Sudan is on the brink, and not a day too soon. The independence of South Sudan a decade ago took with it 90 percent of total oil reserves. Even though Sudan got a good deal for the use of the pipeline including securing a compensation of $2.6 billion for future lost oil earnings, easily the biggest aid transfer from one African country to another, production disruptions in South Sudan have hit revenues hard. This shock was compounded by the effect of international sanctions and the Darfur insurgency. Sudan needed fundamental economic restructuring that it has not pursued, partly because it was also hamstrung by these two factors.
The independence of South Sudan a decade ago took with it 90 percent of total oil reserves. Even though Sudan got a good deal for the use of the pipeline, production disruptions in South Sudan have hit revenues hard.
A severe hard currency shortage has taken its toll on the country’s production capacity. Shortages stoked inflation. The government compounded the problem by tightening monetary policy, starving the economy of credit. Nowhere is this more evident than in agriculture, plagued by lack of credit, fuel shortages and deterioration of the capital stock. Data published by the FAO show food insecurity rising sharply (see chart).
Late last year, President Omar el Bashir dissolved government and appointed a leaner one that he said would respond to the economic crisis—too little, too late. Inflation is now running at 70 percent. Demand management of supply shock inflation was never going to work. One of the new government’s first actions was to devalue the Sudanese Pound; it slid from 28 to 47 pounds to the dollar. A year and a half ago, it was exchanging at 6.7 pounds to the dollar. With an economy in meltdown, a hungry population, few friends and powerful foes, Khartoum has very limited options and nowhere to turn.
Sudan’s problems are patently political. In a nutshell, it is the failure to find a political formula to hold together a huge, culturally and geographically diverse country. For whatever reason, the ruling elite in Khartoum has pursued Islamist hegemony. This is what ultimately led to the break up with South Sudan.
Before its break up, Sudan was Africa’s biggest country at 2.5 million square kilometres. At 1.86m square kilometres it is still the third largest, behind Algeria (2.4m) and the DR Congo (2.34m). The old Sudan is about the size of the five biggest EU countries (France, Spain, Sweden, Norway Germany plus the UK), and if we start from the other end, Sudan would have fitted 36 of Europe’s 50 countries starting with the Vatican (0.44 sq. km) all the way to the UK (249,000 sq. km).
Sudan’s problems are patently political…the failure to find a political formula to hold together a huge, culturally and geographically diverse country.
Neighbouring Ethiopia is also experiencing political convulsions. Ethiopia is Africa’s second most populous country after Nigeria, with a population of 100 million people. Though never colonised, Ethiopia is a fractious nation that struggles to hold itself together, with secessionist movements in Ogaden and Oromia regions. Eritrea managed to break away. DR Congo, Africa’s second largest country now, has just held a very African presidential election two years late. The war that has raged there for the last two decades ranks as the most deadly conflict since the Second World War.
At the other end of the scale, and as this column has previously observed, Africa’s smallest countries are also its most successful. The Freedom House Index 2018 ranks ten African countries as fully free/democratic (Benin, Botswana, Cape Verde, Ghana, Mauritius, Namibia, Sao Tome & Principe, Senegal, South Africa, Tunisia) of which only one, South Africa is a big country. The average population of the ten countries is 13 million – 8 million when excluding South Afric – less than half the continental average of 21 million. Geographically, Botswana (pop. 2.3m) and Namibia (pop. 2.5m) are peculiar in that they are physically large countries with small populations. Excluding South Africa and these two, the average size of the other seven is 100,000 sq. km, against a continental average of 536,000 sq. km.
The old Sudan is about the size of the five biggest EU countries (France, Spain, Sweden, Norway Germany plus the UK), and if we start from the other end, Sudan would have fitted 36 of Europe’s 50 countries…
Countries rated as “partly free” average 354,000 sq. km and 26 million people. Those ranked “not free” average 800,000 sq. km. and 24 million people. Of eight countries that are over a million square kilometres (Algeria, DR Congo, Libya, Angola, Chad, Mauritania, Sudan, Niger) seven are ranked “not free”— Niger is the exception. There are five small countries ranked as unfree, i.e. less than 100,000 sq. km (Burundi, Djibouti, Equatorial Guinea, Rwanda, Swaziland), six if you include Eritrea, which is just over the 100,000 sq. km threshold, out of a total of 22. Well governed African countries are almost invariably small, while badly governed ones are predominantly large.
When it comes to governability, size does seem to matter. And as it turns out, governability has considerable economic payoffs. Africa’s “free” countries have increased income per person by three times more than the rest of the continent since 1990 (see chart).
Nation-states like to project themselves as sacrosanct, immutable entities. Few political principles are proclaimed with as much fervour and fury as territorial integrity. It is an illusion. The United Nation membership of sovereign nation-states stands at 193, up from 51 founding members in 1945. The number of nations has increased 3.8 times, faster than the world population (2.9 times) Nation formation was at its height during decolonization (1950-80) growing from 60 to 154. (see chart). There was another surge after the collapse of the Soviet empire (1990 – 2000) when another 30 nations emerged. Since then only Eritrea and South Sudan have joined the ranks. But there is a pipeline of close to 70 dependent territories with nationhood potential and aspiration as well as pesky secessionist movements on every continent. Brexit could beget an independent Scotland.
