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China’s Debt Imperialism: The Art of War by Other Means?

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The Belt and Road Initiative, China’s ambitious attempt to create a global infrastructure corridor spanning 65 countries and connecting 60 percent of the world’s population, is the biggest imperial coming-out party in modern history. Not by armed conquest but by a strategy of debt-financed diplomacy, from Sri Lanka to Montenegro, from Islamabad to Mombasa, China is deploying its $3.2 trillion credit surplus to establish a 21st century Oriental Empire, impoverishing entire continents through the allure of roads, railways and bridges. DAVID NDII conducts a global cost-benefit analysis.

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Therefore the skillful leader subdues the enemy’s troops without fighting, captures their cities without laying siege, he overthrows their kingdom without lengthy operations in the field.” ~Sun Tzu

Colombo. On June 8, Fly Dubai’s last flight departed from Sri Lanka’s spanking new Mattala Rajapaska International Airport. It was the only airline flying there. Sri Lanka’s national airline stopped flying there in 2015. The “world’s emptiest airport” as its been known since it opened in 2013, is now officially a lily white elephant. The airport is a stone’s throw from Habantota, the world’s emptiest sea port that has made Sri Lanka the poster child of China’s predatory lending. The two are the largest of a slew of ill-fated mega-infrastructure projects that were supposed to transform Habantota, which happens to be the home town of former President Mahinda Rajapaska (for whom the airport is named, or rather, who named it for himself), into Sri Lanka’s second city.

It has not quite worked out that way. Rajapaska lost elections in 2015 in a cloud of corruption scandals, after a decade in power during which he buried Sri Lanka in a mountain of Chinese debt. After weighing its options the successor government ceded the Habantota port to China in exchange of a partial debt write-off. It has not helped. Sri Lanka is still caught in China’s debt trap. Last year, it turned to the IMF for a bailout. This year, Sri Lanka is looking to raise US$ 1.25 billion from China to keep up with its debt repayments.

Podgorica If you are an imperialist looking for a European client state, you could not do better than Montenegro. It is small (population: 620,000; GDP US$4 billion), vulnerable, and in a most strategic location on the Adriatic coast. Its hinterland includes Serbia and Hungary, both landlocked, as well as the Black Sea countries (Romania, Bulgaria and Ukraine) whose access to the sea, the Bosphorous, is controlled by Turkey.

Montenegro has been mulling a grand motorway from its port city of Bar to Boljare on the Serbian border for a long time, a distance of only 165 kilometres, but the country is extremely rugged, making the cost prohibitive. Two feasibility studies done in 2006 and 2012 for the Montenegro government and the European Investment Bank concluded that the highway was not economically viable. Then China came along.

The first 41 kilometres of the highway, built with an EUR 800 million Chinese loan, has nearly bankrupted Montenegro, forcing the government to raise taxes, freeze public wages and cut welfare spending. Borrowing close to 20 percent of GDP to build a quarter of a road is unwise. Unable to proceed, Montenegro has signed an MOU with the Chinese contractor to complete and operate it as a toll road on undisclosed terms. The fear now is that the Chinese have extracted onerous revenue guarantees. The contractor is none other than the state owned corruption scandal prone China Road and Bridge Company, the builder and operator of Kenya’s new standard gauge railway.

Montenegro has been mulling a grand motorway from its port city of Bar to Boljare on the Serbian border for a long time, a distance of only 165 kilometres…Two feasibility studies done in 2006 and 2012 for the Montenegro government and the European Investment Bank concluded that the highway was not economically viable. Then China came along. The first 41 kilometres of the highway, built with an EUR 800 million Chinese loan, has nearly bankrupted Montenegro, forcing the government to raise taxes, freeze public wages and cut welfare spending. Borrowing close to 20 percent of GDP to build a quarter of a road is unwise.

Islamabad. Pakistan sits between China and the Persian Gulf. When China buys oil from the Middle East and Africa, it has to be shipped 6000 kilometres round India, through the Straits of Malacca to the South China Sea. The Malacca Dilemma refers to China’s vulnerability to a potential trade blockade on this narrow sliver of ocean between Indonesia and Malaysia.

