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When Family Means Business

9 min read. Family-owned businesses are the backbone of the global economy yet many do not survive one or two generations. DARIUS OKOLLA provides a glimpse into large family-owned businesses in Kenya, and assesses their fortunes in an uncertain political and economic environment.

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When Family Means Business
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The Korean economic landscape is dominated by chaebols, Americans have conglomerates, the Japanese have Zaibatsus, Germans have Mittlestands, while Kenyans have, well, let’s call them Mamols – a cluster of faceless, powerful, family-owned enterprises whose stake in the economy is massive and diverse and which form the core to the competitiveness of the Kenyan economy. Mamols, the word derived from native Dholuo for tendril-like tentacle plants that intertwine their way into multiple nearby vegetation to form a strong mesh-like interconnected undergrowth.

Kenya’s economy, as currently constituted, represents a feudal-like family economy dominated by a few well-capitalised family-owned units at both the top and mid-tier. At a glance, the majority of the 7.4 million small and medium-size enterprises (SMEs) in Kenya are conventionally family businesses owing to their initial source of capital, ownership and day-to-day operations.

A chaebol, or in our case a mamol, is a large industrial firm that is run and controlled by a founder and his or her family. Their internal make-up is that of a large number of diversified affiliate brands, products and markets under a patriarch whose power over the business operations often exceeds legal authority.

There are significant differences between Japanese aaibatsus, Korean chaebols, Kenyan mamols, and American conglomerates, key among them being the source of capital. The aaibatsus organised around a bank, chaebols were prohibited from owning a bank, their American counterparts go to Wall Street, while Kenyan mamols rely on internal revenues and private equity for growth.

The constitutive nature of these businesses is any profit-making venture patronised by two or more family members in its workforce and the majority of ownership or control lying within that family. Traditionally, such corporate structures place the founding patriarchs and matriarchs at the helm and family members in ownership positions, allowing them to exert direct control across the board. Family-level investments are known to tap into the general social immobility of capital, which tentatively guarantees that if properly transitioned, the resources can stay within the family for anywhere between five and six generations.

Family-owned businesses are the backbone of the global economy. The Conway Centre for Family Business estimates that 35 per cent of Fortune 500 companies are family-controlled across the full spectrum of firms, from small niche outlets to major brands. In fact, family businesses account for 50 per cent of the U.S. gross domestic product, generate 60 per cent of the country’s employment, and account for 78 per cent of all new job creation.

The East Africa region has a wide array of such firms, which shrewd private-equity investors can explore in the medium to large segment with market caps of between $10 million and $100 million. The research firm Asoko’s data identified over 10,000 firms in this revenue bracket across a diverse range of markets in East and West Africa.

The Conway Centre for Family Business estimates that 35 per cent of Fortune 500 companies are family-controlled across the full spectrum of firms, from small niche outlets to major brands.

Unsurprisingly, only a handful of the thousands of family-owned firms in Kenya reach elite status or provide strong products, brands, and services across the region, thus significantly influencing the export basket. Extrapolation of local studies indicates that there are 645 family-owned firms earning between $10 million and $100 million annually in East Africa, with nearly three out of every four of these companies being Kenyan, followed by Ethiopia, at 17 per cent, Zambia, at 5 per cent, and Uganda, Rwanda and Tanzania, at 2 per cent each. Asoko’s research further identified 490 family-owned Kenyan firms earning annual revenues in excess of Sh1 billion across a wide range of industries; of the 490, 14.3 per cent, or 70 companies, earn more than Sh5 billion, 22 of which earn over Kshs 10 billion every year.

Within these hallowed halls of prime family-owned enterprises that churn premium products, there exist complexities and contradictions cutting across the family-business divide in which virtues and vices on one end diffuse to the other end with speed and ferocity. Much more intuitively, their very nature as family-owned businesses results in unique models of starting, running and decision-making, the end result of which is usually a surprising litany of dilemmas: political interference, their worries about work and sibling rivalry, inheritance squabbles, and most of all, the fears for the heirs.

Locally, the roughly 500 sprawling family-run conglomerates with at least $10 million in revenues are the understated cornerstones of Kenya’s economic, political and social landscape. Taken together, they make up the silent pillars of the nation’s versatile economy and include the likes of KenPoly, and ICEA Lion, with Ramco being among the oldest of them all. Unlike the globally renowned family-owned firms like Walton, the Korean Chaebols or Japanese corporate giants, most African Kenyan Mamols in particular, prefer to court as little publicity as possible partly because corporate culture generally abhors uncourted publicity given the landmines of publicity.

The PwC 2018 Family Business Survey indicated expected revenue growth in 82 per cent of the family-owned enterprises – a major feat in this era of fiscal constraints and declining exports in the country occasioned by high energy costs and over-taxation. The top obstacles to surmount are corruption (72 per cent), accessing the right skills and talents (52 per cent), prices of inputs (52 per cent), competition from cheap imports (52 per rcent) and the pressure to innovate (50 per cent).

Locally, the roughly 500 sprawling family-run conglomerates with at least $10 million in revenues are the understated cornerstones of Kenya’s economic, political and social landscape. Taken together, they make up the silent pillars of the nation’s versatile economy…

These massive firm’s opaque and often unexamined governance and ownership structures and oversized influence, coupled with their cosy relationship with regulators, often lends credence to fears of influence-peddling. No doubt, as the fiscal condition of the political economy under the Jubilee government tightens, it will cast an intense spotlight on these firms, just at the time when many are navigating murky generational transitions. Absent are clear models of generational transition of wealth acquired and sustained through the patriarch’s political or social patronage, which leaves the heirs ill-prepared for their inherited fortune.

Given the nature of our political economy, most of these firms rely on close cooperation with the political structures for their operations, inducing decades of political goodwill, and support. The guarantee could be in the form of subsidies, loans, and tax incentives only imagined by their rivals. That the president, cabinet secretaries, and top bureaucrats can trace their political fortune to the attendant patronage of family capitalism gives the best glimpse of these firms’ impact in our political infrastructure.

