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

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Lava Jato: The CIA’s Poisoned Gift to Brazil

Recently leaked conversations show shocking levels of US involvement in Brazil’s Lava Jato corruption case against former president Lula da Silva.

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Lava Jato: The CIA’s Poisoned Gift to Brazil
Photo: Unsplash/Rafaela Biazi
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“I’m going to celebrate today.”— Laura Tessler

“A gift from the CIA.”— Deltan Dallagnol

These recently leaked quotes refer to the arrest and jailing of former Brazilian President Lula da Silva in April 2018 that changed the course of the country’s history. It opened the door to far-right candidate Jair Bolsonaro, who came to power with the support of the United States and powerful corporate interests.

Although US involvement in the once heralded anti-corruption investigation operation Lava Jato has been publicly known for some time, leaked conversations between its prosecutors like Tessler and Dallagnol and Judge Sergio Moro have revealed a level of collusion that has shocked even the keenest observers.

A petition filed with the Federal Supreme Court (STF) by the defence of ex-president Lula presents such new evidence that ex-judge Sergio Moro colluded with foreign authorities in conducting the process which led to the arrest of the Workers Party leader, and his subsequent barring from a run for the presidency in 2018.

In the latest leaked Telegram conversations, which are now official court documents, the level of illegal collaboration visible between the Lava Jato task force and the internationally promoted judge is the most flagrant yet, and more valuable for Lula’s defence than chats first published by the Intercept in 2019.

The latest excerpts could result in the politically motivated case against Lula being annulled.

Ex-judge Sergio Moro and head of the Lava Jato task force Deltan Dallagnol have been accused of “treason” for their illegal collusion with United States authorities. In 2017, deputy US attorney general Kenneth Blanco boasted at an Atlantic Council event of informal (illegal) collaboration with Brazilian prosecutors on the Lula case, citing it as a success story. In 2019 the U.S. Department of Justice attempted to pay the Lava Jato task force a $682 million dollar kickback, ostensibly for them to set up a “private foundation to fight corruption”.

On April 5, 2018, the day Lula was arrested by Moro, prosecutor Isabel Grobba revealed the news: “Moro orders Lula to be arrested,” and Deltan Dallagnol replied: “Before MA (Supreme Court Justice Marco Aurélio) screws everything up.” Dallagnol was referring to what Marco Aurélio was then preparing; a Supreme Court vote which would potentially see defendants such as Lula freed from jail pending their second appeal.

Had this passed, it would’ve enabled Lula to run for president at the 2018 election. Polling at that point showed him twenty points ahead of nearest rival, U.S. backed far right candidate Jair Bolsonaro.

After coming to power, Jair Bolsonaro and Sergio Moro — who had been appointed as Bolsonaro’s Justice Minister — made an unprecedented visit to CIA headquarters in Langleywith the backing of Wall Street. The FBI has also massively increased its reach in Brazil since the election and was in direct, legal and illegal collaboration with Lava Jato task force since its inception, with its main liaison and now head of FBI’s international corruption unit, Leslie Backschies, boasting that it had “toppled Presidents in Brazil”.

Cooperation between Brazilian and United States authorities, including the use of FBI hackers to break encrypted files, had become clear long before the arrest of the ex-president. Messages from August 31, 2016, when Dilma Rousseff faced her final impeachment hearing, already prove this.

FBI use of hackers in Brazil dates back to 2012 when they encouraged a group from ‘Anonymous’ to attack Brazilian government and corporate institutions and online infrastructure, in a staged protest against “corruption”. Sérgio Bruno revealed: “Janot (Prosecutor General) was with people from the US Embassy last week and it seems that he commented on this [breaking into files via illegal means], without going into details (sic)”.

On the same day, Brazilian prosecutor Roberson Pozzobon also mentions the task force’s cooperation with FBI hackers: “We asked to see if the FBI has the expertise to break (into encrypted files)”.

The following year, Janot toured the world promoting Operation Lava Jato at investor events, both in the United States, and at the World Economic Forum in Davos, describing the now-disgraced anti-corruption operation as “pro-market”, a political position it was not supposed to have. Cooperation with Swiss and Swedish authorities is also evident from the leaked conversations.

A recent announcement has stated that Lava Jato, or Car Wash, as it was relentlessly promoted in the English-speaking media, will be shut down completely later this year, having helped wreck Brazil’s economy and eviscerate its democracy.

