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Kenya Budget 2018/19: It’s Time for a Taxpayers Boycott

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The Kenya Budget 2018 has drastic implications on national and regional stability, on the Kenyan economy and on Kenyan workers. Its projections contradict data shared in previous Economic Surveys; it makes patently false claims, for instance, about the decline in domestic credit, to justify doling out billions to already well-provisioned sectors, notably manufacturing. But more than anything else, it is quite simply a perfect script for more waste and theft. By L. MUTHONI WANYEKI

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Kenya Budget 2018/19: It’s Time for a Taxpayers Boycott
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It’s time for a taxpayer’s boycott in order to evaluate what is increasingly sapped out of us through tax and against what’s disgorged out of us through the theft and waste of our money. Let’s compare the facts, according to the government’s own Economic Survey 2018 and this week’s budget speech.

This year’s budget aims are meant to align with, and support the Jubilants’ so-called ‘Big Four Agenda’ – boosting manufacturing activities, enhancing food and nutrition security, achieving universal health coverage and supporting the construction of at least 500,000 affordable houses by 2022. Bear in mind, however, that the first Jubilant administration, through its Economic Transformation Plan, also had a focus on agriculture and manufacturing.

Last year, the real added value of agriculture shrunk by 3.5 percent to 1.6 percent. This was blamed (as usual) on the lack of rainfall. True, there were shocking decreases in production of key crops – coffee’s production dipping by 11.5 percent and tea’s by 7 percent with only horticultural production going up. But there was an overall increase in the value of marketed production of Ksh.28.6 billion for the agricultural sector. So why did the real added value shrink? What happened?

There’s no doubt that Kenya’s efforts to expand social protection are worthwhile. Reforming social insurance, for instance. Or expanding social assistance to vulnerable groups. But social protection is about risk mitigation – preventing the already precarious from tipping over into even more precarious. Social protection is not about growing jobs, enabling livelihoods and improving returns from employment. It’s also not about ensuring that the intent to improve access to quality social services translates into actual access to social services.

The real added value of manufacturing shrunk by 1.9 percent to 0.2 percent. This was blamed (also as usual on the extended electoral process, high production costs and competition). Note that credit extended to manufacturing actually increased – by Ksh 36 billion, no less. Yet there were shocking decreases in the levels of key manufactured products – except for maize and soda (!). What happened?

Regardless of what happened last year, to fix these sectors now, our Treasury proposes the following:

For the agricultural sector (amongst the usual pleas to move away from rain-fed agriculture and so on), to put about 700,000 acres under large-scale production by public-private partnerships (PPPs). No mention is made of where these additional acres are to come from – when land theft, fragmentation and scarcity is the source of so much national tension already. Maybe the President’s family intends to return the immense tracts of public land the founding President appropriated for himself?

For the manufacturing sector, contradictions abound. On the one hand, Kenya’s speedy accession to the African Continental Free Trade Area is praised. On the other hand, regional (and other) competition is being dealt with by ‘re-negotiations’ and ‘reviews’ of the sub-regional trade arrangements we are already committed to. Plus the rather cavalier raising of customs duties on anything we’re deemed capable of producing – to no less than 35 percent (!) on everything from iron and steel to paper, plywood, textiles and vegetable oils. This, we are informed, should raise us an additional Ksh.27.5 billion (not to mention the ire of our neighbours in the sub-region). Free trade is only good when it’s good for us, apparently.

Moving on to the financial sector: the Treasury had much to tell us about the supposedly negative effects of the interest rate cap. It has, we were told, made banks ‘shy away’ from would-be borrowers, who have also pushed depositors towards an expanded range of non-interest earning deposit accounts. It has also, we were told, slowed growth in credit afforded to the private sector.

Yet the Economic Survey for 2017 told us otherwise. As mentioned above, credit to the manufacturing sector grew last year – by Ksh.36 billion. Credit to the construction sector also grew last year – by Ksh.5.1 billion. Overall, domestic credit increased by 7.9 percent in 2017 – including an increase of credit to the private sector by 2.4 percent. And, despite interest rates remaining fairly steady, deposit rates went up as well!

