Kenya’s sugar industry circus continues. Late last year, the government formed a task force to look into the industry’s never-ending woes. Last week, a farmers lobby group formed a parallel task force, which is already convening in western Kenya and collecting views. The government has dismissed the private task force, and vice versa. Farmers seem to be behind the private one. Ironically, both are talking the same language— reviewing law and policy.
For more than a decade now, Kenya has been granted reprieves by the COMESA trade block to reform its sugar industry. Last year, the reprieve was extended for a further two years to 2020. The COMESA region has some very competitive sugar producers including Sudan and Malawi. Kenya runs a huge trade surplus with COMESA. Kenya’s excuses are wearing thin. This time round, the trade block set up a committee to supervise the implementation of the deal.
It is a tall order. Kenya’s sugar industry has a productivity problem. This has two components, low farm productivity and low sugar recovery. We have the lowest cane yields in the COMESA region (and the other COMESA countries have some of the highest yields in the world). The recovery rates are between 9 and 11 percent, that is, a tonne of cane produces between 90 – 110 kilos of sugar, while western Kenya manages to recover only 6 percent.
Why are cane yields in western Kenya so low? Simply put, this is because cane sugar production is a land and capital intensive crop. Western Kenya smallholders are land and capital poor. They don’t have the capital to invest in irrigation and high tech agronomy, or the scale to make such investments pay off. We do not leave the country to benchmark. Kwale International Sugar, the Mauritian investors who revived Ramisi Sugar report that they are harvesting 60 tonnes per hectare on rain fed cane, and 140 tonnes per hectare on irrigated fields. They describe their irrigation system as a “state-of-the art technology that includes a sub-surface drip-fed irrigation system which delivers 40 percent water saving.
We have the lowest cane yields in the COMESA region…the other COMESA countries have some of the highest in the world…
Assuming the rest of the agronomy is the same, irrigation alone more than doubles the cane yield. In fact, at 60 tonnes per hectare the rain-fed yield in Kwale is the same as western Kenya. However, cane at the coast matures faster, 12 months as compared to 15 to 18 months in western. This makes for significant productivity differences. In western, it translates to 120 tonnes per hectare over a three year cycle, which brings down the average annual production per hectare to 40, while in Kwale the yield and annual production remain at 60 tonnes per hectare. So, though we have 220,000 hectares planted, we only harvest 80,000 a year on average, which is just over a third of the planted acreage. To see the difference this makes, we produce on average 600,000 metric ton of sugar on 200,000 acres (440,000 acres) of land. Mauritius produces a similar about of sugar on 72,000 hectares (158,000 acres).
In economics, we think of resource allocation in terms of opportunity cost. The economic value of an industry is what it produces over the next best alternative use of the scarce resources that it employs. Kenya is a land-poor country. Only a third of the land is arable without considerable investment in irrigation and land improvement. The sugar belt is some of Kenya’s most productive rain-fed cropland. If the land under sugarcane could be made as productive as tea, it would generate $1.3 billion ( Sh.130 billion) at current exchange rates, compared to US$ 180 million worth of sugar currently.
By misallocating resources, western Kenya is losing KSh 100 billion worth of agricultural productivity. As a country we are losing more. Average ex-factory price of sugar is currently quoted at KSh 4,000 per 50-kg bag (KSh 80 per kilo) which translates to US$ 800 per tonne. Sugar is trading at about $280 a tonne, or KSh 30 per kilo in the world market. Kenyan consumers are paying more than double the world price. With current consumption at 80 kilos per household, the sugar industry protection works out to KSh 4,000 per household per year. If we were buying sugar at the world price, the savings would be enough to buy every Kenyan household a kilo of meat every month.
By misallocating resources, western Kenya is losing KSh 100 billion worth of agricultural productivity.
We pay western Kenya more than double the world price of sugar, but it has not made the region prosperous. All the public sugar companies are insolvent. The government and stakeholders continue to go round in circles. Waswahili have a popular saying “ukiona vialea vimeundua” (ships/vessels float because they are build to), meaning there are reasons why things are what they are.