Enter CPEC. CPEC stands for the China Pakistan Economic Corridor. Billed as a crown jewel of the Belt and Road Initiative, CPEC is an ambitious and costly modernization of Pakistan’s infrastructure centred on a transport corridor linking China’s “landlocked” hinterland to Pakistan’s Arabian sea port of Gwadar. The corridor cuts the distance of China’s western border to the sea by half, from four to two thousand kilometres. China has already taken control of the Gwadar port on a 40-year lease and is building an airport and industrial parks— effectively making it a Chinese enclave inside Pakistan. Costed at US$40 billion when it was launched in 2013, CPEC’s price tag has escalated to US$ 62 billion.

Four years on, Pakistan is in deep financial trouble. The CPEC projects are bleeding the country and destabilizing the economy. In addition to CPEC debt, Pakistan is now living on a Chinese financial lifeline —US$5 billion so far — to stave off a foreign exchange crisis. A succession of devaluations have failed to stem the tide, and foreign reserves are now down to less than two months requirements. Pakistan is now caught between the proverbial devil and the deep blue sea: to go for an IMF bailout or to settle into becoming a Chinese client state. An IMF bailout would put pressure on Pakistan to scale down CPEC and expose the secretive financing to western scrutiny.

CPEC stands for the China Pakistan Economic Corridor. Billed as a crown jewel of the Belt and Road Initiative, CPEC is an ambitious and costly modernization of Pakistan’s infrastructure centred on a transport corridor linking China’s “landlocked” hinterland to Pakistan’s Arabian sea port of Gwadar, cutting the distance of China’s western border to the sea from four to two thousand kilometres. China has already taken control of the Gwadar port on a 40-year lease and is building an airport and industrial parks— effectively making it a Chinese enclave inside Pakistan. Costed at US$40 billion when it was launched in 2013, the price tag has escalated to US$ 62 billion. Four years on, Pakistan is in deep financial trouble.

What is China up to?

There are two readily apparent economic objectives that China could be pursuing, one immediate, and one longer term.

The immediate objective is investment diversification. China is sitting on US$ 3.2 trillion of foreign reserves accumulated from its trade surpluses with the rest of the world, more than those of the next four countries combined (Japan $1.27 trillion, Switzerland $740 bn, Saudi Arabia $900 bn, Russia $460 bn). Most of this money is held in safe but low yielding American and European government securities, with just over a third (US$ 1.2 trillion) in US government securities. Analysts estimate that another one third is held in other US dollar-denominated securities.

The longer term objective is sustaining its economic rise. China’s economy may be the world’s biggest but it is still a middle-income country, with an average income of less than a fifth of Singapore. One of the big questions out there is whether China will escape the “middle income trap”. The middle income trap is the observation that while many countries easily transition from poor to middle income status, only a few managed to transition from middle to high income. Of 103 countries that were middle income in 1960, according to an analysis by the World Bank, only 13 had transitioned to high income status by 2008, almost fifty years later.

China is sitting on US$ 3.2 trillion of foreign reserves accumulated from its trade surpluses with the rest of the world, more than those of the next four countries combined. Most of this money is held in safe but low yielding American and European government securities…Returns on these have been pretty dismal since the global financial crisis. But outside these markets there aren’t many assets that can absorb money on this scale. The BRI can thus be seen as a strategy by China to create such assets.

China has followed the export-led industrialization model of Japan and the Asian Tiger economies. This model will soon run its course. China’s average manufacturing wage has increased three-fold in dollar terms over the last decade, and is now on a par with the poorer former communist eastern European countries. To make the transition will require China to move up the product value chain, or as a recent paper by investment bank UBS put it, from “made in” to “created in” China. This will entail moving its factories abroad, some closer to markets, some to low-wage locations. Some of the BRI initiatives do seem to be gearing up for this. CPEC is an obvious case. China’s Great Wall company has a manufacturing plant in Bulgaria, which is in the hinterland of the Montenegro motorway.

It still begs the question why it needs to roll out the biggest building project since the Great Wall of China. Japan and the other Asian Tigers did not have to. And the BRI’s scale and aggression defies these rational economic objectives. If it goes to plan, it will span 65 countries, accounting for 60 percent of the world’s population and 40 percent of global economic output, and cost between four and eight trillion dollars That is not economics. It is empire building. It is not inconceivable that China is operating on a nineteenth century imperialism blueprint. Indeed, the Belt and Road Initiative graphics that litter the internet conjure images of Chinese power men around a world map sticking pins on strategic targets.

