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Jubinomics and Kenya’s Debt Crisis: A Private Sector View

11 min read. Five years ago, the Jubilee administration embarked on a dangerous economic course of deficit financing, profligate spending and punitive taxation. Legitimate government suppliers in the private sector were crowded out in favour of tenderpreneurs and briefcase companies. Mysteriously, government agencies with expanded budgets were unable to pay suppliers. The result today: banks are staring at ballooning non-performing loans, tax revenues have fallen steeply and the private sector is dying a slow, painful death. By P. GITAU GITHONGO.

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Jubinomics and Kenya’s Debt Crisis: A Private Sector View
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The March 9, 2018 handshake between Uhuru Kenyatta and Raila Odinga, silenced many of the critical voices accusing the Jubilee coalition of divisive politics, ethnic bigotry and the disenfranchisement of at least half of Kenya’s population.  In fact, for a brief moment it seemed that the bitter grievances of the disputed August 2017 election, the acrimonious exchanges between political rivals, the threats to the judiciary, the unsolved murder of IEBC’s Chris Msando, and the police killings in the post-election crisis, had been forgotten following the very-closed-door meetings between Uhuru and Raila. As a writer with the Daily Nation gushingly wrote a week later: ‘In the name of that handshake, the shilling has stabilised overnight with the outlook by players in tourism already promising what some experts have christened as the ‘peace dividend’ after an inordinately protracted electioneering period. The stock market is also recovering’. Despite the ceasefire of the handshake, its promised benefits have not cleared the dark clouds hanging over the Kenyan economy, which is now headed into serious difficulties. In fact, at a practical level there appears to be no change in the way the national government runs its day-to-day affairs.

Since coming to power in 2013, the Jubilee administration has been dogged by accusations of profligacy and patronage – most notably in the award of tenders. Policy-making, with senior public officials apparently motivated more by personal interests than by public service, and even outright nepotism and tribalism, spurious contracting in the implementation of policy initiatives in the key sectors of health, agriculture and infrastructure.

Perhaps it is no coincidence that the Jubilee administration has also presided over a massive debt-fuelled increase in annual public spending – KSh 1.2 Trillion to over KSh 2.5 Trillion in 6 years, complemented by a budget deficit approaching Ksh 750 billion (see Table 1). Notably, this growth in spending is at a rate beyond the GDP growth rate and, as far as many critics are concerned, has been partly motivated by the need to accommodate corrupt patronage practices. Spending on infrastructure programmes in particular, seamlessly lends itself to patronage and has been a dominant feature of Jubilee’s tenure, with a range of big-ticket projects in the transport, energy and health sectors. Recurring elements of these projects include secretive feasibility studies, procurement and financing arrangements, as well as questionable labour deployment and land acquisitions – all of which embody the controversial SGR Railway project which has taken up the lion’s share of this spending binge.

Spending on infrastructure programmes in particular, seamlessly lends itself to patronage and has been a dominant feature of Jubilee’s tenure, with a range of big-ticket projects in the transport, energy and health sectors. Recurring elements of these projects include secretive feasibility studies, procurement and financing arrangements, as well as questionable labour deployment and land acquisitions.

Table 1.

Jubilee’s Treasury team however, has maintained that the increase in public spending was and remains necessary to spur economic growth. Treasury has systematically played down the risks from the widening budget deficit in the process. This surge in spending – financed mostly with (Chinese) debt – has also taken centre stage in the cooling relations between the government and development partners, notably the IMF and World Bank. Critical to debate on this spending surge and the risks from a widening budget deficit is its impact on the performance of the Kenyan economy.

In particular, why have key sectors of the economy registered such diminished performance over the past half-decade in the face of this increased spending? Why does so much anecdotal evidence point to growing job-layoffs (an estimated 7,000 formal sector jobs have been lost in the past three years alone)? Even the normally bullish real estate market has shown signs of glut and slowdown over the past three years. The Nairobi Securities Exchange has seen its NSE 20 index climb from slightly over 4,000 in 2013 to a high of 5,400 in 2015, before falling to about 3,400 today. The Stock Exchange, without a single IPO listing since 2014, has seen more than half of all listed companies declare reduced earnings or losses in each of the past two years.

Why have key sectors of the economy registered such diminished performance over the past half-decade in the face of this increased spending? Why does so much anecdotal evidence point to growing job-layoffs (an estimated 7,000 formal sector jobs have been lost in the past three years alone)?

Table 2 below shows Average GDP Growth rates (RHS Scale) over the past 8 years and actual GDP (Using Constant 2009 Prices LHS Scale).

Whereas average GDP growth rates have averaged 5.8 percent over the period shown, the downward trend since 2010 has persisted despite the huge increase in spending – and this is despite GDP-rebasing in 2013 which enhanced the growth rate that year by at least 1%. Both 2013 and 2017 were election years and unsurprisingly, registered the lowest growth rates; but the increased government spending – albeit on long-term projects – appears to have actually had a dampening impact on GDP growth over the period. There are several reasons for this, but three key issues are highlighted here.

