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Between the Hammer of the Markets and the Anvil of Politics: Mr Kenyatta, in Debt Distress

8 min read. Recently released Treasury figures paint a frightening picture: not only is the government broke and struggling with declining revenues, it is now spending the equivalent of 90 percent of the wage bill on interest repayments and in July, failed to remit any monies to the Counties. Interest payments on debt are eating into recurrent expenditure, threatening to grind daily government operations to a halt. The low-down: big projects – including Uhuru Kenyatta’s legacy projects, the ‘Big Four’ Agenda and the Standard Gauge Railway – are off the table. And for Jubilee, the prospect of collapse is very real. By DAVID NDII.  

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Between the Hammer of the Markets and the Anvil of Politics: Mr Kenyatta, in Debt Distress
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A few weeks ago the CS Treasury was kind enough to publish and gazette the government’s income and expenditure statement for July, the first month of the current financial year.  They are only a few numbers, but they are quite revealing.

The government opened the year with KSh 102.8 billion in the bank. It raised KSh 99 billion from taxes, and borrowed KSh 30 billion locally, that is, total inflows of KSh 129 billion during the month. How was the money spent? Debt took KSh 68 billion, just under 70 percent of the tax raised.  The counties and development budget got no money at all. The Treasury closed the month with KSh 110.7 billion, KSh 8 billion more than the opening balance.  Why did the Treasury hoard money when the counties and development projects were starved of cash? I will come back to that question shortly.

It is tempting to think that this was only the first month of the financial year, and things will look up. Not quite. Treasury puts revenue for the full financial year at KSh 1.34 trillion which translated to a KSh 112 billion monthly average, so the July revenue figure is low but not far off the mark.  The debt service budget for the year is KSh 870 billion, which works out to KSh 72.5 billion per month so the July figure of KSh 68bn is also consistent. The domestic borrowing target for the year in the budget is KSh 270 billion, which works out to KSh 23 billion per month, so the July borrowing of KSh 30 billion is well above target. 

In essence, the July statement is a good snapshot of the state of government finances. Unless revenue increases dramatically, the only way the government will be able to stay afloat is by excessive domestic borrowing.  Borrowing more than it is doing already will put paid to any chances of recovery of credit to the private sector, which stalled three years go.  And one does not have to be an economist or finance expert to appreciate that a person, business or government spending 70 percent of income to service debt is distressed.

How did we get here? Binge borrowing.

 

 

 

As at end of June 2018, our total public debt was KSh 5.2 trillion, up from KSh 1.8 trillion five years ago, an increase of KSh 3.3 trillion. Jubilee has borrowed close to double the debt it inherited. The debt has increased more or less equally between domestic and foreign borrowing.  The second is cost of debt.

Unless revenue increases dramatically, the only way the government will be able to stay afloat is by excessive domestic borrowing.  Borrowing more than it is doing already will put paid to any chances of recovery of credit to the private sector, which stalled three years go.  And one does not have to be an economist or finance expert to appreciate that a person, business or government spending 70 percent of income to service debt is distressed.

The stock of debt has increased 187 percent but debt service outlays are up 230 percent, from KSh 264 billion to KSh 870 billion. The standout figure here is foreign interest, which has increased sevenfold from KSh 14 billion to KSh 114 billion. This in turn, is explained by two factors, foreign commercial and China debt.  Five years ago, foreign commercial debt was inconsequential— we owed only one syndicated loan and that was an exception. We were not in the habit of taking on foreign commercial debt. Five years on, commercial debt is the single largest item on foreign debt accounting for 36 percent of it.  We owed China KSh 63 billion accounting for seven percent of foreign debt. Debt to China is now up to KSh 550 billion accounting for close to 30 percent.  Commercial debt and China combined account for 80 percent of the increase in foreign debt.

We, of course, expect commercial debt to be more expensive than the soft loans from bilateral and multilateral development institutions. But Chinese debt is not cheap either.  Last year’s debt service figures show that we owed China 21 percent of foreign debt, but we paid them 32 percent of the interest. Multilateral lenders account for 33 percent of the debt but only 15 percent of the interest payments (See chart). The interest rates implied by these payments, although only a rough approximation, show that China’s debt is the most expensive at 4.8 percent, followed by commercial debt at 3.9 percent, other bilateral lenders at 2.4 percent and multilateral lenders are the cheapest at 1.4 percent. But as I said, these are implied rates, not the actual ones, as they do not reflect the debt movements within the year.

Jubilee has borrowed close to double the debt it inherited. The debt has increased more or less equally between domestic and foreign borrowing. The stock of debt has increased 187 percent but debt service outlays are up 230 percent, from KSh 264 billion to KSh 870 billion. The standout figure here is foreign interest, which has increased seven fold from KSh 14 billion to KSh 114 billion. This in turn, is explained by two factors, foreign commercial and China debt.

