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Kenya Budget 2018: Did CS Rotich Just Turn Kenya into a Tax Haven?

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Deep inside the Finance Bill 2018 is an amendment on the Tax Procedures Act, 2015. Its intent is to protect illicit money returned to Kenya from any form of scrutiny. Alongside this are plans, well underway, to turn Kenya into an ‘international financial centre’, a common euphemism for a tax haven. Amnesty measures for past corruption globally have generally failed. So why is the Jubilee administration pursuing them? By JOHN GITHONGO.

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Kenya Budget 2018: Did CS Rotich Just Turn Kenya into a Tax Haven?
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In September last year, the Tunisian parliament approved a law granting amnesty to officials accused of corruption during the rule of dictator Zine El-Abidine Ben Ali. This immediately triggered protests. Since the Arab Spring of 2011, Tunisia has been hailed as a democratic success in the Middle East. Unlike many of the other countries where the democratic convulsions of 2011 were quickly smothered or descended into chaos, Tunisia’s democratic experiment has perhaps not flourished but neither is in critical condition. In July 2013 Russia’s lower house of parliament approved an amnesty for thousands of entrepreneurs jailed for economic crimes. It was argued that the criminalisation of business disputes in Russia had had a deleterious effect on the commercial climate generally. In June 2015 the Indonesian Finance Minister Bambang Brodjonegoro announced an initiative aimed at boosting tax incomes by introducing an amnesty for past economic crimes that would allow billions of dollars parked abroad by Indonesians to be returned to the country. President Joko ‘Jokowi’ Widodo’s government was in a crunch. They had embarked on a series of expensive infrastructure projects but needed to bump up tax revenues by 30 percent to fund them.

Amnesty programmes always imply pragmatic choices seen as disproportionately benefiting elites that have benefitted from corruption in the past. For the independent media and civil society, the concern is always one of entrenching impunity with regard to economic crimes. Where impunity attends to economic crimes it is always accompanied by similar official attitudes to sometimes the most egregious human rights abuses.

The Finance Bill, 2018 published with the budget last month, included an amendment to the Tax Procedures Act, 2015, suggesting that Kenya may have quietly chosen to go in a direction similar to Indonesia’s. Though the rationale of the action here has yet to be publicly articulated like similar initiatives in other parts of the world, the new amendment changes the tax amnesty that was declared three years ago. It has been expanded to include undeclared income to the extent that: “The funds transferred under the amnesty shall be exempt from the provisions of Proceeds of Crime and Anti-Money Laundering Act, 2009 or any other Act relating to reporting and investigation of financial transactions, to the extent of the source of the funds excluding funds derived from proceeds of terrorism, poaching and drug trafficking.”

Amnesty programmes always imply pragmatic choices seen as disproportionately benefiting elites that have benefited from corruption in the past. For the independent media and civil society the concern is always one of entrenching impunity with regard to economic crimes. Where impunity attends to economic crimes it is always accompanied by similar official attitudes to sometimes the most egregious human rights abuses.

The new amendment changes the tax amnesty that was declared three years ago. It has been expanded to include undeclared income to the extent that: “The funds transferred under the amnesty shall be exempt from the provisions of Proceeds of Crime and Anti-Money Laundering Act, 2009 or any other Act relating to reporting and investigation of financial transactions, to the extent of the source of the funds excluding funds derived from proceeds of terrorism, poaching and drug trafficking.

Money has no loyalty and in this globalised era, wears the uniform or label of no country. It doesn’t announce itself as in, “I am being laundered”; or, “This is terrorism finance or the proceeds of poaching.” The rigour and integrity of the oversight mechanisms meant to check these flows needs to be world class. And even world class anti-money laundering mechanisms in the world’s most developed economies with the best resourced investigative authorities have only made a small dent on the giant global flows of illicit wealth around the globe over the last two decades. Typically, drug dealers, money launderers and globalised criminal enterprises are better resourced and more ruthlessly managed than even the best policing institutions in the world.

Kenya’s recent changes, combined with currently advanced plans to turn Kenya into an international finance center – a tax haven, essentially – could herald the end of the war against corruption in Kenya as we know it. All while we are distracted by the exciting scandals being reported on in the media. The reality of what’s playing out remains to be seen but it should be of some concern that one of the most corrupt yet sophisticated financial sectors in Sub-Saharan Africa is about to open itself up in a structured legalised manner to the darkest element of the global financial system.