1. An unremunerated Private Sector.

Accusations of partisanship and gravy-train policy-making in the award of public tenders and contracts, are not just the grumblings of out-of-favour business-people that lost out on lucrative government business to well-connected or favourably-related individuals. There is a constituency of ordinary hard-working entrepreneurs, professionals and manufacturers increasingly unable to compete against the empowered cartels of tenderpreneurs, influence peddlers and brief-case businessmen. These rogue players currently dominate government contracting – not to mention annual auditor-general reports – making a mockery of procurement guidelines. In some instances they even approach qualified bidders, offering to be embedded in bidding teams (despite the lack of relevant competencies) with a promise of tender success at inflated bids. This patronage-based ‘crowding out’ doesn’t end there. This well-connected class of tenderpreneurs also has perfected the dark art of jumping bureaucratic payment queues, often receiving payments before delivery of goods and services – or even before contracts are signed.

Not by coincidence, legitimate suppliers, service providers, and even farmers, have been experiencing debilitating delays in the settlement of payments and have accumulated massive debts on their credit arrangements and tax obligations. The paradox is that while government department budgets were being ramped up, delays in contract awards and settlement of payments to legitimate suppliers were worsening. This has created a unique set of economic challenges that seems to have been lost in all the discussions on political handshakes.

According to the Central Bank of Kenya, Non-Performing Loans (NPLs) as a proportion of total lending by commercial banks doubled from 6.1 percent in 2015 to 12.4 percent (or about KSh 265 billion) by April 2018 (see Table 3 below). The Table shows Gross Lending by Commercial Banks as well as the stock of Non-Performing Loans, as well as the stock of Non-Performing Loans expressed as a percentage of Gross Lending by Commercial Banks. Even this 12.4 percent figure could be an under-statement if banks have not been adequately disclosing and providing for non-performing loans – as suggested by the sagas of the collapsed Imperial and Chase Banks.

Table 3

CBK Governor Patrick Njoroge attributes a significant factor in this growth in bad loans to delayed payments owed to the private sector by the national government, government departments and devolved units. CBK data suggests that up to KSh 200 Billion was owed to SME businesses by the national government by the end of the 2017/2018 Financial Year, with as much as KSh 25 Billion worth of those pending bills directly contributing to non-performing loans.

Following an increase in imported grains last year (amid accusations of pre-election giveaways), the National Cereals and Produce Board (NCPB) owed farmers as much as KSh 3.5 Billion by the end 2017 for produce already delivered. In a hard-hitting editorial on 7th August 2018, the Daily Nation averred, ‘The Jubilee government is wallowing, not just in foreign debt, but also in the money it owes local businesses, which it has either crippled or is in the process of ruining’.

According to the Central Bank of Kenya, Non-Performing Loans (NPLs) as a proportion of total lending by commercial banks doubled from 6.1 percent in 2015 to 12.4 percent (or about KSh 265 billion) by April 2018. The Table shows Gross Lending by Commercial Banks as well as the stock of Non-Performing Loans, as well as the stock of Non-Performing Loans expressed as a percentage of Gross Lending by Commercial Banks. Even this 12.4 percent figure could be an under-statement if banks have not been adequately disclosing and providing for non-performing loans.

The Daily Nation’s particular beef was that the Government Advertising Agency (GAA), owed media houses close to KSh 3 billion by the end of FY 2017/2018. About half of the KSh 404 Million paid out by GAA during the year, went to the big publishing houses – Nation Media Group, Standard Newspapers, Royal Media Services, The Star and Media Max Network. Against the KSh 3 billion owed, the distribution of payments to media houses was sufficiently skewed to warrant an investigation by the Office of the Public Prosecutor.

Worryingly as well, the increase in bad loans in the banking sector has come despite the implementation of August 2016 of lending rates ‘caps’, which limit the cost of existing loans to 4 percent of the Central Bank’s Recommended Rate. (See Table 4)


2. A Stifled Private Sector

This environment of pending government bills is also linked to worsening Kenya Revenue Authority (KRA) tax collection performance. This creates a vicious cycle in which the private sector is defaulting on its obligations on account of money owed by the same government. The government has long complained about KRA’s inability to meet its collection targets, complaining instead about ‘revenue leakages’ facilitated by corrupt tax officials. But it fails to acknowledge that its pursuit of tax defaulters is a consequence of the fact that they themselves are owed millions by national and county governments.

The reality is that National Government revenue shortfalls have averaged KSh 90 Billion annually over the past 4 years, despite improved tax collection efficiencies at the KRA. (See Tables 5 & 6 below.) The World Bank estimated that in the 2016/2017 financial year, tax revenue as a proportion of GDP fell to under 17%, the lowest in a decade – with the growth in nominal Tax Revenues outpaced by nominal GDP growth.