In Latin America, family capitalism is at its most efficient in the pursuit of political power and using tentacled connections to launder public and private resources. In Argentina, the family-owned firm’s goal is political conquest with presidential and gubernatorial positions as the ultimate prize.

In keeping with the largely conservative investment decisions of these investors, 60 per cent of them populate the agricultural, industrial and manufacturing sectors of the economy. A survey by consultancy firm Knight Frank shows that these clusters have allocated 25 per cent of their investment portfolios to equities, 22 per cent to property and 22 per cent to cash or cash equivalents, with only 3 per cent in private equity and another 3 per cent in luxuries stuff such as art, wine and luxury cars.

Given the nature of our political economy, most of these firms rely on close cooperation with the political structures for their operations, inducing decades of political goodwill, and support. The guarantee could be in the form of subsidies, loans, and tax incentives only imagined by their rivals.

Curiously, Kenya’s leading family-owned enterprises are still within the first three generations of ownership, a fact tied to the barely 60 year-old independence in this 100 year-old plantation. Large industrial firms like Ramco, which traces its roots back to precolonial 1940s, signals a growing sustenance and entrenchment of these Mamols into the heart of the nation’s political economy. Ranci is currently chaired by one of the sons of the original patriarch who is subordinated by members of the third generation, a feat replicated by only one other company, which is on its third generation of leadership from within the family.

Lots of other mamols are still being ruled by first- and second-generation leadership and often silently face precarious generational transitions. Surprisingly, about 17 per cent of the top family-owned conglomerates have a succession plan ahead of the global 14 per cent average. The generational divide, coupled with increasing complexity and diversity of skills that the firm needs as it grows, predisposes the second or third generations who take over the reins of family businesses to be more open to outside investors, and hiring of experts. Globally, just 30 per cent of family businesses make it through the second generation, with only 13 per cent passing three generations, which is the context within which lots of these huge Kenyan firms exist.

What’s their story?

As the founders phase out, there’s the compelling case of having fantastically wealthy heirs dealing with wealth that is inherited rather than earned, which may predispose them to hubris. The perpetuation of the firm is not a great deal more fulfilling to them as it was to the founders. Despite being vibrant contributors to the economy, family-owned businesses face corporate governance issues, political wheeler-dealing and flaky succession plans whose overall impact limits the company’s lifespan. In total, just over half of Kenya’s family businesses reported having a succession plan in place, with two-thirds indicating that the next generation was already part of the business.

The litany of generational differences, fraying and differing visions of the future and emerging challenges and gaps compel the patriarchs to invoke external talents to increase the talent pool available for operations. Consequently, a more recent survey has revealed that family businesses in Kenya are in robust health, with revenues expected to continue growing in four out of every five firms.

According to the Finnish Family Firm Association 2009 report there are three prime ownership models in these family-owned firms: first, the owner, active in governance with three overlapping roles as manager, family member, and owner; second, the owner, non-active in governance, is a family member and owner; and third, non-owning, active in governance family member has two roles as owner and as manager. A non-family member active in governance can be a member of the board or management; also a non-family member can be owner as a capital investor or as a managing director who owns shares of the family firm.

Then there are the family members, who have no role as owners or managers and who are typically spouses (in-laws), trustees and next of kin. Relatives of most of Kenya’s stock market billionaires prefer to stay out of the public limelight, avoiding governance roles, such as directorships, in the portfolio companies where their families control major shareholding.

The Family Business Survey 2018 shows that the Nairobi Securities Exchange (NSE)’s main value proposition to mamols – visibility, access to financing and a divestment platform – appeal to the 46 polled companies whose turnovers range from Sh500 million to more than Sh10 billion. Eighty-five per cent of the Mamols rely on internal cash and 83 per cent on bank lending/credit lines, while 59 per cent prefer private equity at a higher percentage than the global average of 39 per cent.

What complicates analysis of these behemoths is that Kenya is known to have a large group of politically-connected superrich families who have hidden their wealth in trusts and a labyrinth of companies to evade taxes. In 2015, a list of 191 individuals and 25 offshore companies linked to Kenya was leaked from the Mossack Fonseca legal firm and published in what came to be known as the Panama papers. The companies and individuals held the cash equivalent of over Sh15 trillion laundered and transferred from Kenya. 

The dark side of family businesses

During the United Nations International Day of the Family in Nairobi, Justice Aggrey Muchelule said that the Family Division has resorted to alternative dispute resolution mechanisms in the quest to resolve the over 13, 000 succession cases over family-owned assets left behind by parents, spouses or other benefactors. Court and political battles over large firms and other properties left to heirs of prime family-owned firms in Kenya pop up regularly even where there is a will. Few of these cases arrive at amicable solutions.

The properties in dispute range from shares to money stashed in banks and tax havens abroad and businesses and other assets, but land still remains the most contested asset; some of these cases have been unresolved since the 1980s. Mbiyu Koinange, James Kanyotu, Gershom Kirima, Jenga Karume, and JM Kariuki’s families are among the affected as the Unclaimed Financial Assets Authority (UFAA) has had to seize their dividends and shares following family feuds over ownership and succession.

Despite their tenacity, the family business model often tends to undermine its own longevity, profitability and efficiency through political favouritism, succession by unfit heirs, endless feuds, and sleaze, including excessive and unnecessary luxury spending on the company’s tab. Examples of drastic declines in family fortunes can be found in Russia and the Middle East.

Locally, while addressing the family of the late Murang’a-born oil tycoon Thayu Kabugi during his burial, President Uhuru Kenyatta, whose family has a major controlling stake in the Kenyan economy, reflected that assembling an estate worth billions of shillings was not a simple task as it takes a lot of struggle, toil and back-breaking work. “But we are seeing a situation whereby families of these icons of our economy go after each other’s throats days after the demise of their economic fortune heroes. That is not the way to go and I would urge all families to desist from such tussles,” he said.