Nation-states like to project themselves as sacrosanct, immutable entities. Few political principles are proclaimed with as much fervour and fury as territorial integrity.
In a 1995 National Bureau of Economic Research (NBER) paper On the Number and Size of Nations (expanded into a book The Size of Nations), political economists Alberto Alesina and Enrico Spolaore develop an economic model of nation formation. The core question they ask is: what is the optimal size of a nation, or put another way, how big should nations be?
They postulate that the essence of nations is the provision of a “public good” called government.
Government is a fixed cost which is financed by taxing people. Fixed cost means that there are economies of scale—the larger the country the less the cost per citizen. But people are also diverse. Different communities will have different preferences. A community in a dryland will value water; a coastal fishing community, maritime security; a trading community roads throughout the territory, and so on. In this scheme of things, the calculus of nation building entails balancing the economies and diseconomies of scale.
Alesina and Spolaore consider two political orders by which nations could come about, namely democracy and autocracy.
In democratic nation building, communities would be free to choose. If they are unhappy in a particular nation, they can call a referendum. To illustrate, think of the world as consisting of 1000 communities of interest – let’s call them nationalities, ethnic groups if you like – with a population of 100,000 each. The cost of setting up government is a trillion shillings. Further still, government can only be at one location, let’s call it the centre, and the benefits of government are directly proportional to proximity to the centre. You can think of the centre as geographical or cultural distance, or both.
It stands to reason that people would be happiest if each nationality had its own government, but this would come with a price tag of Sh.10 million per citizen. It would also be immensely inefficient, as the total cost of government would be a thousand trillion shillings. Conversely, a world government would cost each citizen only Sh.10,000. As per our closeness to government assumption, the communities farthest from centre of the world government would be obliged to pay the same tax and receive very little benefits. They would be marginalized.
Let’s begin with a configuration: take 10 nations of 100 communities. Think of the political geography as a circle with governments located at intervals of 50 communities i.e. governments located in the middle of 100 communities. The communities closest to governments get 1.5 times what they put in. Benefits decline by 2 percent of the tax (so that community number 25 on the line gets exactly what it put in. Those farther along the line get progressively less until the 50th community, which gets only half what it put in.
If the neighbouring border communities would persuade the other “losers” to secede they end up being at the centre of a new circle of countries, resulting in double the countries with half the population. But this would mean paying double the tax, but because they are smaller countries there are fewer communities that are marginalized overall. We can surmise that under democratic order, this political calculus would continue until the benefits of proximity to government balance out with the higher tax per citizen.
The other political regime is autocracy, which Alesina and Spolaore call a Leviathan order a la Hobbes. In this order, the state is a protection racket, where residents of a territory agree to pay tribute to a warlord in exchange for protection from predation by other warlords, along the lines of Mancur Olson’s “roving” and “stationary” bandit model. A Leviathan has two objectives. First, to extract as much tribute as it can without triggering revolt and second, to expand territory – market share, if you like. Territory can be gained by conquest or offering neighbouring communities a better deal than the resident warlord.
It turns out that Leviathan’s problem is analogous to an oligopolistic industry (a market with a small number of players) As with oligopolistic markets, the first best solution is a cartel. The logic is as follows. War is expensive. So is predatory pricing whose most likely consequence is to trigger price wars which hurt every player. Leviathans would do best by sitting round a table and carving out territories amongst themselves. This logic seems to accord with the 1885 Berlin Africa conference and the Peace of Westphalia of 1648.
The Alesina-Spolaore model yields three propositions on nation formation:
First, neither the democratic order or autocracy achieves the ideal number of states. Democracy leads to too many small states and autocratic order leads to too few.
The second has to do with the impact of free trade. Consider the case when there is no trade between countries. Without trade it is economically advantageous to be a big country on account of a bigger market. This will add to the disadvantage of being a small country over and above the high overhead of governing itself. But with free trade, borders lose economic relevance. Small countries get to have their cake and eat it, like Switzerland, which trades freely with the EU, and has the highest average income in Europe despite not being a member of the EU. It should not surprise that it is Britain, long accustomed to having its cake and eating it, that finds itself in the Brexit predicament.
The third proposition is that decentralization can mitigate the fragmentation dynamic inherent in the democratic order. Decentralization mitigates the complexity of diversity. With decentralization, the centre provides those public goods where economies of scale are significant, while the local governments take care of those whose prioritising will vary widely across the different constituent parts.
…With free trade, borders lose economic relevance. Small countries get to have their cake and eat it, like Switzerland, which trades freely with the EU, and has the highest average income in Europe despite not being a member of the EU.
What to make of all this? Let’s do the math.