Table 5

This reduced growth rate of revenue collection by KRA is at first glance paradoxical considering that over the past 5 years, an unprecedented number of Kenyans have been brought into the tax bracket. A similarly unprecedented range of products and services have been subjected to various new direct and indirect taxes. Over the past five years, several tax measures have been introduced including: 12 percent Rental Income tax for landlords from 2015; successive excise duty and fuel levy increases in 2015, 2016 and 2018; VAT on bottled water and juices; VAT on food served by restaurants as well as piped water; successive increases in excise duties on spirts, cigarettes and mobile telephony; and 50 percent Gaming tax on lotteries and book makers in 2017, among  a host of others. The 16 percent VAT on fuels and fuel oils first awarded in 2013 but deferred over the subsequent years with the exemption set to expire on 1st September 2018, adds a controversial element to this expanded tax net aimed at bringing the growth in VAT collections closer to that of direct taxes such as PAYE and Income Taxes (see Table 6).

Table 6

In his June 2018 Budget statement, Finance CS, Henry Rotich, laid out several new and controversial ‘Robin Hood Tax’ proposals which he declared necessary to fund programmes that are part of Jubilee’s ‘Big 4’ agenda. Prominent among the proposals purportedly designed to protect low-income earners, is a monthly contribution to a nebulous National Housing Development Fund by every employee and employer of 0.5% (capped at KSh 5,000) of the employee’s gross pay. This contribution would be funnelled to the Housing Fund whose mandate will be to build low-cost housing units. Another ‘Robin Hood Tax’ proposal was the levying of 0.05% excise duty on all remittances of KSh 500,000 or more, transferred through banks and other financial institutions; as well as an increase in the excise duty charged on money transfer services by mobile phone providers from 10 percent to 12 percent, all geared to financing Universal Health Care – another Big 4 pillar.

Several of these proposals have been rightly criticised as being unjust and inordinately detrimental to low-income earners. With more than a third of all Kenyans living on less than Ksh 100 per day, a projected VAT-inclusive paraffin price of KSh 105 per litre is simply unreasonable. The curb on logging has already raised the cost of the popular-sized sack of Charcoal to more than Ksh 3,000 in parts of Nairobi, with the 4-kg tin costing more than KSh 150. With electricity prices also being ramped up as the monopoly power distributor Kenya Power struggles to maintain solvency following years of mismanagement, low and middle income earners are clearly big losers. The situation is no better for businesses, notably manufacturers and other high energy consumers. Early this month, the Kenya Association of Manufacturers registered strong objections to the revised energy tariffs which entailed a 36 percent increase in the energy base-cost – before the envisaged 16 percent VAT increase – which KAM argued would have a detrimental effect on the cost of doing business in the country.

With more than a third of all Kenyans living on less than Ksh 100 per day, a projected VAT-inclusive paraffin price of KSh 105 per litre is simply unreasonable. The curb on logging has already raised the cost of the popular-sized sack of Charcoal to more than Ksh 3,000 in parts of Nairobi, with the 4-kg tin costing more than KSh 150. With electricity prices also being ramped up as the monopoly power distributor Kenya Power struggles to maintain solvency following years of mismanagement, low and middle income earners are clearly big losers.

A recurring complaint from the private sector over the past half-decade has consistently been that consumer purchasing power has contracted considerably and that this is being exacerbated by recent and proposed tax measures. The decline in tax revenues despite the increases in tax rates, tax measures and collection efficiencies by KRA (notably year-on-year growth in taxpayers registered on KRA’s I-Tax platform), all but confirms a sharp drop in formal economic activity over the period.

Arthur Laffer who was an adviser to the Nixon/Ford Administration in the mid-1970’s mainstreamed the simple mathematical tautology that there is a point beyond which any increases in tax rates will always result in declining tax revenues. Laffer’s analysis of the US economy at the time recommended a decrease in federal tax rates to boost tax revenues. Rotich’s proposed tax measures risk the same results by further dampening of economic activity as well as greater tax evasion.

3. A Crowded-out Private Sector

The aforementioned slump in tax revenue growth was also partially influenced by the slowdown in bank profitability – which in turn was due to the twin influences of growing bad loans and reduced access to credit by the private sector. These factors are inexorably linked to diminished private sector performance. However, reduced access to credit by the private sector in Kenya is not a new phenomenon; nor are its fundamental causes. Its disruptive influences however, are significant.   Commercial credit to the private sector has contracted from about 24 percent in 2013 to 18 percent by end of December 2015, to about 2.5 percent in June 2018. This is despite the implementation of interest caps in August 2016, disabusing the suggestion that enhanced credit to the private sector was the intended beneficiary of the interest rate caps. In contrast, during the same period annual growth in lending to government averaged 14%.