After independence, the government set about identifying cash crops that smallholders could grow in the different “high potential” agro-ecological zones. Central Kenya had coffee, tea and pyrethrum. The white highlands had their cereals and dairy. In line with the import substitution industrialization strategy of the time, sugar and cotton were identified as ideal cash crops for the lake region. It is the misfortune of western Kenya that both crops were unsuited for a smallholder out-grower production system. To be sure, it is pure good luck that tea turned out to be suited for the model. In fact, the World Bank strongly advised the government against it, as there was no precedent of smallholder tea production anywhere in the world.
The sugar industry thrived behind the tariff barriers of import substitution industrialization. But by the mid-seventies, the structural and economic challenges that now plague the industry were already in place. Prof. Stephen Mbogoh, one of the country’s leading agricultural economists, who studied the sugar industry for his doctorate observed:
“At the macro-level planners are interested in other aspects of an enterprise, besides the profitability aspect. The potential for an enterprise to create employment in Kenya, particularly in the rural areas, is an important consideration. Cane production is found to be the most profitable enterprise, but it does not generate as much capacity for absorbing the rural unemployed as the alternative enterprises.” (Mbogoh, Stephen Gichovi. An Economic Analysis of Kenya’s Sugar Industry with Special Reference to the Self-Sufficiency Production Policy PhD Thesis. University of Alberta. 1980)
Mbogoh’s analysis showed that sugar had the highest income per worker, but the lowest job creation potential of the competing alternatives (See table). But this analysis does not bring the import protection factor to bear. Even then sugar was the most highly protected of the alternatives. From Mbogoh’s data sugar was retailing at KSh. 4.50 per kilo in 1976, which works out to US$ 750 per tonne, against a world price of US$ 250 per tonne— the same as now. If both the domestic resource cost (i.e. the cost of protection) and job creation were taken into account, the maize/groundnut combination would have come out on top. It is worth noting that even with import protection, the maize/groundnut gross revenue is comparable to sugarcane.
After independence, the government set about identifying cash crops that smallholders could grow in the different “high potential” agro-ecological zones. Central Kenya had coffee, tea and pyrethrum. The White Highlands had their cereals and dairy. In line with the import substitution industrialization strategy of the time, sugar and cotton were identified as ideal cash crops for the lake region. It is the misfortune of western Kenya that both crops were unsuited for a smallholder out-grower production system.
From an economic policy standpoint, gross revenue is a more important variable than the net profit because it captures all the incomes generated by an economic activity and not just the profit of that specific enterprise. The difference between gross and net income captures the multiplier effect of an enterprise. In this case, we see that while both sugarcane and the maize/groundnut option have roughly the same gross income, the maize/groundnut options buys 60 percent more (KSh 2,122) than sugarcane (KSh 1,296), which is indicative of a better distributional outcome than sugarcane.
By the mid-seventies, the structural and economic challenges that now plague the industry were already in place.
In summary the policymakers saddled western Kenya with an uncompetitive, capital intensive, low productivity, regressive (i.e. income concentrating) cash crop. One cannot help but wonder whether the predominance of western Kenya migrant labour in Nairobi has something to do with these policy choices.
In all fairness, this was not, as is sometimes insinuated, a conspiracy to impoverish the region. Rather, it was a reflection of the conviction behind import substitution industrialization. Indeed, the import substitution strategy was predicated on “export pessimism” – the idea that primary commodity exporters were condemned to deteriorating terms of trade (purchasing power vis-a-vis manufactured goods) in perpetuity. Viewed from this perspective, western Kenya with its sugar and cotton mills seemed brighter than that of primary commodity exporting central Kenya.
Policymakers saddled western Kenya with an uncompetitive, capital intensive, low productivity, regressive cash crop. One cannot help but wonder whether the predominance of western Kenya migrant labour in Nairobi has something to do with these policy choices.
By the end of the 70s, import substitution had run its course. Subsidies drained government coffers, and the imports of machinery and raw materials required to keep the industries afloat depleted foreign exchange without generating any. In Sessional Paper No.1 of 1986, Economic Management for Renewed Growth, the Moi government acknowledged that it was at the end of the road. Gradual liberalization began then, and ended with a bang in 1993. The textile industry, and cotton farming were wiped out.