The modern nation state is a European invention. In this regard, Europe provides as good a benchmark of organic nation-formation as there is. The United States is a natural experiment of self-forming nations. The European countries average at 164,000 sq. km including Russia and 126,000 excluding Russia with average populations at 15m and 12 million respectively.
However, the typical European country is between 40,000 and 100,000 sq. km with populations between two and ten million people. American states are not that different, averaging 146,000 sq. km and 6.3 million people, with only three states with populations over 20 million (California, Texas and Florida).
The “natural” nation-state it seems is of the same order of magnitude as Africa’s small successful states. The governable African country would seem to be in the eSwatini (17.000 sq. km)- Ghana/Guinea (240,000 sq. km) ballpark.
How to hold onto and sustain plunder of such massive territories in the face of expanding political freedom, globalization, huge diverse populations and ecological pressure? Leviathans have their work cut out.
Africa. Average size of country: 607,000 sq. km including the Sahara desert, 423,400 excluding the Sahara desert—3.4 times and 2.6 times the European and US respectively—consistent with the handiwork of a plunder-maximizing Leviathan cartel. Average population currently is 24 million, but Africa’s population is projected to reach 2.5 billion in 2050, which works out to 50m per country.
How to hold onto and sustain plunder of such massive territories in the face of expanding political freedom, globalization, huge diverse populations and ecological pressure? Leviathans have their work cut out.
That Sinking Feeling 2.0: Who Is to Blame for Tanzanian’s Ferry Disasters?
5 min read. Systematic overloading of poorly maintained state-owned vessels, compounded by human error, explains why Tanzanian marine transport is so dangerous, but who is answerable for mass deaths on Tanzania’s lakes? nobody, it would appear writes BRIAN COOKSEY
On the 20th of September 2018, the ferry MV Nyerere capsized in shallow water at the tiny port of Ukara Island on Lake Victoria. Nearly 230 men, women and children drowned, most of them trapped inside the upturned hull. About 40 people were rescued by small boats. The vessel had a capacity of 100 passengers. Many of the dead were buried on the lakeshore, identities unknown, victims of Tanzania’s shoddy, state-run ferry services. President John Pombe Magufuli immediately declared four days of national mourning and flags flew at half-mast on public buildings. “Negligence has cost us so many lives . . . children, mothers, students, old people”, he lamented, ordering the arrest of “all those involved in the ferry.” Three days later, Prime Minister Kassim Majaliwa set up a seven-person Commission of Enquiry led by the former Chief of the Defence Forces, General George Waitara, to establish the cause of the accident and bring those responsible to book. The commission was given a month to report. That was the last the public heard of it, for the commission has shown no signs of life in the twelve months since the accident, during which period the political opposition, media and civil society organisations have kept quiet on the issue of state accountability for the accident. For who else can be held accountable when a state-owned and state-managed boat capsizes? There was no stormy weather to blame. A few commentators, including the state-owned Daily News and commentator Nkwezi Mhango, went so far as to blame the victims for knowingly, recklessly, boarding an overloaded craft. Writing in The Nation, Professor Austin Bukenya recommended “discipline” among passengers who should know better than to clamber onto overcrowded ferries. Presumably, they should wait for the next (uncrowded?) one. . .
Systematic overloading of poorly maintained state-owned vessels, compounded by human error, explains why Tanzanian marine transport is so dangerous. Unknown numbers die when small private vessels—mitumbwi (dug-out canoes) and ngalawa (canoes with sails and outriggers)—capsize. But the large steel boats run by the state are supposed to be orders of magnitude safer than the traditional modes of water transport.
Since the MV Bukoba capsized and sank in 1996, with the loss of an estimated 1,000 lives, Tanzanians have continued to die in large numbers in further ferry disasters, including two in Zanzibar waters within less than a year of each other claiming more than 1,800 lives. To date, no government official or private operator (the Zanzibar ferries were privately owned) has been held responsible for any of these disasters.
Accidents Waiting to Happen
Overcrowding ferries is systematic and intentional. A 200-passenger ferry is allowed to carry, for example, 400 passengers. The 200 “official” passengers are recorded on the vessel’s manifest, the 200 “unofficial” ones are not recorded and their fare is pocketed by the officials responsible for the management and the safety of the ship. Income that should be used for maintenance and repairs is similarly pocketed, leading to regular breakdowns and the suspension of services, thus increasing the overcrowding problem. Those anonymous corpses buried on the beach at Ukara are the “collateral damage” caused by rent-seeking government officials. A ferry service that is privately-owned and managed would deprive these officials of their rents; that is why ferry services remain a state monopoly.
Large-scale accidents on Lake Victoria are therefore arguably the result of a state monopoly of formal ferry services which dates back to the colonial period when the East African Harbours Corporation provided ferry services for the three East African countries. President Magufuli is committed to the improvement of lake transport, but it is taken for granted that the state will run the show. Magufuli has commissioned four new ferries and ordered the rehabilitation of old ones.
