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Sleeping with the Enemy: Are KDF and Humanitarian Agencies Doing Business with Al Shabaab?

9 min read. Kenya’s bid to have Al Shabaab listed as a terrorist organisation by the UN Security Council has raised several questions about the timing of the proposal and about whether it is a genuine attempt to deal with the terrorist threat emanating from Somalia writes RASNA WARAH.

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Sleeping with the Enemy: Are KDF and Humanitarian Agencies Doing Business with Al Shabaab?
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For several years, Somalia-watchers have suspected that aid and humanitarian organisations make deals with Al Shabaab in order to gain access to territories controlled by the terrorist group. Now, these suspicions have been confirmed by none other than former United States officials and heads of donor agencies and humanitarian organisations who are urging the Kenyan government not to request the United Nations Security Council to list Al Shabaab as a terrorist organisation because such a designation will hinder humanitarian work in Somalia.

According to a Daily Nation report, the group—which includes the former US Ambassador to Kenya, Mark Bellamy, the former Undersecretary of State, Thomas R. Pickering, and the former USAID administrator, J. Brian Atwood—says that Kenya’s proposal will “break the current working relationship where humanitarian workers are allowed certain windows to reach extremist-held regions”. In a letter to the US Secretary of State Mark Pompeo, the group stated that such a move could put hundreds of thousands of lives at risk.

Now it is not very clear why the Kenyan government has suddenly decided that Al Shabaab should be declared a terrorist organisation by the United Nations, given that Kenya and several other countries already recognise Al Shabaab as a terrorist outfit. Speculation is rife that such a listing in the UN Security Council would release more funds for counterterrorism efforts, which could financially benefit Kenya, which is both a frontline state and a major target of Al Shabaab’s terrorist activities. The timing of Kenya’s bid is also strange given that in 2010 the UN Security Council had designated Al Shabaab as a threat to peace and security and had added it to a list of sanctioned entities that are subject to travel bans, asset freezes and arms embargoes.

According to a report prepared jointly by the United Nations Environment Programme (UNEP) and Interpol, after losing Kismaayo, Al Shabaab began imposing “taxes” at roadblocks along routes in the hinterland that were used to transport charcoal to the port. At just one roadblock in Somalia’s Badhadhe District, the terrorist group was estimated to have made between $8 million and $18 million per year from charcoal traffic

Some Kenya government officials have hinted that if Al Shabaab is listed as a terrorist organisation along the same lines as Al Qaeda and the Islamic State in Iraq and Syria (ISIS), this will lead to an international military campaign to counter the group, an effort which is currently being shouldered mainly by African Union Mission in Somalia (AMISOM) forces, of which Kenya is a part.

Whatever the real motives of the Kenyan government, the admission by the aid sector that it has contacts with the terrorist organisation has unleashed all kinds of conundrums, and exposed the convoluted nature of aid to Somalia.

What is surprising is that former US officials and diplomats are at the forefront of stopping the Kenyan government from presenting its proposal to the UN Security Council. After all, the United States designated Al Shabaab a terrorist organisation as far back as February 2008 following the group’s proclamation of its allegiance to Al Qaeda. Subsequently, Norway, Sweden, Australia, Canada and the United Kingdom also listed Al Shabaab as a terrorist organisation.

Protection money

Two things happen when a group is declared as a terrorist organisation by a donor country or aid organisation. One, donor countries who name the group as a terrorist organisation put in safeguards to ensure that their funding/aid does not directly or indirectly benefit the organisation. There are severe consequences for those who break this rule. For instance, in the United States, violations can result in both civil and criminal penalties, including fines of up to $1 million or 20 years in prison. Two, donor countries stop or reduce funding to the country where the terrorist organisation is based.

Yet in the case of Somalia, these rules became a bit blurred, especially at the height of the 2011 famine in the country, when there was an international effort to raise millions of dollars for food aid. Sceptics wondered how the UN and other aid agencies expected to deliver food to large swathes of central and southern Somalia that were controlled by Al Shabaab, considering that the terrorist group had banned several UN agencies and international NGOs from operating there. (Al Shabaab views international aid organisations as fronts for Western intelligence agencies.) This was when it became apparent that in order to gain access to Al Shabaab-controlled territories in Somalia, aid agencies and NGOs on the ground had been making deals with the terrorist group; many UN agencies and international NGOs were paying taxes or “protection money” to Al Shabaab through their local implementing partners (usually Somalia-based NGOs).

Whatever the real motives of the Kenyan government, the admission by the aid sector that it has contacts with the terrorist organisation has unleashed all kinds of conundrums, and exposed the convoluted nature of aid to Somalia

A paper published in December 2013 by the Overseas Development Institute (ODI) titled “Talking to the other side: Humanitarian negotiations with Al Shabaab in Somalia” explained how the system worked: “While banning some organisations, Al Shabaab permitted others to work – albeit under increasingly tight rules and regulations. With the consequences for disobedience clear, the threat of expulsion compelled agencies either to comply or to withdraw, which was seen by many as unacceptable given the scale of the need. In November 2009, Al Shabaab imposed 11 conditions on remaining aid agencies in Bay and Bakool, including payment of registration and security fees of up to $20,000 every 6 months.”

Ashley Jackson and Abdi Aynte, the authors of the report, say that such behaviour is not limited to Somalia; aid agencies in Afghanistan have also been known to negotiate with the Taliban.