Table 7

The Banking Amendment Act 2016 proposed by MP Jude Njomo was signed into law by President Uhuru Kenyatta with the same hollow promise of cheaper and more private sector lending by banks that a similar bill by then MP Joe Donde had made in the year 2000. The backgrounds shared notable similarities however – most notably heavy government borrowing. Domestic borrowing was indeed high in the late 1990s – evidenced by the 91-day Treasury Bill on offer with a 21% return in June 1999. By 2000, domestic borrowing was attracting Ksh 22 Billion in annual interest payments.  The stock of domestic debt by June 2000 stood at KSh 164 Billion with new issues representing 17.5 percent of government revenue. By June 2007, with short term Treasury Bill rates down to less than 8 percent, the stock of domestic debt had only risen modestly to KSh 405 Billion representing 22.1 percent of GDP, and attracting interest payments of KSh 37 Billion in FY 2006/2007. By March 2016 however, the stock of domestic debt had jumped to KSh 1.65 Trillion representing close to 27 percent of GDP and was attracting a massive 30 percent of total government revenue in debt service. And that’s not even taking into account external debt which had grown at a similar rate. The stock of domestic debt in March 2018 had reached KSh 2.3 Trillion, attracting more than KSh 350 Billion in annual debt payments.

Arthur Laffer who was an adviser to the Nixon/Ford Administration in the mid-1970’s mainstreamed the simple mathematical tautology that there is a point beyond which any increases in tax rates will always result in declining tax revenues…Rotich’s proposed tax measures risk the same results by further dampening of economic activity as well as greater tax evasion.

In August 2000, Commercial bank lending rates averaged close to 21 percent and deposit rates about 7 percent, providing obvious justification for the Njomo Bill’s popular support. The stock of non-performing loans (NPLs) at the time, was an eye-popping KSh 122 Billion in April 2001, (40 percent of total lending). In June 2018 and despite interest rate caps in place, NPLs represent 12.4 percent of commercial lending with an estimated Ksh 303 Billion in this category.

Table 8

The Parlous state of Kenya’s national accounts – most notably the KSh 5 Trillion stock of public debt and ballooning budget deficit – but also poor performance of the real economy with stagnant exports and tax revenues, suggests that the government cannot afford to be adding to the burden borne by the private sector. It also suggests that the slew of tax measures proposed in Budget 2018 was purely about desperately seeking to finance reckless government spending and not about providing incentives for private sector economic growth. Critically, it also confirms that the interest caps were always really about government access to cheaper domestic borrowing and not about promoting private sector economic activity, which the government appears to be doing its best to stifle.

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Gitau Githongo is a financial consultant based in Nairobi.

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South Africa: Xenophobia Is in Fact Afrophobia, Call It What It Is

5 min read. Anti-African violence in South Africa is fuelled by exclusion, poverty and rampant unemployment. This isn’t black-on-black violence. This is poor-on-poor violence.

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South Africa: Xenophobia Is in Fact Afrophobia, Call It What It Is
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Written in May 2008, as African bodies burned on the streets of South Africa, Ingrid De Kok’s throbbing poem Today I Do Not Love My Country poignantly captures the mood of an Afrophobic nation fluent in the language of violence and name-calling.  (I say Afrophobic because South Africa does not have a xenophobia problem. We don’t rage against all foreigners—just the poor, black ones from Africa.)

The irony of South Africa’s most recent attacks on African immigrants is that they happened in the wake of the African Continental Free Trade Agreement which positions the country as an economic gateway to the continent. As the debris is cleared off the streets of Johannesburg after a week of violent looting and attacks against African migrant-owned businesses that saw eleven people killed and almost 500 arrested, Pretoria now faces calls to boycott South African-owned businesses on the continent.

Zambia and Madagascar cancelled football matches. Air Tanzania has suspended flights to South Africa. African artists are boycotting South Africa. Should an Afrophobic South Africa lead the African Union next year?

The irony of South Africa’s most recent attacks on African immigrants is that they happened in the wake of the African Continental Free Trade Agreement which positions the country as an economic gateway to the continent

The South African government has remained steadfast in its denial of Afrophobia, opting instead to condemn “violent attacks” and highlight the criminal elements involved in looting African-owned businesses. The police attributed the attacks to “opportunistic criminality”. By denying that these are Afrophobic attacks, everyone can deny the role of South Africa’s political leadership in fomenting the hatred.

The Afrophobic attacks are not spontaneous criminal mobs preying on foreigners. They are the result of an orchestrated, planned campaign that has been fuelled by the ongoing anti-immigrant rhetoric of South African politicians.

The All Truck Drivers Forum (ATDF), Sisonke People’s Forum and Respect SA stand accused of orchestrating last week’s violence. ATDF spokesperson, Sipho Zungu, denied that his group had instigated the violent looting, saying that “the nation is being misled here.” Zungu did stress, however, that South African truck drivers “no longer have jobs” and the government “must get rid of foreign truck drivers.”

Zungu echoes the sentiments of many poor South Africans, and their views are the end result of a drip-feed of anti-immigrant messages from South African politicians, particularly in the run-up to this year’s elections.

Anti-African violence in South Africa is fuelled by exclusion, poverty and rampant unemployment. This isn’t black-on-black violence. This is poor-on-poor violence.