Marine Services Company Ltd (MSCL) and Tanzania Electrical, Mechanical and Electronics Services Agency (TEMESA) are the two official agencies responsible for running cargo ship and ferry services on Tanzanian waters. Prior to its incorporation in 1997, MSCL was the marine division of Tanzania Railways Corporation (TRC). The rationale for restructuring MSCL was to make it and other parts of TRC semi-independent “business units” to increase efficiency and profitability. According to its website, MSCL “operates ferries, cargo ships and tankers on Lake Victoria, Lake Tanganyika and Lake Nyasa. It provides services to neighbouring Burundi, DR Congo, Zambia and Malawi.” Over the years, these services have steadily dwindled. While MSCL used to run nine sizeable passenger and cargo vessels, breakdowns and lack of maintenance have left the company with only two. Laid up since 2014, the MV Victoria and MV Butiama are finally being rehabilitated at a cost of Sh26 billion, or $11.4 million, but will not be operational before March 2020 according to MSCL project manager Abel Gwanafyo, quoted by the Citizen newspaper on 8 August. Since the “rehabilitation” is only partially complete (22.5 per cent in the case of MV Butiama) further delays may be expected. The rehabilitation is part of a Sh152 billion ($67 million) shipbuilding and infrastructure development project launched by the President in August last year. At the launching ceremony, Magufuli revealed that he once considered disbanding MSCL but changed his mind because of the “exemplary performance” of the company’s new CEO, Eric Hamissi, in beginning to turn the company around.
While MSCL runs larger ships over longer routes, TEMESA—which is an executive agency under the Ministry of Works—serves short river crossings as part of the road network. Established in 2005, TEMESA operates double- and single-ended Roll on-Roll Off (‘ro-ro’) car ferries, mainly in remote locations where traffic volumes do not justify the construction of bridges. TEMESA’s “mission” involves “running safe and reliable ferry services”, including the ill-fated MV Nyerere. As a result of last September’s disaster, the President summarily suspended TEMESA’s Director General Dr Musa Mgwatu and its advisory board.
Finally, after the MV Nyerere disaster Magufuli took to task the country’s transport regulator, the Surface and Marine Transport Regulatory Authority (SUMATRA), summarily suspending its board of directors. In November 2017, the president signed the Tanzania Shipping Agencies Act which established the Tanzania Shipping Agencies Corporation (TSAC) to take over SUMATRA’s responsibility for marine transport regulation. According to lawyers Clyde and Company, TSAC was to become operational in February 2018. With a narrower scope than SUMATRA, it was hoped that the new agency would operate with greater efficiency and bring increased transparency to Tanzania mainland’s marine transport sector. The appointment of board members from the private sector as well as from government should, according to Clyde and Company, allow TSAC “to operate with an effective commercial approach.” It is unclear why SUMATRA rather than TSAC, was taken to task over the MV Nyerere accident.
The ferries the government commissions for service on Tanzanian lakes are mostly built by Songoro Marine Transport Ltd, owned by Mr Saleh Songoro and Sons of Mwanza. Mr Songoro bought the company—which was set up with aid from the Netherlands—when it was privatised in 1998. Songoro has a good working relationship with Dutch firm Damen Shipyards, one of the world’s largest builders of small ships. But a private shipbuilding monopoly serving monopoly state agencies is not going to solve the problem of inadequate and accident-prone transport services on Lake Victoria. The chronic shortage of lake transport is the maritime equivalent of poor urban public transport, which Dar es Salaam suffered during the days of the Usafiri Dar es Salaam (UDA) public transport monopoly. Private minibuses (daladala) were permitted in 1985, much to the relief of Dar es Salaam’s long-suffering citizens. The inhabitants of Lake Victoria’s shores are still waiting for their maritime daladala to come on stream.
Would Private Ferry Services Reduce the Death Toll?
Would privately owned, privately run ferry services be safer and more efficient than what we have now? It is possible that private services would be equally prone to rent-seeking and inefficiency in the absence of transparent and accountable contracting and regulation. On the other hand, private operators are more likely to maintain their vessels in order to maximise profit than state-run services, where all income flows are potentially vulnerable to self-destructive rent-seeking. They are also more likely to take safety issues more seriously than a state-run service, since private operators are more likely than civil servants to be held accountable in the event of a major accident. Since the ruling elite includes those who have little belief in or respect for the private sector, we could expect a more determined search for culprits and sanctions, especially if the boat-owners were Asians, Arabs or Caucasians.
President Magufuli has been widely praised for instilling discipline in government offices, hospitals and schools and sacking top officials deemed not to be performing and promoting those who are. But accountability is personal, not institutional, and the president clearly does not want to challenge all agencies equally. Since there is no public debate over privatising lake transport, we can expect Lake Victoria ferry passengers to continue being the potential victims of overcrowded and dangerous ferry services.
Charities, Voluntourism and Child Abuse: Is There a Link?
8 min read. The recent case of children dying at a feeding centre in Uganda has once again highlighted the issue of whether “voluntourists” and children’s charities operating in Africa are doing more harm than good. RASNA WARAH explains why volunteers and non-profits working in poor countries need to be monitored and vetted more closely.
