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Shopping Mall Economics: A Note on the Value of the Kenya Shilling

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What does a recent spat between the IMF and the Central Bank’s Prof Patrick Njoroge, himself a veteran of the Fund, tell us about the state of the Kenya shilling? By DAVID NDII.

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Shopping Mall Economics: A Note on the Value of the Kenya Shilling
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Is the Kenya shilling overvalued or not? According to the IMF it is currently overvalued by 17 percent. In an unusually combative response to his former employer the Central Bank governor says that is only off-kilter by 5 percent and accuses the IMF of making Kenya a “guinea pig in its new approach.” The offensive claim, contained in the IMF’s latest report on the country dated October 2018, states as follows:

“The EBA-lite methodology for the exchange rate suggests that the external position is weaker than fundamentals. The current account approach shows that the current account deficit (both actual and cyclically adjusted) are above the norm (the CA gap is -2.5 percent), suggesting an overvaluation of about 17.5 percent of the real exchange rate. This can only marginally be explained by the policy gap. The REER approach also shows a similar-size of overvaluation, equivalent to about 18.0 percent. Again, the policy gap is marginal. Given the continued appreciation of the real exchange rate, the external position is assessed to be weaker than fundamentals. Regarding the last approach, the external sustainability approach, it was not possible to use it as the international investment position data is not yet produced by the authorities.”

This needs a fair amount of disambiguation. EBA is a needless acronym that stands for external balance approach for exchange rate assessment. The methodology is described in an IMF paper published in 2013 as an update of a previous methodology known as CGER. CGER is another needless acronym for consultative group for exchange rate assessment. This EBA thing appears to be what the CBK governor is referring to as a new approach.

The methodological spat is a red herring. Economic models are tools, not oracles. What we have here is workmen quarrelling over tools. Our top three economic mandarins are former IMF staffers. Surely, as former colleagues, they can sit together with their colleagues and their models and converge on an assessment as to whether the shilling is overvalued or not?

The IMF refers to three methodologies: the Real Effective Exchange Rate (REER), the current account and external sustainability approach. Of the three, the REER is the most intuitively understandable and also the one for which we have data. But what is this animal the REER?

The methodological spat is a red herring. Economic models are tools, not oracles. What we have here is workmen quarrelling over tools. Our top three economic mandarins are former IMF staffers. Surely, they can sit together with their colleagues and their models and converge on an assessment as to whether the shilling is overvalued or not?

Suppose bananas are retailing at KSh 100 shillings a bunch in Kenya. The Kenya/Uganda shilling exchange rate is one to ten. At this exchange rate and banana price, 20 percent of bananas are coming from Uganda. Suppose price of Kenyan bananas goes up to KSh 125 a bunch (e.g. because of increase in taxes), and exchange rate remains the same. Ugandans can continue to sell bananas in Kenya profitably at KSh 100 while many Kenyan producers cannot. In fact, Ugandans are likely to hike their price to let us say KSh.110 making Kenya an even more profitable market than their home market. Uganda bananas will flood the market and put Kenyan producers who are not profitable at Ksh. 110 out of the banana business. For the market to remain at the old equilibrium (i.e. 20/80 Uganda/Kenya market share) requires Kenya shilling to fetch USh. 8.00 so that to get USh. 1000 as before, the Ugandans will also have to sell their bananas at KSh125.

Its readily apparent that if our domestic prices go up faster than those of our trading partners, then foreign goods will keep becoming cheaper. But you cannot tell by just looking at the dollar shilling exchange rate. We need to factor in the price movements with every trading partner. The REER is an index that combines the relative exchange rate and price movements of all our trading partners.

If the REER is rising, our goods are becoming more expensive. We can expect to import more and export less. If this happens our trade deficit will widen. If the trade deficit continues to widen, we run the risk of defaulting on our international obligations in particular debt service and repatriation of profits and capital. This is where the IMF comes in. The IMF’s mandate is to maintain international financial stability. The IMF is a financial cooperative whose job it is to ensure members do not run into external payments difficulties, and to bail them out when they do, in order to keep global finance and commerce going.