One-third of South Africans are unemployed. Thirteen per cent of South Africans live in informal settlements, and a third of South Africans don’t have access to running water. The problems are a combination of the country’s apartheid past and rampant corruption and mismanagement within the ANC-led government. Crime is climbing, mainly due to corrupt and dysfunctional policing services, high unemployment and systemic poverty.

By denying that these are Afrophobic attacks, everyone can deny the role of South Africa’s political leadership in fomenting the hatred.

South African politicians from across the spectrum have blamed immigrants for the hardships experienced by poor South Africans. Political parties tell voters that foreigners are criminals flooding South Africa, stealing their jobs, homes and social services, undermining their security and prosperity.

Even the government sees poor and unskilled African migrants and asylum seekers as a threat to the country’s security and prosperity. Approved in March 2017, its White Paper on International Migration, separates immigrants into “worthy” and “unworthy” individuals. Poor and unskilled immigrants, predominantly from Africa, will be prevented from staying in South Africa by any means, “even if this is labelled anti-African behaviour” as the former Minister of Home Affairs, Hlengiwe Mkhize, pointed out in June 2017. The message is simple: there is no place for black Africans in South Africa’s Rainbow Nation.

In November 2018, Health Minister Aaron Motsoaledi claimed in a speech at a nurses summit that undocumented immigrants were flooding South Africa and overburdening clinics and hospitals. When immigrants “get admitted in large numbers, they cause overcrowding, infection control starts failing”, he said.

Johannesburg—the epicentre of the anti-African violence—is run by the Democratic Alliance (DA), the second-largest political party in South Africa after the ruling African National Congress (ANC). DA mayor, Herman Mashaba, has been leading the war against African immigrants.

In a bid to attract more support, Mashaba and the DA have adopted an immigrant-baiting approach straight out of Donald Trump and Jair Bolsonaro’s playbooks.

Mashaba has described black African migrants as criminals and has spoken of the need for a “shock-and-awe” campaign to drive them out.

In February 2019, Mashaba diverted attention away from protests against his administration’s poor service delivery in Johannesburg’s Alexandra township by tweeting that foreigners had made it difficult to provide basic services.

On August 1, police operations in Johannesburg to find counterfeit goods were thwarted by traders who pelted law-enforcement authorities with rocks, forcing the police to retreat. Social media went into overdrive, with many accusing the police of being cowards running away from illegal immigrants. Mashaba was “devastated” by the police’s restraint. A week later over 500 African immigrants were arrested after a humiliating raid, even though many said they showed police valid papers.

In 2017, South Africa’s deputy police minister claimed that the city of Johannesburg had been taken over by foreigners, with 80% of the city controlled by them. If this is not urgently stopped, he added, the entire country “could be 80% dominated by foreign nationals and the future president of South Africa could be a foreign national.”

None of this anti-immigrant rhetoric is based on fact. Constituting just 3% of the South African population, statistics show that immigrants are not “flooding” South Africa. They aren’t stealing jobs from South Africans and nor are they responsible for the high crime rate. South Africa’s crime problem has little to do with migration, and everything to do with the country’s dysfunctional policing services, unemployment and poverty.

Johannesburg—the epicentre of the anti-African violence—is run by the Democratic Alliance (DA), the second-largest political party in South Africa after the ruling African National Congress (ANC). DA mayor, Herman Mashaba, has been leading the war against African immigrants.

But South African politicians don’t let facts get in the way.  After all, it’s easier to blame African immigrants rather than face your own citizens and admit that you’ve chosen to line your own pockets instead of doing your job. If you can get others to shoulder the blame for the hopeless situation that many South Africans find themselves in, then why not?

South Africans are rightfully angry at the high levels of unemployment, poverty, lack of services and opportunities. But rather than blame African immigrants, frustration must be directed at the source of the crisis: a South African political leadership steeped in corruption that has largely failed its people.

The African Diaspora Forum, the representative body of the largest group of migrant traders, claimed that the police failed to act on intelligence that it had provided warning of the impending attacks. It took almost three days before Cyril Ramaphosa finally issued weak words of condemnation and for his security cluster to meet and strategise.  All of this points to a government refusing to own its complicity and deal with the consequences of its words.

South Africa has fallen far and hard from the lofty Mandela era and Thabo Mbeki’s soaring “I am an African” declaration.

Senior political leaders in South Africa are blaming vulnerable Africans for their failure to adequately provide a dignified life for all South Africans. Until this scapegoating stops, violent anti-African sentiment will continue to thrive, and South Africa will entrench its growing pariah status on the continent.

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A New Despotism in the Era of Surveillance Capitalism: A Reflection on Census 2019

6 min read. In the creeping securocratisation of every sphere of the State, the incessant threats and arbitrary orders, the renewed quest for that elusive all-encompassing kipande, and even the arbitrary assignment of identity on citizens, Montesquieu would see a marked deficiency of love for virtue, the requisite principle for a democratic republic.