It is off to a rough start. Mahathir Mohammed, Malaysia’s comeback prime minister has cancelled three big BRI projects worth $22 billion signed by his predecessor, who is now facing corruption charges. He says he is trying to save Malaysia from bankruptcy. Even Burma’s steely generals have got cold feet. They have cancelled a port project citing fears that it could end up like Sri Lanka’s Habantota. Earlier this week, the Prime Minister of Tonga, rallying fellow South Pacific Island nations to negotiate debt forgiveness with China, expressed his fears that China could seize strategic assets.“If it happens in Sri Lanka, it can happen in the Pacific.”

Habantota is turning out to be a strategic blunder.

Did China actually set out to trap countries into debt or has the Belt and Road Initiative gone awry? It is conceivable that China is unfazed by the political blowback. Folklore has it that the Chinese take a very long term view of things. But it is more likely that China did not anticipate the blowback.

China seems to have underrated the vulnerability of its would-be client states to the vagaries of global capitalism and overrated the grip of the regimes that it is corrupting on power. China will not be the first great power to do this. The USA has been muscling and blundering its way, wreaking havoc around the world by conflating its interests and political values for the better part of a century.

Did China actually set out to trap countries into debt or has the Belt and Road Initiative gone awry? […]China seems to have underrated the vulnerability of its would-be client states to the vagaries of global capitalism, and overrated the grip on power of the regimes that it is corrupting. China will not be the first great power to do this.

The real Achilles heel of the debt traps is that China has little recourse should any of its distressed debtors default. Western lenders can and often take concerted action on defaulters (a la Greece and “the troika”), but China is a lone ranger.

In China, economic illiteracy on this scale is not without precedent. Sixty years ago, Chairman Mao had the brilliant idea that industrialization could be drilled down to producing copious amounts of grain and steel. The government set a target of doubling steel production within a year and overtaking Britain’s production in 15 years. China’s peasant farmers were herded into communes. Villagers were forced to set up backyard furnaces. Pots, pans and other metal possessions were seized and melted up to meet production quotas. Trees were decimated and even furniture burned to fuel the furnaces. The Great Leap Forward, history’s most monumental political blunder, cost between 20 and 40 million lives.

It is noteworthy that Kenya is the BRI’s only touchpoint on the African continent.

Kenya’s SGR, Uhuru Kenyatta’s erstwhile legacy project, has turned out to be the bugbear that this columnist among others warned that it would be. Its freight capacity is a third of what was promised, and it cannot be competitive without a hefty public subsidy. Uhuru Kenyatta’s administration has increased Kenya’s foreign debt two and a half fold, from US$9 billion to US$25 billion. The railway alone accounts for a third of this increase; another third is by sovereign bonds for which the country has nothing to show.

Public debt service now stands at KSh 860 billion (US$ 8.6 billion), a staggering 72 percent of the last financial year’s tax receipts. The question that is frequently asked now is whether, if Kenya cannot pay, the Chinese will take over the port of Mombasa. Word on the streets of Mombasa is that the port was pledged as security for the railway loans. In a manner of speaking, they already have. The Chinese have a concession to run the railway until 2027. That includes a take-or-pay freight assignment contract, which is to say, the Kenya Ports Authority, the port operator, has to meet the railway’s freight target or pay the railway for the unused capacity. In effect, the port is working for the railway.

The question that is frequently asked now is whether, if Kenya cannot pay, the Chinese will take over the port of Mombasa. Word on the streets of Mombasa is that the port was pledged as security for the railway loans. In a manner of speaking, they already have.

“It is not uncommon for a country to create a railway, ” said Charles Elliot, the Kenya Protectorate commissioner who oversaw the construction of the Uganda railway. “But it is uncommon for a railway to create a country.” Almost 120 years later, after it emerged that Kenyan workers are routinely subjected to physical punishment by Chinese, following which the Chinese ambassador dismissed this as Chinese culture, Kenyans are wondering whether the railway heralds a new age of Oriental colonialism. On this, my take is that China and Kenya’s political class have bitten off more than they can chew.