Some aid and humanitarian organisations resisted this form of “taxation”, but those that complied had to factor in these fees in their project budgets. Yet, these same organisations continued to deny that they gave money to Al Shabaab in exchange for access—such an admission could have led to reduced funding and perhaps even sanctions against the organisations.

KDF’s links

What is surprising about Kenya’s recent move is that the government itself has not been averse to dealing with terrorist organisations in the past, as when Kenya Defence Forces (KDF) recruited the Ras Kamboni militia to fight alongside it when KDF invaded southern Somalia in October 2011. It is common knowledge that the Ras Kamboni militia’s leader, Sheikh Ahmed Mohamed Islam, better known as Madobe, was a high-ranking official of the militant Islamic group Hizbul Islam, which was formed in 2009 by Sheikh Hassan Dahir Aweys (who has been designated as an international terrorist by the United States) before he joined the Kenyan forces.

Madobe was the governor of Kismaayo during the short-lived rule of the Islamic Courts Union, and later joined and then defected from Al Shabaab, ostensibly after protesting against its brutal methods. He later formed the Ras Kamboni militia to fight his former allies and to regain control over the prized port of Kismaayo, which was under the control of Al Shabaab when his and the Kenyan forces entered southern Somalia. (This could have been his primary motive for collaborating with the Kenyans.) All these double-dealings and defections should have been a cause for concern to KDF, but apparently they were not factored in when KDF—or rather the government of Mwai Kibaki—recruited Ras Kamboni militia for Kenya’s military mission in Somalia.

What could have prompted the Kenyan government to not only join forces with a known insurgent but even train his soldiers? Was it not a huge risk to be partnering with a militant group that had previous links with Al Shabaab? Wasn’t supporting such a group a security risk to the Kenyan forces? What if the Ras Kamboni soldiers defected? Given Madobe’s own record of defections, could he be relied on as a steady and committed ally?

Some observers believe that because he already knew the lay of the land, and had similar objectives as the Kenyan forces—to gain control of Kismaayo, Al Shabaab’s economic lifeline—Madobe was identified, and probably presented himself as a natural ally of the Kenyans, who were keen to create a friendly “buffer zone” in Jubbaland in southern Somalia. His Ogaden clan, which has for years sought to control southern Somalia, and which is also politically dominant in northeastern Kenya, could have also worked to his advantage.

It is important to note that the Kenyan government did not seek UN Security Council approval before it invaded Somalia. Kenyans were told that the operation was merely an “incursion” that had the blessing of the Federal Government of Somalia in Mogadishu and which was aimed at ousting Al Shabaab from areas along Kenya’s border with Somalia. It is ironic that the Kenyan government is now seeking the UN Security Council’s support.

The hypocrisy of the Kenyan government vis-à-vis the UN Security Council was further exposed when KDF were re-hatted as AMISOM. In September 2012, almost one year after the Kenyan invasion, when Kismaayo, the prized port that was Al Shabaab’s main economic base, fell to the Kenyan and Ras Kamboni forces, rumours began to emerge of Kenyan and Ras Kamboni soldiers exporting charcoal from the port, despite a UN Security Council ban.

Apparently, when the Kenyan and Somali forces entered Kismaayo, they discovered an estimated four million sacks of charcoal with an international market value of at least $60 million lined up by Al Shabaab and ready for export. In its report to the UN Security Council, the UN Monitoring Group on Somalia and Eritrea claimed that the Kenyan and Ras Kamboni forces decided to export the charcoal despite the UN ban, and that the export of charcoal more than doubled under their watch.

The Kenyan and Ras Kamboni forces, like Al Shabaab, it seemed, had turned Kismaayo into a cash cow. The UN Monitoring Group on Somalia and Eritrea estimated that charcoal worth $250 million was shipped from Somalia in 2013 and 2014, and that an average of 20 trucks, each carrying 5 to 12 tonnes of charcoal, were arriving in Kismaayo every day.

Kenya thus has to contend with the fact that the UN Security Council may not be holding a favourable view of Kenyan forces in Somalia because KDF might, in fact, be funding Al Shabaab. In its 2014 report to the UN Security Council, the UN Monitoring Group also made the astonishing claim that profits from the port of Kismaayo, which were made through taxes, charcoal exports and the importation of cheap sugar, were equally divided between the Kenyan forces, the Interim Jubbaland Administration headed by Ahmed Madobe, and Al Shabaab—suggesting that KDF’s presence in Somalia had not affected Al Shabaab’s ability to raise funds; on the contrary, KDF might have been aiding the terrorist group’s income-generating activities.

These claims were also supported by a report by the US-funded Institute of Defence Analyses, which was cited by the Sunday Nation in an article published on 27 July 2014, which stated: “Kenya, although formally a participant in AMISOM, which operates in support of the Somali national government, is also complicit in support of trade that provides income to Al Shabaab, its military opponent, both inside Somalia, and, increasingly, at home in Kenya.”

According to a report prepared jointly by the United Nations Environment Programme (UNEP) and Interpol, after losing Kismaayo, Al Shabaab began imposing “taxes” at roadblocks along routes in the hinterland that were used to transport charcoal to the port. At just one roadblock in Somalia’s Badhadhe District, the terrorist group was estimated to have made between $8 million and $18 million per year from charcoal traffic. Christian Hellemann, the principal analyst for the report, likened the charcoal trade in Somalia to the drug wars in Mexico in terms of the violence and the amounts of money involved.