Editorial note: The following is an edited version of the article originally published by Brasil Wire. It has been amended to provide context for the recent developments in the Lava Jato corruption case. You can find all of Brasil Wire’s articles on operation Lava Jato here.

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Is Balkanisation the Solution to Somalia’s Governance Woes?

Thirty years after the civil war of 1991, Somalia has still not been able to develop a functional governance structure that delivers services to the people. Federalism has also not delivered political stability. Is it time for Somalia to break up into independent clan-based states?

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Is Balkanisation the Solution to Somalia’s Governance Woes?
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When former prime minister Mohamed Abdullahi Farmaajo was elected president of the Federal Government of Somalia in 2017, many lauded his victory. Unlike his predecessors, Farmaajo was viewed as a leader who would unite the country because he had a nationalistic mindset and was someone who was not influenced by clan interests. Many believed that, unlike his predecessor, Hassan Sheikh, whose tenure was marred by corruption allegations and in-fighting, he would bring together a country that has remained fragmented along clan lines and endured internal conflicts for decades. He was also perceived to be someone who would address corruption that has been endemic in every Somali government since the days of President Siad Barre.

Sadly, Farmaajo’s tenure did not result in significant transformation of Somali governance structures or politics. On the contrary, his open hostility towards leaders of federal states – notably Jubbaland, where he is said to have interfered in elections by imposing his own candidate – and claims that corruption in his government had increased, not decreased, left many wondering if he had perhaps been over-rated. Now opposition groups have said that they will not recognise him as the head of state as he has failed to organise the much anticipated one-person-one-vote election that was due this month, which would have either extended or ended his term. This apparent power vacuum has caused some jitters in the international community, whose backing Farmaajo has enjoyed.

However, it would be naïve to assume that Farmaajo’s exit is a critical destabilising factor in Somalia, because, frankly, the president in present-day Somalia is merely a figurehead; he does not wield real power. The government in Mogadishu has had little control over the rest of the country, where clan-based fiefdoms and federal states do pretty much what they want, with little reference go Mogadishu. National security is largely in the hands of the African Union Mission in Somalia (AMISOM) forces, not the Somalia National Army.

The concept of a state that delivers services to citizens has also remained a mirage for most Somalis who are governed either by customary law known as xeer or the Sharia.  Some have even argued that with its strict codes and hold over populations through systems of “tax collection” or “protection fees” combined with service delivery, Al Shabaab actually offers a semblance of “governance” in the areas it controls – even if these taxes are collected through extortion or threats of violence.

In much of Somalia, services, such as health and education, are largely provided by foreign faith-based foundations, non-governmental organisations or the private sector, not the state. Many hospitals and schools are funded by foreign (mostly Arab) governments or religious institutions. This means that the state remains largely absent in people’s lives. And because NGOs and foundations can only do so much, much of the country remains unserviced, with the result that Somalia continues to remain one of the most underdeveloped countries in the world, with high levels of illiteracy (estimates indicate that the literacy rate is as low as 20 per cent). State institutions, such as the Central Bank and revenue collection authorities, are also either non-existent or dysfunctional.

Efforts by the United Nations and the international community to bring a semblance of governance by supporting governments that are heavily funded by Western and Arab countries have not helped to establish the institutions necessary for the government to run efficiently.  On the contrary, some might argue that that foreign aid has been counter-productive as it has entrenched corruption in government (as much of the aid is stolen by corrupt officials) and slowed down Somalia’s recovery.

Foreign governments have also been blamed for destabilising Somalia. The US-backed Ethiopian invasion of Somalia in 2006, which succeeded in ousting the Islamic Courts Union (ICU) – which had successfully brought about a semblance of governance in Somalia through a coalition of Muslim clerics and businessmen –  spawned radical groups like Al Shabaab, which have wreaked havoc in Somalia ever since.  Kenya’s misguided “incursion” into Somalia in 2011, had a similar effect: Al Shabaab unleashed its terror on Kenyan soil, and Kenya lost its standing as a neutral country that does not intervene militarily in neighbouring countries. Certain Arab countries, notably Qatar and the United Arab Emirates, have also been accused of interfering in Somalia’s elections by sponsoring favoured candidates.