The spat between the IMF and the CBK is therefore about our external creditworthiness. The key indicator for this is the current account balance. The current account balance has two components: trade and income. The trade account I have already mentioned. The income account consists of payments for “factor services” such as interest (use of capital), labour (e.g. for services of Kenyan troops abroad) and another component we call unrequited transfers (meaning money we have not earned) such as diaspora remittances, grant aid and such like. The external account in turn, has a third component, the capital account where, as the name suggest, we record investment transactions.

The spat between the IMF and the CBK is…about our external creditworthiness. The key indicator for this is the current account balance.

This is how it works. Kenya Airways buys an aircraft using a foreign loan. The aircraft is entered in the trade account as an import and simultaneously in the capital account as a capital inflow. The following day it ferries passengers from Lagos to Dubai. The income is recorded in the trade account as a service export. At the end of the month it remits repayment on the loan. The interest is recorded in the income account as a factor service payment and the principal is in the capital account as a capital outflow.

The net of the current account and the capital account are added together to give the overall balance. An increasing overall deficit depletes foreign reserves, while a surplus leads to a build up of reserves. Current account surpluses mean that a country’s savings exceed its investment; it can, therefore, export capital, like China. A current account deficit means that a country is investing more than its savings, in other words, it is importing capital (either debt, FDI, remittances, grants etc).

The country’s creditworthiness thus depends not just on trade but also on other financial flows, that are determined by factors other than trade competitiveness, both economic and non-economic. Complicated stuff.

Both the IMF and CBK agree that the shilling has appreciated, but they disagree on the magnitude. The IMF also implies that the appreciation is a reflection of policy action while the CBK maintains that it is a reflection of market forces. The IMF view translates to accusing the CBK of misleading the public by espousing a monetary policy that claims to target inflation, while in practice it is actually targeting the exchange rate. The IMF’s “smoking gun” is the fact that the NEER has flatlined for the past six years (see Chart).

Recently the IMF re-classified the Kenya shilling from a “floating” (meaning market determined) to “other managed arrangement.” This means the IMF is convinced that the Central Bank is propping up the shilling. What reason would the Central Bank prop up the shilling especially if it undermines the country’s competitiveness and solvency?

Foreign currency debt exposure is one reason. The interest payments on the first Eurobonds issued in 2015 ($185 million a year) has increased by KSh 3 billion, KSh 16 billion to KSh 19 billion on account of the depreciation of the shilling. Translate that to the total interest payments this year which are in the order of $1.4 billion dollars. The shilling has weakened by about three shillings to the dollar since the beginning of the financial year. The total interest payments this year which are in the order of $1.4 billion. This translates to a KSh 4 billion squeeze on a government that is already living way beyond its means. The last thing the Treasury wants to hear is that the shilling should be trading at about 120 to the dollar.

Recently the IMF re-classified the Kenya shilling from a “floating” (meaning market determined) to “other managed arrangement.” This means the IMF is convinced that the Central Bank is propping up the shilling. What reason would the Central Bank prop up the shilling especially if it undermines the country’s competitiveness and solvency?

Another reason is pressure to keep low interest rates. Interest rate is the policy instrument in an inflation-targeting monetary policy regime such as we claim to have. Central Banks are given statutory independence over the conduct of monetary policy to insulate them from such pressure so that they can raise interest rates when they need to, even when it is politically costly for the government of the dayParliament’s capping of interest rates two years ago is ample demonstration that political pressure on Central Banks is real.

Keeping interest rates artificially low puts pressure on the exchange rate. A weakening currency creates inflationary pressures, which is what the Central Banks are mandated to control in the first place. The Central Banks end up trying to meet incompatible objectives, low interest rates, low inflation and a stable currency.

This is precisely what happened from mid-2009 to September 2011. The Central Bank bent over backwards to accommodate the government’s economic stimulus meant to respond to both the post-election violence and the global financial crisis. Interests rate were driven to the floor. From mid-2010 to mid-2011 the benchmark 90-day Treasury bill rate was kept below 3 percent. The IMF’s charts show how this ended— with a very hard landing. The shilling which had been propped up at about 80 to the dollar, started unravelling in April peaking at KSh100 to the dollar in September. The Central Bank was forced to jack up interest rates in a hurry. By the end of 2011, the T-bill rate was heading to 20 percent.

