tax from counterfeited and unlicensed products, and in addition it has a negative impact on those brands whose products are being replicated. International firms such as Southern Graphics Systems (SGS) operating in Kenya, Sproxil in Tanzania and Bureau Veritas in all of the studied countries, offer services to business and individuals, and cooperate with governmental agencies on strengthening quality checks and identify counterfeited produce. Technology is often adopted in these measures. An interesting example is that of collaboration between the Human Development Innovation Fund, UK’s Department for International Development and the firm Sproxil. The initiative involves the introduction of Mobile Product Authentication technology to help verify counterfeit produce in pharmaceuticals and educate individuals on health risks associated with such products.

National governments have featured strongly as those pushing for strengthening of the tax regulation, so all the nine studied countries contained a government-led initiative related to taxation. To highlight the variety and scale of these initiatives a few examples provides powerful illustration: declarations of crackdowns on tax misconduct by the country’s presidents in the case of Tanzania; registering taxpayers at the district level in an effort to address the problem at grass-roots level, and the adoption of Electronic Billing Machines in Rwanda; amendments to national legislation to specifically tackle tax-avoidance as in South Africa. More aggressive measures in Nigeria whose Federal Inland Revenue Service have threated to deny access to banking facilities for those companies that don’t join taxation register.

In Ghana, measures to combat tax evasion and avoidance are initiated by a number of actors, including the Ghana Investment Promotion Council with an initiative to develop a ‘beneficiary ownership regime’ aimed at identifying owners of companies, particularly in the extractives industries. In a more recent initiative, the Ghana Revenue Authority planned to use the Point of Sale (PoS) devices to strengthen tax collection and improve monitoring of revenue. There seems to be widespread support for this measure, including from Price Waterhouse Coopers Ghana. Kenya’s efforts focused on Small and Medium Enterprises, where the Kenya Revenue Authority seeks to address the issue at grassroots level and work closely with county authorities to integrate the SMEs into the taxation system. Malawi Revenue Authority keeps up with the trend of using technology, in particular electronic payment systems to encourage tax payers and prevent evasion and avoidance.

Finally, Botswana focused on tackling tax avoidance by identifying ‘multinational tax dodgers’ and has joined OECD’s framework on Base Erosion and Profit Shifting. According to a state official, ‘Botswana is […] obliged to conform to these standards and that may mean amendment of tax legislation where necessary.’ In the words of the same official, ‘Botswana’s tax system will be put under scrutiny whether it conforms to international best practice which should in turn boost investor confidence and hence it has the potential to attract investment by credible investors.’

The involvement of foreign actors, including governmental bodies is extensive across the studied countries. UK’s DFID has been particularly active in offering assistance, having spent over £32 million on tax system improvements overseas in 2015, and £26 million in 2016. Out of the 9 studied countries, seven (Ghana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia) received assistance from the British government. For example, in 2015, Ghana and the HMRC partnered with the Ghana Revenue Authority to develop their expertise on tax legislation, compliance and data privacy. This agreement is part of a wider, OECD backed ‘global standard’ for an automatic exchange of information of tax payer’s data scheduled for 2018. According to International Development Secretary Justine Greening, ‘the UK is committed to helping developing countries get their tax systems in order so that as their economies grow they are able to increasingly fund their own health and education programmes and reduce aid dependence.’

Advocacy and civil society groups are actively gaining ground in running of campaigns to raise awareness on illicit financial flows. One of the widely known organisations is Tax Justice Network (TJN) which offers research, analysis and advocacy on tax evasion and avoidance, as well as The Global Tax Alliance for Tax Justice (a spin off from TJN), which brings together civil society organisations and activists working with this issue. Numerous regional organisations such as Tax Justice Network Africa, run national and grass roots level events. Among its initiatives is the Stop Bleeding Africa Campaign which joined various stakeholders in an attempt to drive one Africa-wide response. Numerous national organisations and civil-rights activists are promoting awareness as part of this initiative, for example the recent campaign in Ghana in collaboration with Ghanaian based Integrated Social Development Centre and Tax Justice Network. Numerous international charities also do extensive work organising initiatives and raising awareness on this issue, and include amongst others Transparency InternationalAction Aid, and Oxfam.

As was mentioned above, OECD has been an active player in introducing measures to address leakages of tax, and some argue, has been pivotal in the setting of certain international taxation standards. Tax Inspectors Without Borders, a joint initiative with UNPD launched in 2013 is aimed at providing technical assistance to developing countries to enhance their capacity to obtain tax contribution from multinational companies. Currently, technical assistance is being offered to 18 African states, in some cases partnered with actors such as UK’s HMRC, African Tax Administration Forum, Germany’s Federal Ministry of Finance, Netherlands’ Tax and Customs Administration, the World Bank Group, the French Direction Générale des Finances Publiques (DGFiP), USAID and others.