 Credit to the manufacturing sector grew last year – by Ksh.36 billion. Credit to the construction sector also grew last year – by Ksh.5.1 billion. Overall, domestic credit increased by 7.9 percent in 2017 – including an increase of credit to the private sector by 2.4 percent. And, despite interest rates remaining fairly steady, deposit rates went up as well!

But no…the Treasury has decided this experiment in making banks less usurious must end. It will be seeking to repeal the now infamous Section 33B of the Banking (Amendment) Act. For those worried about small borrowers, especially for small and medium-size enterprises, have no fear. The new, combined Biashara Fund is here (which’ll combine the three special funds for SMES owned by women and the youth).

And, just so we’re clear that Treasury isn’t, in fact, on the side of usury, it will be seeking to institute a ‘Robin Hood’ tax – charging a 0.05 percent tax on all bank transfers of Ksh.500,000 or more to go towards public health. Which we might be happy about if they came from banks and not us (as individuals and businesses). And if Treasury wasn’t also increasing the (already outrageous) tax on all mobile money transfers by two percent to 12 percent. What the good Lord gives with one hand he’ll certainly take away with the other.

Oh, and in case we missed it, instead of the progressive income tax increase on high-earners we had expected, now everybody gets a tax increase. The Employment Act is to be amended to impose a housing tax on all of us – an additional 0.5 percent will be taken from every formal sector worker, matched by an additional 0.5 percent from the employer virtuously to go towards housing.

Our spending target is to come in at just under Ksh.2.56 trillion. The aim apparently being to reduce our deficit from 7.2 percent to 5.7 percent while keeping our debt to gross domestic product ratio just below 50 percent. This spend target is slightly under our spend for 2017 – which sat, at the end of the day, at just under Ksh.2.78 trillion. Not controlled for theft and waste obviously

Our spending target is to come in at just under Ksh.2.56 trillion. The aim apparently being to reduce our deficit from 7.2 percent to 5.7 percent while keeping our debt to gross domestic product ratio just below 50 percent. This expenditure target is slightly under our spending for 2017 – which sat, at the end of the day, at just under Ksh.2.78 trillion. Not controlled for theft and waste, obviously.

With regard to theft and waste, the Treasury announced a bunch of moves to make public procurement more to scale and transparent, with significant allocations to all criminal justice institutions now involved in the ‘multi-agency’ effort against theft and waste. But it’s hard not to be cynical given the absolute lack of attention apparently paid to improving efficiencies and prudence.

There’s no doubt that Kenya’s efforts to expand social protection are worthwhile. Reforming social insurance, for instance. Or expanding social assistance to vulnerable groups. But social protection is about risk mitigation – preventing the already precarious from tipping over into even more precarity. Social protection is not about growing jobs, enabling livelihoods and improving returns from employment. It’s also not about ensuring that the intent to improve access to quality social services translates into actual access to social services.

That translation has been utterly undermined by the breadth, depth, prevalence of the theft and waste of public money that prevails. Treasury needs to convince us that it’s taking that theft and waste seriously. Sorry, the measures announced just don’t cut it.

It’s time for a taxpayers boycott. Really. There’s no taxpayer who is not absolutely and completely embittered by what we have to contribute. Because what we contribute is going to theft and waste.

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L. Muthoni Wanyeki
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L. Muthoni Wanyeki, PhD, is Africa Director with the Open Society Foundations (OSF) network based in London. This column is written in her personal capacity and does not necessarily reflect the views of OSF.

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Another False Start: The Green Revolution Myths that Africa Bought

The flaws and dire consequences of India’s Green Revolution should have warned policymakers of the likely disappointing results of GR in Africa.

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Another False Start: The Green Revolution Myths that Africa Bought
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Since the Alliance for a Green Revolution in Africa (AGRA) was launched in 2006, crop yields have barely risen, while rural poverty remains endemic, and would have increased more if not for out-migration. With funding from the Bill and Melinda Gates Foundation and the Rockefeller Foundation, AGRA was started with the objective of raising yields and incomes for 30 million smallholder farm households while halving food insecurity by 2020. There are no signs of significant productivity and income boosts from promoted commercial seeds and agrochemicals in AGRA’s 13 focus countries. Meanwhile, the number of undernourished in these nations increased by 30 per cent.