Different components of debt affect the budget differently. Interest comes out of the recurrent budget, and in effect from revenue. Working with a realistic figure of KSh 1.4 trillion revenue, the interest burden this year takes 29 percent of revenue up from 14 percent five years ago. In fact, interest cost is now equivalent to 90 percent of the wage bill as compared to 40 percent five years ago.  Interest on debt is crowding out the Operations and Maintenance (O&M) budget. O&M is what makes government work. It is the money that enables the police to move around, and health facilities to treat patients, government laboratories to test food and drugs and so on.

On this trajectory, it will not take long for the recurrent budget to consist of only salaries and interest

The foreign debt consists of market debt (the Eurobonds), syndicated loans and term loans.

Eurobonds and syndicated loans are similar. The key difference is that syndicated loans are short-term notes, typically sold in two-year cycles, which banks typically hold to maturity. Amortization of bonds and syndicated loans (i.e. repayment of principal) is financed by new market debt, and is known as re-financing. The principal on bank debt has to be repaid. The key concern with market debt is the refinancing risk. The government has to be able to sell new bonds as old ones mature.  The market conditions can change, or the investors risk-perceptions can change to the extent that the government is unable to sell enough bonds in which case it defaults. Alternately, it may have to offer such high returns that sooner or later, it cannot afford the interest, which amounts to the same thing— default.

Which brings me to the  KSh102 billion shilling cash hoard— the money that government had but did not spend in July. This is half the money that the government raised in the second Eurobond six months ago. It was not spent because it was raised to refinance the maturing debt, KSh 250 billion this year.  The balance has to be raised. 

The key concern with market debt is the refinancing risk. The government has to be able to sell new bonds as old ones mature.  The market conditions can change, or the investors risk-perceptions can change to the extent that the government is unable to sell enough bonds in which case it defaults. Alternately, it may have to offer such high returns that sooner or later, it cannot afford the interest, which amounts to the same thing— default.

The preferred option is to float another Eurobond, preferably a long dated one that does not come up for refinancing soon. The alternative is more syndicated loans which will cost more and come up for refinancing in two years. The market environment that they will be doing this is not favourable.  When we raised the first Eurobond in 2014, the market was awash with “Quantitative Easing” (QE) money the US Federal Reserve and European Central Bank were “printing” in order to shore up their banking systems following the 2007 financial crisis, as well as “petrodollars” accumulated by oil exporters—recall that oil was selling at over $100 a barrel). The returns on financial assets in advanced markets were close to zero or negative.

Money managers were looking for higher returns wherever they could find them. Emerging markets were growing fast, and news out of Africa was dominated by the “Africa Rising” story.

Zambia was one of the first countries to jump onto the Eurobond bandwagon.  Zambia floated a debut bond, looking to borrow US$500 million. It was heavily oversubscribed, attracting offers in excess of US$ 12 billion. Zambia accepted $750 million.  Kenya’s stated objective was to issue a US$500 million “benchmarking” bond and use the proceeds to offset a syndicated loan that was due. How this turned to a US$ 2.8 billion is a story for another day— where it went is already the stuff of legend.

Our political class seems not to have understood the paradigm shift that becoming a sovereign borrower in international markets entails. Going to the market is analogous to a business going public. When a company is private, its affairs are dealt with behind closed doors. The only way unhappy investors can express their views is with their voices, or voting out directors during the annual general meetings, and this is usually quite difficult as typically, the insiders usually have more shares than outsiders. When a company gets listed on the stock exchange, investors don’t have to wait for AGMs. They communicate with the company every day by either buying or dumping the stock. Facebook’s share price fell 11 percent (US$134 billion) in the wake of the Cambridge Analytica scandal—and that’s all the shareholders needed to say.   

Prior to “listing” in the international sovereign bond market, our financial affairs were discussed behind closed doors between the government and its external financiers led by the IMF, and enforced through “conditionalities.” Sanctions for non-performance were flexible and negotiable, and influenced by political considerations. We call this programme discipline.  After “listing”, the bond yields work the same way as share price, punishing or rewarding the country for good or bad economic management as the case maybe. We call this market discipline. The IMF continues to have a role, but a different one— providing a form of credit enhancement to the markets.

Our political class seems not to have understood the paradigm shift that becoming a sovereign borrower in international markets entails. Going to the market is analogous to a business going public. When a company is private, its affairs are dealt with behind closed doors…When a company gets listed on the stock exchange, investors don’t have to wait for AGMs. They communicate with the company every day by either buying or dumping the stock.

But Zambia’s government does not seem to have gotten that memo. Sometime ago it organized national prayers for the Kwacha, hardly a confidence building measure.  A quarrelsome negotiation with the IMF broke down in February. Last week, the government kicked the IMF out of the country for “spreading negative talk”.  The markets responded accordingly. Zambia’s bonds are trading at a bigger discount than Mozambique which has already defaulted.

As of last week, Zambia’s bonds were trading at a yield of 15 percent.  An increase in the yield corresponds to a decline in value of a bond, and vice versa. Zambia’s debut Eurobond carries a coupon of 5.375%, and was issued at a yield at 5.625%, meaning that investors paid $93.50 for $100 of face value.  A yield of 15 percent means that the bond is now trading at $36, a 60 percent fall in value.  As summed up by an investor in Zambian Eurobonds: “It’s not a place that investors would rush into even if emerging markets become popular again. People will be cautious about Zambia until it produces better numbers or gets an IMF deal.”