The looming political and economic crises simultaneously plaguing the country has exhausted the country’s political-economy’s capacity to self-correct. A major hit to the economy, the population bulge, massive corruption, and the upcoming elections and referendum will reorient the list of families that control the national pie by raising a few while sinking others. It shouldn’t be lost to us that those who’ve stashed Sh15 trillion abroad stand a better chance of surviving the storm and snapping up the auctioned assets at dirt-poor prices and entrenching their family capitalism for another generation.

Despite their tenacity, the family business model often tends to undermine its own longevity, profitability and efficiency through political favouritism, succession by unfit heirs, endless feuds, and sleaze, including excessive and unnecessary luxury spending on the company’s tab.

An annual study was released ahead of the 2019 World Economic Forum that shows that globally wealth is consolidating back into the hands of a few, with 26 billionaires owning as much as the lower 3.6 billion people in the world. Combined with declining social safety nets, the family business model remains the short-term cushion and guarantor of social mobility for large swathes of the population.

Family businesses range in size, turnover, ownership structures and profitability, from small roadside stalls to behemoths straddling national boundaries. Despite all the squabbles and relational upheavals, family businesses remain a critical means of wealth transfer and generational transition of wealth, opportunity and income.

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Darius Okolla is a writer and a social commentator based in Nairobi, Kenya.

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Unlearning Fear: The Mystery of Creativity

11 min read. When we challenge idiocy and cowardice, we liberate the courage of fellow human beings. When we shake off fear, we discover that the emperor’s power was always contingent upon our complicity. This is the lesson of Kenya’s history that is activated by creative education.

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Unlearning Fear: The Mystery of Creativity
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Counter-intelligence analyst Gregory Treverton once described two kinds of problems: puzzles and mysteries.

Puzzles are problems that have definite answers, such as: What is the capital city of Kenya? or How many kiosks in Nairobi sell unga? It might be difficult to pin down an exact number, but the answer can be estimated provided you define what a kiosk is. Puzzles can vary in complexity, but they all share the fact that they have definite answers. Crossword puzzles may be frustrating, but the solver at least has the satisfaction of knowing that the correct answer for the blank boxes exists. This is also the exact kind of problem most of our institutions are optimised to solve.

A mystery, on the other hand, is a problem with no definite answer because the answer depends on a future interaction of an unknown number of factors. For example, will there be kiosks in Nairobi in three years? If yes, how many? Who is going to supply them unga then? The answers are contingent on architecture, policy, or economics, and if you are an aspiring unga trader, they are also contingent on your choices today. This is an unsolvable problem because it contains too much information. To treat this mystery the same way as a puzzle would be akin to trying to thread a needle with water.

Our journey toward urbanisation has been one of using our puzzle-solving abilities to expand our sphere of certainty within an infinitely dark ocean of uncertainties. Our sphere of certainty up until now has included statements such as: “If I go to school and study hard, I will get a nice job and be able to afford to buy unga not only for myself, but for my family as well.” “The unga I buy from the kiosk is healthy.” “There is a hospital to go to in case the unga I ate is not healthy.”

As the answers to these questions become more unclear for many Kenyans in our unstable economy, we are beginning to question the puzzle bias of our education system and seeking to unlearn the current education model and replace it with a creative education model better suited to framing the mysteries of our time.

Unlearning the puzzle bias

The puzzle bias of our education system is reflected in the fortress-like security at the gates of the offices of the Kenya National Examinations Council (KNEC). Tragically, as youth unemployment figures steadily rise, the message that has arrived late is that the armed infantry units at the gates of KNEC may be guarding an empty house.

Perfect examination scores are increasingly less correlated to career success. Adaptive intelligence that comes from creative education is becoming a much more reliable predictor of success. This is something that should be shared with exam candidates, many of whom have committed suicide because they perceived exam failure to be the end of their world.

We are in the process of entering an electronically mediated world in which all puzzle problems are being delegated to computer programmes that are more intelligent than our best performing human actuaries. Universities are quickly ceding their role as centres of knowledge creation and distribution to decentralised and distributed networks of creative ecosystems powered by technology. Those universities that survive and thrive will be those that are effective platforms for a creative student body. The shift required is analogous to the shift from “monoculture” farming of pupils that privileges puzzle-solving to a “permaculture” approach to education in which creative ecosystems allow students to creatively collaborate with their peers in solving mysteries in unique ways.

Perfect examination scores are increasingly less correlated to career success. Adaptive intelligence that comes from creative education is becoming a much more reliable predictor of success.

My most recent book, Art of Unlearning, uses the radically powerful medium of comics to literally draw a map of how to get out of our puzzle-minded school fortresses and into creative ecosystems. Unlearning, we inevitably discover, requires profound humility, as recovering addicts already understand.

The map begins from the foundation that all infants are born without a culture – naked, hungry and intensely curious. The principal role of parents is to take this uncultured, naked, hungry and intensely curious being and persuade it, cajole it, and terrorise it until one way or another it is convinced that the way we do things in this tribe is the natural way ordained by God. Anything that you feel like doing that doesn’t fit into tribal customs is considered to be a bad idea. Adults who are thoroughly conditioned in a culture may be genuinely horrified to discover that their children were not born with their taboos already installed. This horror is intensifying so much that the youth and elders might be considered to be inhabiting increasingly separate islands of reality that speak different languages.

An authoritarian framework is the worst possible way to engage with such a dynamic information environment. It has been my observed experience that the self-appointed cultural managers, such as Kenya Film Classification Board (KFCB) and many county culture ministries, have absolutely no idea what is happening in the information ecosystem that lies beyond their own Twitter feeds. Their perspective is limited to one of traditional rent-seeking from artists in whose creations they have made no investment. The role of investment has been largely abandoned to foreign cultural agencies and embassies.

As the rate of information exchange in our society accelerates, all tribes are beginning to communicate electronically, bringing the conflicts in our agendas to resolution. So, for example, the musician King Kaka is now a much more powerful bridge-builder than the Building Bridges Initiative (BBI) ever was.