The IMF seems to believe that, left to market forces, the shilling will depreciate in real terms. The IMF’s REER chart covers eight years, from 2010 to 2017. A longer timespan does not necessarily support this contention (see Chart). My chart goes back to the beginning of the liberalized regime in 1994. What do we see? The shilling has been appreciating in real terms since it was liberalized. Overall it has appreciated 157 percent, by 9 percent per year on average. This could mean that the Government has been propping up the shilling all these years, or that market forces are not working the way the IMF expects.

Many Kenyans have observed that we have become an importing country. One also hears policymakers lamenting that we are losing our markets in the region and blaming all manner of things. There is no mystery to it.

My [assessment is that] the shilling has been appreciating in real terms since it was liberalized. Overall it has appreciated 157 percent – by 9 percent per year on average. This could mean that the Government has been propping up the shilling all these years, or that market forces are not working the way the IMF expects.

But is the Central Bank propping up the shilling? That we cannot be able to tell that easily. There are lots of moving parts. It can also be on account of some trading partners manipulating their currencies: China, for example, is regularly accused of maintaining an artificially weak currency. China has a big weight in our REER and it’s been growing over time.

The ultimate question is whether it is sustainable. There are two parts to this, financial and economic. The widening trade deficit has been plugged by remittances and portfolio inflows (money flowing into the stock exchange and government securities), not all of it honest money, and lately, government commercial borrowing, the ubiquitous eurobonds and syndicated loans. As long as these keep flowing, the show can go on.

Why are we told the economy is growing and yet we cannot feel it? This is the shopping mall economy. How long can we keep that going?

The economics is a different story. This is the shopping mall economy. It is not good for employment and equity. It is not good for employment, or equity, or sustainable growth. It is part of the answer to the question that Kenyans keep asking: why they are told the economy is growing and they are not feeling it. This is the shopping mall economy. How long can we keep that going? Your guess is as good as mine. Governments are known to manipulate currencies and to distort financial markets generally. The IMF is known to (a) have more faith in market forces than warranted and (b) get the workings of those market forces wrong. What to do?

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David Ndii is a leading Kenyan economist and public intellectual.

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The Second Sex: Women’s Liberation and Media in Post-Independence Tanzania

Fatma Alloo (of the Tanzania Media Women’s Association) on how women used the media and cultural spaces to organize and challenge gender norms.

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The Second Sex: Women’s Liberation and Media in Post-Independence Tanzania
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Fatma Alloo’s activism grew in the decades following Tanzania’s independence in 1961, when she worked as a journalist under Julius Nyerere, or Mwalimu, the first president of Tanzania; co-founded the feminist advocacy group Tanzania Media Women’s Association (TAMWA) in 1987; and co-founded the vibrant Zanzibar International Film Festival (ZIFF) in 1997. Here, she unpacks how women used the media and cultural spaces for social mobilization and shifting patriarchal norms, particularly in periods where they were marginalized from state power. In the “Reclaiming Africa’s Early Post-Independence History” series, and the Post-Colonialisms Today project more broadly, we’re learning from African activists and policy makers from the early post-independence era, to understand how their experience of a unique period of economic, societal, cultural, and regional transformation can aid us in the present day, when questions of decolonization and liberation are more pressing than ever.

Heba M. Khalil: You have lived through so many changes in so many different political systems, from the Sultanate, colonialism, the Nyerere years; you’ve seen the dawning of liberalism and neoliberalism.

Fatma Alloo: As you say, I’ve been through a lot of “-isms” in Tanzania. The other day I was reflecting that although I grew up under colonialism in Zanzibar, as a child I was not aware that it was colonialism, I was not aware there was a Sultanate. We used to run and wave to the Sultan because he was the only one with a shiny, red car and we used to love that car, a red Rolls Royce. But as I reflect now, I realized that these were the years Mwalimu was struggling for independence in Tanganyika.

