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.
How Not to Run a Country: Further Reflections on Moi’s Presidency
11 min read. Moi’s misrule neutered parliament, turned the courts into his puppets, and the bureaucracy into his handmaid but if his life leaves behind a lesson, it is in the codification of the Kenyan constitution so that the country need never again be subject to the whims of one person.
Once the flood of sanctimonious tributes ebbs after Daniel arap Moi’s burial, his true legacy will remain in the 205-page manual on how not to rule a country. Chapter and verse of the Constitution of Kenya, 2010, responds to what Moi put the country through in the 24 years he was president: it disperses power, secures human rights, shares resources, protects the environment and guarantees independent institutions. And it says unequivocally, “Never again”.
Moi’s misrule neutered parliament, turned the courts into his puppets, and the bureaucracy into his handmaid. With just a little tinkering – ironically by the man who had been his vice president and minister for finance as well as by Moi’s erstwhile lieutenants – the system he used did put Kenya on the mend, thus confirming the hypothesis that the dictator had been the problem all along.
The sense of relief at Moi’s departure from office was captured in the cartoon by Godfrey Mwampembwa, aka Gado, depicting a public notice with the former president’s caricature announcing that he was no longer authorised to transact any business on behalf of the people of Kenya. But the place of honour for first caricaturing Moi in 1990 belongs to Paul Kelemba, aka Maddo.
Moi’s narcissism drove him to flatter himself into believing that there would come a time when Kenyans would pine for his return to power. Clearly, that did not come to pass in the 18 years he was in retirement – despite the upheavals of two electoral crises that bordered on civil war and secession.
Aware of his limitations in filling founding president Jomo Kenyatta’s shoes, Moi elected instead to follow in his footsteps – the irony of following a dead man’s footsteps backwards was completely lost on him. Greatly buoyed up by the sycophancy of choristers, Moi began to demand flattery as a right; returning from a foreign trip early in his presidency, Moi demanded that everyone sing his tune “like parrots” – just as he had done while serving as Jomo Kenyatta’s vice president for 15 years.
Yet, Moi’s ascendancy to the presidency was not so much a product of his loyalty to founding President Jomo Kenyatta as it was a years-long cloak and dagger scheme choreographed by the Machiavellian Attorney General, Charles Njonjo, to manipulate the Kenyatta succession in the event of his death.
Moi’s narcissism drove him to flatter himself into believing that there would come a time when Kenyans would pine for his return to power
As it happened, the numerous attempts to stop Moi from holding office in an acting capacity for 90 days were rendered moot. Duncan Ndegwa, former Central Bank of Kenya governor, writes in his autobiography that in September 1978 there was a disagreement between Njonjo and the Secretary to the Cabinet concerning Moi’s swearing in — in the presence of the Chief Justice and Moi. In the end, Moi was sworn in as President — and not in an acting capacity as provided for in the Constitution. Within two weeks of Kenyatta’s death, the entire Cabinet pledged loyalty to Moi and endorsed his candidature. He would take oath publicly as President on 14 October 1978, nearly a full month before the 90 days transition period lapsed. Moi, with Njonjo’s help, had just executed the first coup against the Constitution. Njonjo continued to employ Edgar Hoover-style tactics to build files on public figures, which information he would use to blackmail them into silence.
Moi’s presidency started as a collegial affair between himself, State Security minister Godfrey Gitahi Kariuki and Njonjo, with the trio riding together in the presidential limousine – but some say the new boss insisted on this arrangement to avoid assassination.
Njonjo’s error of judgment – hoisting into the presidency someone he considered unfit for the office in an attempt to use him to accede to power – would come back to bury the former AG’s political ambitions. Seduced by Moi into resigning from his position as AG to join Parliament in order to assist him, Njonjo betrayed his hunger for political power and was scalped for it. Within a year, he would be ready for the big fall resulting from the 1982 failed coup d’etat, and be publicly humiliated through a judicial commission of inquiry. Although the commission found Njonjo guilty, Moi pardoned him instantly, so that he could retire to minding businesses in which the president continued to hold shares, and attending the annual dog show. Some speculate that Moi and Njonjo had a gentleman’s pact in which the former would serve as president for five years before handing over to the latter.
Analyses of the pathology of Moi’s dictatorship often identify the failed coup d’état of 1 August 1982 as the turning point in his personality. The evidence points to the contrary.