Why our Treasury mandarins have been bending over backwards for a deal with the IMF is now readily apparent.  IMF deal or no-deal, the government will have to produce better numbers. Healthy foreign exchange reserves are good, but reserves don’t service debt; revenues do. The markets want to see fiscal consolidation. The markets do not send missions. They dump your bonds. 

The low-down: Mega projects are off the table, as is the “Big Four.”  The SGR is not going past Naivasha anytime soon. The only order of business is crisis management – that is, if the government survives. Looking around, the odds are not good.  The Greek crisis consumed five governments. Argentina went through five presidents in two weeks following imposition of the “corralito” (small enclosure) austerity measures in December 2001. The EPRDF autocracy in Ethiopia, erstwhile poster child of Africa’s new breed of authoritarian developmental regimes, did not run out of bullets or prisons. It ran out of money, and unravelled. Sri Lanka, Pakistan and Malaysia have ejected the mega-project mega-corruption governments that corralled them into China’s debt trap. Earlier this week Sudan’s President Omar al Bashir dissolved his government and appointed a new prime minister tasked to form a leaner government “as part of austerity measures to tackle economic difficulties.”

Mega projects are off the table, as is the “Big Four.”  The SGR is not going past Naivasha anytime soon. The only order of business is crisis management – that is, if the government survives. Looking around, the odds are not good.  The Greek crisis consumed five governments. Argentina went through five presidents in two weeks following the imposition of austerity measures in December 2001. The EPRDF autocracy in Ethiopia, erstwhile poster child of Africa’s new breed of authoritarian developmental regimes, did not run out of bullets or prisons. It ran out of money, and unravelled…It is fair to say that Mr. Kenyatta is now caught between the hammer of the markets, and the anvil of politics.

It is fair to say that Mr. Kenyatta is now caught between the hammer of the markets, and the anvil of politics. That comes with the territory.

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

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An IMF Straightjacket Is a Fitting End to Jubilee’s Reign of Hubris, Blunder, Plunder, Squander and Abracadabra

8 min read. Six years of fiscal profligacy have finally caught up with the Jubilee administration. Money is short, it now admits, and the begging bowl is out. The IMF has been in town and will be back again. But the cure could be worse than the disease as Jubilee prepares to don an IMF straightjacket for the remainder of its term.

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An IMF Straightjacket Is a Fitting End to the Jubilee’s Reign of Hubris, Blunder, Plunder, Squander and Abracadabra
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The economic management space has become rather lively of late. A few weeks ago, the National Treasury published an updated national debt register that spooked quite a few people. A couple of days later, it circulated a draft debt policy for comments in whose wake followed a stern memo from State House to all state agencies. The subject of the memo was austerity measures and the following three directives were addressed to state corporations: “(a) to immediately remit the entirety of identified surplus funds to the National Treasury; (b) to assign (transfer ownership) of all the Treasury Bills/Bonds currently held in the name/or for the benefit of the State Corporations/SAGAs to The National Treasury, including any accruing interest by Friday, 15 November 2018; (c) to remit the entirety of Appropriations-in-Aid (AiA) revenues to The National Treasury”

SAGAs stands for Semi-Autonomous Government Agencies. Appropriations-in-Aid is the money that government agencies raise from the public, usually in fees; court fines, licences and payments for services. This money is usually factored into their budgets—for instance, if an agency’s approved budget is Sh1 billion and it expects to collect Sh200 million, the Exchequer will budget to fund the balance of Sh800 million.

It turns out that this memo was the agenda of the event at which Uhuru Kenyatta made his “why are Kenyans broke?” faux pas. Evidently, he had summoned the state corporation bosses to read them the riot act on the directive. Hot on the heels of the State House meeting, it was reported that Parliament had passed an amendment to the Public Financial Management Act requiring that all public agencies centralise their banking with the Central Bank of Kenya.

Why the sudden zeal?

The answer may be found in a press release issued by the IMF on 22 November disclosing that the Fund had concluded a visit to the country to review recent economic developments. It also disclosed that another visit was planned for early next year “to hold discussions on a new precautionary stand-by facility.” A precautionary standby facility is a credit line that IMF member countries can draw on in the event of a shock that affects a country’s ability to meet its external payment obligations, for example, a petroleum price shock, or a global financial crisis of such severity that a country’s foreign exchange resources would not be sufficient to cover both imports and debt servicing.

The previous standby facility, which was due to expire in March 2018, was suspended in the run-up to the 2017 general election because of non-compliance. In early 2018, the administration sought and secured a six-month grace period during which it would negotiate a new one (with no money available during the grace period as the government was not compliant). The grace period was to expire in September, but in August the talks collapsed. Some of the conditions that the IMF sought were the removal of both the interest rate cap and the controversial VAT on fuel. The exchange rate policy may have been another sticking point, as the IMF claimed that the government was artificially propping up the shilling, a contention that the Central Bank has vigorously contested.