Then, of course, as you grow, life takes you on a journey, and I ended up at the University of Dar es Salaam in the 1970s, where the Dar es Salaam debates were taking place. Tanzania hosted liberation movements, and that is where socialism, communism, Marxism, Leninism, Trotskyism, Maoism, and feminism were being debated, and that’s where my consciousness grew, because I was in the midst of it. As the progressive, international community at the university was ideologically fired up by Mwalimu’s socialism, I began to understand that even my feminism had come from the West. Nobody had taught me that women lived feminism on the continent. This realization came when, as a student, I participated in an adult literacy program launched by Mwalimu. As students, we were sent to a rural and urban factory to teach literacy, but I emerged from those communities having been taught instead!

Heba M. Khalil: What do you think the role of women was in Tanzania in particular, but also on the continent, in defining the parameters, the choices and the imagination of post-independence Africa?

Fatma Alloo: Women had always been part and parcel of the independence movement in Africa. In Southern Africa and Tanzania they stood side-by-side with the men to fight, so they were very much part of it. The unique thing about Tanzania was that Mwalimu established a party called the Tanganyika African National Union (TANU), which had five wings with women being one of them. The others were youth, peasants, and workers, so as to mobilize society as a whole.

Post-independence is another story, one that very often has been narrated by men in power. There was a struggle for the visibility of women. I remember the debates in South Africa, where the African National Congress was arguing about the women’s wing wanting to discuss power relations. And there was resistance to this, the party leaders would argue first let’s just get independence, let’s not waste our time, women’s liberation will come later. It was a very bitter struggle, and of course after independence, women lost out quite a bit.

Heba M. Khalil: Why were post-independence power structures and ideologies defeated and replaced at some point by new ideologies of liberalism and, eventually, neoliberalism?

Fatma Alloo: The western media portrays Mwalimu as a failure. He has not failed, from my point of view. The whole issue of national unity is important. Tanzania has been a relatively peaceful country. Why? It did not happen by accident, it had to do with Mwalimu’s policies—he realized he had to deal with profound divisions, and he understood the role of education. Administratively, the nation had been inherited after decades of divide and rule policies. It was divided on racial and religious bases, as Tanzania is half Christian and half Muslim. We could have had a civil war, like in Lebanon, or a tribal-oriented conflict, like in Kenya or Libya. Mwalimu really understood this from the very beginning. I remember when we started TAMWA, when the women came together, we had no idea who belonged to what tribe. He was that successful.

We had free medicine, free education, but of course, all that went away with neoliberalism. My generation remembers this, and I think we have to make sure that the younger generation knows the history of the country, knows the literature that emerged from the continent. In my opinion, of all the contributions of Mwalimu, the most important was the peace and unity—amani, in Kiswahili.

Because Mwalimu was so successful, the West, especially Scandinavian countries, made him their darling. As you know, Scandinavian countries had not colonized Africa much, so people also trusted them and accepted their development aid. Very sadly, it did eat away at the success of Mwalimu with his people, and eventually made us dependent on that development aid, which continues to date. Without development aid we don’t seem to be able to move on anything. We have stopped relying on ourselves.

Heba M. Khalil: What was your experience of organizing during the rapid growth of the mass media sector in Tanzania?

Fatma Alloo: I was very active, first as a journalist in the 1980s and early 1990s, and it was extremely different. We were very influenced by Mwalimu’s ideology and ready to play our role to change the world. Mwalimu had refused to introduce television because, he argued at that time, we did not have our own images to portray, to empower our younger generations. He said if we introduce television the images shown will be of the West and the imperialist ideology will continue. In Zanzibar, however, we already had the oldest television on the continent, and it was in color. When Abeid Karume attained power in Zanzibar in 1964, after a bloody overthrow of the sultanate in power, the first thing he did was to introduce not only television, but community media, so every village in Zanzibar already had these images. But television didn’t come to Tanganyika until 1992 (Mwalimu stepped down in 1986), when it was introduced by a local businessman who established his own station. Until then the state had controlled the media, so history began to change as businesses were allowed to establish media.

I remember I was then in TAMWA and we had to encourage a lot of production of plays and other visuals, for which there was no market before. The radio had been powerful; when the peasants went to the countryside, they would take the radio and listen as they ploughed the land. So, the radio was the main tool that was used to mobilize society during Mwalimu’s era.