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A New Despotism in the Era of Surveillance Capitalism: A Reflection on Census 2019
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The just concluded census 2019 brought with it many strange occurrences including the official classification of my good friend Rasna Warah as a Mtaita, a community to which she is only very remotely connected by virtue of being married to a husband whose mother is a Mtaveta. The Taita and Taveta, who give their home county Taita-Taveta its name, are two related but distinct ethnic groups. Rasna’s ethnicity is unambiguous, she is a Kenyan Asian, which should be one of the ethnicities available on the census questionnaire.

In standard statistical practice, people’s racial and ethnic identity are self-declared and the identity questions usually have options such as “other” and “mixed” as well as the choice not to disclose. But Rasna was not given a choice, as she recounts here. While this may seem like a trivial matter, the undercurrents of racism and patriarchy in this action are disturbing. It is, I think, even more alarming that the enumerators, given a little authority, felt that they had the power to exercise discretion on the matter.

Past censuses have been rather uneventful statistical exercises. This one had the aura of a security operation. In the run-up, we were treated to all manner of threats and arbitrary orders from the Internal Security Cabinet Secretary, the Jubilee administration’s energetic and increasingly facile enforcer. On the eve of the census, the government spokesman added to the melodrama by issuing a statement informing the public that census enumerators would be asking for personal identification details, including national ID and passport numbers and, ominously, huduma namba registration status. There are few issues as controversial right now as huduma namba and to introduce that question was a sure way of heightening suspicion and undermining the credibility of the census.

More fundamentally, anonymity is a canon of statistical survey work. In fact, the law prohibits dissemination of any information which can be identified with a particular respondent without the respondent’s consent. For this reason, censuses and statistical surveys are usually designed and the data maintained in such a way as to ensure that the respondents remain anonymous.

In October last year, the Government gazetted the census regulations that include a schedule of the information that would be collected. Identity information is not listed in the schedule. In January this year, the Keya National Bureau of Statistics (KNBS) issued a media briefing, still on their website, that also listed the information that would be collected. It too does not mention identity information. That it was the Government spokesman—and not the KNBS—who appraised the public, and only on the eve of the census, is telling.

The response to the protestations that met the disclosure was vintage Jubilee—dishonest and inept. The spokesman explained that the personal identity information would be removed to restore the anonymity of the data. If indeed the purpose was to establish registration coverage, the professional statisticians would have asked respondents to state their registration status. Moreover, for planning purposes, professional statisticians would have designed a comprehensive module that would have included other critical information such as birth registration status.

The draconian zeal with which huduma namba is being pursued—including the proposed legislation—is all the more perplexing because, since all the functions listed are those that are currently served by the national ID, the sensible thing to do would be to upgrade the national ID. Seeing as we have already had three national ID upgrades since independence, it seems to me unlikely that a fourth upgrade would have generated the heat that the huduma namba has.

In The Spirit of the Laws, Montesquieu classified political systems into three categories, namely republican, monarchical and despotic. He defined a republican system as characterised by citizenship rights. A republican system is democratic if political equality is universal, and aristocratic if the rights are a privilege that is denied to some members (e.g. slaves). In monarchical systems, the rulers have absolute authority governed by established rules. In a despotic system, the ruler is the law.

Montesquieu postulated for each system a driving principle, ethos if you like, on which its survival depends. The driving principle of a democratic republic is love of virtue— a willingness to put the public good ahead of private interests. He opined that a republican government failed to take root in England after the Civil War (1642-1651) because English society lacked the required principle, namely the love of virtue. The short-lived English republic, known as the Commonwealth of England, lasted a decade, from the beheading of Charles I in 1649 to shortly after the death Oliver Cromwell in 1659. The driving principle of monarchical systems is love of honour and the quest for higher social rank and privilege. For despotism it is fear of the ruler. The rulers are the law, and they rule by fear.

In The Spirit of the Laws, Montesquieu classified political systems into three categories, namely republican, monarchical and despotic. He defined a republican system as characterised by citizenship rights.

Identity documents are a key element of the apparatus of despotism. Our own identity card has its origins in the colonial kipande (passbook). As Juliet Atellah narrates in Toa Kitambulisho! Evolution of Registration of Persons in Kenya,

“The Kipande was worn around the neck like a dog collar. The Kipande contained the wearer’s tribe, their strengths and weaknesses and comments from his employer on his competence, therefore, determining his pay or whether or not he would be employed. The government used the Kipande to curtail freedom of Africans and monitor labour supply. It also empowered the police to stop a native anywhere and demand to be shown the document. For Africans, the Kipande was like a badge of slavery and sparked bitter protests.”