An anonymous source who spoke to the Saturday Nation claimed that smuggled sugar was also a major source of income for Al Shabaab and KDF. There were five checkpoints between Kismaayo and the Kenyan town of Garissa; three of them were controlled by Al Shabaab and two by the Kenyan forces. “The sugar trucks are waved through all the checkpoints without any checks,” said the source. “There is a tacit agreement between the owner and these entities and we are sure hefty sums of money change hands in the form of illegal ‘taxes’,” stated the source, who was cited in the article published on 25 April 2015.

These reports were corroborated by other investigations that indicated that about 70 businessmen located in Kismaayo, Nairobi and Garissa were brokers in the sugar trade between Somalia and Kenya.

In other words, Kenyan forces were implicated in aiding Al Shabaab materially. Yet no sanctions have been placed on the Kenyan government or KDF and none of these allegations have affected how Kenyan forces in Somalia are viewed at home. In fact, reports about KDF’s involvement in the illicit charcoal and other trades in Somalia are largely ignored.

Maritime dispute

So what could be behind this new-found urgency on the part of the Kenyan government to compel the UN Security Council to declare Al Shabaab a terrorist organisation? After all, if sanctions are imposed on Kenya as a result of its own alleged affiliation with Al Shabaab, then will Kenya not be the ultimate loser?

Analysts believe that there must be something else behind Kenya’s diplomatic efforts at the UN. “It may have something to do with the maritime dispute between Kenya and Somalia because the Kenyan government is not going to accept a negative result from the court,” says Andrew Franklin, a Nairobi-based security analyst.

Kenya is currently in a legal dispute with Somalia over a maritime boundary along its border—a 100,000 square metre triangular chunk of the Indian Ocean that is suspected to be rich in oil. The International Court of Justice is expected to announce its decision on the dispute soon. It is possible that the Kenyan government is using the Al Shabaab threat to put additional pressure on the Federal Government of Somalia to withdraw the case against Kenya. Maybe Kenya believes that the listing of Al Shabaab as a terrorist organisation could lead to the imposition of UN sanctions on countries that harbour terrorists, in this case, Somalia. Having been weakened by the UN sanctions, Mogadishu might then consider negotiating with Nairobi on the border dispute. (The distribution of oil wealth will no doubt determine the content of any such negotiations.)

But there might be other considerations as well. Kenya has been unsuccessful in bringing back two Cuban doctors working in Kenya who were abducted by Al Shabaab in April this year from the border town of Mandera and taken to Somalia. Perhaps pressure from the Cuban government might have prompted the Kenyan government (which made a deal with Cuba to bring in the Cuban doctors, a decision that has irked Kenyan doctors who have failed to negotiate better terms for themselves with the government for years) to make it look like it is doing something about the Al Shabaab menace, hence the proposal to the UN Security Council.

Meanwhile, Al Shabaab, not one to let an opportunity go to waste, has apparently been using the medical services of the Cuban doctors. “There are rumours that the Cubans are treating Al Shabaab fighters and the general civilian population,” says Franklin. How ironic will it be if these Cuban doctors, when finally released, are charged with aiding a terrorist organisation?

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Ms Warah, the author of War Crimes, a sweeping indictment of foreign meddling in Somalia, and A Triple Heritage, among several other books, is also a freelance journalist based in Malindi, Kenya.

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The Broader Implications of the Kibra By-Election

6 min read. Despite the positive outcomes of the recent Kibra parliamentary by-election, the poll confirmed that the country is just as polarised as it was before the 2018 “handshake”.  The rabid political rhetoric, the ethnic mobilisation, the violence and allegations of bribery, were not any different from those witnessed during the 2017 election.  Kibra laid bare the fractures within the ruling Jubilee Party and confirmed the collapse of NASA. Rather than bridging the political differences in the country, the “handshake” has deepened them. This does not augur well for the country, particularly in these difficult economic times.

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The Broader Implications of the Kibra By-Election
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Now that the dust has somewhat settled after the Kibra parliamentary seat by-election, let us reflect on its broader implications.

There are some outcomes that stand out as positive. The vigilance of the political parties at polling stations was impressive, despite the violent tactics employed. This was a major improvement on 2017 when most political parties did not have agents present at the polling stations.  As confirmed by the High Court, the election results announced at the polling station are final, and the electoral regulations of the Independent Electoral and Boundaries Commission (IEBC) require that these results, signed by the agents, must be posted at polling stations.

Technically, if a candidate has agents at each polling station, he or she should be able to have a sense of their performance even before the IEBC Returning Officer. This is because the Returning Officer has to await the physical delivery of results by the Presiding Officers before embarking on the tallying. It was probably data from his agents which led the Jubilee candidate, McDonald Mariga, to make his call conceding defeat to Bernard (Imran) Okoth long before the official results were announced. For Mariga to concede defeat and accept the results early is indeed commendable and should be the norm. But this is only possible when candidates perceive the electoral process to be fair.

It also requires that stakeholders have reliable information, which appears to have been the case in Kibra. This cannot be said of the 2017 General Election, where the IEBC gave candidates reason to doubt the results it was releasing. In Kibra, the IEBC did not use its electronic results transmission system (although it did use the biometric voter identification system). Does this confirm that technology is not a panacea for the lack of transparency and confidence in electoral results? Indeed, Kibra opens the door for us to engage with the ideas put forward by former IEBC Commissioner Roselyn Akombe in her end of assignment report on the use of technology in elections.

Yet, despite some of these positive outcomes, I would argue that the negative aspects of the process far outweigh the positive ones, for four main reasons.