The press gave women journalists little chance to cover issues of importance to women. We were given health or children to cover as our issues. Before, Tanzania had one English paper, one Kiswahili, Uhuru, and one party paper. By 1986, there were 21 newspapers, and it became easier for us to really influence the press, and TAMWA began talking about issues like sexual harassment at work. But it was a double-edged sword, because the television stations recruited pretty girls to do the news reading, and the girls also wanted to be seen on television as it was a novelty. So, while we were expanding the conversation on the portrayal of women, here was television, where women were used as sex objects. The struggle continues, a luta continua.

Heba M. Khalil: How are movements trying to achieve change on the continent, particularly youth movements or younger generations, by utilizing media and cultural spaces?

Fatma Alloo: The youth need to develop tools of empowerment at an educational level and at an organizational level. Africa is a young continent, and our hope is the youth. Many youth are very active at a cultural level, they may not be in universities but at a cultural level they are extremely visible, in music, dance, and street theater.

At the moment, you see the pan-African dream has sort of lost the luster it had during independence. Even if you look at the literature of that time, it was a collective dream for Africa to unite—Bob Marley had a song “Africa Unite,” we used to dance to it and we used to really identify with it, and the literature—Franz Fanon, Ngũgĩ wa Thiong’o, Sembène Ousmane, Miriam Ba, Nawal al Saadawi—and also the films that came out. In fact, Egypt was the first country to produce amazing films; when we established the Zanzibar International Film Festival (ZIFF), in our first year we showed a film from Egypt, The Destiny by Youssef Chahine.

Zanzibar International Film Festival was born because we asked the question, “If we in Africa do not tell our stories, who will?” We ask that question particularly to train and stimulate the production of films on the continent, including in Kiswahili, because while West Africa has many films, East Africa lags behind. The festival has been in existence for 21 years. This part of the world has more than 120 million people who speak Kiswahili, so the market is there. We also encourage a lot of young producers and we encourage putting a camera in children’s hands, because from my own experience, children get so excited when they can create their own images. Twenty-one years later, these children are now adults, and they are the directors and the producers in this region. So, one has to play a role in impacting change and liberating consciousness on our vibrant and rich continent.

This article is part of the series “Reclaiming Africa’s Early Post-Independence History” from Post-Colonialisms Today (PCT), a research and advocacy project of activist-intellectuals on the continent working to recapture progressive thought and policies from post-independence Africa to address contemporary development challenges. Sign up for updates here.

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The State of Judicial Independence in Kenya: A Persistent Concern

Judicial independence is Kenya’s last buffer line, stopping the country from degenerating into absolute tyranny. Judicial independence is a collective national good. It will be protected as such. So long as we may have an independent Judiciary, the great interests of the people will be safe.

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The State of Judicial Independence in Kenya: A Persistent Concern
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On Thursday 22 July 2021, Justice Aggrey Muchelule and Justice Said Juma Chitembwe were subjects of arbitrary search, intimidation, and interrogation by the Directorate of Criminal Investigations (DCI) on the basis of unfounded allegations of corruption.

The arrest, coming in the wake of constant and relentless attacks on the judiciary by the Executive and politicians, left a very sour taste in the mouths of many, bearing in mind that nothing was found to implicate the judges upon searching their respective chambers. Let it be clear that NOBODY is above the law  (nemo est supra legis)! Not even the President of the Republic, let alone the judges.

However, there are reasons why there are arguments for special procedures when arresting or dealing with criminal allegations against a sitting judge: the need to preserve the sanctity of the office and the need to manage perceptions with regard to the judicial office. The Supreme Court of India in the case of  Delhi Judicial Service Association v. State of Gujarat  AIR 1991 SC 2176, (1991) 4 SCC 406 recognized the fact that whereas judges were not above the law, certain guidelines had to be in place to guide the conduct of arrest  “in view of the paramount necessity of preserving the independence of judiciary and at the same time ensuring that infractions of law are properly investigated”. The concept of judicial independence, it must be recalled, recognizes not only realities but also perceptions that attach to the judicial office.