In essence, the kipande was a surveillance tool for an indentured labour system which enabled the settler economy to suppress wages. But it was not perfect. Keren Weitzberg, a migration scholar and author of We Do Not Have Borders: Greater Somalia and the Predicaments of Belonging in Kenya, makes an interesting and insightful contextual link between huduma namba and the colonial quest to better the kipande revealed in a recommendation that appears in a 1956 government document:

“Consideration should be given to the provision of a comprehensive document for Africans, as is done in the Union of South Africa and the Belgian Congo. This should incorporate Registration particulars, payment of Poll Tax, and such other papers as the African is required to carry or are envisaged for him, e.g. Domestic Service record and permit to reside in urban areas. Eligibility under the Coutts proposals for voting might also be included in the document. The document would then become of value to the holder and there would be less likelihood of its becoming lost or transferred, as is the case with the present Identity document.” 

The purpose of the huduma namba is the same as that of the “comprehensive document for Africans”—to instill in people the sense that Big Brother is watching. But despotism is not an end in itself. The raison d’être of the colonial enterprise was economic exploitation. This has not changed.

The 2001 Nobel Prize for Economics was shared by George Akerlof, Michael Spence and Joseph Stiglitz for their analysis of markets with asymmetric information. A market with asymmetric information is one where material attributes of a good or service are private information known only to the seller and not observable by the buyer; the seller has an incentive to conceal the attributes. In essence, it is a market where the buyer cannot be sure that they will get what they pay for. Asymmetric information problems are pervasive in labour and credit markets.

Identity documents are a key element of the apparatus of despotism. Our own identity card has its origins in the colonial kipande (passbook). As Juliet Atellah narrates in Toa Kitambulisho! Evolution of Registration of Persons in Kenya

A potential employer cannot tell in advance whether a worker is a performer or not, or even whether he or she is dishonest—they only get to know that after hiring the worker, and at considerable cost if they get it wrong. We know that job seekers go out of their way to misrepresent themselves, including faking qualifications and references, and concealing adverse information such as previous dismissals and criminal records. To mitigate the problem, employers go out of their way to obtain and check out references including certificates of good conduct from the police.

The original kipande, as Atellah notes, included information on the bearers “strengths and weaknesses and comments from his employer on his competence.” It does not require too much imagination to see how errant natives would have made for a severe labour market information asymmetry problem, motivating the settler economy to invent this seemingly innocuous but probably effective labour market information system.

Similarly, a potential borrower’s creditworthiness is not observable to lenders. Lenders only get to sort out good and bad borrowers from experience. A customer’s credit history is a lender’s most valuable asset. A public credit reference system, such as the Credit Reference Bureaus, is a device for mitigating credit market information asymmetry. The parallel with the kipande character reference is readily apparent.

In essence, the kipande was a surveillance tool for an indentured labour system which enabled the settler economy to suppress wages.

As a credit information system, the digital panopticon envisaged by huduma namba is priceless, and as one of the country’s leading mobile lenders, the Kenyatta family-owned Commercial Bank of Africa (CBA) is the primary beneficiary. Indeed, well before the public was informed about it, huduma namba featured prominently in a CBA-led mobile lending platform project called Wezeshafeatured in this column—that was subsequently rebranded and launched as Stawi.

Nine years ago this week, we promulgated a new constitution. Since its enactment the political and bureaucratic establishment has spared no effort to restore the unfettered discretion and apparatus of rule by fear that the new constitutional dispensation is meant to dismantle. Early in its term, the Jubilee administration sought to pass a raft of security-related legislation that would have clawed back most of the civil liberties enshrined in the Bill of Rights. Uhuru Kenyatta is on record, in one of the pre-election TV interviews, attributing his underwhelming performance to the constraints on his authority by the 2010 Constitution. He went on to express nostalgia for the old one.

In the creeping securocratisation of every sphere of the State, the incessant threats and arbitrary orders, the renewed quest for that elusive all-encompassing kipande, and even the arbitrary assignment of identity on citizens, Montesquieu would see a marked deficiency of love for virtue, the requisite principle for a democratic republic.

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Africa and Palestine: A Noble Legacy That Must Never Be Forgotten

4 min read. Today’s generation of African leaders should not deviate from that the solidarity between Africa and Palestine. Indeed, writes RAMZY BAROUD If they betray it, they betray themselves, along with the righteous struggles of their own peoples.

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Africa and Palestine: A Noble Legacy That Must Never Be Forgotten
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Europe’s “Scramble for Africa” began in earnest in 1881 but never ended. The attempt at dominating the continent using old and new strategies continues to define the Western relationship with this rich continent. This reality was very apparent when I arrived in Nairobi on June 23. Although I had come to address various Kenyan audiences at universities, public forums and the media, I had also to learn. Kenya, like the rest of Africa, is a source of inspiration for all anti-colonial liberation movements around the world. We Palestinians can learn a great deal from the Kenyan struggle.

Although African countries have fought valiant battles for their freedom against their Western colonisers, neocolonialism now defines the relationship between many independent African countries and their former occupiers. Political meddling, economic control and, at times, military interventions – as in the recent cases of Libya and Mali – point to the unfortunate reality that Africa remains, in myriad ways, hostage to Western priorities, interests and dictates.