What has come to be known as the ‘Global Forum on Transparency and Exchange of Information for Tax Purposes’ was rolled out in the 2000s and includes 148 members, both OECD and non-OECD members. The Exchange of Information on Request, and most recently the Declaration on Automatic Exchange of Information (AEOI) have been the two core initiatives. These frameworks are now regarded as the new standard and currently over 100 countries have signed up to the declaration. The core idea is to allow for easier and timely transmission of financial information (gathered by financial institutions such as banks) about a country’s residents living overseas with the aim of greater transparency and prevention of tax evasion and avoidance, while suggesting that the existence of tax heavens may come to an end. The countries can sign multilateral (there are currently 98 signatories) or bilateral agreements, as we have seen between Ghana and the Netherlands. Countries are free to chose with which countries to exchange information.

Are we on the right track?

The examples outlined above would suggest that various actors recognise the need to address illicit financial flows and implement different measures to raise awareness (even if driven by profit motives), and put in place mechanisms to prevent tax dodging and allow for greater transparency. However, what is critical to note is that a number of the actors involved in pushing for anti-tax evasion and avoidance, may themselves be culpable for similar abuses of the tax legislation. For example, Deloitte, and other accountancy firms such as PwC were acting as advisories and helped companies such as Blackstone avoid paying tax as we have seen in the Paradise Papers. Moreover, a group of consultancy firms that have become known as ‘the big four’, PwC, Deloitte, EY and KPMG, are known to use their positions to lobby for certain regulations and in some cases employees of these firms are known to take up roles at the OECD and in national governments to push for their client’s interests. Furthermore, numerous international banks were discovered to make use of tax heavens to hide their profits, such as Barclays which declared profits of €557m in Luxembourg but only paid €1m in tax.

These are just some of the examples, where the ‘advisories’, are in fact the ones making use of the loopholes in legislation, while at the same time offering advice to countries in the Global South on how to better manage their taxes (see on this phenomenon John Christensen’s analysis in David Whyte and Jörg Wiegratz’s book here). What is important to note there is that such ‘advice’ often informs policy and legislation within those countries and here, one cannot fail to notice the characteristically unequal North-South dynamic.

While OECD’s initiatives are, one might argue, an important step towards greater transparency, and have even been deemed as ‘revolutionary’, commentators are calling for scrutiny of some of the organisation’s measures. In the case of Tax Inspectors Without Borders – a joint OECD/UNDP initiative – following a review of its operation it was discovered that leadership for the three of its pilot projects in Rwanda, Ghana and Senegal originated from donor countries, which was against the original formulation of the initiative.

In terms of the AEOI (Automatic Exchange of Information) one of the main concerns is the need for reciprocity meaning that it is required for a country to be able to collect and send information if it is to receive information in return. The issue here is the lack of capacity, infrastructure and resources in some Southern countries to do this, thus this would automatically exclude them from participating in the framework at least in the immediate future. Moreover, even if a country matches reciprocity requirements, another concern within the framework is the fact that countries are able to choose with whom to exchange information and this has been compared to a dating game. For example, even if country X wants to receive information from country Y, they will only be able to do this if country Y approves. An example is the US, which is a major player on the taxation arena and a country where many tax heavens are safely hidden. The States has for a long time imposed automated exchange of information on countries where their citizens reside, without participating in turn and is refusing to take part in the AEOI.

A final aspect to mention here is the fact that the framework is reliant on financial institutions to record and verify residency information of their customers in order to transfer the requested information to the correct country. The concern is that there are ways – for example, making an investment – to gain residency in certain countries, use that information to register in a bank but not reside and conduct financial transactions in the country in question. So, fraudsters may continue to evade and hide tax in other locations without risk of being unmasked.

In this blogpost I have summarised some of the initiatives to address tax evasion and avoidance by numerous actors on the African continent and draw attention to frameworks that are presented as ‘international standards.’ The initiatives vary in type, scale, and the actors involved. It also suggests that the initiatives are underpinned by various drivers, whether commercial, political or other. There is a degree of hypocrisy on the side of some ‘advising’ actors where they are directly involved in or are facilitating financial crime. OECD’s initiative, while potentially beneficial, has loopholes and seems to disadvantage Southern countries.

While a growing body of literature is currently emerging surrounding illicit financial flows, as well as around the nature of global tax governance as a whole, there is not enough evidence to suggest that the ‘global fight’ is indeed not a ‘global flight’ driven by certain powerful entities and interest groups to avoid paying tax. Given that the issue has universal significance and undermines the development of many countries in the Global South, more research (and campaigning) is needed in order to understand the nature of these initiatives, the forces behind them, and the unequal North-South dynamic that prevails.

This article was published in the Review of African political Economy (ROAPE).

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By

Nataliya Mykhalchenko graduated from the University of Leeds in 2016 with a BA in International Development. She now works in London for a company that helps education, research, healthcare, non-profits and civil society institutions. Nataliya started researching anti-fraud initiatives on the African continent in 2015 as part of a funded five week Leeds University Summer Research Internship Scheme. In 2016, supported by ROAPE, she continued her research. To date she has looked at anti-fraud measures in South Africa, Ghana, Botswana, Nigeria, Tanzania, Kenya, Malawi, Rwanda and Zambia. Nataliya’s research was linked to the ongoing work of ROAPE’s Jörg Wiegratz at the University of Leeds on the political economy of anti-fraud measures in the Global South.

Politics

The Assassination of President Jovenel Moïse and the Haitian Imbroglio

As CARICOM countries call for more profound changes that would empower the Haitian population, Western powers offer plans for “consensual and inclusive” government that will continue to exclude the majority of the citizens of Haiti from participating in the running of their country.