All of Somalia’s governments since 2004, when a transitional government was established, have thus failed to re-build state institutions that were destroyed during the civil war or to deliver services to the Somali people. In its entire eight-year tenure, from October 2004 to August 2012, the Transitional Federal Government (TFG) did not have the capacity to become a fully functioning government, with a fully-fledged revenue collecting authority and robust ministries.  Ministers had no portfolios and ministries had skeletal staff. The national army was weak and under-funded, and since 2007, the government has relied almost exclusively on African Union soldiers for security, though some donors, notably Turkey, have attempted to revive the Somalia National Army.

Somalia’s first post-transition government was elected in 2012 under a United Nations-brokered constitution. Hassan Sheikh was elected as president with much enthusiasm and in the belief that things would be different under a government that had the goodwill of the people. In his first year in office, President Hassan Sheikh was named by TIME magazine as one of the world’s 100 most influential people. Somalia expert Ken Menkhaus called his election “a seismic event” that “electrified Somalis and both surprised and relieved the international community”. However, it would not be long before his government would also be marred by corruption allegations.

What governance model should Somalia adopt? 

There has been some debate about which type of governance model is most suitable for a country that is not just divided along clan/regional lines, but where lack of functioning secular institutions threaten nation-building.

Federalism, that is, regional autonomy within a single political system, has been proposed by the international community as the most suitable system for Somalia as it caters for deep clan divisions by allocating the major clans semi-autonomous regional territories.  The 4.5 formula for government representation proposed by the constitution based on the four largest clans (Darod, Hawiye, Dir and Rahanweyne) and 0.5 positions for minorities does acknowledge the reality of a clan-based society, but as Somalia’s recent history has shown, clan can be, and has been, manipulated for personal gain by politicians.  As dominant clans seek to gain power in a federated Somalia, there is also the danger that the new federal states will mimic the corruption and dysfunction that has prevailed at the centre, which will lead to more competition for territories among rival clans and, therefore, to more conflict.

Several experts have also proposed a building block approach, whereby the country is divided into six local administrative structures that would eventually resemble a patchwork of semi-autonomous territories defined in whole or in part by clan affiliation.. In one such proposal, the Isaaq clan would dominate Somaliland in the northwest; the Majerteen in present-day Puntland would dominate the northeast; the heterogeneous Jubbaland and Gedo regions bordering Kenya would have a mixture of clans (though there are now fears that the Ogaden, who are politically influential along the Kenya border, would eventually control the region); a Hawiye-dominated polity would dominate central Somalia; the Digil-Mirifle would centre around Bay and Bakol; and Mogadishu would remain a cosmopolitan administrative centre.

Somaliland offers important lessons on the governance models that could work in a strife-torn society divided along clan lines and where radical Islamist factions have taken root. Since it declared independence from Somalia in 1991, Somaliland has remained relatively peaceful and has had its own government and institutions that have worked quite well and brought a semblance of normality in this troubled region.

After Siad Barre ordered an attack on Hargeisa following opposition to his rule there, Somaliland decided to forge its own path and disassociate from the dysfunction that marked both the latter part of Barre’s regime and the warlordism that replaced it during the civil war. It then adopted a unique hybrid system of governance, which incorporates elements of traditional customary law, Sharia law and modern secular institutions, including a parliament, a judiciary, an army and a police force.  The Guurti, the upper house of Somaliland’s legislature, comprises traditional clan elders, religious leaders and ordinary citizens from various professions who are selected by their respective clans. The Guurti wields enormous decision-making powers and is considered one of the stabilising factors in Somaliland’s inclusive governance model. Michael Walls, the author of A Somali Nation-State: History, Culture and Somaliland’s Political Transition, has described Somaliland’s governance model as “the first indigenous modern African form of government” that fuses traditional forms of organisation with those of representative democracy.

However, Somaliland’s governance model is far from perfect: the consensual clan-based politics has hindered issue-based politics, eroded individual rights and led to the perception that some clans, such as the dominant Isaaq clan, are favoured over others. Tensions across its eastern border with Puntland also threaten its future stability.

In addition, because it is still not recognised internationally as a sovereign state, Somaliland is denied many of the opportunities that come with statehood. It cannot easily enter into bilateral agreements with other countries, get multinational companies to invest there or obtain loans from international financial institutions, though in recent years it has been able to overcome some of these obstacles.