First, the process confirmed that the IEBC has not learned any lessons from its recent dismal failures. It continues to flaunt clearly laid out electoral laws and acts with impunity in the knowledge that the state—which it has been totally captured by—will protect it.  

Take, for instance, the issue of the voters register. The Elections Act requires that the Commission avail a register of voters to ensure transparency, verifiability and accountability. Yet, once again, the Commission failed to make the register available to stakeholders and nor did it make one available online. It only complied with the law once the Orange Democratic Party (ODM) sought relief from the courts.

You will recall that during the 2017 elections, every aspect of the electoral process, from registration of voters to procurement of electoral materials, was subject to litigation. Why is it so difficult for the Commission to comply with electoral laws and with its own procedures? In its own review of the 2017 General Election, the Commission identified over 500 legal cases against it, including Presidential, County and National Assembly petitions. It is important that an independent audit of the 2017 electoral process is undertaken if we are to hold on to the hope of electoral justice.  Otherwise, we risk having the same issues repeated in the next electoral cycle.

The IEBC has not learned any lessons from its recent dismal failures. It continues to flaunt clearly laid out electoral laws and acts with impunity in the knowledge that the state—which it has been totally captured by—will protect it.

Second, the Kibra by-election confirmed that the country is just as polarised as it was before the 2018 “handshake”.  The rabid political rhetoric, the ethnic mobilisation, the violence and allegations of bribery, were not any different from those witnessed during the 2017 election.

What the “handshake” did was shift the political alliances. We still have two political coalitions, just as we did in 2017. Only that the “dynasties” camp in the Kibra campaign was led by Rt. Hon. Raila Odinga, with the President’s acquiescence, and the “hustlers” team by the Deputy President. Kibra laid bare the fractures within the ruling Jubilee Party and confirmed the collapse of NASA. Rather than bridging the political differences in the country, the “handshake” has deepened them. This does not augur well for the country, particularly in these difficult economic times.

Third, state capture—which many observers including Wachira Maina and David Ndii have written about—is very much alive.  For many months now, close aides of Rt. Hon. Odinga have been boisterous about how the “system” has, since the handshake, switched its “loyalty” from the Deputy President to their Baba. They point out that with the “system” or the “deep state” solidly behind Baba, he is the “President-in-waiting” and the de facto co-Principal to the President.

One could argue that the “men in the shadows”, as John Githongo calls them in his article One Week in March: Was the Handshake Triggered by the IMF?, are keen to show that the handshake is working. With the Deputy President’s power withdrawn, he did not stand a chance of imposing his candidate in Kibra, as he is alleged to have done for most of the key positions in the 2017 election. His recent pronouncements are of a bitter man, spoilt by the ease with which he previously wielded power and now finding himself bereft. It is the anger of a man who has been betrayed by the same President whom he helped bring to power.

Second, the Kibra by-election confirmed that the country is just as polarised as it was before the 2018 “handshake”.  The rabid political rhetoric, the ethnic mobilisation, the violence and allegations of bribery, were not any different from those witnessed during the 2017 election.

I can imagine his frustration as he watched the security system tacitly approve the violence meted out against his candidate and his confidantes. A man who is alleged to have used the government machinery to terrorise dissenting voices, now watching from the periphery as they worked for his arch-rival.  A man who is reported to have made cold, menacing telephone calls, leading senior officials to resign from their positions rather than wait for his threats to materialise, was now seeing these tactics used against his cronies.

In light of this, Rt. Hon. Odinga’s supporters may be tempted to celebrate their ability to benefit from state capture today. However, they should be wary of how the tables may be turned should Baba fall out with Kenyatta. They surely must know the volatility of alliances in this country. There are still many factors that could come into play in the coming months. In cheering on state capture for short-term gain, we have sunk to our lowest level and history will judge us harshly for our acquiescence.

Fourth, Kibra confirmed that women continue to face insurmountable challenges when seeking political office. The two main political coalitions did not consider any female candidate in their “nominations”. Despite the odds, there were three formidable women in the race: Editar Ochieng (Ukweli Party); Hamida Musa (United Green Movement) and Fridah Kerubo (Independent).

Unlike most of the other 21 candidates, these three women live in Kibra and have been involved in community organising. Yet their voices were drowned out as Kibra became the arena for a national supremacy challenge between two men who do not even reside there. Men who visit the constituency for its political symbolism and have done nothing during their time in power to make even minimalist changes to improve the lives of Kibra’s inhabitants.

The sexist undertones of the campaigning were repulsive; the labeling of an entire constituency as one man’s “bedroom”, with another man retorting that he was within sight of invading it, should have been strongly condemned yet even the various organisations and groups purporting to defend women’s rights were eerily silent. They dared not hold either Rt. Hon. Odinga or the Deputy President accountable for their insensitive sexist innuendoes, which continue to undermine the participation of women in politics.  The mainstream unfortunately joined the bandwagon, using the same “bedroom” analogy without interrogating how this undermines their own mantras on the use of gender-sensitive language. Sadly, Kibra is a reminder that if we do not change the environment around our electoral process, the gender parity provisions in our constitution will remain a mirage.

Beneath the gender-insensitive use of the “bedroom” analogy in Kibra, is the underlying message of patronage. It trivialises the lives of the residents as dispensable political pawns.  It promotes the erroneous perception that one man can own the thousands of residents of Kibra. This is the same outrageous mindset which led Johnstone Kamau to appropriate a country’s name and present himself as it’s light (thus Kenyatta),  as he describes this re-naming in his book Facing Mount Kenya. No wonder his descendants see the country as their personal property to plunder.