Now that Kenyans are literally going beyond the limits of marathon times and limited leaders with limited visions, a new locus of understanding must be framed that can address our most pressing challenges: ecological destruction, food insecurity, ending political dynasties, and most of all, educating our children for an exponential world.

Who will frame our mysteries?

The choice to deliver this message in the form of a comic book (or graphic novel to be precise) was crucial. Because if one is going to opine on a vision for creative education in Kenya, one must demonstrate creative experience. We demand no less of our dentists or doctors and we should demand no less of our educators.

Illustration and visual storytelling are a domain in which I have had the most experience over the past ten years and they are well suited to taking difficult conversations out of the academy and onto the street. We must end our unconstitutional limits on creative expression such as Cap 222 (Films and Stage Plays Act). This idea of openness to new information will be unfamiliar and uncomfortable to our conservative culture, but so is all growth.

My best explanation of this point comes without words in an illustration titled “Education Factory”. In it you see in one moment gleeful children entering an education factory on one end only to emerge into a wasteland on the other end, stupefied and drained of creativity. Art of Unlearning contains dozens of such moments of understanding that I believe are critical in a society that has been so violently divided by the differences in our tongues and in words. This moment of understanding is a moment that requires no permission from a “higher authority”. It is a moment that cannot come too soon. Comics are in my view the ultimate mystery-framing tool. Let’s get started!

Unlearning fear

Play is nature’s antidote to the debilitating fear of change. All mammals spend their early life playing constantly to learn their limits. My ten-month-old son is so dangerously unafraid that I cannot take my eyes off him lest he plunge head first from the bed to the floor. At this crucial stage, the extent to which children are allowed to explore their limits imprints a lifelong attitude toward new experiences.

Now that Kenyans are literally going beyond the limits of marathon times and limited leaders with limited visions, a new locus of understanding must be framed that can address our most pressing challenges: ecological destruction, food insecurity, ending political dynasties, and most of all, educating our children for an exponential world.

If as children our guardians allowed us to explore our limits safely, we will likely adopt this posture for the rest of our lives, with all the risks and rewards that this entails. But if, on the other hand – as is too often the case in our Kenyan context – the response to exploration is violence, shaming and exorcism prayers, you are likely to avoid the memory of violence by avoiding conflict or eye contact with strangers and shying away from new experiences.

Our history of extreme political violence and repression remains unacknowledged to this very day by the political dynasties that have ruled this country. They cannot be expected to hold themselves or any initiative they table accountable.

Violence was the foundation of the colonial economy and remains the foundation of our economy to this day. Creative natives were a natural threat to an architecture of exploitation and so they have been made the human refuse of our education system. With the internet, this human refuse (please excuse the slur) of creative natives is set to inherit the world and now is the time to pay attention to what they have to teach us.

What we call artists are people who consistently respond to their encounters with novelty in beautiful ways, such as sculpture, painting, literature and song. They teach us that fear is physical and its transcendance is also physical in the form of the creative human expression. This is why art is so essential to the work of healing from trauma. Art represents the proudest monument of our humanhood and is the first potentiality to be sacrificed at the altar of violence. It is very difficult to recite poetry with a gun pointed at your head.

The metaphorical gun that is currently pointed at the heads of artists in Kenya today is much more economic than it is political. The Kenyan artist fears starvation, anonymity and suicide more than she does Ezekiel Mutua’s censorship crusade that is targeted only at the most visibly successful of Kenyan films, such as Wanuri Kahiu’s Rafiki. Kenyans have correctly challenged the idea that one unelected bureaucrat’s colonial prejudices should not be allowed to deny mature audiences an opportunity to evaluate works of art for themselves.

Not coincidentally, human survival on this planet, now more than ever before, depends upon our courage to share our creative ideas, as so many of my favourite writers, such as Dr. Wandia Njoya and Dr. David Ndii frequently do in this publication. When we exercise courage and challenge idiocy and cowardice, we have the compounding effect of liberating the courage of fellow human beings, which is expressed creatively in works such as King Kaka’s Wajinga Nyinyi. When we shake off fear, we discover to our amazement that the so-called emperor is wearing no clothes and that his power was always contingent upon our complicity. This is the lesson of our history that is activated by creative education.

Losing your fear is also good business and not merely a political stance. Walk down any average supermarket aisle and notice how many different brands are competing to sell the same product. Uniqueness is the best differentiator. Similarly, creative education allows young people to seek out unique opportunities to thrive in a jobless and degree-saturated economy. This is an insoluble dilemma for a dynastic oligarchy such as ours whose existence depends on the unquestioning obedience and tribal subservience of its citizenry – while at the same time needing a tax base to finance its exorbitant salaries.

Corporal punishment and other fear-based persuasion of children must become a thing of the past. We must discard antiquated notions such as “spare the rod and spoil the child” and with them the idea that all our conduct needs to be governed by a self-appointed priesthood. We cannot continue to studiously trace movements of biblical tribes while we remain ignorant about the migration history of our own ancestors here in East Africa.

The time has come to unburden our minds and bodies from fear and fear-mongering institutions. I believe that democratising creative education for all Kenyan children is the first and most critical step in this direction. Using “creativity and innovation” as a buzzword on the Kenya Institute of Curriculum Development (KICD) website is simply not enough.

Unlearning comparison

From the day a student enrolls in the Kenyan education system, he or she is subjected to examinations. Examination scores are then compared against those of other students in a zero-sum competition organised by KNEC. This zero-sum competitive mindset continues into later life in our workplaces and in traffic jams. It also sits at odds with our natural human tendency to solve problems collaboratively so that the collective can benefit from as many different viewpoints as possible.

We all benefit from culinary, cultural and cosmological diversity. This is why monotheism’s history of violence is so much more bloody than that of polytheistic cultures that tolerated a diversity of cosmologies.

Whatever one’s particular religion, it should be clear that the internet is a platform that is much more stimulating of unique ideas than any medium before it. In an attention-deficient media landscape with numerous options for viewers, the only way to hold sustained attention is by being significantly different.