Chief Justice Howland in the Canadian Supreme Court case of  R v. Valente  [1985] 2 SCR 673 stated as follows with regards to perception as an ingredient of judicial independence: “it is most important that the judiciary be independent and be so perceived by the public. The judges must not have cause to fear that they will be prejudiced by their decisions or that the public would reasonably apprehend this to be the case.’ There is therefore the need to guard and jealously so, the image of the judiciary such as to manage how the judiciary is perceived by the public.

The unsubstantiated claims of corruption, and knee jerk searches without an iota of evidence does not bode well for the perception of the judiciary as a whole, and specifically, for the individual judges involved whose reputations are dragged through the mud, and needlessly so. There are germane reasons why the arrest of a judge should not be a trivial matter. The deference and respect to a judicial office informs the caution exercised in the conduct of arresting a judge. The judicial office fuses with the person of the holder and therefore it becomes necessary to err on the side of caution.

Indeed, Courts elsewhere have endeavoured to engage cautiously in this exercise of delicate funambulism. The Supreme Court of India in the case of  K. Veeraswami v Union of India and others,  1991 SCR (3) 189  found that a sitting judge can only be undertaken with permission from the Chief Justice or if it is the Chief Justice who is sought to be prosecuted, from the President.

Equally, the Court of Appeal of the Federal Republic of Nigeria in the case of Hon. Justice Hyeladzira Ajiya Nganjiwa V. Federal Republic of Nigeria  (2017) LPELR-43391(CA) held that a sitting judge cannot be prosecuted for offences that would have otherwise been a ground for removal from office.

It is important to note that the grounds for the removal of any judge from office are captured in article 168 of the Constitution of Kenya and they include a breach of the code of conduct and gross misconduct or misbehaviour.

Noteworthy it is to remark that the High Court of Kenya, in laying a principle of constitutional law in the case of Philomena Mbete Mwilu v Director of Public Prosecutions & 3 others; Stanley Muluvi Kiima (Interested Party); International Commission of Jurists Kenya Chapter (Amicus Curiae)  [2019] eKLR ably stated that, “While the DCI is not precluded from investigating criminal misconduct of judges, there is a specific constitutional and legal framework for dealing with misconduct and/or removal of judges.

Consequently, cases of misconduct with a criminal element committed in the course of official judicial functions, or which are so inextricably connected with the office or status of a judge, shall be referred to the JSC in the first  instance.” The cumulative conclusion was that the gang-ho recklessness meted on Justices Muchelule and Chitembwe by an increasingly overzealous Department of Criminal Investigations (DCI) was an affront to judicial independence in its functional sense and also in terms of perception. It was a careless move.

If there is any evidence linking any of the judges to any conduct unbecoming, then out of constitutional edict and commonsensical pragmatism, the first point of call should be the Judicial Service Commission (JSC). The Office of the Chief Justice must also be subject of focus during this unfortunate debacle.

The statement emanating from that office in the aftermath of the unfortunate events of 22nd  July 2021, was at best timid and disjointed. The statement did not appear to reinforce the constitutional principle that judges cannot be arrested over matters that really ought to be addressed by the Judicial Service Commission. The office of the Chief Justice should have done better.

In summary, let it be proclaimed boldly that judicial independence is too precious a public good that it will be protected at all costs. Let it be lucid that incessant interference with judicial independence will not be tolerated from any quarters.

Judicial independence is Kenya’s last buffer line, stopping the country from degenerating into absolute tyranny. Judicial independence is a collective national good. It will be protected as such! And in the words of John Rutledge, a scholar, jurist and the second Chief Justice of the United States of America; “So long as we may have an independent Judiciary, the great interests of the people will be safe.”

This article was initially published at THE PLATFORM For Law, Justice and Society Magazine

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Land Title and Evictions in the Supreme Court of Kenya

Violent evictions of families from their homes are not exceptional events. They go to the heart of Kenya’s political economy and its long history of valorising the rights of those who hold private title.

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Land Title and Evictions in the Supreme Court of Kenya
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The Supreme Court of Kenya published its judgment in William Musembi v The Moi Educational Centre Co. Ltd. on the 16th July 2021. The case arose after fourteen families — the residents of two informal settlements, City Cotton and Upendo village in Nairobi — petitioned the High court following their evictions in 2013. They had lived on the land since 1968 when it was public land. The first respondent claimed that they had legitimately acquired title to the land by letters of allotment and that the land was therefore private land. According to Amnesty Kenya, the evictions began in the early morning, without warning. Groups of young men burst into homes. Four hundred homes were demolished and personal possessions were destroyed. Crowbars and sledgehammers were used. The police were present. They fired live ammunition and used teargas canisters during the operation.