Kenya’s dalliance with amnesties for past economic crimes is not new. As the end of the Moi era drew closer, I was involved in a national debate regarding what we would do with past economic crimes when a new administration came to power after the December 2002 elections. In 2000 and 2001, Transparency International-Kenya, the National Council of Churches of Kenya and the Law Society of Kenya among others convened a series of debates on the subject. The rationale at the time was that, first Kenya’s public service culture had been ruined by rampant theft and plunder especially since the 1972 Ndegwa Commission Report which legalised conflict of interest. Changing this culture meant having a structured national approach to dealing with past corruption. An option was to articulate an amnesty mechanism accompanied by a restitution programme that would allow the return of corruptly acquired wealth and a lustration initiative that would forever bar those who were granted the amnesty from ever holding public office in Kenya. The Commission of Inquiry into the Illegal and Irregular Allocation of Public Land of 2003 (aka the Ndung’u Commission) came out of this thinking, as did efforts to trace wealth stashed illegally overseas by Kenyans.

A second strand of reasoning at the time was that the opposition, which seemed likely to win the election, would be coming into office broke after over a decade of expensive campaigning, and would be confronted by a Moi-era political and bureaucratic elite opposed to progressive reform and possessed of the kind of wealth to cause a huge amount of political trouble; indeed with the capacity to stymie real reform altogether. The thinking was that this wealth needed to be squeezed out of our politics to allow a new administration the space to implement far reaching reforms aimed at improving the welfare of Kenyans generally and transforming the economy, society and politics.

The Kibaki era initiative faltered when the elite around him led by some of his key ministers decided to make private deals with the very thieves their own administration was ostensibly chasing down. It got so bad at one point that some officials were using the anti-corruption campaign as a highly lucrative extortion tool. Well-heeled players from the past coughed up the equivalent of billions of shillings in cash, forex, land, real estate, company shares and other considerations in exchange for essentially bringing the anti-corruption campaign to a halt and turning it into a PR gimmick to placate wananchi.

When one looks around the world since the early 1990s, amnesty initiatives for economic crimes – especially in countries where corruption is systemic – have largely been failures. They succeed in facilitating the repatriation of some hot money that causes bumps in stock markets, hikes real estate prices and strengthens local currencies in the short term. In the medium term they seem to send a message that theft works and therefore serve to entrench impunity especially with regard to economic crimes. In the developing world their limited successes seem to apply only during the first 18 months of a popular regime elected on an anti-corruption ticket.

The Kibaki era corruption amnesty initiative faltered when the elite around him led by some of his key ministers decided to make private deals with the very thieves their own administration was ostensibly chasing down… At one point, some officials were using the anti-corruption campaign as a highly lucrative extortion tool. Well-heeled players from the past coughed up billions of shillings in cash, forex, land, real estate, company shares and other considerations in exchange for essentially bringing the anti-corruption campaign to a halt and turning it into a PR gimmick to placate wananchi.

It is also the case that typically these amnesty initiatives are implemented only in the most corrupt countries where the context makes for the greatest challenges. This, as I have noted earlier, doesn’t always apply when accompanied by tectonic political changes, notably as the ones we are witnessing in Malaysia today.

Additionally, it is often the case that amnesty programmes are often desperate measures aimed at dealing with the fiscal distress of corrupt regimes. In this sense they can also be deeply cynical ploys to launder the ill-gotten gains of the past and concurrently wave the white flag for a political elite that has given up the fight against systemic corruption in public life.

 As I observed above, as an instrument aimed at dealing with a widespread culture of theft and plunder the issue of an amnesty for economic crimes has bubbled up several times over the last two-decades in Kenya. In 2007 the KACC complained about amendments the legislature had introduced to the Anti-Corruption and Economic Crimes Act, 2003 following the Anglo Leasing scandal. In a statement issued in September 2007 the then head of the Commission, Justice Aaron Ringera argued that parliament had essentially granted ‘a blanket amnesty’ for economic crimes committed before the 2nd of May 2003. More recently, the NCCK’s leadership, confronted with the current explosion of corruption scandals in the media called for a one-year amnesty for past corruption after which all future graft would be punished ruthlessly. The NCCK has been one of the most consistent actors in this debate for almost two decades now. The former head of the Anglican Church, Archbishop Wabukala is chair of the Ethics and Anti-Corruption Commission and was party to the statement made by the NCCK in May.