Sadly, Kibra is a reminder that if we do not change the environment around our electoral process, the gender parity provisions in our constitution will remain a mirage.

Kibra reminds us that we have failed to address the root causes behind the current political polarisation. We have failed to make the changes necessary to end the ongoing state capture of independent institutions such as the IEBC. We pay lip service to the participation of women in politics and marginalise large swathes of our population. We have failed to address the economic policies that have led to our people living in difficult conditions, including in places such as Kibra. We have squandered the future of the youth and left many of them unemployed and disillusioned. It is time that we made serious attempts at addressing these issues. Otherwise, as we have seen in recent months from Algeria to Zimbabwe, the streets will take care of the situation. And the outcome of such popular protests may not be what the political elite might expect.

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‘I Don’t Understand Why Kenyans Are Broke’: Mr. Kenyatta’s Debt Distress Revisited

10 min read. Many Kenyans have been wondering why we are told that the economy is growing at a brisk 5 to 6 per cent year after year, yet they are not feeling it. Instead, big companies are issuing profit warnings and laying off people. Kenya’s public debt has increased threefold over the last six years, from Sh1.8 trillion to Sh6 trillion and although the data shows that the economy is growing, the tax base is not expanding and revenue is falling short as debt service charges are rising.

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‘I Don’t Understand Why Kenyans Are Broke:’ Mr. Kenyatta’s Debt Distress Revisited
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In 2018, following the Raila-Uhuru détente we call the handshake, I went against the grain and argued against the anti-corruption campaign that ensued. My reasons were simple enough; Uhuru and Ruto were jointly culpable for the administration’s corruption, hence my contention that the fight against corruption was being politically weaponised. I postulated that politicising the war on graft would blow back on the handshake (it has).

I voiced my concerns both publicly and privately. The response I got was that the anti-graft drive was strictly economic, and not political, motivated by the realisation that the government was hurtling towards a financial crunch. Different people on both sides of the handshake deal mentioned the figure of Sh300 billion, which they claimed was the amount that could be saved by stopping graft. I tried to explain the nature of the crisis that was unfolding but no one wanted to hear that fighting corruption was not the silver bullet. Heads were firmly in the sand.

The Sh300 billion figure cropped up again a few weeks ago, this time as the amount of tax payments that are in dispute. It was disclosed that the government is proposing legislation that will require the disputed figures to be paid up front. It does not take much imagination to see how such a law could be abused. A government as desperate for cash as this one can make inflated tax assessments—which tax one has to pay first and ask questions later—while also opening another avenue for tax officials to extort taxpayers. It can be used for political persecution or to cripple competitors and businesses targeted for acquisition by our rapacious crony capitalist cartels.

Why is the government clutching at straws? Let’s have a look at the finances. The government plans to spend Sh2.6 trillion in the current financial year (2019-2020). It plans to finance this spending through domestic revenue to the tune of Sh1.88 trillion (Sh1.81 trillion tax and Sh70 billion non-tax, respectively), Sh701 billion of debt, and external grants of Sh19.5 billion. Of the Sh701 billion of debt, it plans to borrow Sh434 billion domestically, and Sh267 billion from foreign lenders—comprising of Sh200 billion in commercial debt and the balance of Sh67 billion in soft loans from development lenders.

Let us put some perspective to these numbers. Over a quarter (27 per cent) of the budget is debt-financed and 90 per cent of this debt will be commercial—30 per cent from foreign lenders and 60 per cent from the domestic market (we often overlook the fact that domestic debt is commercial). The Jubilee administration has been doing this for six years running. When it took office, we had a single $600 million foreign commercial loan, which was paid off using the first Eurobond issue. Today, a third of our foreign debt amounting to $10 billion is commercial. The administration justified the $2.8 billion debut Eurobond issue, the largest African issue to date, on the promise that it would replace domestic borrowing, thereby leaving domestic credit to the private sector and reducing interest rates. It did not. Instead, the administration ratcheted up domestic borrowing as well and crowded out the private sector completely. It is also worth reminding ourselves that the proceeds of that Eurobond cannot be accounted for.

The Sh701 billion deficit translates to the government spending 37 per cent more than its income. This is like a Sh30,000 earner who has just acquired a credit card deciding that she can afford to live large by spending Sh40,000 a month. Now, let us assume that the credit card charges 15 per cent per year, and requires 5 per cent repayment of the outstanding principal every month. A year down the road, the monthly debt service will be in the order of Sh7,500, which is not too bad as she will still be spending Sh2,500 more than her salary after debt charges. But four months later the debt service charge will start eating into her salary and by the end of the second year, she will be paying Sh15,000 in debt charges a month and owing Sh. 240,000. If she were to run into a credit limit at that point, she would have to live on Sh. 15,000 a month— half her salary—and her lifestyle will definitely have to change drastically.

This scenario will be familiar to people who have abused credit cards. It is the situation we are in—six years of abuse of the national credit card. For the country, it is unprecedented; we are one of the few African countries that escaped the 1980s-90s debt crisis that was resolved by the Highly Indebted Countries Initiative (HIPC). But I gather that this is not the first time that the bloke at the helm has over-swiped.