Last year I wrote about Katie Meyler, a young American woman who set up an educational charity called More Than Me that ran a school for girls in Liberia and which became the site of sexual abuse perpetrated by one of its founders. It turned out that Meyler had no academic qualifications for teaching and her school, like many foreign NGOs and charities operating in Africa, was not sufficiently monitored by the Liberian authorities. It was only when a Liberian nurse at the school reported cases of sexually transmitted diseases, including HIV, among the students that the authorities took notice and when it became apparent that the girls in the school were being routinely raped by Meyler’s close friend, a Liberian man who recruited the girls from Monrovia’s poorest slums.
Now a similar case has emerged in Uganda. The case of Renee Bach has once again highlighted the dangers of allowing unregulated foreign charities to operate in poor countries. Bach’s case might never have received media attention if two Ugandan women had not sued her and her religious non-profit organisation, Serving His Children, which was ostensibly set up to feed malnourished Ugandan children. Gimbo Zubeda and Kakai Annet claim that their sons died as a result of having been “treated” at the Serving His Children feeding centre in Masese, Jinja. They are suing Bach for negligence.
Zubeda’s and Annet’s children were not the only ones who died at the feeding centre. Between 2010 and 2015, some 105 children died there, according to Bach’s own admission. Medics who have commented on the case say that many of these children were not just malnourished; they also suffered from other acute illnesses that Bach’s centre could neither diagnose nor treat properly. They died because there was no trained medical practitioner at the centre who could either prescribe the right medicine or refer the children to another facility.
What is most astonishing about this case is that Bach apparently passed herself off as a doctor even though she had no medical training. And despite having no credentials to run a feeding programme for severely malnourished children, she managed, like Meyler, to raise hundreds of thousands of dollars from donors in the United States who believed that she was saving African lives.
Like many young naïve white volunteers who come to Africa and then decide to stay – and fund their stay by forming a charity – Bach arrived in Uganda as an 18-year-old volunteer. Two years later, in 2009, this young American women from Virginia registered an NGO in her home state that claimed to provide welfare to the needy and which also engaged in some Christian evangelism on the side. The area in Jinja where she set up her charity has high levels of illiteracy, particularly among women, and high levels of child malnutrition. This combination allowed her to hoodwink the local population and to pass herself off as a medical practitioner.
This particular initiative, which had deadly consequences, has once again raised the question of whether Africa needs more foreign charities and NGOs, and whether there is a direct link between what is often referred to as “voluntourism” and child abuse.
There is a growing awareness of the dangers of young volunteers from the West working for short periods of time in orphanages in poor parts of the world – in essence combining tourism with volunteer work. It appears that the number of orphanages in poor countries is growing in proportion to the number of volunteers. “Orphanage tourism” has now become a business, with tourists and volunteers paying large amounts of money to have an “orphanage experience”. One study in Cambodia found that the number of orphanages in the country had increased by 75 per cent between 2005 and 2010 even though the number of children without parents had declined; the majority of these orphanages were in tourist areas.
Parents or caregivers who give up their children to many of these orphanages are promised better education for the children but very often the children are kept in poor conditions to attract donor funding. This also seems to be the case with local charities run by individuals or which are funded by the government. Recently, a famous children’s home in Nairobi named after Kenya’s first First Lady was criticised for mistreating children under its care.
Many children are, in fact, actively recruited into orphanages to meet the demand of tourists, donors and volunteers – a phenomenon defined as “orphanage trafficking”. Sometimes one can accurately gauge the level of poverty in an area by the number of charities (especially orphanages) there. I once counted five orphanages in the short stretch between Malindi and Watamu, a tourist destination in Kenya that is known for both its high levels of poverty and its beautiful beaches. Is it possible that so many children in this part of Kenya’s coastal region have no parents? I seriously doubt it.
Children’s rights advocates have pointed out the lack of background checks on volunteers and say that the lack of child protection policies in many countries places vulnerable children at the risk of being sexually abused or trafficked by both locals and foreigners. Orphanages allow paedophiles claiming to be volunteers easy access to children.
Many critics of the aid industry say that aid is not so much about making the aid recipient’s life better, but more about making the donor feel good about him or herself. That is why so many young white women, looking for adventure or redemption – or both – like Bach and Meyler, come to Africa when they could be helping poor or underprivileged communities in their own neighbourhoods back home.
The Nigerian-American writer Teju Cole dubbed this phenomenon “The White Saviour Industrial Complex”, which he says is not about justice but about having “a big emotional experience that validates privilege”. In an article published in The Atlantic in March 2012, Cole wrote: “Africa has provided a space onto which white egos can be conveniently projected. It is a liberated space in which the usual rules do not apply: a nobody from America or Europe can go to Africa and become a godlike saviour or, at the very least, have his or her emotional needs satisfied.”
And the writer Paul Theroux observed, “Because Africa seems unfinished and so different from the rest of the world, a landscape on which a person can sketch a new personality, it attracts mythomaniacs.”