Although in 1978 Moi had freed political prisoners detained under his watch as Home Affairs minister and ostensibly on Kenyatta’s authority, he returned to the default settings when university students held demonstrations to demand that one-time vice president Jaramogi Oginga Odinga be allowed to contest the 1979 elections from which he had been barred. The following year, Moi banned the Academic Staff Union, barred external speakers from the university, and seized the passports of eight lecturers (Micere Mugo, Oki Ooko Ombaka, Michael Chege, Mukaru Ng’ang’a, Okoth Ogendo, Atieno Odhiambo, Peter Anyang-Nyong’o and Shadrack Gutto).
Moi’s ascendancy to the presidency was a years-long cloak and dagger scheme choreographed by the Machiavellian Attorney General, Charles Njonjo
The open-air theatre at Kamirithu in Limuru was banned, together with the play Ngugi wa Thiong’o and Micere Mugo were staging, Ngaahika Ndeenda. Ngugi and Micere fled into exile.
Later, Moi publicly excoriated linguist Al Amin Mazrui, educational psychologist Edward Oyugi, sociologist George Katama Mkangi, lawyer Willy Mutunga and historians Mukaru Ng’ang’a and Maina wa Kinyatti for teaching “bad ideas”. They were all either arrested, jailed or detained without trial, or forced into exile. It would mark the beginning of the formal decline of the university as a centre of learning and ideas.
The roll of those arrested, convicted and jailed on trumped up charges, or detained without trial, included writers, journalists and thinkers like Wahome Mutahi, Njuguna Mutonya, Paul Amina and Otieno MakOnyango.
In 1980, the army interned the local population in a school field resulting in the death of 3,000 people in what came to be known as the Garissa Massacre. A repeat performance at the Wajir Airstrip resulted in the Wagalla Massacre with 5,000 casualties.
By the end of June 1982, Parliament had removed the security of tenure for judges and the Attorney General, leading to the resignation of two Commonwealth judges — and the country legally became a one-party state. It was believed that at least three coups d’état had been planned for August 1982. By then, Moi already fit the textbook definition of a dictator.
Published memoirs by five people at the centre of government – deputy spy chief Bart Joseph Kibathi, politician Njenga Karume and heads of civil service Jeremiah Kiereini, Simeon Nyachae and Duncan Ndegwa – suggest that Moi knew about the planned August 1, 1982 coup attempt but allowed it to go ahead in order to strengthen his hand in changing leadership in the armed services. Subsequently, Moi disbanded the air force and changed the leadership of the army and the police, stocking them with his co-ethnics. It is ironical that some of the co-ethnics whom he appointed to critical institutions had the most progressive effect on them: General Daudi Tonje, whose regulations continue to guide military service; Brigadier Wilson Boinnet, who rebranded the National Security Intelligence Service; and Micah Cheserem, who led reform at the Central Bank of Kenya in the aftermath of the export compensation scandal.
Moi, with Njonjo’s help, had just executed the first coup against the Constitution
Moi was easily threatened by ideas, and was loath to engage what he termed as “foreign ideologies”. He was mortally afraid of political challenge and competition. Since the 1960 pre-independence election in which he defeated his brother-in-law Eric Bomet in Baringo with 5,225 votes to Bomet’s 503, Moi had dodged every opportunity to obtain a popular mandate, contenting himself with being “elected” unopposed until he was forced to confront his opponents in the 1992 and 1997 elections. In both instances, he slipped through to the presidency with only a third of the vote, even after committing a host of election irregularities.
Notwithstanding Moi’s aversion to new ideas and intellectuals generally, he surrounded himself with pliable intellectuals and left a large imprint on Kenya’s education sector. He appropriated the choral music genre, infiltrated universities through the establishment of district students’ associations, introduced a quota system in admissions to secondary schools and banned the umbrella students’ body, thus entrenching tribalism.
His bold education investment through the Kabarak schools and university, and the change in the education system to respond to the country’s needs as well as expanding higher learning by opening up universities, have all had mixed results. For example, the free milk programme that encouraged school attendance and retention was also used to brainwash children into reciting a loyalty pledge, and collapsed the Kenya Co-operative Creameries.
His undertaking of huge infrastructure projects to expand air transport, increase electricity generation, and his commitment to environmental conservation through tree planting and building gabions is counterbalanced by massive corruption, the proliferation of white elephants, and land grabbing in the country’s water towers.
In 1980, the army interned the local population in a school field resulting in the death of 3,000 people in what came to be known as the Garissa Massacre
A man who never enjoyed a popular mandate outside his Baringo birthplace where his original name – Kapkorios – was lost, Moi seemed easily threatened and reacted by capturing, personalising and predating on the instruments of state – the courts, the police service, the academy, the military, the bureaucracy, the political party.