When will we ever learn?

What went wrong? The continuing protests by Indian farmers — despite the COVID-19 resurgence — highlight the problematic legacy of its Green Revolution (GR) in frustrating progress to sustainable food security. Many studies have already punctured some myths of India’s GR. Looking back, its flaws and their dire consequences should have warned policymakers of the likely disappointing results of the GR in Africa. Hagiographic accounts of the GR cite “high‐yielding” and “fast-growing” dwarf wheat and rice spreading through Asia, particularly India, saving lives, modernising agriculture, and “freeing” labour for better off-farm employment.

Many recent historical studies challenge key claims of this supposed success, including allegedly widespread yield improvements and even the number of lives actually saved by increased food production. Environmental degradation and other public health threats due to the toxic chemicals used are now widely recognised. Meanwhile, water management has become increasingly challenging and unreliable due to global warming and other factors.

Ersatz GR2.0 for Africa

Half a century later, the technology-fetishizing, even deifying AGRA initiative seemed oblivious of Asian lessons as if there is nothing to learn from actual experiences, research and analyses. Worse, AGRA has ignored many crucial features of India’s GR. Importantly, the post-colonial Indian government had quickly developed capacities to promote economic development. Few African countries have such “developmental” capacities, let alone comparable capabilities. Their already modest government capacities were decimated from the 1980s by structural adjustment programmes demanded by international financial institutions and bilateral “donors”.

Ignoring lessons of history

India’s ten-point Intensive Agricultural Development Programme was more than just about seed, fertiliser and pesticide inputs. Its GR also provided credit, assured prices, improved marketing, extension services, village-level planning, analysis and evaluation. These and other crucial elements are missing or not developed appropriately in recent AGRA initiatives. Sponsors of the ersatz GR in Africa have largely ignored such requirements. Instead, the technophile AGRA initiative has been enamoured with novel technical innovations while not sufficiently appreciating indigenous and other “old” knowledge, science and technology, or even basic infrastructure. The Asian GR relied crucially on improving cultivation conditions, including better water management. There has been little such investment by AGRA or others, even when the crop promoted requires such improvements.

From tragedy to farce

Unsurprisingly, Africa’s GR has reproduced many of India’s problems. As in India, overall staple crop productivity has not grown significantly faster despite costly investments in GR technologies. These poor productivity growth rates have remained well below population growth rates. Moderate success in one priority crop (e.g., wheat in Punjab, India, or maize in Africa) has typically been at the expense of sustained productivity growth for other crops. Crop and dietary diversity has been reduced, adversely affecting cultivation sustainability, nutrition, health and wellbeing. Subsidies and other incentives have meant more land devoted to priority crops, not just intensification, with adverse land use and nutrition impacts. Soil health and fertility have suffered from “nutrient-mining” due to priority crop monocropping, requiring more inorganic fertilizer purchases. Higher input costs often exceed additional earnings from modest yield increases using new seeds and agrochemicals, increasing farmer debt.

Paths not taken 

AGRA and other African GR proponents have had 14 years, and billions of dollars, to show that input-intensive agriculture can raise productivity, net incomes and food security. They have clearly failed. Africans —  farmers, consumers and governments —  have many good reasons to be wary, especially considering AGRA’s track record after a decade and a half. India’s experience and the ongoing farmer protests there should make them more so. Selling Africa’s GR as innovation requiring unavoidable “creative destruction” is grossly misleading. On the other hand, many agro-ecology initiatives, which technophiles decry as backward, are bringing cutting-edge science and technology to farmers, with impressive results. A 2006 University of Essex survey, of nearly 300 large ecological agriculture projects in more than fifty poor countries, documented an average 79 per cent productivity increase, with declining costs and rising incomes. Published when AGRA was launched, these results far surpass those of GRs thus far. Sadly, they remind us of the high opportunity costs of paths not taken due to well-financed technophile dogma.