It turns out then that the sudden flurry of activity may be all about impressing the IMF. Indeed, the centralisation of government banking—known as the Treasury Single Account (TSA)—is one of the IMF’s latest fads, And just as with IFMIS before it, TSA is supposed to be the silver bullet that will put an end to financial control woes.

There are at least two other developments that are consistent with the sort of demands that we can expect from the IMF.

First, the government has started to make wage bill noises again. The acting Treasury Cabinet Secretary was heard to lament at a conference convened to discuss the wage bill that it is consuming 48 per cent of revenue, way above the maximum of 35 per cent stipulated in the Public Finance Management Act. This appears to be a case of giving a dog a bad name. The total wage bill for the entire public sector including commercial enterprises was Sh600 billion, about 40 per cent of national revenue. But even this is misleading because commercial parastatals (Kenya Pipeline, Kenya Airports Authority, Central Bank, etc.) do not depend on government revenue. The consolidated public sector wage bill as a percentage of consolidated revenues is in the order of 34 per cent. This is not the first time that the government is cooking the wage bill figures.

It has also been reported that Kenya Power has applied for a 20 per cent tariff increase, in part to cover for the national government subsidy for low-income consumers. The IMF takes a dim view of subsidies of this kind and although this has not come into the public domain, I would expect the IMF to similarly take a dim view of the operational subsidy made to the SGR, which is even less defensible than the tariff subsidy.

Given that the same Jubilee administration that found IMF conditions unpalatable last year now appears to be bending over backwards to secure a deal, we are compelled to ask: what has changed?

Money is short. This year the government plans to borrow Sh700 billion. It plans to borrow Sh450 billion domestically, and Sh250 billion from foreign sources. Soft loans from development lenders are budgeted at Sh50 billion, leaving the balance of Sh200 billion to be sourced from commercial lenders, either by way of issuing sovereign bonds (Eurobonds) or by arranging syndicated bank loans. The Sh200 billion foreign borrowing is “net”, that is, over and above what the government will borrow to pay the principal installments on foreign bank loans (e.g. the Exim Bank of China SGR loans), and to refinance or roll-over maturing syndicated loans (thankfully, there are no Eurobonds maturing this year) amounting to Sh131 billion, bringing the total borrowing to Sh331 billion. As a rule, interest payments are paid out of revenue while the government aims to pay the principal by rolling-over or refinancing.

The government has access to three potential sources of this kind of money: budget support (also known as programme loans, issued by multilateral institutions, including the IMF itself), Eurobonds and syndicated loans. Of the three, the multilateral lenders are the cheapest, but they take long, come with conditions and usually require that an IMF programme be in place (although last year the World Bank did extend a programme loan without one).

Eurobonds are the next best option. The Government does not need an IMF deal to go to the sovereign bond market. Indeed, it did not have an IMF programme in place during its previous two bond issues: the debut issue in 2014 and the second one in February 2018. But circumstances do change. With as many as 20 African countries either already in or at high risk of debt distress, it may be that the market has signaled to the government that an IMF stand-by would be “an added advantage.” Indeed, the IMF itself has downgraded Kenya’s debt distress risk from low to medium.

Multilateral lenders are the cheapest, but they take long, come with conditions and usually require that an IMF programme be in place

For what it’s worth, the Jubilee administration is finally owning up to the fact that its finances are in a worse state than it has previously cared to admit. The new narrative heaps the blame on the now-suspended Treasury officials, Cabinet Secretary Rotich and Permanent Secretary Kamau Thugge. I was taken aback recently when a cabinet secretary who has a strong background in finance remarked that they were not aware how bad things were until Rotich and Thugge were booted out, while the central bank governor has been quoted blaming Rotich’s rosy revenue forecasts—which he has characterised as “abracadabra”—for encouraging the government to pile up debt. This is disingenuous because that is not how it is done. The borrowing is decided politically first, and then they cook the revenue numbers to show that we can afford it. The Governor has been part of the racket. It is also mean to mock one’s colleagues when they are in trouble, not to mention that the Central Bank has been deeply implicated in the Eurobond fraud cover-up under his watch. The Governor’s turn to be thrown under the bus may yet come, but I digress.

What is now inescapable is that six years of the most egregious fiscal profligacy has caught up with us. As this column argued a fortnight ago, the government is now hostage to fate—it can kick the can down the road and hope and pray that the crunch does not come this side of the election, in which case an IMF facility seems like a good cushion to have. But it comes with a health warning: the cure may be worse than the disease.

A couple of weeks ago, Lebanese people took to the streets and brought down the government in what has been dubbed the Whatsapp revolution. Those of us who are a bit long in the tooth remember Beirut as the byword for urban warfare. Lebanon’s sectarian warfare ended when its fractious and venal political elite worked out an inclusive eating arrangement of the kind that our equally venal eating chiefs are now crafting with handshakes, bridge building and whatnot. With no agencies of restraint, the chiefs finished the tax money and progressed to eating debt, chomping their way into a 150+ per cent of GDP debt (third highest in world after Japan and Greece) that is consuming half the government revenue in interest payments alone, and causing economic stagnation.