Many Kenyans have been wondering why we are told that the economy is growing at a brisk 5 to 6 per cent year after year, yet they are not feeling it. Instead, big companies are issuing profit warnings and laying off people. A related question is why government revenue is falling short when the economy is supposedly booming. Under Jubilee, the tax revenue as a percentage of GDP has declined from 18 per cent to 15 per cent, the lowest level since the 90s. The three percentage points difference is, surprise, surprise, Sh300 billion.

Jubilee has increased our public debt threefold over the last six years, from Sh1.8 trillion to Sh6 trillion and counting. Unlike our consumer, however, the government will argue that its debt has been invested. But investments are risky, or long term. Moreover, you don’t borrow short-term to invest long-term as the government has been doing. If you do, the debt repayments eat into the working capital, and you will soon be defaulting on your suppliers, as the government is doing.

Under Jubilee, the tax revenue as a percentage of GDP has declined from 18 per cent to 15 per cent, the lowest level since the 90s. The three percentage points difference is, surprise, surprise, Sh300 billion.

Government borrowing is predicated on the expectation that the projects financed will stimulate productive investment that will in turn generate tax revenues to service the debt. But very little of this debt has yielded any economic benefits that would in turn generate tax revenues. The Standard Gauge Railway (SGR)—the largest of these projects—has not stimulated any new economic activity. Much to the contrary, all it has achieved to date is to disrupt port logistics and road haulage while increasing costs and inefficiency for importers. Right now, its net economic contribution is negative. All indications are that the Galana-Kulalu irrigation scheme is a white elephant, and we know for sure that the economic contribution of the Arror and Kimwarer dams is zero.

Moreover, the government shoots itself in the foot by awarding the construction projects to foreign— predominantly Chinese—state-owned firms. This undermines revenue in two ways. First, the companies are exempted from paying tax. Second, the money they make is repatriated, denying the economy the multiplier effect it would have if the money had been earned by domestic firms. I gather that Uhuru Kenyatta was banging tables the other day demanding to know why Kenyans are broke, how come the money spent on government projects is not circulating in the economy.

Let us take his flagship project, the SGR. The man went and swiped the national credit card and the Chinese delivered the goods. The money stayed in China, debited from our loan accounts in the Chinese banks and credited to the suppliers’ bank accounts. We are paying the loans from our pockets. This year, we’ve budgeted to pay the Chinese banks Sh94 billion, up from Sh39 billion last year. Far from circulating it in the economy, foreign debt-financed government projects are draining money from the economy.

Thus, although the data shows that the economy is growing, the tax base is not expanding and revenue is falling short as debt service charges are rising. While tax revenue has just about doubled under the Jubilee administration, from Sh900 billion in the 2012-2013 financial year to Sh1.49 trillion in the last financial year (2018-2019)—translating to 15 per cent per year—interest payments have increased three-fold from Sh93 billion to Sh390 billion, translating to 52 per cent per year. Consequently, from consuming 12 per cent of revenue, interest payments have risen to 26 per cent. It should not come as a surprise that the government is having trouble paying suppliers. It is also noteworthy that the increase in the cost of interest payments is in the order of—here we go again—Sh300 billion.

Last year the government projected that it would raise Sh1.77 trillion in tax revenues, later revised downwards to Sh1.67 trillion. It managed to raise 1.5 trillion, respectively Sh270 billion and Sh170 billion short of the approved and revised budgets. Still, it budgeted to raise Sh1.8 trillion in 2019. At the end of the first quarter of this year the government had raised Sh372 billion. If the trend remains, Sh1.49 trillion will have been raised—about the same as last year—a shortfall of, well, Sh300 billion.

If the government were to borrow the whole amount this would increase debt financing to a trillion shillings, that is, 38 per cent of the budget or 67 per cent of revenue (remember that revenue is projected at just about Sh1.5 trillion). If it were to borrow domestically, that would also suck in the little credit that is trickling to the private sector. Moreover, the interest rate caps imposed three years ago have now been removed. The caps were meant to benefit private borrowers but the only beneficiary was the government—enabling it to borrow while postponing the political price that would have been exacted had interest rates surged to the mid-20s—as they would have. But the economy has paid the price because, by making it difficult for banks to price risk, the rate caps made the government’s crowding out of the private sector in the credit market more severe than it would have otherwise been.

It should not come as a surprise that the government is having trouble paying suppliers. It is also noteworthy that the increase in the cost of interest payments is in the order of—here we go again—Sh300 billion.

With the caps removed, the government’s excessive appetite for debt will now put upward pressure on interest rates, including the government’s own cost of domestic borrowing. The math is eye-popping; the government’s domestic debt is in the order of Sh3 trillion. A one percentage point increase in the cost of borrowing translates to a Sh30 billion increase in interest expenditure. How quickly an interest rate rise is transmitted into actual cost depends on the structure of the debt—the more short-term, the faster. Jubilee has done a good job of borrowing at the short end of the market, and so transmission will be relatively quick. The exchange rate presents a similar conundrum. The annual servicing of external debt is in the order $2.5 billion, and a depreciation by one shilling translates to a Sh2.5 billion increase in the cost of servicing the debt. It should come as no surprise then that the IMF’s contention that the government is propping up the shilling raised a furore.

Belt tightening is the sensible thing to do when a person or a business is over-indebted. For governments it is a little more complicated. The government is the single largest entity in the economy, and what it does has feedback loops that can amplify the problems it is trying to solve. The problem we have now is that the economy has become addicted to expansionary budgets. Five years ago, government expenditure accounted for a fifth of annual GDP growth, meaning that when growth was reported at 5 per cent, it meant that the private sector accounted for 4 per cent and the government for 1 per cent. Today, the share of the private sector is down to 3 per cent and the government’s share has doubled to 2 per cent. In effect, belt tightening has to contend with the economy suffering withdrawal symptoms—a weakening economy feeding into an even bigger revenue shortfall, requiring even more belt tightening.