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The Assassination of President Jovenel Moïse and the Haitian Imbroglio
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On Wednesday 7 July 2021, the President of Haiti, Jovenel Moïse, was assassinated in his home. His wife was injured in the attack. That the president’s assassins were able to access his home posing as agents of the Drug Enforcement Agency of the United States (DEA) brought to the fore the intricate relationship between drugs, money laundering and mercenary activities in Haiti. Two days later, the government of Haiti reported that the attack had been carried out by a team of assailants, 26 of whom were Colombian. This information that ex-soldiers from Colombia were involved brought to the spotlight the ways in which Haiti society has been enmeshed in the world of the international mercenary market and instability since the overthrow of President Jean-Bertrand Aristide and the Lavalas movement in 2004.

When the French Newspaper Le Monde recently stated that Haiti was one of the four drug hubs of the Caribbean region, the paper neglected to add the reality that as a drug hub, Haiti had become an important base for US imperial activities, including imperial money laundering, intelligence, and criminal networks. No institution in Haiti can escape this web and Haitian society is currently reeling from this ecosystem of exploitation, repression, and manipulation. Under President Donald Trump, the US heightened its opposition to the governments of Venezuela and Cuba. The mercenary market in Florida became interwoven with the US Drug Enforcement Agency (DEA) and the financial institutions that profited from crime syndicates that thrive on anti-communist and anti-Cuba ideas.

But even as Haitian society is reeling from intensified destabilization, the so-called Core Group (comprising of the Organization of American States (OAS), the European Union, the United States, France, Spain, Canada, Germany, and Brazil) offers plans for “consensual and inclusive” government that will continue to exclude the majority of the citizens of Haiti from participating in the running of their country. Elsewhere in the Caribbean, CARICOM countries are calling for more profound changes that would empower the population while mobilizing international resources to neutralize the social power of the money launderers and oligarchs in Haitian society.

Haiti since the Duvaliers

For the past thirty-five years, the people of Haiti have yearned for a new mode of politics to transcend the dictatorship of the Duvaliers (Papa Doc and Baby Doc). The Haitian independence struggles at the start of the 19th century had registered one of the most fundamental blows to the institutions of chattel slavery and colonial domination. Since that revolution, France and the US have cooperated to punish Haiti for daring to resist white supremacy. An onerous payment of reparations to France was compounded by US military occupation after 1915.

Under President Woodrow Wilson, the racist ideals of the US imperial interests were reinforced in Haiti in a nineteen-year military occupation that was promoted by American business interests in the country. Genocidal violence from the Dominican Republic in 1937 strengthened the bonds between militarism and extreme violence in the society. Martial law, forced labour, racism and extreme repression were cemented in the society. Duvalierism in the form of the medical doctor François Duvalier mobilized a variant of Negritude in the 50s to cement a regime of thuggery, aligned with the Cold War goals of the United States in the Caribbean. The record of the Duvalier regime was reprehensible in every form, but this kind of government received military and intelligence assistance from the United States in a region where the Cuban revolution offered an alternative. Francois Duvalier died in 1971 and was succeeded by his son, Jean-Claude Duvalier, who continued the tradition of rule by violence (the notorious Tonton Macoute) until this system was overthrown by popular uprisings in 1986.

The Haitian independence struggles at the start of the 19th century had registered one of the most fundamental blows to the institutions of chattel slavery and colonial domination.

On 16 December 1990, Jean-Bertrand Aristide won the presidency by a landslide in what were widely reported to be the first free elections in Haiti’s history. Legislative elections in January 1991 gave Aristide supporters a plurality in Haiti’s parliament. The Lavalas movement of the Aristide leadership was the first major antidote to the historical culture of repression and violence. The United States and France opposed this new opening of popular expression such that military intervention, supported by external forces in North America and the Organization of American States, brought militarists and drug dealers under General Joseph Raoul Cédras to the forefront of the society. The working peoples of Haiti were crushed by an alliance of local militarists, external military peacekeepers and drug dealers. The noted Haitian writer, Edwidge Danticat, has written extensively on the consequences of repeated military interventions, genocide and occupation in the society while the population sought avenues to escape these repressive orders. After the removal of the Aristide government in 2004, it was the expressed plan of the local elites and the external forces that the majority of the Haitian population should be excluded from genuine forms of participatory democracy, including elections.

Repression, imperial NGOs and humanitarian domination

The devastating earthquake of January 2010 further deepened the tragic socio-economic situation in Haiti. An estimated 230,000 Haitians lost their lives, 300,000 were injured, and more than 1.5 million were displaced as a result of collapsed buildings and infrastructure. External military interventions by the United Nations, humanitarian workers and international foundations joined in the corruption to strengthen the anti-democratic forces in Haitian society. The Clinton Foundation of the United States was complicit in imposing the disastrous presidency of Michel Martelly on Haitian society after the earthquake. The book by Jonathan Katz, The Big Truck That Went By: How the World Came to Save Haiti and Left Behind a Disaster, provides a gripping account of the corruption in Haiti. So involved were the Clintons in the rot in Haiti that Politico Magazine dubbed Bill and Hilary, The King and Queen of Haiti.