Luckily, one does not have to try too hard to be different because we already are. Nature does not create duplicates. One simply has to unlearn the habit of comparison that obscures our unique and innate aspirations. We must unlearn the shaming of those we call wajuaji or arrogant for straying away from tribal orthodoxy. The approval of the herd is thin soup compared to the thick gravy that is self-discovery. In Kenya, this means unlearning the habit of borrowing beauty standards, borrowing political frameworks, borrowing religions and borrowing Chinese loans without the consent of the people. Conformity is for sheep, and sheep are led to slaughter — a consistent lesson of Kenya’s experiment in democracy for those old enough to remember. Let us try instead to foster and export our uniqueness.

The time has come to unburden our minds and bodies from fear and fear-mongering institutions. I believe that democratising creative education for all Kenyan children is the first and most critical step in this direction.

In unlearning comparison by embracing uniqueness, one of my most impactful teachers has been the late martial artist Bruce Lee. Bruce was a unique figure with no peers because he was a rare combination of fighter, actor and philosopher. Bruce’s example urges us to seek out precisely those behaviours that set us apart and to develop them.

In my case, graduating with an LLB degree a year after our devastating post-election violence in 2008 was my nudge in the direction of a more unique career. With uninspiring job prospects all round and glaring evidence that my profession was impotent to prevent catastrophe, I began to explore alternatives that would have in previous times been considered unthinkable. Ergo, my current profession of drawing comics and animations. I found my voice in comics and the expression of all the latent abilities that were deemed economically useless.

It is my hope that the sacrifices of my generation in the early blossoming of digital content in Kenya will lead to thriving creative ecosystems. As Muthoni Drummer Queen so eloquently stated in her TED Talk, creativity builds nations. Nation-building can never be done by rent-seeking governments and certainly not by rent-seeking governments as deficient in legitimacy as Kenya’s political dynasties that are desperately trying to remain relevant today. Creative education is a tide that will lift all boats by applying digital technologies to demonetise, dematerialise and democratise knowledge sharing. Creative education challenges our feudal economic structure by placing a value on intellectual property.

In the age of exponential technologies, it has become impossible for even the most highly trained “white collar workers”, such as dermatologists, to rest on their laurels. There are no safe jobs. A deep learning algorithm has the power to recognise millions of skin diseases in a second, whereas the human dermatologist will require multiple lifetimes to approach that number.

The risk of obsolescence becomes more acute the more puzzle-oriented a profession gets. The extent to which Kenyan youth will be able to complement the rise of data science is directly dependent on the investment that we are willing to make in innovation and creativity today. If my experiences as an artist living in Kenya are anything to go by, this investment is only being made by individual parents and foreign cultural agencies, such as the Goethe Institute and the Alliance Francaise in Nairobi.

Unlearning belief systems

The most important three words for someone to become creative are “I don’t know”. Concealing ignorance with inherited assumptions and prejudices that are outside your experience is not an effective strategy for becoming creative. If you are going to do something original, “I don’t know” is the optimal stance to begin from. Those who do things that have never been done before were by definition unqualified to do them the moment before they did. Are we confident enough as a continent to question the Middle Eastern religions that dominate Africa?

The most important three words for someone to become creative are “I don’t know”. Concealing ignorance with inherited assumptions and prejudices that are outside your experience is not an effective strategy for becoming creative.

Original thinkers never believe fully in anyone else’s BS (belief systems), least of all their own. Their only confidence is in their own capacity for keen investigation with the help of books such as Art of Unlearning to frame life’s mysteries creatively. Any belief system we have right now is provisional before it is revised and updated to incorporate new events and perspectives. Only this way can we imagine Africa differently than its colonisers and missionaries did. This, incidentally. is the natural functioning of the human brain and the way children’s minds work before they are distorted by intimidation from the education system.

Unlearning belief systems is as difficult as a right-hander learning to write with his left hand. Human perception was not evolved to see the truth, but rather to see only that which was optimal for survival. But what is optimal for our survival has changed while we were sleeping. 

I do not know the shape of the society we are going to forge, but I do know that I am compelled by a passion for freehand movement to face this mystery creatively.

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Experimental Neoliberalism and Refugee Survival in Kenya

7 min read. ALI BHAGAT situates refugees as a new population for neoliberal experimentation as refugee camps are transformed into spaces of untapped profit.

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Refugee survival in Kenya is inseparable from the dynamics of inequality, finance, and debt embedded in capitalism. This article draws much inspiration from Kevin Sieff’s excellent article in The Washington Post that looks at how debt-ridden refugees are being forced to return to a war zone in Somalia.

I am most interested in the ways that capital – in its money form – supercedes, intervenes, and invades the humanitarian sector. At the site of the refugee camps and in cities like Nairobi, capital claims to free the refugee from the passivity of shelter and assistance through entrepreneurialism. This article explores neoliberal experimentation in the context of refugee survival in Kenya. I argue that refugees represent an experimental population. Their various sites of survival are opened up to financial penetration – a last ditch and piecemeal market-led solution to alleviate poverty.

Kenya hosts approximately half a million refugees in its camps and urban areas and has done this for nearly three decades. Dadaab and Kakuma, two of the world’s largest refugee camps, have become sites of increased xenophobia and structural violence where the Kenyan government continues to threaten their closure in the face of diminished global aid.

Contrastingly, these camps are also sites of finance, debt, and neoliberal-led forms of experimentation. Neoliberalism – the ideological and material power of private interest through the dismantling of state-led solutions for welfare – is highlighted here as a way to understand a global stance and policy focus on self-reliance. In so doing, I situate refugees as a new population for experimentation.

Experimentation is a market-oriented solution to alleviate refugee poverty. It is hinged on self-reliance and propagates the financial interests of the private sector. The intentions of capital accumulation are hidden under the guise of choice and liberty where refugees can use credit to escape poverty and transform themselves into entrepreneurs. Self-reliance is a façade.

Mastercard and the U.S Agency for International Development (USAID) announced a public-private coalition to transform refugee settlements into digital communities in 2018. This strategy seeks to “bring together technology, solutions, and experience from multiple sectors to transform refugee settlements into digitally-connected communities’, thereby providing infrastructure-based innovations in terms of mobile phone and internet access vis-à-vis key dimensions of survival such as safety, food, shelter, and water”.