This whole conundrum is how countries end up in a Greek-style downward spiral of a contracting economy and ballooning indebtedness. The case of Mozambique is instructive. Before the “tuna bond” scandal unfolded, Mozambique’s economy was roaring at 7 per cent per year, riding on post-conflict reconstruction and the discovery of huge offshore natural gas reserves. The loan sharks moved in. In 2013 Mozambique borrowed $2 billion—equivalent to a third of the budget—in privately placed bonds known as “loan participation notes” to finance a tuna fishing fleet and maritime security, of which only $850 million was made public. It has recently emerged from a fraud and money laundering court case in New York that at least $200 million was stolen and shared out between the investment bankers and Mozambique’s who’s who, including the finance minister and the president’s son.

In early 2016, Mozambique defaulted on interest due on the $850 million. Shortly thereafter, the secret loans were exposed. Money dried up. By the end of the year, the currency had fallen 40 per cent, causing the debt-to-GDP ratio to increase from 55 per cent to 120 per cent. Everything unravelled. Serial defaults and debt restructuring became the order of the day. Growth tumbled to 3.3 per cent last year and is now down to just over 2 per cent. It is going to be a long and painful climb out of the mess.

Which brings me to the question that many people are asking: what is the solution? I have opined that our debt distress will be resolved by one of two scenarios: the Ethiopia or the Sudan scenario. This is why:

To dig ourselves out of the debt quagmire requires four things. First, you need a dollop of cheap money to cushion the economy and vulnerable groups as the government withdraws from domestic borrowing so as to release credit to the private sector, restructure government finances, and rebalance the economy more generally. My guesstimate is a minimum of $3 billion (yes, Sh300 billion!) to $4.5 billion. The only source of such money is an international bailout. Second, to get financiers to buy in, you need a bankable plan. Third, you need a credible turn-around team to implement it. It is not a job for yes-men and yes-women—you need people who can stare down Kenyatta and his crony capitalist cartels. Fourth, economic turnarounds entail making tough unpopular decisions and pushing through painful reforms, and that requires political goodwill. It is not the sort of thing you can do with the 2022 political warfare raging—as we witnessed it in the Kibra by-election.

At the end of the first quarter of this year the government had raised Sh372 billion. If the trend remains, Sh1.49 trillion will have been raised—about the same as last year—a shortfall of, well, Sh300 billion.

This is the situation that Ethiopia found itself in two years ago when the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) coalition realised that only a leadership change could save it. Fortunately for Prime Minister Abiy Ahmed, there was a lot of low-hanging political fruit—releasing political prisoners, making peace with Eritrea, appointing women— that he could use to build goodwill, bring in some money and buy time. Still, that’s all he’s been able to do— he is still circling the big economic reform questions, and he now runs the risk of his political honeymoon ending before he gets started.

Sudan’s Omar al-Bashir sought to do the same thing but it was too little too late. Just over a year before he was toppled, amid mounting protests and a deepening economic crisis, he dissolved the government, intending to constitute an economic turn-around team. But the ship of state was already too leaky and his key appointees turned down his overtures (his choice of finance minister is now Prime Minister).

Can the Jubilee administration pull a political rabbit out of the hat like the EPDRF did in Ethiopia? Doubtful. For one, the EPRDF had the advantage of a parliamentary system which enables change of leadership without going through elections. But it is also the case that for a President at the tail end of his tenure, an economic reform programme would be all pain and no gain. Moreover, a lot of what needs to be done means reversing his policies, and he would have to cede a fair amount of power, making him even more of a lame duck than he already is. And having left it until the ship was leaking, there is also the question of who loves him enough to jump in when its owners—the Moses Kurias of this world —are jumping out. So his best strategy is the path of least resistance—kick the can and hope and pray that the bottom does not fall out this side of the election, be that by way of a financial meltdown or people taking to the streets.

Five years ago, I cautioned Jubilee that it had embarked on a reckless fiscal path, to wit, “We cannot afford to continue on the fiscal path that we are on. It is reckless. This mega-infrastructure madness has to stop. If we don’t do it ourselves, the iron laws of economics will do it for us—and that, take it from me, does not come cheap.”

We say in Gikuyu mūrega akīīrwo ndaregaga akīhetwo: a person who rejects counsel will listen when the consequences arrive. That moment is upon us.

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What is the Sinister Motive Behind the Mwende Mwinzi Probe?

4 min read. Mwende Mwinzi’s appointment as Kenya’s Ambassador to South Korea is fully within the law as Ambassadors and High Commissioners are not considered state officials.  Under Article 78 (3) (b) of Chapter 6 of the Constitution on Leadership and Integrity, she is qualified as a Kenyan whose dual nationality is linked to the laws of another nation. 

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What is the Sinister Motive Behind the Mwende Mwinzi Probe?
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How did the appointment of a Kenyan citizen as Kenya’s Ambassador to South Korea become so embroiled in controversy as to seem like a personal vendetta?

Early in the year, Mwende Mwinzi, a dual citizen of Kenya and the United States, went through the vetting process administered by the Defense and Foreign Relations Committee as the law requires. From its onset, some Members of Parliament began to question her suitability for the post as they openly questioned the authenticity of her Kenyanness and claimed that she does “not have any unique skills other Kenyans don’t have”.