In 2015, Jovenel Moïse was elected president in a very flawed process, but was only able to take office in 2017. From the moment he entered the presidency, his administration became immersed in the anti-people traditions that had kept the ruling elites together with the more than 10,000 international NGOs that excluded Haitians from participating in the projects for their own recovery. President Moïse carved out political space in Haiti with the support of armed groups who were deployed as death squads with the mission of terrorizing popular spaces and repressing supporters of the Haitian social movement. In a society where the head of state did not have a monopoly over armed gangs, kidnappings, murder (including the killing of schoolchildren) and assassinations got out of control. Under Moïse, Haiti had become an imbroglio where the government and allied gangs organized a series of massacres in poor neighbourhoods known to host anti-government organizing, killing dozens at a time.

Moïse and the extension of repression in Haiti

Moïse remained president with the connivance of diplomats and foundations from Canada, France and the United States. These countries and their leaders ignored the reality that the Haitian elections of 2017 were so deeply flawed and violent that almost 80 per cent of Haitian voters did not, or could not, vote. Moïse, with the support of one section of the Haitian power brokers, avoided having any more elections, and so parliament became inoperative in January 2020, when the terms of most legislators expired. When mayors’ terms expired in July 2020, Moïse personally appointed their replacements. This accumulation of power by the president deepened the divisions within the capitalist classes in Haiti. Long-simmering tensions between the mulatto and black capitalists were exacerbated under Moïse who mobilized his own faction on the fact that he was seeking to empower and enrich the black majority. Thugs and armed gangs were integrated into the drug hub and money laundering architecture that came to dominate Haiti after 2004.

After the Trump administration intensified its opposition to the Venezuelan government, the political and commercial leadership in Haiti became suborned to the international mercenary and drug systems that were being mobilized in conjunction with the military intelligence elements in Florida and Colombia. President Jovenel Moïse’s term, fed by spectacular and intense struggles between factions of the looters, was scheduled to come to a legal end in February 2021. Moïse sought to remain in power, notwithstanding the Haitian constitution, the electoral law, or the will of the Haitian people.

So involved were the Clintons in the rot in Haiti that Politico Magazine dubbed Bill and Hilary, The King and Queen of Haiti.

Since the removal of Aristide and the marginalization of the Lavalas forces from the political arena in Haiti, the US has been more focused on strengthening the linkages between the Haitian drug lords and the money launderers in Colombia, Florida, Dominican Republic, and Venezuelan exiles. It was therefore not surprising that the mercenary industry, with its linkages to financial forces in Florida, has been implicated in the assassination of President Moïse. The Core Group of Canada, France and the US has not once sought to deploy the resources of the international Financial Action Task Force (FATF) to penetrate the interconnections between politicians in Haiti and the international money laundering and mercenary market.

Working for democratic transition in Haiti

The usual handlers of Haitian repression created the Core Group within one month of Moïse’s assassination. Canada, France and the United States had historically been implicated in the mismanaging of Haiti along with the United Nations. Now, the three countries have mobilized the OAS (with its checkered history), Brazil and the European Union to add their weight to a new transition that will continue to exclude the majority of the people of Haiti. It has been clear that under the current system of destabilization and violence, social peace will be necessary before elections can take place in Haiti.

Moïse sought to remain in power, notwithstanding the Haitian constitution, the electoral law, or the will of the Haitian people.

The continuous infighting among the Haitian ruling elements after the assassination was temporarily resolved at the end of July when Ariel Henry was confirmed by the US and France as Prime Minister. Henry had been designated as prime minister by Moïse days before his assassination. The popular groups in Haiti that had opposed Moïse considered the confirmation of Ariel Henry as a slap in the face because they had been demonstrating for the past four years for a more robust change to the political landscape. These organizations mobilized in what they called the Commission, (a gathering of civil society groups and political parties with more than 150 members), and had been holding marathon meetings to publicly work out what kind of transitional government they would want to see. According to the New York Times, rather than a consensus, the Core Group of international actors imposed a “unilateral proposal” on the people of Haiti.

Haiti is a member of CARICOM. The Caribbean community has proposed a longer transition period overseen by CARICOM for the return of Haiti to democracy. With the experience of the UN in Haiti, the Caribbean community has, through its representative on the UN Security Council, proposed the mobilization of the peacekeeping resources and capabilities of the UN to be deployed to CARICOM in order to organize a credible transition to democracy in Haiti. The nature and manner of the assassination of President Moïse has made more urgent the need for genuine reconstruction and support for democratic transition in Haiti.

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Politics

How Dadaab Has Changed the Fortunes of North-Eastern Kenya

Despite the hostile rhetoric and threats of closure, the presence of refugees in the camps in northern-eastern Kenyan has benefited the host communities.

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How Dadaab Has Changed the Fortunes of North-Eastern Kenya
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In the 1960s, Kenya had a progressive refugee policy that allowed refugees to settle anywhere in the country and to access education. This approach created in Kenya a cadre of skilled and professional refugees. However, the policy changed in the 1990s due to an overwhelming influx of refugees and asylum seekers escaping conflict in Somalia, Ethiopia and South Sudan. Kenya switched to an encampment policy for refugees, who were mainly confined to camps.