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SAPs – Season Two: Why Kenyans Fear Another IMF Loan

The Jubilee government would have us believe that the country is economically healthy but the reality is that the IMF has come in precisely because Kenya is in a financial crisis.

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SAPs – Season Two: Why Kenyans Fear Another IMF Loan
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Never did I imagine that opposing an International Monetary Fund (IMF) loan to Kenya would be viewed by the Kenyan authorities as a criminal act. But that is exactly what transpired last week when activist Mutemi Kiama was arrested and charged with “abuse of digital gadgets”, “hurting the presidency”, “creating public disorder” and other vaguely-worded offences. Mutemi’s arrest was prompted by his Twitter post of an image of President Uhuru Kenyatta with the following caption: “This is to notify the world . . . that the person whose photograph and names appear above is not authorised to act or transact on behalf of the citizens of the Republic of Kenya and that the nation and future generations shall not be held liable for any penalties of bad loans negotiated and/or borrowed by him.” He was released on a cash bail of KSh.500,000 with an order prohibiting him from using his social media accounts or speaking about COVID-19-related loans.

Mutemi is one among more than 200,000 Kenyans who have signed a petition to the IMF to halt a KSh257 billion (US$2.3 billion) loan to Kenya, which was ostensibly obtained to cushion the country against the negative economic impact of COVID-19.  Kenya is not the only country whose citizens have opposed an IMF loan. Protests against IMF loans have been taking place in many countries, including Argentina, where people took to the streets in 2018 when the country took a US$50 billion loan from the IMF. In 2016, Eqyptian authorities were forced to lower fuel prices following demonstrations against an IMF-backed decision to eliminate fuel subsidies. Similar protests have also taken place in Jordan, Lebanon and Ecuador in recent years.

Why would a country’s citizens be against a loan given by an international financial institution such as the IMF? Well, for those Kenyans who survived (or barely survived) the IMF-World Bank Structural Adjustment Programmes (SAPs) of the 1980s and 90s, the answer is obvious. SAPs came with stringent conditions attached, which led to many layoffs in the civil service and removal of subsidies for essential services, such as health and education, which led to increasing levels of hardship and precarity, especially among middle- and low-income groups. African countries undergoing SAPs experienced what is often referred to as “a lost development decade” as belt-tightening measures stalled development programmes and stunted economic opportunities.

In addition, borrowing African countries lost their independence in matters related to economic policy. Since lenders, such as the World Bank and the IMF, decide national economic policy – for instance, by determining things like budget management, exchange rates and public sector involvement in the economy – they became the de facto policy and decision-making authorities in the countries that took their loans. This is why, in much of the 1980s and 1990s, the arrival of a World Bank or IMF delegation to Nairobi often got Kenyans very worried.

In those days (in the aftermath of a hike in oil prices in 1979 that saw most African countries experience a rise in import bills and a decline in export earnings), leaders of these international financial institutions were feared as much as the authoritarian Kenyan president, Daniel arap Moi, because with the stroke of a pen they could devalue the Kenyan currency overnight and get large chunks of the civil service fired. As Kenyan economist David Ndii pointed out recently at a press conference organised by the Linda Katiba campaign, when the IMF comes knocking, it essentially means the country is “under receivership”. It can no longer claim to determine its own economic policies. Countries essentially lose their sovereignty, a fact that seems to have eluded the technocrats who rushed to get this particular loan.

When he took office in 2002, President Mwai Kibaki kept the World Bank and the IMF at arm’s length, preferring to take no-strings-attached infrastructure loans from China. Kibaki’s “Look East” economic policy alarmed the Bretton Woods institutions and Western donors who had until then had a huge say in the country’s development trajectory, but it instilled a sense of pride and autonomy in Kenyans, which sadly, has been eroded by Uhuru and his inept cronies who have gone on loan fishing expeditions, including massive Eurobonds worth Sh692 billion (nearly $7 billion), which means that every Kenyan today has a debt of Sh137,000, more than three times what it was eight years ago when the Jubilee government came to power. By the end of last year, Kenya’s debt stood at nearly 70 per cent of GDP, up from 50 per cent at the end of 2015. This high level of debt can prove deadly for a country like Kenya that borrows in foreign currencies.