Seeing senior public officials grovelling and making excuses for these Chinese excesses gives perspective to history, from the chiefs who sold their people into slavery to those who signed away their lands to European imperialists for blankets and booze. We get it.

Related Links

Letter by US Senators to US Government on IMF China Belt and Road Initiative

David Ndii
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David Ndii is a leading Kenyan economist and public intellectual.

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Seeds of Neo-Colonialism: Why GMO’s Create African Dependency on Global Markets

Rather than addressing food scarcity, genetically modified crops may render African farmers and scientists more, not less, reliant on global markets.

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As COVID-19 continues to lay bare the deficiencies in the global food system, imagining new food futures is more urgent than ever. Recently, some have suggested that seeds that are genetically modified to include pest, drought, and herbicide resistance (GMOs) provide an avenue for African countries to become more self-sufficient in food production and less reliant on global food chains. Although we share the desire to build more just food systems, if history is any indicator, genetically-modified (GM) crops may actually render African farmers and scientists more, not less, reliant on global actors and markets.

In a paper we recently published in African Affairs, we trace a nearly 30-year history of collaborations among the agribusiness industry, US government agencies, philanthropic organizations, and African research councils to develop GMOs for African farmers. We found that these alliances, though impressive in scope, have so far resulted in few GMOs reaching African farmers and markets. Why, we ask, have efforts to bring GMOs to Africa yielded so little?

One reason, of course, is organized activism. Widespread distrust of the technology and its developers has animated local and transnational social movements that have raised important questions about the ownership, control, and safety of GM crops. But another issue has to do with the complex character of the public-private partnerships (PPPs) that donors have created to develop GM crops for the continent. Since 1991, beginning with an early partnership between the US Agency for International Development (USAID), the Kenyan Agricultural Research Institute, and Monsanto to develop a virus resistant sweet potato (which never materialized), PPPs have become a hallmark of GMO efforts in Africa. This is mainly so for two reasons. The first is that GM technology is largely owned and patented by a handful of multinational corporations, and, thus, is inaccessible to African scientists and small to mid-sized African seed companies without a partnership agreement. The second is that both donors and agricultural biotechnology companies believe that partnering with African scientists will help quell public distrust of their involvement and instead create a public image of goodwill and collaboration. However, we found that this multiplicity of partners has created significant roadblocks to integrating GMOs into farming on the continent.

Take the case of Ghana. In the mid-2000s, country officials embarked on an impressive mission to become a regional leader in biotechnology. While Burkina Faso had been growing genetically modified cotton for years, Ghana sought to be the first West African country to produce GM food crops. In 2013, Ghanaian regulators thus approved field trials of six GM crops, including sweet potato, rice, cowpea, and cotton, to take place within the country’s scientific institutes.

However, what began as an exciting undertaking quickly ran into the trouble. Funding for the sweet potato project was exhausted soon after it began. Meanwhile, cotton research was put on indefinite hold in 2016 after Monsanto, which had been supplying both funding and the Bt cotton seed, withdrew from its partnership with the Ghanaian state scientific council. Describing its decision, a Monsanto official said that without an intellectual property rights law in place—a law that has been debated in Ghanaian parliament and opposed by Ghanaian activists since 2013—the firm could not see the “light at the end of the tunnel.”

Monsanto was also embroiled in legal matters in Burkina Faso, where their Bt cotton had unexpectedly begun producing inferior lint quality. Meanwhile, Ghanaian researchers working on two varieties of GM rice had their funding reduced by USAID, the main project donor. This left them with insufficient resources, forcing the team to suspend one of the projects. The deferment of both the cotton and one of the rice projects dealt a blow to the Ghanaian scientists who were just a year or two away from finalizing their research.

In many ways, the difficulties presented here from both Ghana and Burkina Faso suggest that efforts to bring agricultural biotechnology to Africa are a house of cards: the partnerships that seem sturdy and impressive from the outside, including collaborations between some of the world’s largest philanthropies and industry actors, are actually highly unstable. But what about the situation in other countries?