Experimentation is a market-oriented solution to alleviate refugee poverty. It is hinged on self-reliance and propagates the financial interests of the private sector.

Mastercard, along with Western Union, announced a new digital infrastructure model hinged on mobile money, digital vouchers, and card-based solutions that promote refugee “self-reliance”Digitising the refugee camp, and thereby transforming it from an arena of passive aid and shelter to a marketplace allows refugees to access formal financial services. This form of neoliberal experimentation also transforms the refugee camp – previously understood in the logic of the development industry as a forgotten barren space – into one of untapped profit.

For example, as the Mastercard and Western Union report states: “…refugees are responsible for payment…For example, children can go to school, but the family must pay for uniforms and books. It becomes vital to access convenient, easy-to-use financial services. Foreign and domestic remittances received via Western Union or hawalas [a remittance channel that takes place outside of the banking system] are a major source of income.”

Interestingly, the logic of empowerment described in this report is equated to providing a wider array of financial service access – not actually addressing the fact that refugees have to pay for some essential survival services such as healthcare and basic goods.

Actors like Mastercard and Western Union, by diversifying access to financial services, are able to capitalise on financial transactions by providing cheaper rates for remittances in the name of “smart city” development. The same report goes on to highlight that Equity Bank holds 15,000 refugee accounts in their Kakuma branch and most remittances are either received through Western Union or hawala agents—needless to say, there is profit to be made if so-called passive aid recipients are transformed into entrepreneurs who are self-reliant actors.

The transformation of refugees into self-reliant entrepreneurs relies on the logic that these people are complex economic actors who need more diverse financial choices. Missing from this reasoning is the recognition that refugees receive little global attention and constantly face reductions in essential services, which pushes them to precarious forms of income-generation in order to survive.

Interventions by private sector actors fall into age-old neoliberal adages of efficiency, accountability, and freedom of choice. State and international human rights actors, such as the Office of the United Nations High Commissioner for Refugees (UNHCR), and the Kenyan government, in the face of global austerity, are more than happy to have private actors step in and take over responsibility for refugee survival.

The transformation of refugees into self-reliant entrepreneurs relies on the logic that these people are complex economic actors who need more diverse financial choices.

In contrast, the threats of closure of the camps by the Kenyan government, particularly in Dadaab, have not disappeared, and the camp sizes are slowly shrinking. In 2011, at the height of the famine in Somalia, Dadaab’s population rose to 421,000. This number had been reduced to 230,000 in 2018, partly because some refugees went back home voluntarily while others were encouraged to return to Somalia, as per a repatriation agreement between the Government of Kenya and UNHCR.

While Kakuma represents an experimental avenue for profit, Dadaab – home to predominantly Somali refugees – is framed by the Kenyan government as an unaffordable space both in terms of the security threat and the financial burden. The Kenyan government – which has often scapegoated Somali refugees as terrorists and the Dadaab camp as a safe haven for Al Shabaab – justifies the return of refugees by arguing that it will quell social disruption. 36.8 per cent of Kenya’s population lives on $1.90 a day, placing Kenya 8th on the list of top 10 African countries experiencing extreme poverty.

There are apparent tensions regarding refugee hosting. Many of the participants interviewed for my research suggest that the Kenyan government supports encampment because it absolves itself from welfare responsibilities. Looking at this more broadly, it was the forces of structural adjustment in the 1990s that coincided with refugee encampment that prevented the Kenyan state from developing long-term welfare capabilities in the first place.

Nevertheless, the new Comprehensive Refugee Programme (CRP) highlights that refugees should have adequate avenues for job creation, entrepreneurship, and integration in camps and urban settlements. This is a key divergence from previous strategies of encampment – refugees are now a new experimental population who must harness the forces of the market.

While self-reliance is the policy du jour, the militaristic arm of the state that seeks to prevent migration is also alive and well. Biometric Identity Management (BIM) through fingerprinting and iris scans are surveillance technologies indicative of state organisations (along with UNHCR) seeking to prevent new or circulatory migrants. For example, Somalis who are “voluntarily” repatriated, as Sieff points out, just to relieve their own state of indebtedness in Dadaab, seek return to Kenya as Somalia remains unstable. BIM prevents this from occurring thus attempting to make repatriation permanent.

Indeed, as one interview participant noted, if UNHCR and the government are claiming that refugees are able to return to Somalia, then – within this flawed logic – they should no longer accept Somali refugees. If they do, then they accept that Somalia is not a safe country for return. So both international and national actors are complicit in the violence that Somalis face in their struggle for survival.

Much attention is given to refugee survival in camps; however, with the constant threat of their closure, many refugees are permanently relocating to Nairobi and its environs – a move that is illegal without a permit. Since welfare programmes for urban refugees are virtually non-existent, these groups must rely on piecemeal forms of assistance from NGOs and their own communities in the form of cash grants, entrepreneurial training, and microfinance within the ambit of experimentation and self-reliance.

Self-reliance as a solution for assistance is hindered by xenophobia too. For example, many Somali refugees relocate to Eastleigh, which has become an area targeted by the police in light of terrorist attacks in Nairobi. Somalis are unfairly rounded up and sent back to camps or deported while other non-Somali refugees are left to survive in Nairobi in the informal sector. A participant from a government department noted in my research that, “If a refugee wants to stay in Nairobi then they can fend for themselves…the camps are equipped to care for them so if they are in Nairobi it is by choice and they ideally should have a transit permit from the government.” Self-reliance is thus inherent in the national attitude towards refugees, which simultaneously ignores the circumstances of violence, health issues, and poverty in refugee camps.

Much attention is given to refugee survival in camps; however, with the constant threat of their closure, many refugees are permanently relocating to Nairobi and its environs – a move that is illegal without a permit.