Why come all the way to Africa when you could be helping your own people? Well, one reason is that it’s easier for a person in the United States to set up a charity claiming to be helping Africans in a country that a donor might never visit than it is to set up a non-profit for homeless people or drug addicts in your own neighbourhood, which might be monitored more closely by the authorities. Such monitoring and oversight is lacking in most African countries, especially countries that are experiencing conflict or natural disaster.
Secondly, it is easier to get away with all kinds of malpractices in Africa if you are white. Being white guarantees immunity from scrutiny. The women who came to Bach’s feeding centre referred to her as “doctor” simply because she was white. Iris Martor, the nurse who worked at the More Than Me Academy in Monrovia explained how white privilege allowed Meyler to get away with things that would have not been tolerated if she had been a black Liberian. “They think we are stupid, with little or no education, and our system is fragile, and they can get away with things because their skin is white,” she said.
Then there is the huge power imbalance. My friend Lara Pawson, a former BBC journalist, says that when she worked as a foreign correspondent in Africa she rarely saw white people treating Africans as equals. This is partly the Africans’ fault. White people in most former colonies in Africa are still treated like gods. They get the best tables at restaurants and are treated with utmost respect in public spaces. Just being white is enough to guarantee you various privileges.
And when they arrive here, they find that their standard of living improves considerably. A working class white kid from the wrong side of the tracks in Philadelphia or London will find that her UN or NGO job (which she got purely on the basis of skin colour) can afford her a big house in the nicest neighbourhoods – plus cooks and chauffeurs. Who would not want to live in Africa?
What no one asks is why we need a 20-something from Philadelphia to help us with problems that we should be solving ourselves.
The aid myth
Some of the fiercest critics of the aid industry have been from the African continent. Dambisa Moyo’s Dead Aid became a bestseller because she debunked the myth that aid benefits the poor. The Kenyan columnist Sunny Bindra has talked of how aid dependency erodes people’s dignity and self-respect. Maina Mwangi had called aid a “blunt instrument”. The Tanzanian scholar Issa Shivji has argued that when donors come to an African country, they establish a neoliberal agenda that essentially wrenches policy-making out of the hands of the African state. He says that the rapid rise of NGOs in Africa is part of a neoliberal offensive where the African state is demonised and the NGO is celebrated. Firoze Manji has often accused NGOs of “depoliticising poverty” by casting poverty, rather than social injustice, as the main problem facing so-called developing countries. Once poverty is depoliticised, it is delinked from the real causes of poverty – including corruption and exploitation of African resources by foreign multinationals. (You can read their brilliant essays on this topic in Missionaries, Mercenaries and Misfits, an anthology I edited.)
With so much opposition to aid by none other than Africans, why is it that these NGOs and charities keep coming to Africa? Well, it’s partly because we let them. African governments are only too happy to let charities and NGOs do the work that they should ideally be doing. And if the NGO or charity is run by a white person, all the better because not only will donor funds be guaranteed, but the government will also save its own resources (which can then be diverted to personal projects or can be embezzled).
How do we extricate ourselves from these do-gooders? Well, for one, by putting in place more stringent measures to vet and monitor them. The More Than Me Academy in Liberia had American teachers and volunteers with no experience in education. Both Bach’s and Meyler’s charities did not have boards that were located in the country where their NGOs were operating, which meant that there wasn’t sufficient oversight of their operations. Government inspectors did not come to the Meyler’s school or to Bach’s feeding centre to see if they met the required standards. No one was watching, so the abuse continued.
More importantly, African countries need to wean themselves off aid. NGOs can never replace governments when it comes to providing basic services – they simply do not have the mandate or the kind of resources to undertake service provision on a national scale. Only a government, or its agencies, can provide universal healthcare and education. Only a government can pass laws, regulations and oversight mechanisms that can ensure that NGOs are accountable to the people they purport to serve.
This is not to say that African governments can be relied on to do what is best for their citizens or to do what is in the public interest (as we in Kenya know too well) but to leave entire populations at the mercy of foreign charities and NGOs that are not accountable to anyone is highly irresponsible – and can be extremely dangerous, as the cases in Uganda and Liberia illustrate.
I don’t think all charities and donor organisations are doing harm; on the contrary, many have been crucial during emergency situations. But I do think that there must be more scrutiny of their operations and of their founders’ intentions. African countries should not be fulfilling the misplaced fantasies of naïve and confused white men and women who come to the continent to find themselves, and in the process end up harming those they claim to be helping.
Many countries are now waking up to the risks posed by voluntourism, especially as they relate to children’s charities and orphanages. Last year, Australia became the first country to recognise “orphanage trafficking” as a form of modern slavery. African countries should do the same.
State Capture Unlimited: The Intrigues Inside the Battle to Control Mombasa’s Second Container Terminal
7 min read. Even without a pecuniary interest in the KNSL transaction, a seamless operation that transfers all the freight logistics to Naivasha is sufficient motivation for Kenyatta to pursue the capture of the terminal as aggressively as he is doing. We may also have our answer as to why the Government is not enticing MSC to Lamu. Kenyatta does not own land there.