Although there are refugees living in urban and peri-urban areas elsewhere in the country, for over two decades, northern Kenya has hosted a disproportionate number of the refugees living in Kenya. The region has been home to one of the world’s largest refugee camps, with generations of lineage having an impact on the economic, social, cultural, and ecological situation of the region because of the support provided by the government and by non-governmental organisations (NGOs) in education, health and security services.

Mandera and Marsabit counties, both of which boarder with Ethiopia, Wajir County which borders with both Ethiopia and Somalia and, Garissa County which borders with Somalia, have hosted refugees and migrants displaced from their countries of origin for various reasons. In 2018, the town of Moyale, which is on the Ethiopian boarder in Marsabit County, temporarily hosted over 10,000 Ethiopians escaping military operations in Ethiopia’s Moyale District.    

Elwak town in Wajir County occasionally hosts pastoralist communities from Somalia who cross into Kenya seeking pasture for their livestock. While the movement of refugees into Marsabit and Wajir counties has been of a temporary nature, Garissa County has hosted refugees for decades.

Located 70 kilometres from the border with Somalia, the Dadaab refugee complex was established in the 1990s and has three main camps: Dagahaley, Ifo, and Hagadera. Due to an increase in refugee numbers around 2011, the Kambioos refugee camp in Fafi sub-county was established to host new arrivals from Somalia and to ease pressure on the overcrowded Hagadera refugee camp. The Kambioos camp was closed in 2019 as the refugee population fell.

According to the UN Refugee Agency, UNHCR, and the Refugee Affairs Secretariat (RAS), the Dadaab refugee complex currently hosts over 226, 689 refugees, 98 per cent of whom are from Somalia. In 2015, the refugee population in the Dadaab refugee complex was over 300,000, larger than that of the host community. In 2012, the camp held over 400,000 refugees leading to overstretched and insufficient resources for the growing population.

Under international refugee and human rights law, the government has the sole responsibility of hosting and caring for refugees. However, there is little information regarding the investments made by the Kenyan government in the refugee sector in the north-eastern region over time. Moreover, the government’s investment in the sector is debatable since there was no proper legal framework to guide refugee operations in the early 1990s. It was only in 2006 that the government enacted the Refugee Act that formally set up the Refugee Affairs Secretariat mandated to guide and manage the refugee process in Kenya.

While the Refugee Act of 2006 places the management of refugee affairs in the hands of the national government, devolved county governments play a significant role in refugee operations. With the 2010 constitution, the devolution of social functions such as health and education has extended into refugee-hosting regions and into refugee camps. While devolution in this new and more inclusive system of governance has benefited the previously highly marginalised north-eastern region through a fairer distribution of economic and political resources, there is however little literature on how the refugees benefit directly from the county government resource allocations.

The three north-eastern counties are ranked among the leading recipients of devolved funds: Mandera County alone received US$88 million in the 2015/2016 financial year, the highest allocation of funds after Nairobi and Turkana, leading to developmental improvements.

However, it can be argued that the allocation of funds from the national government to the northern frontier counties by the Kenya Commission on Revenue Allocation—which is always based on the Revenue Allocation table that prioritizes population, poverty index, land area, basic equal share and fiscal responsibility—may not have been taking the refugee population into account. According to the 2019 census, the population of Dadaab sub-county is 185,252, a figure that is well below the actual refugee population. The increase in population in the north-eastern region that is due to an increase in the refugee population calls for an increase in the allocation of devolved funds.

The three north-eastern counties are ranked among the leading recipients of devolved funds.

Dadaab refugee camp has been in the news for the wrong reasons. Security agencies blame the refugees for the increased Al Shabaab activity in Kenya, and even though these claims are disputed, the government has made moves to close down the camp. In 2016, plans to close Dadaab were blocked by the High Court which declared the proposed closure unconstitutional. In 2021, Kenya was at it again when Ministry of Interior Cabinet Secretary Fred Matiang’I tweeted that he had given the UNHCR 14 days to draw up a plan for the closure of the camp. The UNHCR and the government issued a joint statement agreeing to close the camp in June 2022.

The security rhetoric is not new. There has been a sustained campaign by Kenya to portray Dadaab as a security risk on national, regional and international platforms. During the 554th meeting of the African Union Peace and Security Forum held in November 2015, it was concluded that the humanitarian character of the Dadaab refugee camp had been compromised. The AU statements, which may have been drafted by Kenya, claimed that the attacks on Westgate Mall and Garissa University were planned and launched from within the refugee camps. These security incidents are an indication of the challenges Kenya has been facing in managing security. For example, between 2010 and 2011, there were several IED (Improvised Explosive Devices) incidents targeting police vehicles in and around Dadaab where a dozen officers were injured or killed. In October 2012, two people working for the medical charity Médicins Sans Frontières (MSF) were kidnapped in Dadaab. Local television network NTV has described the camp as “a womb of terror” and “a home for al-Shabaab operations”.

There has been a sustained campaign by Kenya to portray Dadaab as a security risk on national, regional and international platforms.

Security restrictions and violent incidents have created a challenging operational environment for NGOs, leading to the relocation of several non-local NGO staff as well as contributing to a shrinking humanitarian space. Some teachers and health workers from outside the region have refused to return to the area following terrorist attacks by Al-Shabaab, leaving behind large gaps in the health, education, and nutrition sectors.