Somaliland is also not recognised by the Federal Government of Somalia, which believes that Somaliland will eventually relent and unite with Somalia, which seems highly unrealistic at this time.  This is one reason why the Somali government gets so upset when Kenyan leaders engage with Somaliland leaders, as happened recently when Mogadishu withdrew its ambassador from Nairobi after President Uhuru Kenyatta met with the Somaliland leader Musa Bihi Abdi at State House. Raila Odinga’s recent call to the international community to recognise Somaliland as an independent state has been welcomed by Somalilanders, but is viewed with suspicion by the federal government in Mogadishu

Nonetheless, there has been some debate about whether Somaliland’s hybrid governance model, which incorporates both customary and Western-style democracy, is perhaps the best governance model for Somalia. Is the current Western- and internationally-supported political dispensation in Somalia that has emerged after three decades of anarchy a “fake democracy”?  Can Somalia be salvaged through more home-grown solutions, like the one in Somaliland? Should Somalia break up into small autonomous states that are better able to govern themselves?

Balkanisation is usually a deprecated political term referring to, according to Wikipedia, the “disorderly or unpredictable fragmentation, or sub-fragmentation, of a larger region or state into smaller regions or states, which may be hostile or uncooperative with one another”. While usually associated with increasing instability and conflict, balkanisation could nonetheless still be the only solution for a country that has been unable to unite or to offer hope to its disillusioned citizens for more than three decades.

As Guled Ahmed of the Middle East Institute notes, “the 1995 Dayton accords, which ended the Bosnian war, paved the way for ethnic balkanisation of former Yugoslavia into six countries. This resulted in peace and stability and prosperity. So if Eastern European countries can separate along ethnicism, why not balkanise Somalia with multi-ethnicism just like the former Yugoslavia to achieve peace and stability and fair elections based on one person one vote?”, he said.

Ahmed told me that balkanisation would also eliminate Al Shabaab (which has been fighting the government in Mogadishu for the last 14 years) as the independent states created would be more vigilant about who controls their territories and also because people will have more ownership of their government. Somali refugees languishing in Kenya, Ethiopia and elsewhere might also be tempted to finally return home.

Balkanisation can, however, be messy – and bloody. But Somalia need not go down that route. A negotiated separation could still be arrived at peacefully with the blessing of the international community. If the international community is serious about peace and stability in Somalia, it should pave the way for these discussions. Sometimes divorce is preferable to an acrimonious marriage.

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The Danger of the Single Story and Africa’s Refugee Equilibrium

Africans’ lack of knowledge about our own shared refugee experiences continues to fuel hate and discrimination on the continent.

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The Danger of the Single Story and Africa’s Refugee Equilibrium
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For far too long, the global refugee situation has been misconstrued as static, with certain parts of the globe generating disproportionate numbers of refugees and others perpetually faced with the burden of hosting displaced peoples. In particular, Africa is seen as a producer rather than a receiver of refugees. To be clear, Africa is not a continent that feeds the world with refugees any less than it hosts them. Although Africa is seen as exceptional in terms of global refugee networks, the factors accounting for refugee crises can bedevil any region at any point in time. These factors include war, natural disasters, political upheavals, military coups, civil strife, religious or cultural persecutions, personal circumstances, economic hardship, terrorist activities, and many more.

African countries, as much as any other, have taken turns in both generating and hosting refugees, and if history is any measuring rod, will continue to do so. It is the African refugee equilibrium, a phenomenon whereby a country that at one moment in its history is feeding its neighbors with refugees can become, at another moment, the receiver of refugees from those same neighbors. Africa isn’t just feeding the world with migrants and refugees but is top on the list of hosts. As per the UNHCR statistics of 2018, 30% of the world’s 25.9 million registered refugees were being hosted in Africa. Yet, the numbers of Africans who make their way to the West as refugees and migrants occupy the headlines of international news, painting the continent and the people as a miserable “sea of humanity,” perpetually flooding the rest of the world, especially North America and Europe.