Both Nigeria and Kenya have made headlines recently for their approval of GM crops. The news out of Nigeria is especially impressive, where officials recently approved a flurry of GMO applications, including Bt cotton and Bt cowpea, beating Ghana to permit the first genetically modified food crop in West Africa. Kenya also approved the commercial production of Bt cotton, an impressive feat considering the country has technically banned GMOs since 2011. Both countries, which have turned to an India-based Monsanto subsidiary for their GM seed supply, hope that Bt cotton will help revitalize their struggling cotton sectors. While biotech proponents have applauded Nigeria and Kenya for their efforts, it will take several growing seasons and more empirical research to know how these technologies will perform.

As the cases described here demonstrate, moving GMOs from pipeline to field is not simply a matter of goodwill or scientific discovery; rather, it depends on a multitude of factors, including donor support, industry partnerships, research outcomes, policy change, and societal acceptance. This complex choreography, we argue, is embedded in the DNA of most biotechnology projects in Africa, and is often ignored by proponents of the technology who tend to offer linear narratives about biotech’s potential to bolster yields and protection against pests and disease. As such, we suggest the need to exercise caution; not because we wish to see the technology fail, but rather because we are apprehensive about multi-million dollar collaborations that seemingly favor the concerns of donors and industry over those of African scientists and farmers.

The notion of public-private partnerships may sound good, but they cannot dispel the underlying interests of participating parties or the history and collective memory of previous efforts to “improve” African agriculture.

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

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The Chira of Christopher Msando Will Haunt His Murderers Until Justice for His Family Is Served

Those who contributed in any way to the abduction, torture and assassination of Christopher Msando will eventually face justice because if there is something that history has confirmed to us time and again, it is that justice is always served, no matter how long it takes.

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The Chira of Christopher Msando Will Haunt His Murderers Until Justice for His Family Is Served
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Lately, I have been thinking a lot about chira. In Luo language and culture, the closest translation of chira is “curse”. It results from an infraction of the kwer (taboos) and can befall an individual, a clan, a community or even a nation. In some cases, ritual cleansing can take away the chira. However, the chira arising from killing a person cannot be removed through rituals. It remains with you, your clan and your community. I am convinced that a chira from the kidnap, torture and brutal assassination of Christopher Msando haunts Kenya to date. The dire state of the economy, socio-economic inequalities, political polarisation, corruption, and state capture, all seem to have gotten worse in the last three years.

To refresh our memories, Christopher Msando was the Information Communications Technology (ICT) manager at the Independent Electoral and Boundaries Commission (IEBC). Msando oversaw key ICT processes, including the audit of the register of voters and the data centre project. Crucially, he was the project manager for the electronic transmission of results for the 2017 presidential elections. Msando was one of the few Africans who had access to the highly sensitive results transmission system set up by the French company Safran/OT Morpho (now renamed IDEMIA). Safran had been single-sourced by the IEBC to deliver the Kenya Integrated Election Management System (KIEMS), in a contract worth close to Sh6b. The deal was so scandalous that even the state-captured Kenya National Assembly’s Parliamentary Accounts Committee on 24 April 2019 banned Safran/OT Morpho/IDEMIA from operating in Kenya for ten years.

Msando had been unanimously nominated by the Wafula Chebukati-led Commission to lead key ICT processes. He was hard working, had superb technical skills, a strong team spirit and excellent communication skills. Msando was an honest man, who at times seemed quite naïve in the trust he placed in his bosses to do the right thing. He was transparent in sharing the loopholes in the ICT system and revealed how some “external” actors had already gained access to it, months before the August 2017 election. He explained complex processes to the Commissioners in layman’s language, without making them feel insecure due to their lack of ICT knowledge. This is probably the singular reason the Commission chose him over his then boss, James Muhati, to be responsible for the ICT operations for the 2017 election. Unlike Muhati, Msando did not show the Commissioners disdain for their ignorance or incompetence.

One of the few defiant actions taken by the Chebukati Commission was to suspend Muhati in May 2017, allegedly for failing to cooperate with an internal audit. But as press reports indicated at the time, there was more to the story than the Commission revealed. The suspension took Muhati’s close friend, then Chief Executive Officer, Ezra Chiloba, by surprise. Chiloba made several attempts to block the suspension from being executed, prompting a reprimand from the Commissioners. Msando was unanimously appointed the officer-in-charge of the ICT directorate.