Significantly, Moi appropriated the treasury and converted it to his personal use to buy and maintain political loyalties or to punish those he perceived as dissenters. Underneath the façade of churchgoer piety, public generosity and the common touch, lurked a cold and vindictive megalomaniac fueled by an insatiable hunger for power.
The assassinations of Foreign minister Robert Ouko, Catholic priest Fr Anthony Kaiser and student leader Solomon Muruli are often laid at Moi’s doorstep, and few others. Yet, many watchers of Jomo Kenyatta’s last years acknowledge his frailty and unavailability, but stop short of assigning blame for the muscular actions that took place in that time, such as the assassinations of Pio Gama Pinto, Tom Joseph Mboya and Josiah Mwangi Kariuki. These deaths were conveniently laid at Kenyatta’s feet when it was Moi who was Home Affairs Minister and the greatest beneficiary of the victims’ absence from the political arena.
Four years before Mboya’s death, when Kenyatta suffered a mild stroke, and there was great concern about his succession, Moi and Njonjo schemed to create a constitutional amendment to raise the age of presidential eligibility to 40 years, up from 35. Mboya was 37.
Published memoirs by five people at the centre of government suggest that Moi knew about the August 1 1982 coup attempt
Mboya’s assassination in 1969 was believed to have been orchestrated by a “big man”, whom everyone assumed was Kenyatta. No one has explored whether anybody else might have been the “big man”. Moi’s car was stoned when he attempted to pay his respects to Mboya’s widow two days later. Two days after that incident, Moi issued an incongruous statement blaming the death on the Chinese working in concert with “a local party”, meaning the Kenya People’s Union.
In the case of popular legislator Josiah Mwangi Kariuki’s death, Moi issued a statement in Parliament claiming that the politician was in Zambia when in fact his post-mortem examination had already been concluded. Kenyatta took much heat for the killing of Pinto, Mboya and JM Kariuki, but the greatest beneficiary of Kenya losing three leading political giants is not too difficult to imagine.
Under Moi, security services normalised the use of torture and other human rights abuses. The highrise Nyayo House in Nairobi was constructed in 1979 with custom-made torture chambers in the basement, which would be put to chilling use during the years of Moi’s untrammelled power. Numerous families were torn apart by the effects of detention without trial, enforced disappearances and torture.
Handpicked by colonial authorities in 1950 for civics training to become a moderate leader, Moi initially declined to represent Rift Valley in the Legislative Council but later accepted after Moses Mudavadi and Enock Kiprotich Ngulat turned down nominations for the job. In the first electoral contest to represent Rift Valley in the Legislative Council, Moi won 4,000 votes against John ole Tameno (750) and Justus ole Tipis (1,500).
Moi appropriated the treasury and converted it to his personal use to buy and maintain political loyalties
Moi had started out as founder of the regionalist party, the Kenya African Democratic Union, which placed emphasis on human rights. His defection to the centralist Kenya African National Union when Kadu dissolved exposed his commitment as only skin-deep. The defection earned him the plush position of Home Affairs minister, previously held by Vice President Oginga Odinga, from where he harassed his predecessor into resignation.
Some have claimed that Moi sold out on claims for community lands in the Rift Valley in exchange for power. Settlement in the Rift Valley would reemerge as a sticking point, leading to the ethnic and political clashes that marked the darkest periods in Moi’s reign, and the Moi who had warned non-Kalenjin against buying land in Rift Valley would oppose devolution, saying it was a recipe for breaking up the country. His political scions continued the animus through micro-aggressions against the new order.
Moi defenders shy away from interrogating his nationalism but never question his patriotism in the plunder and pilferage of public resources that led to the near-collapse of the economy. Curiously, audit firm Kroll Associates, commissioned by Moi’s successor Mwai Kibaki to investigate corruption in Kenya, found that Moi and his acolytes had stashed Sh140 billion outside the country. A significant amount of money and assets was reportedly surrendered to the government when Moi left power in December 2002.
Since the 1960 pre-independence election in which he defeated his brother-in-law Eric Bomet in Baringo, Moi had dodged every opportunity to obtain a popular mandate
In the 40 years of mediocrity that Moi gave Kenya in service as a member of the Legislative Council, vice president and president, he erected monuments to prop up his fragile ego and gave his name to numerous institutions, but none was large enough to fill the void his rule had created in the nation’s psyche.