What is now inescapable is that six years of the most egregious fiscal profligacy has caught up with us

On its knees, the government passed an austerity budget in July. The austerity budget coincided with an IMF mission which recommended “a credible medium term fiscal plan aiming for a substantial and sustained primary fiscal surplus.” Primary fiscal balance is the difference between government revenue and recurrent expenditure excluding interest. It is achieved by raising more taxes and cutting wages and O&M (operations & maintenance) spending. These cuts usually fall most heavily on social spending.

As the government set about imposing more austerity and raising taxes, it unveiled a tax on voice-over-IP (VOIP) calls in October, the idea being to protect tax revenue from regular voice calls. It was the last straw. Evidently, the eating chiefs had not realised that this was the social lifeline for the youth. The people took to the streets. Two weeks later, the government fell. Lebanon is now in full financial meltdown. The IMF is nowhere to be seen.

Mozambique had an IMF programme in place when it ran into debt payment difficulties that forced the government to disclose more than a billion dollars of secret “Tuna bonds” debt. Now, the purpose of an IMF programme is to help a country in payment difficulties, but because the secret debt violated the terms of the IMF deal, instead of bailing Mozambique out, the IMF led the other donors in suspending aid to the country. Instead of helping put out the fire, the fire brigade decided that teaching the culprits a lesson was more important than saving the victims. Mozambique’s economy went into free fall, where it remains. This is the very same IMF that cooked our books to cover up the Eurobond theft.

The borrowing is decided politically first, and then they cook the revenue numbers to show that we can afford it

What alternative does Uhuru Kenyatta have? In economics, we talk of the orthodox and heterodox approaches to dealing with a sovereign financial crisis.

The orthodox approach is a formulaic one-size-fits-all approach which adheres to one economic school of thought known as neoclassical economics. Its prescriptions are fiscal austerity and doctrinaire free market ideology. It is, as is readily apparent, the IMF prescription. Heterodox is another name for unorthodox, and refers to a pragmatic strategy that draws from the entire spectrum of economic ideas from Austrian to Marxist political economy and everything in between.

The dilemma governments have to face is that the orthodox cure is sometimes worse than the disease, but it’s the one with the money behind it. Heterodox approaches work better, but they require a resolve and an imagination that many governments are unable to muster, especially when they have their backs against the wall.

Can the Jubilee administration muster the resolve for a heterodox response? Doubtful.

Four years ago I contemplated the Jubilee administration ending precisely where it is headed, to wit: “I cannot think of a more fitting epitaph for the Jubilee administration’s reign of hubris and blunder, plunder and squander, than the rest of the term spent savouring copious helpings of humble pie in an IMF straightjacket. Choices do have consequences. Sobering.

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“We Have Failed Kenyans”: Lamentations for a Broken Nation

7 min read. When a seasoned Senator tells young people not to look to the National Assembly, the Executive or the Judiciary for answers to the spiraling debt, the closure of businesses, the extra-judicial killings of young people and the run-away unemployment, where else should they look?

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“We Have Failed Kenyan’s”: Lamentations for a Broken Nation
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I rarely follow the theatrics of Gatundu Member of Parliament Moses Kuria. But I was struck by his recent remarks – widely circulated in the press – that “as Parliament we have failed. Mea culpa. As a member of parliament and a member of the budget committee, we have failed Kenyans . . . We have told Kenyans this romantic story that all is well . . . I want to say that we have lied to Kenyans, first of all. And the second thing is that we have failed in our oversight responsibility . . . .”

One might have dismissed Moses Kuria as that maverick known for saying ridiculous things. But then, shortly after this, there was another admission of failure from another member of the National Assembly. This time it was Senator James Orengo in response to a challenge from the youth attending an event celebrating Prof. Yash Pal Ghai. Mr. Happy Olal of the Dandora Social Justice Centre had put Senator Orengo on the spot for handing the Executive a blank check and failing to play their oversight role on the debt ceiling, unemployment, extra-judicial killings of the youth, and all the many other ills plaguing Kenyans.

“I wanted to appeal here that sometimes we look for solutions where there are no solutions. Like when you are talking about parliament and looking for a solution in parliament. I think you are absolutely mistaken. . . .”, said Senator Orengo.

I can hardly recall a time in our political history when political stalwarts such as Senator Orengo openly admitted to us that they had failed in their legislative and oversight responsibilities. This is the country that produced firebrands like George Anyona, Chelagat Mutai, Martin Shikuku, Jean-Marie Seroney, and JM Kariuki during the repressive regime of Jomo Kenyatta. And in the infamous Nyayo era, Orengo was one of the “Seven Bearded Sisters” (along with Abuya Abuya, Chelagat Mutai, Onyango Midika, Mwashengu wa Mwachofi, Lawrence Sifuna, Chibule wa Tsuma, and Koigi wa Wamwere), who gave Daniel Arap Moi’s regime sleepless nghts.