Within a month of being in charge of the ICT directorate, Msando finalised the register of voters, secured a new data centre, developed the workflow for the electronic transmission of presidential results and sealed some technical loopholes in the KIEMS gadgets that would have enabled “dead voters” to vote. It is probably these measures that he had put in place that gave Msando the confidence to say to John-Allan Namu in an interview in June 2017 that “no dead voters will rise under my watch”. And indeed, with his assassination, potentially, many “dead voters” voted.

Reports indicate that the intention of the Commission had been to keep Muhati suspended until the end of the 2017 elections. However, former Commission staff say that Chebukati received a “dossier” from the Jubilee Secretary-General, Raphael Tuju, falsely claiming that Msando was working for the opposition coalition, NASA. Incidentally, death threats against Msando intensified during this period. He spoke openly about them, showed friends and colleagues the chilling text messages, and with his typical hearty laughter, brushed them off as he went on with his work almost unperturbed. Despite making official reports, no measures were taken to address his concerns. Msando was not even provided with a Commission vehicle and security, which he was entitled to by dint of his functions.

In the meantime, the pressure to reinstate Muhati intensified. There are reports that Deputy President William Ruto and his wife Rachel Ruto called almost all the Commissioners to demand the reinstatement of Muhati, who is a close friend from their University days. Those who did not get a direct call from the Deputy President or his wife, had the message delivered by his Chief of Staff, Ambassador Ken Osinde. Despite protests from two of the Commissioners, Muhati quietly returned from his suspension on 1 June 2017, and from then on, Msando’s days on earth were numbered.

The reports of Msando’s disappearance on 29 July shocked but did not surprise many at the Commission. The threats had been there for many months including on the lives of Chebukati and former Commissioner Roselyn Akombe. One would say that the manner in which these threats were handled by the Commission made the environment conducive for Msando to be assassinated. The silence emboldened his assassins to go ahead with their plan. For their silence, the chira from Msando’s murder will forever remain with Chebukati, Akombe and the other Commissioners.

On that fateful day on 29 July 2017, it is alleged that Chiloba and Muhati asked Msando not to go home after his KTN interview at 7 pm. It is reported that Msando and a friend decided to have drinks at a joint near the Commission’s Anniversary Towers office, as they waited for further instructions from Chiloba and Muhati. Details of what exactly happened to Msando from that Friday night until his bruised body was identified at the City Mortuary on 31 July 2017 will eventually come out. It is clear that there are many colleagues of Msando’s who have more information than they have revealed in public. To many them, chira for their silence will forever hang over them.

But of course, the harshest chira is reserved for those who ordered, aided and executed Msando’s abduction, torture and assassination. If there is something that history has confirmed to us on many occasions, it is that justice is always served, no matter how long it takes. Just this year, we have seen the fugitive Félicien Kabuga, an alleged leader and financier of the 1994 Rwandan genocide arrested. Monuments in honour of those who perpetuated grave injustices including racism, slavery and colonialism for more than 400 years have been brought down in the United States and Europe. And just last month in Germany, 94-year-old Reinhold Hanning was convicted of being “an accessory” to the murder of thousands of Jews while he worked as a guard at the Auschwitz Death Camp. It took 77 years to convict him for crimes he committed at the age of 17, but justice was eventually served.

It does not matter how long it will take, justice for Chris Msando will be served. Msando’s children Allan, Alvin, Alama and Alison deserve to know why their daddy was murdered. His widow Eva has several unanswered questions. Mama Maria needs to know why her last-born son could not have been jailed if he had done something wrong, rather than wake up every morning to his grave in Lifunga. Msando’s siblings deserve closure. But three years on, the investigators have no answers to offer nor have they shown any interest in the case. Politicians like Moses Kuria, Kimani Ngunjiri and Oscar Sudi continue to recklessly play politics with such a painful issue. But Msando’s friends are quietly pursuing the leads. Quietly documenting the facts. For, eventually, Kenya will have to reckon with its history of political assassinations.

In the meantime, over to juok, to continue raining chira on those who contributed in any way to the abduction, torture and assassination of Msando.