But the sugar industry survived. How come? To the best of my knowledge, this question has not received much academic attention, but I have a theory. Cotton was by and large a poor man’s crop. Sugarcane outgrowers are both rich and poor. According to Prof. Mbogoh’s study, large scale outgrowers farming 40 to well over a 1000 hectares accounted for 40 percent of the outgrower acreage, and smallholders with between one and six hectares for the other 60 percent. I suppose that the sizes will have changed as land has become fragmented but the industry structure remains more or less the same.
Liberalization…ended with a bang in 1993. The textile industry, and cotton farming were wiped out. But the sugar industry survived. How come?
Because sugarcane production is capital intensive, the large scale outgrowers are able to achieve higher farm productivity than smallholders, but still benefit from the cane prices that are based on the smallholders cost structure. Moreover, the low husbandry requirements between planting and harvesting makes sugarcane very amenable to “telephone” farming by western Kenya elites. Additionally, the same said elites have preferential access to other business opportunities in the value chain, such as suppliers to the factories and sugar distribution. It is instructive that Mumias, which stands out by not having large scale outgrowers, was the only sugar company that was privatized, perhaps because there were no powerful elites with a vested interest in maintaining the status quo. From this vantage point, the private task force begins to look more like a “steak holder” than a stakeholder initiative.
Because sugarcane production is capital intensive, the large scale outgrowers are able to achieve higher farm productivity than smallholders, but still benefit from the cane prices that are based on the smallholders’ cost structure.
But western Kenya’s sugar industry cannot be protected from competition indefinitely. Sooner or later, the COMESA safeguards will come to an end. If not that, other domestic producers will follow KISCOL and cash in on the high prices with lower costs of production. And as long as the wedge between the international and domestic prices remains what it is, episodes of import deluges will continue to destabilize the industry. The time for western Kenya sugar industry to face reality is now.
Steak holders should let the people go.
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SAPs – Season Two: Why Kenyans Fear Another IMF Loan
The Jubilee government would have us believe that the country is economically healthy but the reality is that the IMF has come in precisely because Kenya is in a financial crisis.
Never did I imagine that opposing an International Monetary Fund (IMF) loan to Kenya would be viewed by the Kenyan authorities as a criminal act. But that is exactly what transpired last week when activist Mutemi Kiama was arrested and charged with “abuse of digital gadgets”, “hurting the presidency”, “creating public disorder” and other vaguely-worded offences. Mutemi’s arrest was prompted by his Twitter post of an image of President Uhuru Kenyatta with the following caption: “This is to notify the world . . . that the person whose photograph and names appear above is not authorised to act or transact on behalf of the citizens of the Republic of Kenya and that the nation and future generations shall not be held liable for any penalties of bad loans negotiated and/or borrowed by him.” He was released on a cash bail of KSh.500,000 with an order prohibiting him from using his social media accounts or speaking about COVID-19-related loans.
Mutemi is one among more than 200,000 Kenyans who have signed a petition to the IMF to halt a KSh257 billion (US$2.3 billion) loan to Kenya, which was ostensibly obtained to cushion the country against the negative economic impact of COVID-19. Kenya is not the only country whose citizens have opposed an IMF loan. Protests against IMF loans have been taking place in many countries, including Argentina, where people took to the streets in 2018 when the country took a US$50 billion loan from the IMF. In 2016, Eqyptian authorities were forced to lower fuel prices following demonstrations against an IMF-backed decision to eliminate fuel subsidies. Similar protests have also taken place in Jordan, Lebanon and Ecuador in recent years.
Why would a country’s citizens be against a loan given by an international financial institution such as the IMF? Well, for those Kenyans who survived (or barely survived) the IMF-World Bank Structural Adjustment Programmes (SAPs) of the 1980s and 90s, the answer is obvious. SAPs came with stringent conditions attached, which led to many layoffs in the civil service and removal of subsidies for essential services, such as health and education, which led to increasing levels of hardship and precarity, especially among middle- and low-income groups. African countries undergoing SAPs experienced what is often referred to as “a lost development decade” as belt-tightening measures stalled development programmes and stunted economic opportunities.
In addition, borrowing African countries lost their independence in matters related to economic policy. Since lenders, such as the World Bank and the IMF, decide national economic policy – for instance, by determining things like budget management, exchange rates and public sector involvement in the economy – they became the de facto policy and decision-making authorities in the countries that took their loans. This is why, in much of the 1980s and 1990s, the arrival of a World Bank or IMF delegation to Nairobi often got Kenyans very worried.