It is the members of this very same National Assembly that had defied single party autocracy and made the regime quiver with rage whenever they spoke, while the public cheered them on knowing that they were the “people’s watchman”. They braved detention without trial, police harassment and economic sabotage to play their oversight role. And yet here was one of the “Bearded Sisters” now telling young people to look elsewhere for leadership – not to him or to the National Assembly, extinguishing any little glimmer of hope among the youth that those who had fought for the political and socio-economic rights of the people would provide leadership in the struggle for social justice.

This blow might have been less painful had the country not been witnessing sustained assaults on another arm of government – the Judiciary. On 4 November, in a widely televised statement, Chief Justice David Maraga lamented efforts to undermine the judiciary, including through budget cuts. In an unprecedented hour-long speech, the Chief Justice described the ways in which powerful Cabinet Secretaries and Permanent Secretaries were trying to control the Judiciary.

Kumbe hii nchi iko na wenyewe” (so this country has its owners) . . . People are trying to cripple the Judiciary . . . They want to control the Judiciary. They want to make the Judiciary a puppet”, said the Chief Justice.

Those were profound words coming from the man who made history by nullifying the results of the election of the incumbent president, triggering a return to the ballot. For those who know the Chief Justice well, it took a lot of courage to speak up and defend the judiciary. What was not lost in his long-winded speech was that he was fed up of trying to appease the Executive and yet having his judges attacked and the Judiciary financially crippled.

And yet here was one of the “Bearded Sisters” now telling young people to look elsewhere for leadership – not to him or to the National Assembly

Nothing infuriates a descendant of Mogusii more than open disrespect and it was clear that he was incensed when the Chief Justice deviated from his prepared speech to denounce the abuse endured by his office. His conclusion that he would not go to anybody to beg for money for the judiciary evoked a Kisii saying which, loosely translated, means, “I don’t eat at yours”. It was a statement of defiance. It is no wonder that the budget cuts were reversed a few days later.

But the onslaught on the judiciary is unrelenting. There are moves to remove both the Chief Justice and his Deputy from office. The promised “revisiting” is taking various forms ranging from budget cuts to personal attacks against judges. Further constraining the functioning of the Judiciary, the President has refused to gazette newly appointed or promoted judges. This confirms the statement from the Chief Justice that the Executive is seeking to make the judiciary its puppet. With an Executive that is out of touch with the people and a legislature that has been castrated by the Executive, the Judiciary remains our last line of defence. But for how long?

The Executive has openly shown its inability to lead the country. There are endless speeches from the President asking us, “jameni mnataka nifanye nini?” (surely, what do you want me to do?). This has become the standard refrain from the President, whether in response to the rampant corruption or to questions on delivery of basic services. Lucia Ayela, a young woman living in Nairobi, very eloquently expressed the frustration of many In video clips that have since gone viral.

“Sir, do you even live in this country? . . . are you even aware of what is going on in your government . . . you do not relate to your subjects [sic] at all”, Ms. Ayela lamented.

Ms. Ayela joins a number of Kenyans who have been responding to the President’s questions to his cabinet about why the country is broke. In an interesting twist, these questions seem to be emerging even from media houses reportedly owned by the Kenyatta family. In her strongly worded Punchline in October, Ms. Ann Kiguta castigated the President for being uninspiring and claiming to be tired of his job. She reminded him that he had asked for the job (three times) and he needed to roll up his sleeves and perform it as energetically as when he was going around the country seeking the presidency. This was followed by an even more hard-hitting piece by Ms. Yvonne Okwara-Matole on Citizen TV. The courage we are seeing from the men and women who are directly calling the Executive to order should not be taken for granted. As we know all too well, in our country, such courage can cost careers and, sometimes, lives.

With an Executive that is out of touch with the people and a legislature that has been castrated by the Executive, the Judiciary remains our last line of defence

Observing how the Executive, the National Assembly, county governments and the Judiciary have been operating over the past two years, it is evident that they have, for various reasons, failed to live up to the spirit and the letter of the Constitution. Chapter one of the Constitution bestows “all sovereign power” on the people of Kenya. The organs of State have power vested in them only so that they may act on behalf of the people. In the event that all these organs fail the people, what recourse do we have?

When a seasoned Senator tells young people not to look to the National Assembly, the Executive or the Judiciary for answers to the spiraling debt, the closure of businesses, the extra-judicial killings of young people and the run-away unemployment, where else should they look? When the organs delegated to exercise the will of the people, prove their inability to carry out their mandate, what recourse do the people have? Well, one could think of three possible options for bringing about political change before the 2022 General Election.

First, and as the Katiba Institute has been educating us, we have the option of firing our members of parliament. The Constitution (Article 104) and the Elections Act 2011, provide for a procedure for recalling Members of the National Assembly. There has been no successful bid so far, although there are reports of a petition filed against the Member of Parliament for Molo, Francis Kuria Kimani. In any case, if discontent is with the entire legislature, there seems to be no easy path towards their mass recall.