However, despite the challenging situation, the refugee camps have also brought many benefits, not only to Kenya as a country but also to the county governments and the local host communities.

Education

According to the Intergovernmental Authority on Development (IGAD) half the refugee population in the IGAD member states are children of school-going age, between 4 and 18 years.

In Garissa, the education sector is one of the areas that has benefited from the hosting of refugees in the county because the host community has access to schools in the refugee camps. Windle Trust, an organisation that offers scholarships to students in secondary schools and in vocational training institutes, has been offering scholarships to both the refugees and the host communities. In July 2021, over 70 students benefited from a project run by International Labour Organisations (ILO) in partnership with Garissa county governments, the East African Institute of Welding (EAIW) and the Kenya Association of Manufacturers (KAM) to give industrial welding skills to refugees and host communities.

However, despite the measures taken by the Kenyan government to enrol refugees in Kenyan schools, there is a notable gap that widens as students go through the different levels of education. Statistics show that of the school-going refugee population, only a third get access to secondary education of which a sixth get to join tertiary institutions. This is well below the government’s Sustainable Development Goal (SDG) 4 target that seeks to ensure that all girls and boys complete free, equitable and quality primary and secondary education. This also reflects the situation of the host community’s education uptake. Other investments in the education sector that have targeted the host communities include recruitment and deployment of early childhood education teachers to schools in the host community by UNHCR and other non-governmental organizations (NGOs).

Non-governmental/intergovernmental support 

The presence of refugees has led to NGOs setting up and running projects in the camps. According to Garissa County’s Integrated Development Plan, there are over 70 non-governmental organisations present, with the majority operating around the Dadaab refugee complex and within the host communities. The UNHCR estimates that it will require about US$149.6 million to run its operations in Dadaab Camp this year. However, as of May 2021, only US$45.6 million—31 per cent of the total amount required—had been received.

The decrease in humanitarian funding has had an impact on the livelihoods of refugees and host communities in north-eastern Kenya.  According to the World Bank, 73 per cent of the population of Garissa County live below the poverty line. In the absence of social safety nets, locals have benefited from the humanitarian operations in and around the camp. The UNHCR reports that about 40,000 Kenyan nationals within a 50km radius of the Dadaab refugee camp ended up enrolling as refugees in order to access food and other basic services in the camps.

In 2014, the UNHCR reported that it had supported the Kenyan community residing in the wider Daadab region in establishing over US$5 million worth of community assets since 2011. The presence of refugees has also increased remittances from the diaspora, and there are over 50 remittance outlets operating in the Dadaab camp, increasing economic opportunities and improving services. Using 2010 as the reference year, researchers have found that the economic benefits of the Dadaab camp to the host community amount to approximately US$14 million annually.

The UNHCR reported that it had supported the Kenyan community residing in the wider Daadab region in establishing over US$5 million of community assets since 2011 since 2011.

To reduce overdependence on aid and humanitarian funding in running refugee operations, the County Government of Garissa developed a Garissa Integrated Socio-Economic Development Plan (GISEDP) in 2019 that provided ways of integrating refugees into the socio-economic life of the community to enhance their self-reliance. The European Union announced a Euro 5 million funding programme to support the socio-economic development plan, thus opening up opportunities for development initiatives including income generating activities such as the flourishing businesses at Hagadera market. The recent announcement of the planned closure of the camp has put these plans at risk.

A voice

The host community is increasingly involved in issues that affect both the locals living around the Dadaab refugee complex and the refugees themselves, with the voice of the community gaining prominence in decision-making regarding the county budget and sometimes even regarding NGO operations. NGOs periodically conduct needs assessments in and around the camp to guide the budgeting and planning process for subsequent years and the host community is always consulted.

Interest in governance issues has also increased. For example, between 2010 and 2015 the host community successfully lobbied for increased employment opportunities for locals in the UNHCR operations. With experience in the humanitarian field, some from within the host communities have secured positions as expatriates in international organizations across the globe, adding to increased international remittances to Garissa County.

Health

Research reveals that, compared to other pastoralist areas, health services for host communities have improved because of the presence of aid agencies in Dadaab. Hospitals managed by Médicins Sans Frontières and the International Red Cross in Dagahaley and Hagadera respectively are said to be offering better services than the sub-county hospital in Dadaab town. The two hospitals are Ministry of Health-approved vaccination centres in the fight against the COVID-19 pandemic.

Despite the massive investments made in the health sector by humanitarian organisations in and around Dadaab, both UNICEF and the World Health Organisation have identified the camp as an entry point for infectious diseases like polio and measles into Kenya. There was a confirmed case of WPV1 (wild poliovirus) in a 4-month-old girl from the Dadaab refugee camp in May 2013. This is a clear indication of the health risks associated with the situation.

Researchers have found that the economic benefits of the Dadaab camp to the host community amount to approximately US$14 million annually.

Other problems associated with the presence of the camps include encroachment of the refugee population on local land, leading to crime and hostility between the two communities. These conflicts are aggravated by the scramble for the little arable land available in this semi-arid region that makes it difficult to grow food and rear farm animals, leading to food shortages.