Examples of how Africa has been mutually hosting its own refugees and taking turns are unlimited. The regions of Central and West Africa have particularly exemplified the concept of the African refugee equilibrium, with many nations taking turns in generating and hosting refugees. Even in the days when it suffered refugee and migrant crises, few Equatorial Guineans left the continent; the vast majority fled to nearby Cameroon, Gabon, and Nigeria. During the First World War, the German colony of Kamerun fed the Spanish colony of Guinea with tens of thousands of refugees. But in the 1970s, Cameroon, in turn, hosted about 30,000 refugees from Equatorial Guinea. During the Nigerian Civil War, Nigeria fed several of its West and Central African neighbors with tens of thousands of refugees, including children, who ended up in countries such as Gabon and Ivory Coast. The post-civil war era has seen Nigeria host hundreds of thousands of refugees and migrants from its neighbors, even while Nigeria itself simultaneously feeds some of those neighbors with a new category of refugees.

West and Central Africa are not unique in this exchange. Since the 1960s, nations in East and Southern Africa have taken turns between hosting and generating refugees. In East Africa, the Kakuma refugee camp in the northwest of Kenya currently hosts about 200,000 refugees from more than 20  neighboring countries, including refugees from Ethiopia, Somalia, Sudan, South Sudan, Uganda, Democratic Republic of Congo, and Burundi, to name but a few. Uganda, which has sent refugees to its neighbors, including Kenya, hosts its own refugees and refugees from others. Uganda’s Bidibidi refugee camp currently ranks the second largest in the world.

Perhaps more interestingly is the fact that besides mutually hosting its own refugees, Africa has hosted refugees from other continents, including from Europe. While examples abound, a few here will suffice. During the late 19th century and the 20th century in the midst of anti-Semitism, a significant number of European Jews entered North and Eastern Africa as refugees, with some settling in as far as South Africa. On the eve of the First World War, there were already more than 40,000 Jewish migrants and refugees settled in South Africa. In the 1930s, South Africa again received more than 6,000 Jewish refugees from Nazi Germany. During the Second World War, in excess of 20,000 Polish refugees, who had been evicted from Russia and Eastern Europe following German invasion, were received and hosted in East and Southern Africa, including in modern day Tanzania, South Africa, and Zimbabwe. In the 1960s, the crisis of war and decolonization in the Congo caused the flight of several thousand whites from the Congo. They were hosted as refugees in a number of African countries, including South Africa, Congo-Brazzaville, Angola, the Central African Republic, Tanganyika, Rwanda, and Burundi.

The examples provided here only scratch the surface of the African refugee equilibrium, but they each demonstrate that we must pay attention to historical antecedents in refugee studies. In other words, we need to historicize African refugee studies. Only by so doing can we fully appreciate the important and diverse role that Africa plays. This approach clearly shows that if our neighbors are currently facing a refugee crisis and turn to us for assistance, we must view them with respect and compassion; it could soon be our turn and we could need them.

There are constant examples across Africa where our lack of knowledge of our own shared refugee experiences or sometimes outright denial of history continues to inform the way we treat fellow Africans with disdain and hostility. Xenophobia (better known as Afrophobia) in South Africa is just one example. The African Centre for Migration and Society (ACMS) has carefully documented xenophobic attacks against other African refugees and migrants in South Africa since 1994, establishing several cases where in many South African towns and cities, South Africans attacked, injured or even killed African refugees and migrants. If only an average South African knew that not too long ago many African countries were safe havens to many of their countrymen and women during the anti-Apartheid struggle, they would think twice before unleashing xenophobic attacks against other Africans. Even across West and Central Africa, there have been several instances of both civilian African populations and their governments treating other African refugees in their countries with unbelievable hostility. When oil was suddenly discovered in Equatorial Guinea in the late 1990s and early 2000s, Equatoguineans and the government alike, quickly forgot their shared refugee and migrant history with Cameroon, and began a series of hostilities against Cameroonian refugees and migrants who came to Equatorial Guinea for “greener pastures.” An informed knowledge about our collective refugee and migrant experiences would go miles in ensuring that Africans and African governments treat other African refugees and migrants in their countries in a friendlier and more accommodative fashion.

There is, however, hope on the horizon. Africanists are increasingly turning their attention to refugee studies and the African refugee equilibrium. Two special issues are forthcoming in the Canadian Journal of African Studies and in Africa Today, both of which showcase Africa’s shared and diverse refugee and migrant experiences. These issues are part of the efforts to redress the image of Africa and the misconceptions surrounding the continent regarding migrants and refugee movements.

What all of these means is that it is only a matter of time before the static image of African refugee dynamics and the African refugee equilibrium will displace these ahistorical ideas.

This post is from a new partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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