In the High Court, Judge Mumbi Ngugi held that the petitioners’ rights to dignity, security, and adequate housing had been infringed. There had been a violation of the rights of children and elderly persons under the constitution. She awarded damages. At the Court of Appeal this judgment was partially set aside. While accepting that there had indeed been violations of the rights to dignity and security, the Court of Appeal nonetheless set aside the order of damages arguing that “there was no material before the court on the basis of which the orders for compensation were made” and that, because it was unable to work out how the damages had been quantified, “the only relief that should have commended itself to the trial Court was a declaration that the forced eviction and demolition of their houses without a Court order is a violation of their right to human dignity and security.” Following this, the petitioners appealed to the Supreme Court.

Importance of the Supreme Court judgment

The importance of this case is, as Gautum Bhatia has written, that it raised the question whether “the right to accessible and adequate housing could be applied inter se between private parties”. It can thus be distinguished from the same Supreme Court’s Mitu-Bell Welfare Society v The Kenya Airports Authority, which ruled on evictions from public land.

Amongst several issues for determination, the petitioners in the present case asked the court to reach a determination of the question whether the letter of allotment held by the first respondent, the Moi Educational Centre, was issued lawfully or legally. Because that question had not been conclusively determined at the High Court or at the Court of Appeal, the petitioners sought “a declaration that the acquisition of the suit property was illegal and unlawful.”

The Supreme Court declined to do this. Arguing that in the High Court Judge Mumbi Ngugi had been right in holding that the question of the propriety of the first respondent’s title was a matter for the National Land Commission and that it is the Land and Environment Court that properly has jurisdiction over this question, the Supreme Court held in William Musembi that “the title of the first respondent remains unimpeached”. Instead, it held, the only question it ought to determine was whether, in evicting the petitioners, the respondents violated the petitioners’ rights to human dignity and security, as well as the rights to housing and health.

It is on the basis of the “unimpeached” title of the first respondent that the court goes on to make its landmark finding. For determination by the court was the question whether the first respondent, being a private party, could nonetheless be responsible for the violation of constitutional rights. Recognising that “the mandate to ensure the realization and protection of social and economic rights does not extend to the first respondent” because it is a private entity which is not under any obligation to ensure the progressive or immediate realisation of those rights, the court found that private parties do nonetheless have a “negative obligation to ensure that it does not violate the rights of the petitioners.”

For Bhatia, the judgment’s significance lies partly in its finding that “a negative obligation not to interfere with socio-economic rights (such as the right to housing), …applies to both public and private parties” although he argues persuasively that “the distinction between negative and positive obligations is doing a lot of work” and that the concrete practice of evictions significantly blurs the boundary between public and private actors. He rightly notes that “evictions invariably involve concert of action between State forces and private landowners, with the latter relying upon the former (either directly, or through forbearance) to accomplish physically removing people from land.”

Public and private

If the distinction between negative and positive obligations is somewhat artificial, I also want to suggest that Kenya’s history of land grabbing shows that so too is the distinction between the state and private landowners. More than just state forces doing the bidding of private landowners, wielding batons and using bullets to break into homes in the early morning, in Kenya the state/private distinction is a mirage. In William Musembi, the court does not elaborate on the important history of letters of allotment in Kenya and the process by which they enabled public land to morph into private land. Instead, it affirms the first respondent’s title – and proceeds to make an important ruling on the obligations of private actors. However, the history of land grabbing and the murky past of letters of allotment is a critical one to keep at the front of our minds.

For determination by the court was the question whether the first respondent, being a private party, could nonetheless be responsible for the violation of constitutional rights.