In the infamous Berlin Conference of 1884, Western colonial regimes attempted to mediate between the various powers that were competing over Africa’s riches. It apportioned to each a share of the African continent, as if Africa were the property of the West and its white colonists. Millions of Africans died in that protracted, bloody episode unleashed by the West, which shamelessly promoted its genocidal oppression as a civilisational project.

Like most colonised peoples in the southern hemisphere, Africans fought disproportionate battles to gain their precious freedom. Here in Kenya, which became an official British colony in the 1920s, Kenya’s freedom fighters rose in rebellion against the brutality of their oppressors. Most notable among the various resistance campaigns, the Mau Mau rebellion of the 1950s remains a stark example of the courage of Kenyans and the cruelty of colonial Britain. Thousands of people were killed, wounded, disappeared or were imprisoned under the harshest of conditions.

Palestine fell under British occupation, the so-called British Mandate, around the same period that Kenya also became a British colony. Palestinians, too, fought and fell in their thousands as they employed various methods of collective resistance, including the legendary strike and rebellion of 1936. The same British killing machine that operated in Palestine and Kenya around that time, also operated, with the same degree of senseless violence, against numerous other nations around the world.

While Palestine was handed over to the Zionist movement to establish the state of Israel in May 1948, Kenya achieved its independence in December 1963.

At one of my recent talks in Nairobi, I was asked by a young participant about “Palestinian terrorism”. I told her that Palestinian fighters of today are Kenya’s Mau Mau rebels of yesteryear. That if we allow Western and Israeli propaganda to define Paestine’s national liberation discourse, then we condemn all national liberation movements throughout the southern hemisphere, including Kenya’s own freedom fighters.

We Palestinians must however shoulder part of the blame that our narrative as an oppressed, colonised and resisting nation is now misunderstood in parts of Africa.

When the Palestine Liberation Organisation committed its historical blunder by signing off Palestinian rights in Oslo in 1993, it abandoned a decades-long Palestinian discourse of resistance and liberation. Instead, it subscribed to a whole new discourse, riddled with carefully-worded language sanctioned by Washington and its European allies. Whenever Palestinians dared to deviate from their assigned role, the West would decree that they must return to the negotiating table, as the latter became a metaphor of obedience and submission.

Throughout these years, Palestinians mostly abandoned their far more meaningful alliances in Africa. Instead, they endlessly appealed to the goodwill of the West, hoping that the very colonial powers that have primarily created, sustained and armed Israel, would miraculously become more balanced and humane.

When the Palestine Liberation Organisation committed its historical blunder by signing off Palestinian rights in Oslo in 1993, it abandoned a decades-long Palestinian discourse of resistance and liberation.

However, Washington, London, Paris, Berlin, etc., remained committed to Israel and, despite occasional polite criticism of the Israeli government, continued to channel their weapons, warplanes and submarines to every Israeli government that has ruled over Palestinians for the last seven decades. Alas, while Palestinians were learning their painful lesson, betrayed repeatedly by those who had vowed to respect democracy and human rights, many African nations began seeing in Israel a possible ally. Kenya is, sadly, one of those countries.

Understanding the significance of Africa in terms of its economic and political potential, and its support for Israel at the UN General Assembly, right-wing Israeli Prime Minister Benjamin Netanyahu has launched his own “Scramble for Africa”. Netanyahu’s diplomatic conquests on the continent have been celebrated by Israeli media as “historic”, while the Palestinian leadership remains oblivious to the rapidly changing political landscape.

Kenya is one of Israel’s success stories. In November 2017, Netanyahu attended the inauguration of President Uhuru Kenyatta. Netanyahu was seen embracing Kenyatta as a dear friend and ally even as Kenyans rose in rebellion against their corrupt ruling classes. Tel Aviv had hoped that the first-ever Israel-Africa summit in Togo would usher in a complete paradigm shift in Israeli-African relations. However, the October 2017 conference never took place due to pressure by various African countries, including South Africa. There is still enough support for Palestine on the continent to defeat the Israeli stratagem. But that could change soon in favour of Israel if Palestinians and their allies do not wake up to the alarming reality.

The Palestinian leadership, intellectuals, artists and civil society ambassadors must shift their attention back to the southern hemisphere, to Africa in particular, rediscovering the untapped wealth of true, unconditional human solidarity offered by the peoples of this ever-generous continent.

Kenya is one of Israel’s success stories. In November 2017, Netanyahu attended the inauguration of President Uhuru Kenyatta. Netanyahu was seen embracing Kenyatta as a dear friend and ally even as Kenyans rose in rebellion against their corrupt ruling classes

The legendary Tanzanian freedom fighter, Mwalimu Julius Nyerere, who is also celebrated in Kenya, knew very well where his solidarity lay. “We have never hesitated in our support for the right of the people of Palestine to have their own land,” he once said, a sentiment that was repeated by the iconic South African leader Nelson Mandela, and by many other African liberation leaders. Today’s generation of African leaders should not deviate from that noble legacy. If they betray it, they betray themselves, along with the righteous struggles of their own peoples.

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