While it is important to acknowledge that progress has been made in integrating refugees into the north-eastern region, and that some development has taken place in the region, more needs to be done to realise the full potential of the region and its communities.  Kenya’s security sector should ensure that proper measures are put in place to enhance security right from the border entry point in order to weed out criminals who take advantage of Kenya’s acceptance of refugees. The country should not expel those who have crossed borders in search of refuge but should tap fully into the benefits that come with hosting refugees.

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Pastoralist Communities Still Anxious About the Status of Their Land

Despite the enacting of the Community Lands Act of 2016, pastoral communities in Kenya have continued to be disadvantaged by the weak nature of their land tenure rights.

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Pastoralist Communities Still Anxious About the Status of Their Land
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Commended as a liberating provision of Kenya’s 2010 Constitution, Article 63 provides a legal basis for recognition, definition, and ownership of communal land. The Community Land Act gives life to Article 63 of the Constitution of Kenya 2010 by recognising, protecting, and providing for the registration of community lands.

The passage of the Community Lands Act (CLA) in 2016 increased expectations among the indigenous pastoralist communities of Kenya that the new law will not only help them secure their land but also reclaim all or part of the ancestral lands they lost to colonialists.

Four years after the adoption of the Act, there are more questions than answers over its implementation, success, and the challenges faced.

Rights and security of tenure

Previously, rights to customary tenure were limited to those of occupation and use. The law did not recognise other rights. Much of the literature has linked customary land tenure and use to environmental degradation (the tragedy of the commons), social conflict and food insecurity. Thus, the indigenous land tenure system has been perceived as inferior and an impediment to agricultural development.

In the new laws, the rights conferred by community land have equal footing in law as other previously recognised land tenures such as freehold and leasehold. The legislation upholds Article 40 of the Constitution of Kenya that grants all the rights to own property in any part of Kenya. The Act is progressive in promoting the rights of Kenyans everywhere, regardless of their different ways of life.

Under Section 4(1) the Act vests ownership of community land in the community. Community is defined as people sharing similar ancestry, culture, geographical/ecological space, or ethnicity. The CLA has vested ultimate responsibility to formalise the community rights in community stewardship. The procedure for registering “a community claiming an interest in or right over community land” is set out in section 7 of the Community Land Act and detailed in Part II of the Community Land Regulations.

The registration as provided under Section 7 of the Act involves a complex procedure of electing a community land management committee (CLMC) with a comprehensive register of communal interest holders. The committee then submits for registration to the Registrar the name, the members, and the minutes of meetings and rules and regulations of the community.

Upon registration, a title deed in the prescribed form is issued in the name of the community. Thereafter, the community under, the leadership of the CLMC, can plan the development and management of the community land and the natural resources on it.

The county government 

The county government is the trustee of all unregistered community land in Kenya. As a trustee, the county government has the responsibility of receiving and keeping in safe custody, on behalf of the community, any monies paid as compensation for compulsorily acquired community land and royalties paid as a benefit for the use of unregistered community land. The county government is also an active stakeholder in the registration process. The Act mandates the county to prepare and submit to the Cabinet Secretary an inventory of all unregistered community land within its jurisdiction to prepare a comprehensive adjudication programme and help in civic education on the registration process.

Threats to pastoral land 

Although there are no official records on the size of community land, a close guesstimate is that 60 per cent of Kenya’s landmass is primarily within 21 of the 47 counties. The surface area of Kenya is approximately 582,646km² of which 97.8 per cent is land and 2.2 per cent is water.

When we consider these statistics, Kenya’s community land stands at 341,897 km², excluding private and public lands. It is no secret that most community land is in the historically ignored, dry northern region of Kenya that is occupied by pastoralists.

Therefore, it is a moral imperative to assess whether the Act lays a foundation for security of tenure and more specifically whether it highlights the role of community land ownership in sustaining pastoral land resources.

Over the years, community land has been defined as un-owned or idle land. It is also often mistaken for government land, resulting in illegal grabbing. Moreover, the risk of pastoral and other indigenous communities being disinherited of their land and natural resources continues to increase.

The CLA is unhelpful in this regard as it allows the county government and the national government to set aside parts of community land to promote or upgrade in the “public interest”, a term that is ambiguous as it is not clearly defined. The result is that the term “public interest” has been used interchangeably with “public purpose” which the Land Act 2012 defines as the establishment of “physical infrastructure, roads, dams, national sports facilities, etc.”, leaving the door wide open by adding, “and for any other analogous public purpose”.

The risk of pastoral and other indigenous communities being disinherited of their land and natural resources continues to increase.

Considering the above, pastoralists in northern Kenya face imminent dispossession of their lands due to state-sanctioned mega-projects such as the Lamu Port, South Sudan, Ethiopia, Transport Corridor (LAPPSET). Although both the Constitution of Kenya 2010, CLA 2016, and Land Act 2012 guarantee compensation in good faith for the unregistered occupant as well as for registered owners in case of land expropriation for a public purpose, compensation for pastoralist will be non-existent or at best a mere token because of the Land Value Index Laws (Amendment) Bill 2016.