The report of the Commission of Inquiry into the Illegal/ Irregular Allocation of Public Land established in 2003 set out in forensic detail the illegal and irregular land awards made over the years using the mechanism of the letter of allotment. Awards of land were made to the families of Presidents Kenyatta and Moi, numerous former ministers, members of parliament and civil servants, as well as to individuals in the military and the judiciary. The report sets out how out of proximity to the state, private property owners were created. Public land – land set aside for the building of public health clinics or schools for example – mysteriously turned into private land on which malls, private residences, and diplomatic headquarters appeared. No doubt some individuals acquired perfectly legitimate letters of allotment. But from the 1970s onwards, a thriving market in improper letters of allotment developed. They came to be treated as tradable land documents. Widely but mistakenly used as land titles (with the collusion of lawyers), they changed hands quickly in sales of grabbed land. This was done in order to get the benefit of the principle that an innocent third party for value without notice takes good title. The full extent of this practice is unknown: the Ndung’u Commission warned that its report provided only a snapshot of the illegal/irregular land allocations that had taken place over the years.

I have written elsewhere that land grabbing is sedimented in Kenya’s political economy such that we can describe it as a “grabbed state”. The “normal” economy is founded on accumulation by dispossession. It is not possible to understand Kenya’s political economy without an understanding of how the normal and the supposedly abnormal are pervasively linked. Far from land grabbing being an aberrant phenomenon that can be sharply distinguished from normal business practice, the illegal and irregular appropriation of land structures Kenya’s economy.

Widely but mistakenly used as land titles (with the collusion of lawyers), they changed hands quickly in sales of grabbed land.

There is no operative distinction between the public and the private in Kenya. This makes the judgment in the present case even more consequential: given the history of these murky conversions in title, the judgment’s finding that negative constitutional obligations can attach to private actors is likely to cover a great many potential eviction scenarios. Indeed, I would argue that given the history of land described above, the court should have gone further. Grounding its reasoning in Kenya’s history of land grabbing and the dispossession and discrimination that resulted, it could have held that positive socio-economic obligations (such as providing alternative accommodation) should extend to private parties. Or it might have held that given the extent of land grabbing — which is a matter of public record — the state should not agree to enforce a court order for eviction until it is satisfied that alternative accommodation has been provided.

Entrenching private property

Welcoming the Supreme Court’s judgment, Bhatia has noted that it “continues the welcome trend of judicial scepticism towards entrenched property rights.” The court demonstrated this scepticism by extending negative constitutional obligations to private actors. However, to do so, the Supreme Court moved to confirm the respondent’s title. That title it described as “unimpeached”. The court used this as the basis for setting out the first respondent’s obligations as a private owner. The extension of constitutional obligations to private actors is to be welcomed. But it is important to recognise also that by refusing jurisdiction to question the first respondent’s title – and ruling that this is a matter for another forum – the Supreme Court effectively sanctioned the enclosure of what the appellants claimed was unalienated public land and potentially legitimated the grabbing of public land.

The court does not elaborate on the important history of letters of allotment in Kenya and the process by which they enabled public land to morph into private land.

Instead, the Supreme Court might have used Art. 23 which provides for the authority of courts to uphold and enforce the Bill of Rights, to try to fashion a remedy. It could have expressly referred the question of the integrity of the first respondent’s title to the National Land Commission rather than state as unequivocally as it did that it is unimpeached. At the very least, given the importance of a letter of allotment and the question of title in the case, the court should have rehearsed Kenya’s history of land grabbing and corruption as revealed by the Ndung’u report so as to give it judicial notice and provide a starting point for the wider task of challenging ill-gotten titles by those who might seek to do so.

Reinstating Judge Mumbi Ngugi judgment in the High Court and in particular her finding that damages should be paid to those evicted, the Supreme Court ordered the first respondents, the Moi Educational Centre, to pay fourteen families KSh150,000 (just over 1000 euros) each in damages. The government will also pay each family KSh100,000. In return, unless the National Land Commission or the Land and Environment Court are asked to rule on the propriety of the first respondent’s title and find against them, the Moi Educational Centre now hold unimpeached title to very valuable land in Nairobi. That is quite a windfall.

Violent evictions of families from their homes are not episodic and exceptional events. They go to the heart of Kenya’s political economy and its long history of valorising the rights of those who hold private title, however acquired. How far can the courts be relied upon to undo accumulation by dispossession?

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