In 2007 the KACC complained about amendments the legislature had introduced to the Anti-Corruption and Economic Crimes Act, 2003 following the Anglo Leasing scandal. In a statement issued in September 2007 the then head of the Commission, Justice Aaron Ringera argued that parliament had essentially granted ‘a blanket amnesty’ for economic crimes committed before the 2nd of May 2003. More recently, the NCCK’s leadership, confronted with the current explosion of corruption scandals in the media called for a one-year amnesty for past corruption after which all future graft would be punished ruthlessly.

The amendments to the Tax Procedures Act 2015 may indicate that the Jubilee regime appears to have cynically heeded the NCCK’s call. Either that or the extent of the regime’s fiscal distress as it implements an IMF sanctioned austerity programme is such that they have resorted to extraordinary measures to find the money to keep government going and the elite with their snouts in the trough. I argued last month that in Kenya, the real corruption is not in the scandals that are tantalising us in the media but in the budget.

(Research by Juliet A. Atellah)

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John Githongo is one of Kenya’s leading anti-graft campaigners and former anti-corruption czar.

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UN Panel of Experts: Kenya Urged to Back Former CJ Willy Mutunga Candidacy

Willy Mutunga, the former Chief Justice and President of the Supreme Court of Kenya has been nominated by a number of international organisations to be one of the three experts. International human rights activists are calling on the government of Kenya to join with others in Global Africa to support the nomination of Willy Mutunga.

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UN Panel of Experts: Kenya Urged to Back Former CJ Willy Mutunga Candidacy
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On 28 June 2021, the Human Rights Council of the United Nations called on the UN to set up a panel of experts to investigate systemic racism in policing against people of African descent. This call came one year after the police murder of George Floyd in the United States. The UN panel of three experts in law enforcement and human rights will investigate the root causes and effects of systemic racism in policing, including the legacies of slavery and colonialism, and make recommendations for change. Willy Mutunga, the former Chief Justice and President of the Supreme Court of Kenya has been nominated by a number of international organisations to be one of the three experts. International human rights activists are calling on the government of Kenya to join with others in Global Africa to support the nomination of Willy Mutunga.

The government of Kenya is strongly placed to support the nomination of its native son, an internationally respected jurist. Kenya is currently a member of the UN Security Council and an influential member of “A3 plus 1”, the partnership between the three African members of the Security Council and the Caribbean member of the UNSC, St Vincent and the Grenadines. Last week on 7 September, President Uhuru Kenyatta co-chaired the African Union, Caribbean Community summit. This meeting between the AU and the Caribbean states agreed to establish the Africa, Brazil, CARICOM, and Diaspora Commission. This Commission will mature into a politico/economic bloc embracing over 2 billion people of African descent. Kenya, with its experience of reparative justice from the era of the Land and Freedom Army, has joined with the Caribbean to advance the international campaign to end the dehumanization of Africans. African descendants around the world have lauded the 2021 Human Rights Council Report for calling on the international community to “dismantle structures and systems designed and shaped by enslavement, colonialism and successive racially discriminatory policies and systems.”

Background to the nomination of Hon Willy Mutunga

The murder of George Floyd on 25 May 2020 led to worldwide condemnation of police killings and systemic racism in the United States. The African Members of the UN Human Rights Council pushed hard to garner international support to investigate systemic racism in policing in the United States. In the wake of the global outcry, there were a number of high-level investigations into police killings of innocent Blacks. Three distinguished organizations, the National Conference of Black Lawyers, the International Association of Democratic Lawyers and the National Lawyers Guild convened a panel of commissioners from Africa, Asia, Europe, Latin America and the Caribbean to investigate police violence and structural racism in the United States. Virtual public hearings were held in February and March 2021, with testimonies from the families of the victims of some of the most notorious police killings in recent times.