In those days (in the aftermath of a hike in oil prices in 1979 that saw most African countries experience a rise in import bills and a decline in export earnings), leaders of these international financial institutions were feared as much as the authoritarian Kenyan president, Daniel arap Moi, because with the stroke of a pen they could devalue the Kenyan currency overnight and get large chunks of the civil service fired. As Kenyan economist David Ndii pointed out recently at a press conference organised by the Linda Katiba campaign, when the IMF comes knocking, it essentially means the country is “under receivership”. It can no longer claim to determine its own economic policies. Countries essentially lose their sovereignty, a fact that seems to have eluded the technocrats who rushed to get this particular loan.
When he took office in 2002, President Mwai Kibaki kept the World Bank and the IMF at arm’s length, preferring to take no-strings-attached infrastructure loans from China. Kibaki’s “Look East” economic policy alarmed the Bretton Woods institutions and Western donors who had until then had a huge say in the country’s development trajectory, but it instilled a sense of pride and autonomy in Kenyans, which sadly, has been eroded by Uhuru and his inept cronies who have gone on loan fishing expeditions, including massive Eurobonds worth Sh692 billion (nearly $7 billion), which means that every Kenyan today has a debt of Sh137,000, more than three times what it was eight years ago when the Jubilee government came to power. By the end of last year, Kenya’s debt stood at nearly 70 per cent of GDP, up from 50 per cent at the end of 2015. This high level of debt can prove deadly for a country like Kenya that borrows in foreign currencies.
When the IMF comes knocking, it essentially means the country is “under receivership”.
The Jubilee government would have us believe that the fact that the IMF agreed to this loan is a sign that the country is economically healthy, but as Ndii noted, quite often the opposite is true: the IMF comes in precisely because a country is in a financial crisis. In Kenya’s case, this crisis has been precipitated by reckless borrowing by the Jubilee administration that has seen Kenya’s debt rise from KSh630 billion (about $6 billion at today’s exchange rate) when Kibaki took office in 2002, to a staggering KSh7.2 trillion (about US$70 billion) today, with not much to show for it, except a standard gauge railway (SGR) funded by Chinese loans that appears unable to pay for itself. As an article in a local daily pointed out, this is enough money to build 17 SGRs from Mombasa to Nairobi or 154 superhighways like the one from Nairobi to Thika. The tragedy is that many of these loans are unaccounted for; in fact, many Kenyans believe they are taken to line individual pockets. Uhuru Kenyatta has himself admitted that Kenya loses KSh2 billion a day to corruption in government. Some of these lost billions could actually be loans.
IMF loans with stringent conditions attached have often been presented as being the solution to a country’s economic woes – a belt-tightening measure that will instil fiscal discipline in a country’s economy by increasing revenue and decreasing expenditure. However, the real purpose of these loans, some argue, is to bring about major and fundamental policy changes at the national level – changes that reflect the neoliberal ethos of our time, complete with privatisation, free markets and deregulation.
The first ominous sign that the Kenyan government was about to embark on a perilous economic path was when the head of the IMF, Christine Lagarde, made an official visit to Kenya shortly after President Uhuru was elected in 2013. At that time, I remember tweeting that this was not a good omen; it indicated that the IMF was preparing to bring Kenya back into the IMF fold.
Naomi Klein’s book, The Shock Doctrine, shows how what she calls “disaster capitalism” has allowed the IMF, in particular, to administer “shock therapy” on nations reeling from natural or man-made disasters or high levels of external debt. This has led to unnecessary privatisation of state assets, government deregulation, massive layoffs of civil servants and reduction or elimination of subsidies, all of which can and do lead to increasing poverty and inequality. Klein is particularly critical of what is known as the Chicago School of Economics that she claims justifies greed, corruption, theft of public resources and personal enrichment as long as they advance the cause of free markets and neoliberalism. She shows how in nearly every country where the IMF “medicine” has been administered, inequality levels have escalated and poverty has become systemic.
Sometimes the IMF will create a pseudo-crisis in a country to force it to obtain an IMF bailout loan. Or, through carefully manipulated data, it will make the country look economically healthy so that it feels secure about applying for more loans. When that country can’t pay back the loans, which often happens, the IMF inflicts even more austerity measures (also known as “conditionalities”) on it, which lead to even more poverty and inequality.