When the IMF comes knocking, it essentially means the country is “under receivership”.

The Jubilee government would have us believe that the fact that the IMF agreed to this loan is a sign that the country is economically healthy, but as Ndii noted, quite often the opposite is true: the IMF comes in precisely because a country is in a financial crisis. In Kenya’s case, this crisis has been precipitated by reckless borrowing by the Jubilee administration that has seen Kenya’s debt rise from KSh630 billion (about $6 billion at today’s exchange rate) when Kibaki took office in 2002, to a staggering KSh7.2 trillion (about US$70 billion) today, with not much to show for it, except a standard gauge railway (SGR) funded by Chinese loans that appears unable to pay for itself. As an article in a local daily pointed out, this is enough money to build 17 SGRs from Mombasa to Nairobi or 154 superhighways like the one from Nairobi to Thika. The tragedy is that many of these loans are unaccounted for; in fact, many Kenyans believe they are taken to line individual pockets. Uhuru Kenyatta has himself admitted that Kenya loses KSh2 billion a day to corruption in government. Some of these lost billions could actually be loans.

IMF loans with stringent conditions attached have often been presented as being the solution to a country’s economic woes – a belt-tightening measure that will instil fiscal discipline in a country’s economy by increasing revenue and decreasing expenditure. However, the real purpose of these loans, some argue, is to bring about major and fundamental policy changes at the national level – changes that reflect the neoliberal ethos of our time, complete with privatisation, free markets and deregulation.

The first ominous sign that the Kenyan government was about to embark on a perilous economic path was when the head of the IMF, Christine Lagarde, made an official visit to Kenya shortly after President Uhuru was elected in 2013. At that time, I remember tweeting that this was not a good omen; it indicated that the IMF was preparing to bring Kenya back into the IMF fold.

Naomi Klein’s book, The Shock Doctrine, shows how what she calls “disaster capitalism” has allowed the IMF, in particular, to administer “shock therapy” on nations reeling from natural or man-made disasters or high levels of external debt. This has led to unnecessary privatisation of state assets, government deregulation, massive layoffs of civil servants and reduction or elimination of subsidies, all of which can and do lead to increasing poverty and inequality. Klein is particularly critical of what is known as the Chicago School of Economics that she claims justifies greed, corruption, theft of public resources and personal enrichment as long as they advance the cause of free markets and neoliberalism. She shows how in nearly every country where the IMF “medicine” has been administered, inequality levels have escalated and poverty has become systemic.

Sometimes the IMF will create a pseudo-crisis in a country to force it to obtain an IMF bailout loan. Or, through carefully manipulated data, it will make the country look economically healthy so that it feels secure about applying for more loans. When that country can’t pay back the loans, which often happens, the IMF inflicts even more austerity measures (also known as “conditionalities”) on it, which lead to even more poverty and inequality.

IMF and World Bank loans for infrastructure projects also benefit Western corporations. Private companies hire experts to ensure that these companies secure government contracts for big infrastructure projects funded by these international financial institutions. Companies in rich countries like the United States often hire people who will do the bidding on their behalf. In his international “word-of-mouth bestseller”, Confessions of an Economic Hit Man, John Perkins explains how in the 1970s when he worked for an international consulting firm, he was told that his job was to “funnel money from the World Bank, the US Agency for International Development and other foreign aid organisations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s resources”.

Sometimes the IMF will create a pseudo-crisis in a country to force it to obtain an IMF bailout loan.

The tools to carry out this goal, his employer admitted unashamedly, could include “fraudulent financial reports, rigged elections, payoffs, extortion, sex and murder”. Perkins showed how in the 1970s, he became instrumental in brokering deals with countries ranging from Panama to Saudi Arabia where he convinced leaders to accept projects that were detrimental to their own people but which enormously benefitted US corporate interests.