In its report, a panel of leading human rights lawyers from 11 countries found the US in frequent violation of international laws, of committing crimes against humanity by allowing law enforcement officers to kill and torture African Americans with impunity and of “severe deprivation of physical liberty, torture, persecution and other inhumane acts”.

Among its principal findings, the Commission found the US guilty of violating its international human rights treaty obligations, both in terms of laws governing policing and in the practices of law enforcement officers, including traffic stops targeting Black people and race-based stop-and-frisk; tolerating an “alarming national pattern of disproportionate use of deadly force not only by firearms but also by Tasers” against Black people; and operating a “culture of impunity” in which police officers are rarely held accountable while their homicidal actions are dismissed as those of just “a few bad apples”.

After the Commission’s report was published, the convening organizations’ Steering Committee mobilized international public opinion to publicize its findings. Former CJ Willy Mutunga was one of the jurists in Africa who worked hard to publicize the report’s findings and recommendations.

It was in large part on the basis of these findings that the Human Rights Council issued its own report at the end of June. The United Nations decided to set up a panel of experts to investigate systemic racism in policing against people of African descent, adding international weight to demands in the United States for accountability for police killings of African Americans, and reparations for victims. The panel of three experts will have a three-year mandate to investigate the root causes and effects of systemic racism in policing. Many organizations have submitted names for suggested panel members. Legal experts from Global Africa and international jurists have recommended Willy Mutunga to be one of the three panellists. Thus far, the following organizations have endorsed the candidacy of Willy Mutunga:

  1. The African Bar Association, with membership in 37 African Countries.
  2. The United States Human Rights network (USHRN), a National network of U.S. organizations working to strengthen the Human Rights movement in the US.
  3. International Commission of Inquiry on Systemic Racist Police Violence Against People of African Decent in the United States.
  4. Society of Black Lawyers of the United Kingdom
  5. Bandung Conference, a Diaspora Human Rights network based in Nairobi, Kenya.

There are now calls for the government of Kenya to step forward to be more proactive to lobby the Human Rights Council and to write letters to its President, H.E. Nazhat Shameen Khan (hrcpresidency@un.org), endorsing the candidature of Dr Mutunga. His CV is included for those who want to write to the Minister of Foreign Affairs for Kenya to lead the endorsement of Willy Mutunga.

The Steering Committee of the International Commission of Inquiry on Systemic Racist Police Violence in the United States is coordinating the campaign for Dr Willy Mutunga to be appointed by the UNHRC as a member of the International Expert Mechanism to monitor compliance of the UNHRC findings and recommendations.

The Government of Kenya and Human Rights groups are kindly asked to send copies of their endorsements to the Coordinator, International Commission of Inquiry on Systemic Racist Police Violence in the United States, lennoxhinds@aol.com.

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Cutting the Hand That Feeds: Is the UN Silencing the Voices of Farmers and Indigenous Communities?

More than 500 indigenous and farmer organisations across the continents have raised their voices to expose the UN’s Food Systems Summit as only advocating one food system—so they’re being silenced.

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Cutting the Hand That Feeds: Is the UN Silencing the Voices of Farmers and Indigenous Communities?
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The United Nations Food Systems Summit (UNFSS) invokes the UN Sustainable Development Goals to demonstrate its purpose—namely, goals 2.1 and 2.2 (to end hunger and malnutrition). At the same time, however, the summit is obstructing another of those goals: goal 2.3 (to increase resources for smallholder farmers).

Because of this contradiction, the summit, planned since 2019 to be held at the UN Headquarters in New York, will now be exclusively virtual (September 23), a measure intended to maximize control and minimize dissent. During the last year, more than 500 indigenous and farmer organizations across the continents have raised their voices to expose the summit as advocating only one food system, the one that is polluting the soil, water, and air, and killing vital pollinators.

In contrast, the food system that feeds 75 to 80 percent of the human population—smallholder farmers practicing biodiverse cropping (in line with the principles of agro ecology)—was only added to the agenda after months of criticism. Those in opposition to the summit say it is advancing industrial agriculture, which is the core problem, not solution, for addressing climate change, malnutrition, and hunger.