In the same manner, although article 145 of the Constitution provides for the impeachment of a president, it requires at least a “third of all members” moving a motion for the impeachment, “supported by at least two-thirds of all the members of the National Assembly.” As the ongoing impeachment process of the President of the United States has demonstrated, loyalty to the party tramps fidelity to the Constitution. With our National Assembly completely in the control of the Executive, impeachment is not a word you will be hearing in the corridors of parliament any time soon.

Second, the Executive and the National Assembly, having recognised that they have failed to fulfill their social contract with the voters, could resign. Prime Minister Hailemariam Desalegn of Ethiopia set a precedent in the region when he resigned in February after coming to terms with his inability to govern following violent crackdowns on protesters and a spiraling economy. However, there are no signs at all that this is an option that the Kenyan government is even taking under its considering.

Rather than seeking to renegotiate the broken social contract, the President is aggressively pushing for a change to the Constitution in what some have called a Ka-Putin attempt to return to power in an as yet to be created position of prime minister, at the end of his current term. Some political leaders, including Hon. Martha Karua, have warned the President not to attempt any such manoeuvre. The next few weeks will be critical in evaluating how far he intends to go in his bid to remain in power.

It would seem that the President is deaf to the cries of voters bewailing unemployment, increasing debt, business closures, lack of affordable health care and education, among a myriad grievances. The Building Bridges Initiative (BBI) that he has crafted together with his elder brother Rt. Hon. Raila Odinga, is mere horse trading between elites, an initiative meant to help an illegitimate President to govern, and an opposition leader who has betrayed millions of his supporters by turning his back on electoral justice, to save face

Third and last, the people – who hold sovereign power – could organise themselves to usher in political change. As David Ndii argues, this change could either be through internal realignment as was the case in Ethiopia or through popular mobilisation leading to the toppling of the regime Sudan-style. Whichever mode of change the people choose to use to exercise their sovereign power, it is clear that, like in Sudan and Ethiopia, the young people will have a critical role to play.

The Building Bridges Initiative that Uhuru has crafted together with his elder brother Odinga, is mere horse-trading between elites, an initiative meant to help an illegitimate President to govern, and an opposition leader who has betrayed millions of his supporters, to save face

There are already young people like Happy Olal of the Dandora Social Justice Center, who are showing the power of community organising. Phenomenal women like Jerotich Seii and the Energy 6 (E6) in the #SwitchoffKPLC campaign who are leading the charge. Small-scale traders in Mombasa holding “Black Monday” protests to raise their concerns on the effect of the Standard Railway Gauge (SGR) on their businesses. Students braving police brutality to demonstrate against insecurity around their campuses, very likely caused by the tough economic conditions facing workers who have been laid off, and graduates without jobs.

The Executive and the Legislature have an opportunity to listen to these diverse voices calling for change across the country. Rather than impose the BBI report and a referendum on Kenyans, they need to find ways of addressing the grievances from across the country. Signs that a people is demanding to exercise its sovereign power are apparent all over social media and it is clear that Kenya is a time bomb waiting only for a trigger to explode. It is in our power to either choose a peaceful path or to choose a painful and chaotic one. Time is not on our side.

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BBI: From “We the People” to “Fix the People”

5 min read. The Building Bridges Initiative is an ill-disguised attempt at social engineering, a “fix the people” approach to Kenya’s problems designed to veil ours eyes from the massive looting and the privatisation of public institutions. It is meant to dissuade us from expecting social and public solutions to our challenges as a country and to instead shoulder the blame and provide for ourselves the solutions to our problems. It is a declaration of war by the political class against the people of Kenya.

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BBI: From "We the People" to "Fix the People"
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On September 23, Kenyans began their week with the sad news that six children had lost their lives at Precious Talents, a private school in Ngando, a low-income neighborhood of Nairobi, following the collapse of one of the school’s poorly constructed buildings. Our belligerent Education Cabinet Secretary Prof. George Magoha rushed to the scene and, after inspecting the disaster and reading a written statement, fielded questions from the press.

In response to the first question about the provision of education for children from poor neighborhoods, the CS insinuated that the children had died because their parents had chosen not to take them to the public schools in the area. He said: “It comes to a matter of choice for parents. I am duly advised that the nearest public primary school from here is only two kilometers away. But then we are a democratic country and the role of the government must be restricted to ensuring that the . . . public primary schools available are safe enough.”

Magoha’s statement bares the soul and reveals the ideology of the Jubilee administration that is driving Kenya towards collapse. Statements from the government and those pundits that slavishly support it often trace the source of any disaster to the public—especially the victims—and to democracy. Government insiders and supporters portray the state as blameless, and fault Kenyans for wanting to participate democratically in the making of decisions that affect them, because by doing so, Kenyans put delays on the good work of the government. “We have good policies,” the government and business people say, “the problem is implementation.” An insider quoted by David Ndii demonstrates the arrogance and the condescending attitude of the people in government, saying that the president’s view of the public is that “commoners will always be complaining of something.”