IMF and World Bank loans for infrastructure projects also benefit Western corporations. Private companies hire experts to ensure that these companies secure government contracts for big infrastructure projects funded by these international financial institutions. Companies in rich countries like the United States often hire people who will do the bidding on their behalf. In his international “word-of-mouth bestseller”, Confessions of an Economic Hit Man, John Perkins explains how in the 1970s when he worked for an international consulting firm, he was told that his job was to “funnel money from the World Bank, the US Agency for International Development and other foreign aid organisations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s resources”.
Sometimes the IMF will create a pseudo-crisis in a country to force it to obtain an IMF bailout loan.
The tools to carry out this goal, his employer admitted unashamedly, could include “fraudulent financial reports, rigged elections, payoffs, extortion, sex and murder”. Perkins showed how in the 1970s, he became instrumental in brokering deals with countries ranging from Panama to Saudi Arabia where he convinced leaders to accept projects that were detrimental to their own people but which enormously benefitted US corporate interests.
“In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire – to satisfy our political, economic or military needs. In turn, they bolster their political positions by bringing industrial parks, power plants, and airports to their people. The owners of US engineering/construction companies become fabulously wealthy,” a colleague told him when he asked why his job was so important.
Kenyans, who are already suffering financially due to the COVID-19 pandemic which saw nearly 2 million jobs in the formal sector disappear last year, will now be confronted with austerity measures at precisely the time when they need government subsidies and social safety nets. Season Two of SAPs is likely to make life for Kenyans even more miserable in the short and medium term.
We will have to wait and see whether overall dissatisfaction with the government will influence the outcome of the 2022 elections. However, whoever wins that election will still have to contend with rising debt and unsustainable repayments that have become President Uhuru Kenyatta’s most enduring legacy.
Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul
Only the Haitian people can decide their own future. The dictatorship imposed by former president Jovenel Moïse and its imperialist enablers need to go – and make space for a people’s transition government.
Haiti is once again going through a profound crisis. Central to this is the struggle against the dictatorship imposed by former president Jovenel Moïse. Since last year Mr. Moise, after decreeing the dismissal of Parliament, has been ruling through decrees, permanently violating Haiti’s constitution. He has refused to leave power after his mandate ended on February 7, 2021, claiming that it ends on February 7 of next year, without any legal basis.
This disregard of the constitution is taking place despite multiple statements by the country’s main judicial bodies, such as the CSPJ (Superior Council of Judicial Power) and the Association of Haitian Lawyers. Numerous religious groups and numerous institutions that are representative of society have also spoken. At this time, there is a strike by the judiciary, which leaves the country without any public body of political power.
At the same time, this institutional crisis is framed in the insecurity that affects practically all sectors of Haitian society. An insecurity expressed through savage repressions of popular mobilizations by the PNH (Haitian National Police), which at the service of the executive power. They have attacked journalists and committed various massacres in poor neighborhoods. Throughout the country, there have been assassinations and arbitrary arrests of opponents.
Most recently, a judge of the High Court was detained under the pretext of promoting an alleged plot against the security of the State and to assassinate the president leading to the illegal and arbitrary revocation of three judges of this Court. This last period has also seen the creation of hundreds of armed groups that spread terror over the entire country and that respond to power, transforming kidnapping into a fairly prosperous industry for these criminals.
The 13 years of military occupation by United Nations troops through MINUSTAH and the operations of prolongation of guardianship through MINUJUSTH and BINUH have aggravated the Haitian crisis. They supported retrograde and undemocratic sectors who, along with gangsters, committed serious crimes against the Haitian people and their fundamental rights.
For this, the people of Haiti deserve a process of justice and reparations. They have paid dearly for the intervention of MINUSTAH: 30 THOUSAND DEAD from cholera transmitted by the soldiers, thousands of women raped, who now raise orphaned children. Nothing has changed in 13 years, more social inequality, poverty, more difficulties for the people. The absence of democracy stays the same.
The poor’s living conditions have worsened dramatically as a result of more than 30 years of neoliberal policies imposed by the International Financial Institutions (IFIs), a severe exchange rate crisis, the freezing of the minimum wage, and inflation above 20% during the last three years.