Since no welfare support systems exist, many NGOs offer some sort of business training and loan assistance programmes – another example of “disciplinary entrepreneurialism”. In order to access these loans or grants, refugees must go through a training programme where they learn the necessary business skills to set up shop. They must learn how to make a profit so that they can repay the loan, because these loans, in fact, are frequently used for other refugees in the context of shrinking services. NGOs also recognise that refugees are a flight risk for loans because the cash in hand is used for basic consumption needs – a key issue identified in the literature on microfinance.

In short, the use of loans under the spirit of entrepreneurialism dovetails with the security maximisation arm of the state that prevents refugees from entering its territory. These strategies coincide with two central aspects of neoliberalism – austerity and accumulation.

As the story goes, the Kenyan government, along with international actors, prevents refugees from entering the country. These refugees are framed as threats to state security and an unaffordable risk. In turn, refugees that already exist in camps are either sent back to their country of origin or transformed into entrepreneurs where the camp becomes a space of experimentation.

In short, the use of loans under the spirit of entrepreneurialism dovetails with the security maximisation arm of the state that prevents refugees from entering its territory.

Refugees in urban areas are also meant to become entrepreneurs in order to survive without any state-led assistance. Importantly, these strategies have little to no empirical evidence, further pointing to the experimental nature of entrepreneurialism as a key strategy for survival upon relocation (for a greater exploration of these themes see my article here).

The Kenyan case reveals that exclusion and violence continue to facilitate capital accumulation while also preventing long-term refugee survival. The notion of experimentation, briefly sketched here, allows us to frame neoliberalism as an ambivalent process. Capital permeates these spaces of poverty and the logics of entrepreneurialism facilitate some form of accumulation either through debt or through micro-transactions in the form of remittances. Importantly, refugees in the development of so-called smart communities also produce data and this data can be used for the purposes of capital accumulation in other contexts.

Editors Note: This article was first posted in the Review of African Political Economy (ROAPE)

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Nairobi: The City That Was Never Meant to Be

7 min read. OWAAHH and JOHN KAMAU explore Nairobi’s evolution from its humble beginnings as a railway depot to its present status as the nation’s capital.

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Nairobi: The City That Was Never Meant to Be
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More than a century ago, a brash and mostly racist decision created a small tin shack town in the middle of a swamp. Then the town became unstoppable.

The first men and women who landed in Nairobi probably considered the brackish swamp land perfect. The area was picturesque, with hills in the horizon and rivers crisscrossing the plains. While the swampy land was not suitable for farming, and certainly not for settlement, it was perfect for grazing.

For the Maasai and the Kikuyu, the plain was also a meeting ground, cutting between the highland farming community in Central Kenya and the nomadic community in the Rift. For the Kamba and other traders and adventurers, it was the easier part of the journey. The Maasai called it Enkare Nyorobi, ‘the land of cool waters’; other names for the land seems to have evaded history books.

The colony’s vanguard also saw it as one of the easy stretches of a long, much more arduous journey to the Western parts of what would become Kenya. The treeless plain was also curiously empty, particularly on the lush parts towards Central Kenya. They wrote of ‘Nyrobe’ in their letters home, a name which, in a short time, would become the name of the capital of a new country.

It was not empty or deserted though; it was occupied, just not permanently. And even less at that point because smallpox and a few other epidemics had cut down the populations of many Kenyan communities.

In 1896, builders of the Lunatic Line set up a small supply depot and a camp on the plains. The original boundaries of what is now Nairobi were for “the area within a radius of one and a half miles from the offices of the sub-commissioner of the Ukambani Province.” There was no plan beyond that, and Nairobi was merely one in a chain of such supply depots. The railhead reached Nairobi, the small supply depot between Mombasa and Kampala, in 1899.

With it, a new future began.

A cultural melting pot

The railway management picked Nairobi to be their railway headquarters. But this seemingly arbitrary decision that would put the builders at loggerheads with the colonial government did not involve any proper assessment of the site. Public health would be the key issue in those early years, with the lack of proper drainage making the new town the perfect breeding grounds for epidemics.

But the railway engineers did not see Nairobi as becoming anything more than an Indian township which, they argued, could “prosper in spite of unsanitary conditions and chronic plague.”

As more people settled on what had become the railway headquarters, a pattern emerged. Europeans settled to the West, Asians to the Parklands side, and Africans to the East. But segregation laws would not become codified until 1908, after yet another bout of the plague. Within the first five years, what had been a sparsely occupied swampy plain was now home to 10,000 people. After Mombasa, Nairobi was now the cultural melting pot of the young British colony.

The railway management picked Nairobi to be their railway headquarters. But this seemingly arbitrary decision that would put the builders at loggerheads with the colonial government did not involve any proper assessment of the site.

With government funding and rich entrepreneurs like AM Jeevanjee, who had made a fortune supplying material and labour to build the railway, a town sprouted from the swamp. The richest man in Kenya at the start of the 20th century, Jeevanjee would later go on an investment spree, building the first law courts, the original Nairobi Club, the first building that housed the National Museum, and many other buildings.

Before the railhead reached Nairobi, the central economic activity for the young town had been big game hunting. By 1900, the town was a single street, driven by commerce as Asian railway builders settled in tin shacks on the plain. Beyond that street “lay the swamp where frogs lived every night at dusk they used to bark out their vibrant chorus and spread a cloak of deep, incessant sound over the little township” as Elspeth Huxley writes in White Man’s Country. The frogs formed part of the ecosystem, providing a rhythmic croaking during the calm nights of a budding young town. It was free music, if not poetry, but it freaked out public health officials.

A public health hazard

Doctors were particularly concerned about the hazards the soggy grounds carried. At 1,750 metres above sea level, colonialists thought Nairobi’s temperate climate would limit the development of malaria-carrying mosquitos (an oft-repeated myth, most notably in Al Gore’s An Inconvenient Truth). It didn’t, and not just because the soggy grounds allowed pools of stagnant water to collect. Malaria would thrive in the new town, with 14,000 new malaria cases reported in Nairobi in 1913 alone. But malaria was just one of many health concerns that made doctors want the small town moved to higher ground.