Moi considered himself a peacemaker, and intervened in conflicts from Angola and Mozambique to Rwanda, Uganda, Burundi, Somalia, Ethiopia and Sudan. His greatest achievement in the field of diplomacy remains the revival of the East African Community, and the creation of the Inter-Governmental Authority on Drought and Desertification, but even here, he had less than stellar results in countries where his personal loyalties clashed with his role as mediator. Moi’s friendship with Juvenal Habiryamana is believed to have influenced his suggestion of a two-state solution for the Hutu and Tutsi in Rwanda and Burundi.
His paternalism in Uganda soured relations with Yoweri Museveni when the latter deposed General Tito Okello despite a signed peace agreement and his sheltering of Somalia’s Mohamed Siad Barre complicated peacemaking in the neighbouring nation.
South Sudan, which was to be the jewel in Moi’s crown of peacemaking efforts, has come apart at the seams. Moi adopted a problematic posture with regard to apartheid South Africa. He received Frederick de Klerk and broke sanctions to allow South African Airways flights to Nairobi, prompting African National Congress’s Nelson Mandela to fly in and seek him out at his Kabarak home.
Under Moi, security services normalised the use of torture and other human rights abuses
Moi’s reentry into Kenyan politics to endorse Kibaki in the 2007 election despite legal bars to his participation from retirement resulted in political rapture that precluded him as peacemaker and mediator when Kenya went bust.
His departure from power opened a floodgate of legal suits for torture and other human rights abuses, land seizures and dispossession, but there has been no formal accounting for economic crimes after the judicial commission of inquiry into the Goldenberg export compensation scandal. It is speculated that when Moi visited Kibaki in a London hospital following the latter’s accident on the campaign trail in 2002, a pact was struck to not prosecute Moi if he allowed free elections that year.
Credit is due to Moi, though, for his ability to adapt to change. Here was a Cold War politician who found his footing in the new world order confronting terrorism and plural politics. The self-styled professor of politics found himself out of his depth in the global arena, and was at the mercy of the International Monetary Fund and the World Bank at the end of his rule. It is a tragedy that in spite of his deeply felt anti-imperialist sentiment, he mortgaged the country and left it at the mercy of the IMF and the World Bank on his way out.
Even the worst dictators have a human side to them – they love music, play with grandchildren, eat roast maize by the roadside — but it is hardly enough to humanise the evil that they commit.
Moi separated from his wife, Lena, in 1975 and lived as a bachelor until his death, but had reportedly reconciled with her before she died. His biographer, Andrew Morton writes that, with the exception of Gideon, he was disappointed in his children and it is remarkable that he did not attend the burial of his eldest son, ace rally driver Jonathan Toroitich.
South Sudan, which was to be the jewel in Moi’s crown of peacemaking efforts, has come apart at the seams
Books on Moi reveal little of the man, but Wanjiru Waithaka’s fictional account, Duel in the Savanna, portrays a man not too dissimilar to Moi in the character of Zack Dwanje. It is so far the only known speculation on Moi’s personal life. He is survived by his children, Doris, Jennifer, Raymond, Philip, John Mark, Gideon and June.
Kanu, the party Moi took over, is in a shambles, with 13 legislators out of 349 in the national leadership. The country is on a trajectory opposite to where he had been taking it. The harambee, his channel for generosity, has become a conduit for corruption.
A man of numerous contradictions, Moi thrived in randomness – hiring and firing people over the radio, making policy pronouncements by the roadside, and creating the appearance of popular participation in an administration he ran on a very tight leash. If his life leaves behind a lesson, it is in the codification of the Kenyan constitution so that the country need never again be subject to the whims of one person.
The Devil and the Deep Blue Sea: Why Ruto and Raila Should Drop out of 2022 Race
9 min read. For the sake of Kenya, both Raila Odinga and William Ruto should step aside and let someone who has a clean governance record vie for the top leadership in 2022. This would make the Uhuru succession politics less toxic and less polarised. It would also, hopefully, usher in much-needed reforms.
“Never dress a deep wound superficially.” – Somali proverb
A recent article by The Elephant’s senior writer Dauti Kahura suggests that one of the main reasons why a sizeable number of Kikuyus are going to vote for William Ruto in 2022 is that they are afraid that if they don’t – and especially if he loses or is forced out of the election race – Ruto will unleash terror on Kikuyus living in the Rift Valley, the kind of terror that Kikuyus in the region experienced when hundreds of them were killed and hundreds of thousands of them were displaced after the disputed 2007 election.