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Quest for a More Equitable Nation Undermined: CRA’s Mission Aborted

In 2010 Kenya adopted a constitution that promised to address the daunting problem of ethno-regional economic discrimination. The Commission for Revenue Allocation was created to safeguard this intention and put an end to the exclusion of many ethnic communities in Kenya, a legacy of colonial rule and a decades-long centralised, ethicised, and personalised presidential system.

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The current contentious debate in the Senate on the horizontal revenue allocation formula between counties, reveals a lack of political goodwill to end legal, systemic and institutionalised marginalisation in Kenya. The fact is that this formula does not exist or emerge in a vacuum, but is rooted in the political machinations and ideologies of those who control the dominant knowledge system that has informed economic policies responsible for sustaining regional privilege.

The proposals on the new revenue sharing formula are a clear sign that although regional discrimination might have been legally terminated, structural, social and systemic discrimination still thrives in Kenya. This is because the dominant philosophy of public policy continues to mirror the same exclusivity and discrimination that were legally institutionalised by Sessional Paper No. 10 of April 1965 authored by Tom Mboya and a cabal of bureaucrats at the post-independence national treasury and planning ministry.

Kenyans must be reminded that the idea of the Commission on Revenue Allocation (CRA) as an independent Commission emerged in response to the (traditionally) skewed allocation of revenue in Kenya. The constitution provides for Commissions and Independent Offices as an avenue to better cushion Kenya’s national interest against transient executive policy choices. Until the enactment of the 2010 constitution, all revenue allocations were centralised under the national government. Because of the pervasive absence of a culture of nationhood in Kenya and the extent of fragmentation in the society, most distribution of national resources has been based on ethnic, regional or political interests.

The exclusion of many ethnic communities in Kenya is the legacy of colonial rule and a decades-long centralised, ethicised, and personalised presidential system. Concerned by the entrenched economic inequalities, the constitution devised the counties to disburse a minimum of 15 per cent of the nationally generated fiscal revenue to the 47 subnational units. Additionally, it sought to ensure that equity was the overriding consideration in sharing revenue among the 47 counties.

The CRA was created to safeguard this intention and mandated to develop a sharing formula every five years. In conceptualising its mandate, the CRA must thus bear in mind this twisted legacy of our economic history and adopt a holistic and not just a positivist approach. Such an approach will integrate an appreciation of historically skewed allocations in favour of some regions the net effect of which has been to render these regions more attractive to diverse economic activities. Factoring in an amortised perspective of an investment in roads in 1960 would provide clarity in what the present value of such an investment could have accrued to a beneficiary region.

To fully understand the institutionalised discrimination patent in the proposed formula, it is important to recognise that, whereas 70 per cent of Kenya’s revenue remains with the national government, the formula does not take this into consideration, yet we know the degree of political expediency that underpins the national government’s distribution of this revenue across various counties through infrastructural and social development programmes. Then, on the basis of only the 30 per cent allotted to counties, the Commission has designed the formula presently before the Senate, where again it proceeds to attach much weight to population and disregards its responsibility to assign equal weight to regional economic disparities and the need for affirmative action in favour of disadvantaged regions.

Why did the formula turn a blind eye on inter-governmental fiscal transfers over and above the amount allocated to county governments as their equitable share of the revenue raised nationally under Article 202(1)? Is it proper for the formula to fail to factor in the impact of five other types of transfers to counties by the national government, namely, conditional and unconditional grants, loans, the equalisation fund, and constituency development funds?

The formula and the range of reactions in its defense reveal gaps in the way marginalisation in Kenya is understood, defined and addressed. In other words those individuals who designed the formula are conditioning Kenyans to only consider the slices of cake and ignore the way the national cake is divided. Under a purposive and holistic interpretation of article 203 (1) (f) (g) and (h), the revenue allocation should consider the distribution of national government projects.

The information on how the national government projects are allocated to the various counties is easily accessible to the Commission and the public through the Presidential Service Delivery Website. Furthermore, the CRA needed to have conducted a structural audit assessment of various counties. Such an audit would assess the kilometres of paved roads, the hospitals, the bridges, power connection, water connection, accessibility to mobile telephony and internet infrastructure, number and quality of schools, among others. Take for example the two counties of Kiambu and Kakamega with a population of approximately 1.6 and 1.9 million people and a landmass of 2,500 km and 3,225 kilometres respectively. Kiambu has 1,145 km of bitumen roads against a mere 700 km for the entire Western Province which has five counties. Kiambu County has 1,145 primary schools against 460 for Kakamega, and a 7/1000 infant mortality rate in Kiambu compared to 65/1000 in Kakamega.