The bill proposes to limit compensation to the value of the structures and improvements made to the land. Under these circumstances, rural property owners are disadvantaged, and nothing will be forthcoming for land purposely set aside for grazing, as is the case in most pastoralist communities.

Loss of community land may also occur through the statutory right of the state to define new categories of public land.  Part of the existing public land that may not be transferred to the community includes lands prone to waterlogging, buffer zones around the national parks, and cultural sites of importance. Wetlands are critical dry season grazing areas for pastoralists and cultivation, and this provision extinguishes the ancestral claim to resources that are critical to their survival.

The National Land Commission may also identify public land that is available to investors. The CLA itself allows the National Land Commission to add to the list of local land types that may not be transferred to communities. All the above point to the risks faced by communities that assume that all their unregistered community areas are protected under the Act.

Challenges 

The CLA has vested the ultimate responsibility of community land registration in the community. This is unfair considering that the community is not sufficiently aware of the law and the land formalisation process. The procedures provided are complex for the comprehension of indigenous communities that have had little to no contact with government authorities in the past. There is a need to create an awareness of the Act to kick-start the registration process.

Poor or limited financial and technical capacity is the biggest impediment to implementing the Community Land Act. Ideally, community land registrars should be on the ground to educate and assist the communities with the registration process, but they are absent in most counties.

For example, in Isiolo, the registrar was only deployed in mid-2020, while some counties such as Marsabit and Samburu rely on registrars from other regions such as Isiolo or West Pokot.

The registration procedures require movement from one office to another, resources to mobilise community members for meetings, and advertisements on local radios to announce such meetings. These activities all have financial implications, but unfortunately, most counties have no budgetary allocation to support such activities; where these resources do exist, they are very limited.

The strength of CLA lies in its social inclusion, and the principle of non-discrimination. Decision-making on the formalisation of communal rights must be done in a fair, transparent and accountable manner. Procedurally, at least two-thirds of all adult members must participate, consent, or vote on actions and decisions. When a member or a section of the people disagree with the rest over a certain matter, they can lodge their complaint with the registrar or the courts and stall the registration process. This has, to some extent, over-empowered individuals at the expense of the majority or collective voice of the community.

Poor or limited financial and technical capacity is the biggest impediment to implementing the Community Land Act.

The disadvantage of this arrangement is that the registration process comes to a halt until the dispute is successfully determined. For example, the registration of the Merti community land (one of the registration units) in Isiolo hit a snag due to a dispute over the naming of community land.

The proposed name, “Nagele Borana”, was rejected by some of the members for fear that other non-Borana communities may be excluded from the community. Isiolo is inhabited predominantly by the Borana ethnic group, but other nomadic ethnic groups such as the Sakuye, the Gabra and the Somali are also present. There is the assumption that the use of the name of one community will exclude the other communities, and this has caused unnecessary tension and delays.

The support of the county government—the trustee of all unregistered community land—is limited by to many factors. Overlapping claims between county and national governments over certain lands create a setback in fast-tracking the process of formalisation. Kenya Defence Forces (KDF), for example, claims part of Isiolo County land as part of their land, leading to evictions from land that is part of the extensive communal land in the county. The forceful evictions by KDF have been triggered by the assumption that unutilised community land is government/free land. The Constitution of Kenya 2010 failed to discern the overlap between public and community lands and to put measures in place to protect communities from the dispossession of their land.

Success

While challenges remain, there are several bright spots, successes, and good practices across the 21 counties concerned. The first step for community land registration is civic education on the requirements and procedures. According to the Food and agricultural organisation (FAO) of United Nations, at least 24 counties have been sensitised on the CLA 2016 by the Ministry of Lands and Physical planning with the support of the Land Governance Programme funded by the European Union. However, this sensitisation drive only targeted the key decision-makers at the county level. There is a need for a serialised civic education campaign at the grassroots considering that rural people in these counties have had little or no prior contact with government authorities.

At least 10 counties have submitted the inventory of their community lands to the Lands and Physical Planning Cabinet Secretary as prescribed by law. These counties include Baringo, Turkana, West Pokot, Tana River, Isiolo, Wajir, Garissa, Mandera, Marsabit and Lamu. However, most of these inventories are not complete and there is need for follow-up with the counties for their completion. Five communities In Isiolo, namely Kalash, Lenguruma, Longobito, Sericho and Merti, are said to have initiated the registration process and are believed to be at the preliminary stages.

Laikipia and Samburu counties are trendsetters in community land registration in Kenya. In these two counties, a combined total of 24 communities have completed the election of their community land management committees and are ready for the transition. At least five former group ranches have successfully transited to community land and been issued with community title. Elsewhere, nine communities have also prepared for registration in West Pokot under the land governance programme that the FAO is implementing in partnership with the Ministry of Lands and Physical Planning. Even though transitioning from group ranches is straightforward compared to the registration of unregistered land, the progress made in these counties is a testament that community land registration is achievable with the financial and technical support of both government and non-governmental agencies.

Pastoral communities in Kenya have continued to be disadvantaged by the weak nature of their land tenure rights compared to other forms of tenure. Despite the constitutional provision that community land tenure is a lawful class of tenure on an equal footing with private and public land tenure, there is persisting anxiety that community land rights are not sufficiently protected or even restored under the CLA of 2016.

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