The Mwende drama started with a delegation that went to the president to whisper in his ear about the problem posed by the nomination of a dual citizen, falsely claiming that her appointment was unconstitutional. As it turned out, her appointment was indeed fully within the laws of Kenya, as Ambassadors and High Commissioners are not considered state officials.  Further to this, under Article 78 (3) (b) of Chapter 6 of the Constitution on Leadership and Integrity, she is qualified as a Kenyan whose dual nationality is a result of the “operation of that country’s law, without ability to opt out” (in this case the US).

But the war to dislodge Ms. Mwinzi only intensified and, in a vicious campaign to disqualify her, has gathered the most ardent supporters of the call to remove her even before she has taken up her appointment. Ms. Mwinzi’s loyalty has been loudly questioned, with opinion-shapers peddling doubts about her ability—and by extension the ability of all dual-citizenship Kenyans—to be loyal to Kenya while holding another country’s citizenship.

This narrow thinking completely misses the point that diplomatic spies and sell-outs do not need dual citizenship to act out of greed, dissatisfaction or unpatriotic inclinations. A study of the history of espionage should be exciting and enlightening for those in thrall to this sensationalist propaganda.

Her appointment was indeed fully within the laws of Kenya as Ambassadors and High Commissioners are not considered state officials

It also misses the point that there are other dual-citizenship envoys in office. This is perfectly within the law, and there is no logical reasoning to support calls for the amendment of the constitution in order to disqualify them on the grounds that they are dual citizens.

The Mwende case has been fraught with hypocrisy and dubious intentions on the part of the vetting Members of Parliament who have now insisted that she must surrender her American citizenship in order to take up office as Kenya’s Ambassador to South Korea. This demand is not only unconstitutional but it is also sinister and cruel to require someone with family in the US to shoot themselves in the foot in order to serve their country.

It is also worth pointing out that it is global standard procedure for countries to appoint dual citizens as high-level diplomats. The United States has enough of these examples, starting with former Secretary of State Madeleine Albright who is Czech-American.  The generous Internet will yield more good examples from several countries that have discarded the self-defeating and parochial view that dual citizens are to be feared, shunned and their role in nation-building limited.

This fear of dual citizens and Kenyans in the diaspora in general, has often elicited the open disdain of Kenyan legislators for Kenyans living abroad. When this disdain and dismissal translate to a suppression of citizens’ rights and opportunities, then it inevitably becomes a legal battle.

Kenyans in the diaspora have never shied away from the fight for justice and inclusion. They have fought to make it clear that living a few hours away is a silly and unjust reason to be discriminated against and that legally holding more than one passport is not a measure of one’s loyalty or patriotism.

It takes smart leadership to recognise that inclusivity of all citizens regardless of their global residence is visionary in the globalised 21st century and that attempts at exclusion are toxic to the nation as a whole.

It is also astonishing that the oft-quoted diaspora remittances cease to count as a mark of loyalty for Kenyan legislators intent on dismissing the Kenyan diaspora’s fight to belong and to serve. Let us be very clear that recognised belonging is the right of every citizen. Kenyans in the diaspora actively show their belonging by investing their hard-earned billions in their home country and, like every other Kenyan, they partake in nation-building every day.

The familiar pettiness that surfaced about Ms. Mwinzi’s accent during her vetting is an example of what must cease if Kenya wishes to make good use of its citizens who have lived abroad. These irrelevant concerns undermine and detract from the more important issues of character, leadership and accomplishments that might be of benefit to our nation.

It takes smart leadership to recognise that inclusivity of all citizens regardless of their global residence is visionary in the globalised 21st century

The sheer hypocrisy of the case has been exposed by the call to probe members of parliament who hold dual citizenship. The Kenyans for Justice and Development organisation has named eight members of parliament and two senators as state officials who need to be probed. This alone puts the vetting Committee’s credibility into question. It demands that all their recommendations against Ms. Mwinzi’s nomination be thrown out and that the constitution that allows her to be nominated reign supreme on this issue.

Mwende Mwinzi has served Kenya in many different capacities. In 2001 she started Twana Twitu, an organisation that has for 17 years supported over 3,000 orphaned and vulnerable children in Kitui. She was a columnist for Sunday Nation and for 3 years served on the National Economic and Social Council (NESC).

Ms. Mwinzi was also part of the team that devoted itself to improving Kenya’s image in the US at a time when Kenya had been negatively branded and was struggling to attract support to overcome its security challenges, boost tourism and trigger investment.  In the last election, Ms. Mwinzi vied for the seat of Member of Parliament for Mwingi West. She has clearly focused her life in Kenya not only in word but also in deed.

This persecution of one person is also a remarkably familiar pattern in the murky and mafia-ridden world of Kenyan politics where backdoor wheeling and dealing is done to secure high-level positions. With the political strategising for the 2022 presidential race already in place, political factions have been seeking to have “their people” in lucrative missions. Diplomatic corruption is both an international and local reality and, South Korea being a coveted station, it requires someone who will not give in to grand corruption schemes.

Editorial note: On November 14, 2019, the High Court of Kenya ruled that Kenya’s ambassador nominee to South Korea Mwende Mwinzi should not be forced to renounce her American citizenship as demanded by Parliament. Justice Makau further noted that an ambassador is not a State officer but a public officer, therefore, Ms. Mwinzi is not required to renounce her citizenship.

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