In 1902, the small town faced its first major public health problem. An epidemic of the dreaded bubonic plague erupted along Indian Bazaar. With no sanitation or municipal plans, the main street at the time had played host to rodents, and the animals had in turn brought in the plague, killing several people. The plague was diagnosed by the enigmatic zebra-riding Dr. Rosendo Ribiero. The Medical Officer, Dr. Alfred Spurrier, ordered the entire street burnt. Everyone was evacuated, and Nairobi’s first CBD was torched.

This was probably the point in history when the situation could have been salvaged and the young town moved, but that didn’t happen. Instead, lethargy and bureaucracy resulted in a status quo.

At 1,750 metres above sea level, colonialists thought Nairobi’s temperate climate would limit the development of malaria-carrying mosquitos…It didn’t, and not just because the soggy grounds allowed pools of stagnant water to collect.

In May 1903, Dr. Moffat, a principal medical officer of the East Africa and Uganda Protectorate, called Nairobi dangerous and defective. After another plague in 1904, he recommended relocating residents to modern-day Kikuyu Township. But Moffat left in April 1904, and his successors held the costs of relocation too high.

On 18 May 1906, Sir James Sadler, commissioner for the Protectorate, wrote to Winston Churchill, Undersecretary of State for the Colonies, complaining about the emergence of Kenya’s capital: “…at the commencement of the 1902 plague…the then-commissioner, Sir Charles Elliot, was strongly of the opinion that the site, which had been selected three years before by the manager of the Uganda Railway without consulting medical or sanitary authorities, was, with its inadequate drainage, unsuitable for a large and growing population. [It is a] depression with a very thin layer of soil or rock. The soil was water-logged during the greater part of the year.”

The letter further reminds Churchill of the 1902 recommendation to move the city “to some point on the hills.” Sadler told Churchill this was a critical point in Nairobi’s history; that his predecessor had said: “…when the rainy season commenced, the whole town is practically transformed into a swamp.”

But the Board running the city decided instead to try drain the swampy bazaar area.

Six years before, in 1898, a 25-year-old man called John Ainsworth had disembarked from a ship at the Port of Mombasa. He was an employee of the colonising company called the Imperial British East African Company, and was ambitious to make a career for himself. Before that year ended, he travelled from Mombasa up to Machakos, and into the tin shack town called Nyrobe. He built his house at Museum Hill to found the colonial administration, much to the chagrin of influential railway builders. Eager to make the swampy plains work, he planted Eucalyptus trees on the swamp to drain the water. Ainsworth’s legacy remains to date, with most of his efforts being the only reason why more and more parts of the swamp could be occupied.

Nairobi continued to develop quickly and Sadler finally threw in the towel: “It is, I admit, too late to consider the question of moving the town from the plains to the higher position along the line some miles to the north. We had a chance in 1902, and I think it was a pity that we did not do so then as advocated by Sir Charles Elliot.”

But even Sadler did not anticipate the growth – eightfold since 1969, from 500,000 people to 4.4 million today. He said Nairobi would never become “a city like Johannesburg or a large commercial centre, for if there is a rapid development of industries or minerals in any of the new districts, the centres would spring up around them.”

Churchill accepted this idea and made the final decision: “It is now too late to change, and thus lack of foresight and of a comprehensive view leaves its permanent imprint upon the countenance of a new country.”

The colonists had given up, and the town they had once thought would only be occupied by Indians became the centre of the new colony. It would take another six years for the Nairobi Sanitary Commission to be appointed, by which time the city was home to thousands of people. The swampy grounds would pose challenges for builders, medical officers, and town planners.

From tin shack town to city

Settlers like Ewart Grogan believed that the Europeans should have occupied the area from Chiromo up towards and past Westlands. They could then leave the lower plains and its tin shacks to Asians and Kenyan natives. The plan never came to be as the influence of the railway builders carried the day, and by the time it became clear the city would grow, it was too late to move it.

In 1919, Nairobi Township became Nairobi Municipal Council and the boundaries were extended. It would be extended nine years later to cover 30 square miles. Seven years after that, Jim Jameson presented a town planning report with great plans to plant Jacaranda trees. The tin shack town was well on its way to becoming a city, and the future generations of city fathers would have to find a way to deal with the thin layer of soil.

It hired a consultant in the mid-1920s, by which time the town’s economic importance made it a fait accompli. One colonial officer wrote that the new plan was ambitious, but until it bore fruit, “Nairobi must remain what she was then, a slatternly creature, unfit to queen it over so lovely a country.”

More than three decades later, when it became the official capital of a new country, Nairobi still did not have a blueprint.

The initial stubborness of the railway engineers trumped those of the colonial government and its health officials. For that, the latter would pay dearly, facing many epidemics and having to dedicate finances to further drain the swamp. Most of the swamp has now been replaced with skyscrapers and road networks, with insufficient footpaths, drainage and leadership.

The colonists had given up, and the town they had once thought would only be occupied by Indians became the centre of the new colony.

More than a century after its unlikely birth, Nairobi is home to more than 4 million people. The city still reminds that it was once a swamp where rivers criss-crossed at will. One pending idea, which has been revived in the Building Bridges Initiative (BBI) Taskforce report, is to grant the city special status as a capital city. It would mean Nairobi will not have a governor, but the report hopes that it would not “impede the rights of the Kenyan people to representation at the ward and parliamentary levels.”

In this scenario, only a special status would allow the central government “the means to provide the services and facilitation necessary to maintaining as a capital city and as a diplomatic hub.” Whether that’s likely is a toss-up, but whoever runs it will always face the same problems as its first city fathers. Indeed, the city that was never meant to be, and probably should never have been, is now the epicentre of the Kenyan economy and society.

Perhaps the time is ripe to ask ourselves whether Nairobi should be the epicentre of Kenya, because today, amidst the floods raging in the city, poor drainage and the chaotic streets, Nairobi leaves much to be desired as a capital city and is still an unfit slatternly creature to queen over the country, despite what the BBI report claims.

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