It should be emphasized that, despite this dramatic situation, the Haitian people remain firm and are constantly mobilizing to prevent the consolidation of a dictatorship by demanding the immediate leave of office by former President Jovenel Moïse.
Taking into account the importance of this struggle and that this dictatorial regime still has the support of imperialist governments such as the United States of America, Canada, France, and international organizations such as the UN, the OAS, and the EU, the IPA calls its members to contribute their full and active solidarity to the struggle of the Haitian people, and to sign this Petition that demands the end of the dictatorship as well as respect for the sovereignty and self-determination of the Haitian people, the establishment of a transition government led by Haitians to launch a process of authentic national reconstruction.
In addition to expressing our solidarity with the Haitian people’s resistance, we call for our organisations to demonstrate in front of the embassies of the imperialist countries and before the United Nations. Only the Haitian people can decide their future. Down with Moise and yes to a people’s transition government, until a constituent is democratically elected.
Deconstructing the Whiteness of Christ
While many African Christians can only imagine a white Jesus, others have actively promoted a vision of a brown or black Jesus, both in art and in ideology.
When images of a white preacher and actor going around Kenya playing Jesus turned up on social media in July 2019, people were rightly stunned by the white supremacist undertone of the images. They suggested that Africans were prone to seeing Jesus as white, promoting the white saviour narrative in the process. While it is true that the idea of a white Jesus has been prevalent in African Christianity even without a white actor, and many African Christians and churches still entertain images of Jesus as white because of the missionary legacy, many others have actively promoted a vision of Jesus as brown or black both in art an in ideology.
Images of a brown or black Jesus is as old as Christianity in Africa, especially finding a prominent place in Ethiopian Orthodox Church, which has been in existence for over sixteen hundred years. Eyob Derillo, a librarian at the British Library, recently brought up a steady diet of these images on Twitter. The image of Jesus as black has also been popularised through the artistic project known as Vie de Jesus Mafa (Life of Jesus Mafa) that was conducted in Cameroon.
The most radical expression of Jesus as a black person was however put forth by a young Kongolese woman called Kimpa Vita, who lived in the late seventeenth and early eighteenth century. Through the missionary work of the Portuguese, Kimpa Vita, who was a nganga or medicine woman, became a Christian. She taught that Jesus and his apostles were black and were in fact born in São Salvador, which was the capital of the Kongo at the time. Not only was Jesus transposed from Palestine to São Salvador, Jerusalem, which is a holy site for Christians, was also transposed to São Salvador, so that São Salvador became a holy site. Kimpa Vita was accused of preaching heresy by Portuguese missionaries and burnt at the stake in 1706.
It was not until the 20th century that another movement similar to Vita’s emerged in the Kongo. This younger movement was led by Simon Kimbangu, a preacher who went about healing and raising the dead, portraying himself as an emissary of Jesus. His followers sometimes see him as the Holy Spirit who was to come after Jesus, as prophesied in John 14:16. Just as Kimpa Vita saw São Salvador as the new Jerusalem, Kimbangu’s village of Nkamba became, and still is known as, the new Jerusalem. His followers still flock there for pilgrimage. Kimbangu was accused of threatening Belgian colonial rule and thrown in jail, where he died. Some have complained that Kimbangu seems to have eclipsed Jesus in the imagination of his followers for he is said to have been resurrected from the dead, like Jesus.
Kimbangu’s status among his followers is however similar to that of some of the leaders of what has been described as African Independent Churches or African Initiated Churches (AICs). These churches include the Zionist churches of Southern Africa, among which is the amaNazaretha of Isaiah Shembe. Shembe’s followers see him as a divine figure, similar to Jesus, and rather than going to Jerusalem for pilgrimage, his followers go to the holy city of Ekuphakameni in South Africa. The Cameroonian theologian, Fabien Eboussi Boulaga, in his Christianity Without Fetish, see leaders like Kimbangu and Shembe as doing for their people in our own time what Jesus did for his people in their own time—providing means of healing and deliverance in contexts of grinding oppression. Thus, rather than replacing Jesus, as they are often accused of doing, they are making Jesus relevant to their people. For many Christians in Africa, therefore, Jesus is already brown or black. Other Christians still need to catch up with this development if we are to avoid painful spectacles like the one that took place Kenya.
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