The implicit message behind such rhetoric is that nothing can be resolved socially or politically any more. After all, if every social challenge we face is caused by us, the people, then the response to the challenge must be to fix the behaviour, the values and the soul of the people. This “fix the people” approach to social problems is the very essence of the Building Bridges Initiative (BBI) document released by the government this week.

Bridge over Troubled People

This is not the first time that the state has used the “troubled people” rhetoric. Former President Moi often said that in order to save Kenyans who were too tribalistic for their own good he could not allow multi-party democracy to take root. This theme of a troubled people goes as far back as colonial rule, when British missionaries and settlers purported to have come to save us from ignorance, poverty, disease and backward cultures, a policy which the first president Jomo Kenyatta embraced and perpetuated with the only difference that he kept culture off our supposed list of shortcomings.

This “fix the people” approach to social problems is the very essence of the  Building Bridges Initiative document released by the government this week

What is different this time is that we are ruled by the most obviously incompetent regime to ever occupy State House. These days, Kenyans first gauge the president’s sobriety before they weigh what he has to say. The regime’s incompetence has been accompanied by massive looting of public coffers, and massive privatisation of public institutions and social services, the latest victim of which is Kenyatta National Hospital. For such an economic mess to be acceptable to the Kenyan public, it must be matched by a corresponding rhetoric.

And so, just like the Reaganomics that produced the portrait of the dysfunctional black family—with the absent black father and the “welfare queen” mother— politicians have pointed to Kenyan families and individuals as the cause of Kenya’s political problems.

These attacks on the family are driven by the need of the political elite to turn the public’s attention away from expecting social and public solutions to the challenges we face, and instead suggest private fixes at the level of our families or our values. If only citizens can manage themselves and their families, the logic goes, everything else will sort itself out.

That is why the BBI, the latest offering from Kenya’s political class in its endeavours to curtail fundamental social change, is largely a declaration of war by the political class against the people of Kenya. The document accuses Kenyans of not knowing their history, of lacking ethical sensibilities, and of not knowing how to raise their children.

Based on its own narrow diagnosis of Kenya’s social problems, the political class offers an even scarier remedy: intervene in our knowledge, our values and our family lives. BBI proposes that the state become the driver of historical memory and culture by providing a “thorough and definitive” history of Kenya supervised by a presidentially appointed “Official Historian.”

If only citizens can manage themselves and their families, the logic goes, everything else will sort itself out

​On the cultural front, the document proposes the development of a syllabus by the government for use in religious and cultural initiation ceremonies, and to ape the church marriage programmes by providing its own programmes to “strengthen parenting.” In education, the document seeks to partner with the private sector to create a “national volunteer network” that would play the same role as Teach For America, an initiative that has been accused of undermining public education in the US.

The process of this social engineering has already started with the competency-based curriculum, where the state has used children to manipulate Kenyan parents into accepting the urban, male-led, monogamous, nuclear family as the normative unit of the Kenyan state. Similarly, the control on the arts and humanities is nothing new. Using the deceptive idea of “talent,” the new education system has relegated the arts to the rubbish heap by tying this discipline to commercialisation and confining it to a narrow pathway. Recently, parliament reinforced this view of the arts by passing a Sessional paper that proposes to pay arts and humanities lecturers less than their counterparts in the sciences.

All these proposals are typical of governmentality. Rather than use violence to control the people, governmentality seeks to bend our ideas, our identity and our emotions to the service of the state. As Stephen J. Ball puts it, governmentality now seeks not to change what we do, but our motivation for doing it. The goal is to change our soul and to change who we are. That means that the interest of the political elite is not, as it claims, to change the status quo. The goal is to change the people to accept the status quo as not just natural, but also as moral, if not godly.

And we must understand that attempting to change the people is an act of desperation. Muigai Kenyatta is not just incompetent; he has lacked legitimacy ever since he became president in 2013, and the Kenyan people are getting tired of propping up a family that has nothing to show for having foisted two presidents upon Kenyans except the wealth it has amassed through power, which power it first acquired by an accident of history.

The goal is to change the people to accept the status quo as not just natural, but also as moral, if not godly.

The political elite, led by Raila Odinga, are hoping to use the fictitious numerical superiority of the Kikuyu, and so they are all tiptoeing around Kenyatta in the hope of succeeding him by inheriting his ethnic voter base.

The political elite and their supporting intellectuals are united in trying to save a colonial model of state that is already collapsing around the world, and so they are grasping at straws to manipulate Kenyans into pledging allegiance to them.

But the ruling elite cannot stop the tide that is already building from Chile to Lebanon to Algeria to the UK and the US; Kenyan people are part of that tide. Instead, they are busy building a “blame the people” bridge to each other and their families, hoping that the tide of the Kenyan people will flow under the political elite and leave the status quo intact.

Unfortunately for them, the tides are no respecters of bridges and eventually wash ill-constructed ones away.

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