A good formula that accounts for the above reality must involve the conscious use of the normative system called the “Presidential Service Delivery” to examine the extent to which national government programmes comport with the notion of equitable economic development. The lack of conscious use of the process of developing the revenue sharing formula by the CRA to narrow the poverty and marginalisation gap undermines its possible instrumentality to secure a more equitable and just nation. It undermines the use of Independent offices and commissions in promoting checks and balances in the developmental process in Kenya. It is up to the Senate and CRA to consider using the revenue allocation formula not as a ritualistic policy obligation to be undertaken every five years but to deploy it in furthering the entrenchment of economic justice, equality and inclusion in the country.

The argument advanced by those supporting the formula that counties that generate more revenue should benefit from higher allocation is pretentious as it conceals the fact that their present economic advantages flow from the relative deprivation of other regions historically. The justifications mobilised by proponents of the formula as they seek to protect their privileged economic status is a type of absolution (to help them sleep at night) and is aptly captured by Albert Memmi, the Tunisian Jewish writer and one of the most influential theorists to emerge out of the post-World War II African decolonisation movement:

The fact remains that we have discovered a fundamental mechanism, common to all marginalization and oppression reactions: the injustice of an oppressor toward the oppressed, the formers permanent aggression or the aggressive act he is getting ready to commit, must be justified. And isn’t privilege one of the forms of permanent aggression, inflicted on a dominated man or group by a dominating man or group? How can any excuse be found for such disorder (source of so many advantages), if not by overwhelming the victim? Underneath its masks, oppression is the oppressors’ way of giving himself absolution.

In other words, to justify the formula is to totally disregard the important reports on historical marginalisation like the Truth, Justice and Reconciliation Report, that clearly pointed out those who are at the center and at the margin or periphery of national development.

The CRA’s mischief in the current stalemate regarding the formula to be used as the basis for sharing revenue among counties is a continuation of the disdain towards marginalised counties reflected in its recommendations to parliament with respect to the Second Policy on the Criteria for Identifying Marginalised Areas and Sharing of the Equalisation Fund in accordance with its mandate under Article 216(4) of the Constitution. The fund is a constitutional earmark of 0.5 per cent of annual revenue to be used to “provide basic services including; water, roads, health facilities and electricity to “marginalised areas”, as urged by article 204(2).

Under the second policy, the CRA departs from the first policy that had identified 14 counties in northern Kenya as marginalised areas and thus deserving of benefitting from the equalisation fund and instead identifies 1,424 administrative divisions across the 47 counties as “marginalised areas”. The policy choices in the CRA’s approach to the equalisation fund unravel when one realises that a good number of the administrative divisions identified are within the geographical limits of fairly well developed counties. Moreover, the choice of administrative units privileges national government structures and weakens the role of counties in the process. Worse, the choice shifts focus from the 14 historically marginalised counties whose economic exclusion the fund was intended to ameliorate. It assumes that parity in development has been achieved between the 14 counties and the rest of Kenya, a wildly fallacious assumption. Had the equalisation fund mechanism been implemented as envisioned in the constitution—with beneficiary counties managing the allocations—it could have assisted in cushioning marginalised counties in the event a formula favouring population as the overarching basis for revenue sharing is enacted.

In 2010, Kenya adopted a constitution that promised to address the daunting problem of ethno-regional economic discrimination. Its egalitarian tenets are evident in the quiet embrace of the principle of Ubuntu via Article 10 which holds “sharing” and “social justice” as defining values of our statehood.

As such, those at the CRA who developed the contentious formula must review their empirically unsupportable position that Kenya has made substantial progress in addressing marginalisation. We are persuaded by Malcom X’s assertion in his attack on race relations policies in the United States thus, “If you stick a knife nine inches into my back and pull it out three inches, that is not progress. Even if you pull it all the way out, that is not progress”. Progress is thus about healing the wound, and Kenya hasn’t even begun to pull out the knife of inequality. The CRA must stand up to its mission or disband.

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