A second criticism is that corporations are trying to replace the UN system of one country-one vote with “stakeholders,” a euphemism that may sound inclusive but really only invites those “who think like us” to the table.  Smallholder farmers, who produce the majority of our food, are not invited.

This food summit is about the global business of agriculture, not the livelihoods of those who produce nutritious, biodiverse foods. Governments’ attempts to regulate global food corporations (e.g., labeling unhealthy foods, taxing sugar products) meet strong opposition from these industries. Yet the corporations profited massively from the 2008 food crisis and strengthened their global “food value chain,” contributing to the consequences that over 23 percent of Africans (282 million people) still go to bed hungry every night.

This focus is in stark contrast to the stated aims of the summit. As the UN Special Rapporteur on the Right to Food explained in August 2021:

Hunger, malnutrition, and famine are caused by political failures and shortcomings in governance, rather than by food scarcity ….. How will the [Summit] outcomes identify the root cause of the crisis and hold corporations and other actors accountable for human rights violations?

A third criticism of the UN Food Systems Summit is that it heralds technological advances as the primary answer to overcoming continuing hunger in an era of climate change. Most of us applaud multiple revolutions in genetics while we queue for vaccines, but genetic manipulation of seeds threatens the future of food, because ownership of the technology controls ownership of the seed. Industrial agriculture expands corporate profits from commodification of seed (beginning early 20th century), from the financialization of seed (speculative trading, late 20th century) and continuing today, through the digitalization of seed.

To the industry, a seed is merely a genome, with its genes representing digital points. The genes can be cut and pasted (by enzymes, e.g., CRISPRcas9), much like we edit text.  A seed is no longer a living organism representing thousands 1000s of years of careful selection by expert farmers. For example, biologists today say they no longer need the germplasm of Oaxacan corn from Mexico to access its drought-resistant characteristics.

Promoters of these technologies rarely admit that they are very imperfect, with uncontrolled “off-target mutations.”  Further, a seed variety needs its biome to flourish. It is farmers who understand the intricate interactions, who experiment with changing micro-climates (often in one field) to cultivate adaptive seed varieties.

No farmer denies the importance of scientific advances. But industrial agriculture giants are denying the value of farmers and their knowledge, saying they no longer need them: digitalized seed can be planted, watered, fertilized, and harvested by machines, run via satellites (this is called “precision agriculture”). Taste is irrelevant, because it is chemically added as crops are processed into food products.

Success in derailing the “corporate capture” of UN processes (e.g., UN Committee on World Food Security) to address increasing hunger arises from global, organized resistance by smallholder farmers, pastoralists, and fisher folk. After appeals to transform the agenda, many of these farmers and advocates decided to boycott the summit. This “outside resistance” included African voices, who stated:

The current UNFSS process gives little space to traditional ecological knowledge, the celebration of traditional diets and cuisine . . . ….Indigenous and local community Africans have experience and knowledge relevant to the current and future food system. Any process or outcome that does not recognize this is an affront to millions of African food producers and consumers.

The “inside resistance” worked to advance farmers’ voices within the official pre-summit dialogues, holding a series of webinars among the farmers in Southern Africa, and then globally (July 28).  This trajectory was possible because of allied support within the UN Food and Agriculture Organization.  As stated by one of the convenors of these official dialogues, Andrew Mushita,  “African smallholder farmers are not beneficiaries of the corporate [agriculture] industry but rather co-generators of innovations and technologies adaptive to ecological agriculture, farmers’ needs—within the context of sustainable agriculture.”

To follow the end result of the summit, go here.

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

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We Are So Much Better Than the Elites Make Us Out to Be

To resist the efforts of Cambridge Analytica and similar social saboteurs in the media and the academy, we must believe in our capacity to vote on a diversity of issues.

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We Are So Much Better Than the Elites Make Us Out to Be
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Theatre scholar Gĩchingiri Ndĩgĩrĩgĩ writes that in 1991, at the height of the clamour for multi-partyism, the government denied a license for the staging of Drumbeats of Kirinyaga, a play by Oby Obyerodhiambo.

The reason given was that the play portrayed an ethnically diverse and politically cohesive Kenya, which contradicted the president’s argument at the time that Kenya was too ethnically divided for multi-partyism.