Sometime in the late 80s, at the tail end of the era of the state commanding the heights of the economy, the Moi government had an idea—to establish a national shipping line. The business case seemed straightforward enough. The country was leaking a substantial amount of its meagre foreign exchange earnings to foreign shipping lines that were ferrying our imports and exports. The total value of shipping services in 1986 was in the order of $230 million (Sh3.7 billion) equivalent to 10 per cent of the country’s $2.2 billion (Sh43 billion) foreign exchange earnings (the exchange rate was Sh16 to the US$). Saving some of this money looked like a splendid idea. As always, the devil is in the detail.
The country was not in a position to buy vessels. The plan was to establish what is referred to in the industry as a Non-Vessel Owning Common Carrier (NVOCC) that would lease space on third-party vessels, essentially a glorified freight forwarding company. The Kenya National Shipping Line (KNSL) was incorporated in 1987 as a joint venture, with Kenya Ports Authority and UNIMAR, a German investor, owning 70 per cent and 30 per cent, respectively (UNIMAR later sold half its stake to DEG, a development finance institution of the German government). KNSL began operations in 1988 by establishing a partnership with Mediterranean Shipping Company (MSC) to charter space on MSC ships plying the Mombasa-Europe route, calling in at Lisbon, Le Havre, Antwerp, Rotterdam, Hamburg and Felixstowe among other ports in that general geographic region.
Business did not go as planned. Chartering slots on ships and hiring containers was easy, getting customers, not so. KNSL quickly racked up debt with the shipping lines and with container leasing companies for slots and containers that it was leasing and not using. But even had business gone according to plan, it is doubtful that it would have saved the country much foreign exchange. At the time, the Mombasa terminal was handling 120,000 TEUs (twenty-foot equivalent units) of containerised freight annually. The total cost of shipping a container to or from Europe would have been in the order of $900, a total of $108 million annually. Even had KNSL been able to secure a monopoly and get a 10 per cent trade margin, which is doubtful, it would have earned the country just over $10 million, about 0.5 per cent of the foreign exchange earnings.
In 1996, Heywood Shipping, an entity linked to MSC, acquired a stake in KNSL. The exact circumstances and nature of the transaction are hazy but it appears that this was part of a restructuring that may have involved converting debt to equity and bringing in MSC as a strategic partner. Heywood Shipping does not appear to be an operating business. An internet search brings up the name in the company registry of the Isle of Man, a British offshore tax haven, which may or may not be of the same company.
Nothing was heard of KNSL for two decades, although to be sure, it had not been making headlines even before. Then, out of the blue, in August 2018, it was reported that the Government had signed a Memorandum of Understanding (MoU) with MSC to revive KNSL. The reports indicated that the government was eyeing a slice of the Sh300 million ($3 billion) that it claimed the country was paying foreign companies for shipping. As usual, the Jubilee numbers are exaggerated. The $3 billion is about right for the total imports of services, of which shipping represents less than a third ($830 million in 2017 according to WTO data). I have two observations. First, this is the same reasoning that had motivated KNSL’s establishment three decades earlier. What has changed? Second, MSC was already a shareholder and strategic partner of KNSL. Why then was the Government signing an MOU with MSC on the same? The plot would soon unfold.
In March 2019 the government introduced an amendment to the Merchant Shipping Act to give the Transport Cabinet Secretary power to exempt government entities from some provisions of the statute. The particular provision that needed to be circumvented prohibits a shipping line from operating port facilities. In competition law and policy, this clause is used to prevent vertical integration, the control of many stages in a business chain by one firm to undermine competition. If for example, a manufacturer also controls distribution and retail, it can use its market power to choke competitors by restricting supply and/or overpricing its goods. A shipping line that also operates port facilities can frustrate competitor shipping lines similarly by making it advantageous to use its seamless services while providing competitors with shoddy services. Yet this is precisely what this amendment was about: to pave way for KNSL to be awarded a concession to operate the second container terminal at the Port of Mombasa, referred to in the industry as CT2.
The CT2 facility has been built by the Government with debt financing from Japan. The first phase was completed in 2016. Under the financing agreement, CT2 would be leased out to an independent operator selected through a competitive process. In 2014, the Government invited port operators to make their bids. Several international port operators applied, but the process was cancelled before completion—but not before eliciting uncharacteristically pointed objections from the usually reticent Japan. Long after the bids had closed, the government sought to introduce new conditions that would have opened up financing of the second phase even though the government had already signed a financing agreement with Japan. In a letter to the Treasury, the resident representative of the Japanese aid agency, JICA, talked of their “obligation to assure accountability and transparency in the process”, and warned that mishandling of the process would jeopardise future assistance to Kenya.