“In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire – to satisfy our political, economic or military needs. In turn, they bolster their political positions by bringing industrial parks, power plants, and airports to their people. The owners of US engineering/construction companies become fabulously wealthy,” a colleague told him when he asked why his job was so important.

Kenyans, who are already suffering financially due to the COVID-19 pandemic which saw nearly 2 million jobs in the formal sector disappear last year, will now be confronted with austerity measures at precisely the time when they need government subsidies and social safety nets. Season Two of SAPs is likely to make life for Kenyans even more miserable in the short and medium term.

We will have to wait and see whether overall dissatisfaction with the government will influence the outcome of the 2022 elections. However, whoever wins that election will still have to contend with rising debt and unsustainable repayments that have become President Uhuru Kenyatta’s most enduring legacy.

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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul

Only the Haitian people can decide their own future. The dictatorship imposed by former president Jovenel Moïse and its imperialist enablers need to go – and make space for a people’s transition government.

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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul
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Haiti is once again going through a profound crisis. Central to this is the struggle against the dictatorship imposed by former president Jovenel Moïse. Since last year Mr. Moise, after decreeing the dismissal of Parliament, has been ruling through decrees, permanently violating Haiti’s constitution. He has refused to leave power after his mandate ended on February 7, 2021, claiming that it ends on February 7 of next year, without any legal basis.

This disregard of the constitution is taking place despite multiple statements by the country’s main judicial bodies, such as the CSPJ (Superior Council of Judicial Power) and the Association of Haitian Lawyers. Numerous religious groups and numerous institutions that are representative of society have also spoken. At this time, there is a strike by the judiciary, which leaves the country without any public body of political power.

At the same time, this institutional crisis is framed in the insecurity that affects practically all sectors of Haitian society. An insecurity expressed through savage repressions of popular mobilizations by the PNH (Haitian National Police), which at the service of the executive power. They have attacked journalists and committed various massacres in poor neighborhoods. Throughout the country, there have been assassinations and arbitrary arrests of opponents.

Most recently, a judge of the High Court was detained under the pretext of promoting an alleged plot against the security of the State and to assassinate the president leading to the illegal and arbitrary revocation of three judges of this Court. This last period has also seen the creation of hundreds of armed groups that spread terror over the entire country and that respond to power, transforming kidnapping into a fairly prosperous industry for these criminals.

The 13 years of military occupation by United Nations troops through MINUSTAH and the operations of prolongation of guardianship through MINUJUSTH and BINUH have aggravated the Haitian crisis. They supported retrograde and undemocratic sectors who, along with gangsters, committed serious crimes against the Haitian people and their fundamental rights.

For this, the people of Haiti deserve a process of justice and reparations. They have paid dearly for the intervention of MINUSTAH: 30 THOUSAND DEAD from cholera transmitted by the soldiers, thousands of women raped, who now raise orphaned children. Nothing has changed in 13 years, more social inequality, poverty, more difficulties for the people. The absence of democracy stays the same.

The poor’s living conditions have worsened dramatically as a result of more than 30 years of neoliberal policies imposed by the International Financial Institutions (IFIs), a severe exchange rate crisis, the freezing of the minimum wage, and inflation above 20% during the last three years.

It should be emphasized that, despite this dramatic situation, the Haitian people remain firm and are constantly mobilizing to prevent the consolidation of a dictatorship by demanding the immediate leave of office by former President Jovenel Moïse.

Taking into account the importance of this struggle and that this dictatorial regime still has the support of imperialist governments such as the United States of America, Canada, France, and international organizations such as the UN, the OAS, and the EU, the IPA calls its members to contribute their full and active solidarity to the struggle of the Haitian people, and to sign this Petition that demands the end of the dictatorship as well as respect for the sovereignty and self-determination of the Haitian people, the establishment of a transition government led by Haitians to launch a process of authentic national reconstruction.

In addition to expressing our solidarity with the Haitian people’s resistance, we call for our organisations to demonstrate in front of the embassies of the imperialist countries and before the United Nations. Only the Haitian people can decide their future. Down with Moise and yes to a people’s transition government, until a constituent is democratically elected.

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