While President Moi was claiming to care for Kenyans who are too tribal, his government was ironically also suppressing any public display of Kenyans transcending their tribal identities. The government needed to encourage tribalism among Kenyans in order to give itself something to cure.

​We were shocked by the confirmation by a young man, Christopher Wylie, that Cambridge Analytica played a major role in polarizing Kenyans during the 2017 elections. Some were insulted that foreigners would deliberately diffuse messages that would polarize us ethnically. Others, however, argued that Kenyans are tribalist, with or without Cambridge Analytica. I think the reality is more complicated than that.

Cambridge Analytica’s role in polarising Kenyans is part of the larger efforts of global and local elites to keep convincing Kenyans that we vote on nothing else but tribe. The elites manipulate culture in order to coerce us to believe that tribalism comes naturally to us Africans. And yet, the reality is something closer to what the government censor did in 1991.

The role of politicians in keeping ethnic temperatures high has been repeatedly stated. But there are two other pillars that keep Kenyans convinced that they are naturally and inevitably tribalist: the use of culture and research by envoys, journalists, researchers, and now, by Cambridge Analytica.

For instance, while Kenyans called for electoral justice, the US ambassador kept framing Kenya’s problem as “long-standing issues” that should be addressed through reconciliation between NASA and Jubilee. The ambassador was savvy enough to know that using the word “tribal” would evoke memories of colonial anthropology. But even “long-standing” is just as insidious, because it appeals to the colonial narrative of Africans as stuck in the past.

Similarly, articles in the local and international media often used tribal data to predict a Jubilee win. The research they quoted almost always used tribe as the major factor in elections, yet there are other factors that influence the way Kenyans vote, such as income, gender, urban migration, economic inequality or voter frustration with politicians.

If a basic rule of good research is that it cannot always use the same variable, it means that the researchers are perpetuating tribalism through faulty research. Yet the variables exist. For instance, our media rarely mention economic inequality as a factor influencing election outcomes, and yet one article in Jacobin found a strong correlation between economic inequality and votes for Raila Odinga.

In the New York Review of Books, Helen Epstein queried the sampling methods of predictions of election results, pointing out that some researchers worked backwards from a known result to a sample, rather than the other way round. Some researchers went to Luo regions and predictably projected a high Raila vote, and to Kikuyu populations and predicted a high Uhuru vote, but did not go, for example, to Kakamega, Bungoma, Busia, Kisii Nyanza, Garissa and other regions where Jubilee claimed to have won a majority.

Other times, electoral predictions remain unquestioned because claims are made from people with perceived academic clout. For instance, Mutahi Ngunyi gave prestige to the concept of “tyranny of numbers”. Most media did not question the validity of his concept, even when a poorly circulated video done by AfriCOG showed that the premises of Ngunyi’s argument were rather weak.

If Kenyans were naturally tribalistic, the politicians, intellectuals and envoys would not need to keep reminding us of it. And there is a political interest in insisting on our tribalism: it prevents us from asking questions about social justice or worse, from organizing ourselves along other lines such us age, profession, economic status and gender.

If a basic rule of good research is that it cannot always use the same variable, it means that the researchers are perpetuating tribalism through faulty research.

The nightmare of the foreign and local elite is of Kenyans organizing as the poor, youth, women or workers, because then, the numbers would surely have an impact. And politicians would not get automatic godfather status like they do as tribes. They would have to pass through institutions like associations and unions, where success is not guaranteed. For instance, politicians’ efforts to divide the doctors along tribal lines backfired and instead produced a hash tag #IAmaTribelessDoctor.

It does not matter how many Kenyans Cambridge Analytica influenced. Even one Kenyan is one Kenyan too many. What matters is that it appealed to Kenyans’ worst fears, essentially hoping to whip up hysteria, just so that the president could win the vote. Our dignity was cheaper than Muigai’s desire to win. Six million dollars cheaper.

But the worst part of the tribal propaganda is that it is based on convincing Kenyans to believe so little of themselves. To resist the efforts of Cambridge Analytica and similar social saboteurs in the media and the academy, we must believe in our capacity to vote on a diversity of issues. For as Daisy Amdany put it, “We are so much better than what the elites make us out to be.  It’s time to believe it, receive it, be it and live it!”

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