In early 2017, it emerged that the government had entered into a bilateral agreement with the United Arab Emirates in which the UAE was to extend a loan of $275 million (Sh28 billion) for improvements to the port at Mombasa, including “enhancing operational and business efficiencies within the Second Container Terminal.” In return, the state-owned port operator, Dubai World, would get the concession for the second container terminal. Dubai World was one of the bidders in the cancelled tender, and according to media reports, it had emerged second. This particular deal seemed to have been designed to circumvent competitive bidding through a ‘government-to-government’ transaction. For whatever reason, it also floundered.
This brings us to the KNSL transaction. Like the UAE agreement, the revived KNSL is devised to circumvent competitive bidding under the guise that KNSL is a state entity. KNSL shareholding stands at 53 per cent Kenya Ports Authority (KPA) and 43 per cent Heywood Shipping. Heywood Shipping has two directors on the board of KNSL: a Mr Peter Reschke and a Captain G. Cuomo. The MoU between the Government and MSC was signed by a Captain Giovanni Cuomo, designated as Vice President. It seems reasonable to assume that Captain G. Cuomo and Captain Giovanni Cuomo are one and the same person.
Financial capacity is one of the standard requirements for concessionaires in public-private partnerships (PPP). According to the 2017 audit, KNSL made a loss of Sh44.7 million, up from Sh37 million the previous year. It had revenues of Sh723,000 against expenses of Sh45 million. On the balance sheet, it has accumulated a deficit of Sh376 million. In short, KNSL is insolvent. The audit is qualified, and the Auditor General’s basis for adverse opinion runs to a couple of pages. KNSL is a shell, and to all intents and purposes, a Trojan horse for MSC.
It has been reported that the business case for single-sourcing MSC is to leverage on the concession to create seafaring jobs for Kenyans on MSC’s ships. Media reports say that MSC has committed to employing several Kenyans on its cruise liners, and to docking them in Mombasa thereby creating more jobs. These may be good intentions, but single-sourcing an operator and stifling competition is not the way to go about it. MSC will be in a position to leverage its position to undermine competitors. The competitors will lose market share in Mombasa but they are unlikely to take it lying down. For transit freight in particular, the competitors are likely to respond by undercutting MSC in competing ports, notably Dar es Salaam, and even Djibouti. Far from enhancing Mombasa as the pre-eminent port in the region, vertical integration will undermine it.
It is worth noting that even as the Government railroads this transaction, it is woefully short of investors for the Lamu port project. So far, the government has completed one of the three berths that it is building—out of a total of 32 in the plan. It is shopping for private investors to build and operate the other 29. The government is also shopping for an operator for the berths that it will have built. According to its website, MSC has a subsidiary—Terminal Investments Limited—that invests in, and manages container terminals. Given that MSC has been a joint venture partner in the KNSL all these years, it is intriguing that the Government has failed to persuade them to take up the Lamu opportunity as either operator, or investor or both.
It is worth noting that even as the Government railroads this transaction, it is woefully short of investors for the Lamu port project. So far, the government has completed one of the three berths that it is building—out of a total of 32 in the plan
We are compelled to infer that someone is out to reap where they have not sown. The initial meddling with the first tender sought to not only influence the award of the operating concession, but to also prevent the Japanese Government from financing the second phase. We infer from this that there was another financier lined up who was amenable to paying the hefty kickbacks that are standard operating procedure for Jubilee mega-infrastructure projects. The deal with the UAE and Dubai Ports had embedded private interests written all over it. The KNSL Trojan horse is the third bite at the cherry.
There is only one office with the power to subvert the competitive bidding process consistently and incessantly, and there are no prizes for guessing which one it is. This is Uhuru Kenyatta’s racket. From the now ill-fated dairy industry regulations to the floundering Huduma Namba, we have learned that wherever you see presidential political capital being expended, family business is involved. Indeed an MP friend remarked the other day that the only business that Parliament is transacting these days is Kenyatta family business.
What we need to know is the what and the how. First, we should demand full disclosure of the ownership and beneficial interests of Heywood Shipping. The two Heywood directors on the KNSL board need to swear affidavits that they have not entered into any agreement to transfer such interest to anyone else in the future. Kenyatta should be asked to declare that he and his family have no current or future beneficial interest in Heywood and MSC.
From the now ill-fated dairy industry regulations to the floundering Huduma Namba, we have learned that wherever you see presidential political capital being expended, family business is involved
A direct beneficial interest in Heywood is by no means the only route that Kenyatta can use to profit from the infrastructure. We know that the terminal integrates with the SGR railway. The railway terminates in Naivasha where the Kenyatta family has extensive landholdings positioned to benefit from the anticipated dry port business. We have seen Uhuru Kenyatta personally offering land for freight stations to Uganda and South Sudan leaders; whether this is public or private land, we do not know, but it does beg the question why Uganda would build a facility in Naivasha if, as we are told, the railway is to be integrated with the revamped meter-gauge rail all the way to the Uganda border.
Even without a pecuniary interest in the KNSL transaction, a seamless operation that transfers all the freight logistics to Naivasha is sufficient motivation for Kenyatta to pursue the capture of the terminal as aggressively as he is doing. We may also have our answer as to why the Government is not enticing MSC to Lamu. Kenyatta does not own land there.
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