“It is the Kikuyu electorate that finds itself torn between the devil and the deep blue sea,” wrote Kahura. “Whatever option it takes, it will not be an easy choice because Ruto has presented the Kikuyus with the greatest dilemma. If they do not support Ruto, is there a risk that the violence of 2007/8 will be repeated?”
One Kikuyu lady told Kahura that she will definitely be voting for Ruto come 2022 because he was part of the deal that Uhuru Kenyatta made when the duo joined forces. In that sense, Kikuyus owe Ruto a political debt. “We entered into a pact with the Kalenjin people, that they would help our son capture power and protect our people in the Rift. In return, we would also lend our support to their son after Uhuru’s terms ended. It would now be disingenuous for the Kikuyu people to renege on that promise . . . it actually would be dangerous. I have relatives in the Rift and I can tell you they are not sitting pretty.”
For those who are neither Kikuyu nor Kalenjin, this rationale sounds like pure and simple blackmail: “If you vote for me, I won’t kill you.” The horror of this thinking cannot be overstated. If this blackmailing tool is what Kalenjins (read Ruto) are going to be using to win the next election, then we are in a very bad place indeed. It not only mocks our democratic right to live wherever we choose but also entrenches a mindset that views Kenya as belonging to only two tribes – the Kikuyu and the Kalenjin – whose agendas we have to accept regardless of whether they are against our own interests. And we must honour every deal they make with each other to stay in power.
If this blackmailing tool is what Kalenjins (read Ruto) are going to be using to win the next election, then we are in a very bad place indeed
It seems like a strange logic, but one that has become normalised in Kenya since 2013. Although many analysts insist that the UhuRuto victory was simply a mathematical probability, in that it united two of Kenya’s largest ethnic groups into one formidable voting bloc, thereby outnumbering the opposition, many also believe that the alliance was a pact based on the threat of violence. In addition, by declaring the election as a “referendum against the ICC [International Criminal Court]”, Uhuru and Ruto managed to galvanise two communities whose elites have held onto power since independence.
How did we get here?
It all started when Justice Philip Waki handed over the secret list of names of the suspected perpetrators of the 2007/8 post-election violence to the African Union’s envoy Kofi Annan in 2009. Kenya had the option to form a local tribunal within a year, but failed to do so. At that time, Raila Odinga, who was then the Prime Minister, had campaigned for the formation of such a tribunal, if for no other reason than that it would end speculation about the identity of the perpetrators.
When the ICC went ahead to charge the so-called Ocampo Six, including Uhuru Kenyatta and William Ruto, with crimes against humanity, Kalonzo Musyoka, who was then the Vice President, travelled to New York to try and convince the United Nations Security Council to defer the cases, ostensibly because “the ICC process has the potential to affect Kenya’s fragile stability”.
The whole episode was filled with intrigues and innuendos. Luis Moreno Ocampo’s threat that he would “make an example of Kenya” sounded childish, vindictive and selective. As I have commented before, why did the ICC not go after Mwai Kibaki, who was in charge of the security forces that unleashed much of the 2007/2008 terror and Raila Odinga, who was the leader of the party to which William Ruto belonged, and who did nothing to stop the violence?
Annan’s decision to hand over the secret list of names of the perpetrators to the ICC’s Chief Prosecutor was probably made in good faith but had the net effect of shrouding the ICC cases in ambiguity and secrecy. This ambiguity was exploited by Uhuru and Ruto, whose 2013 election campaign was pegged on the claim that they had been “fixed” and scapegoated by the likes of Raila and others who were using the ICC to get rid of their political rivals.
In the end, the ICC ended up delivering the presidency to Uhuru and Ruto. If the court had not relentlessly pursued the Kenyan cases (and bungled them), and if, as many believe, the election had not been rigged or manipulated by the likes of Cambridge Analytica, there would be no Jubilee government in place today. The ICC cases, therefore, had the unintended consequence of galvanising a nation against it.
Unfortunately, the social and economic cost of the UhuRuto political union has been unacceptably high. Kalenjin and Kikuyu politicians interpreted the truce between the two communities as a licence for theft and impunity. Members of the Jubilee government have been implicated in a looting spree of public coffers of a magnitude that has not been witnessed since the Moi years. Some would argue that the looting today is unprecedented, and has even surpassed that of the Moi era – a position that is supported by data coming out of the Auditor General’s office.
The lesson we might learn from this saga is that if political reconciliation between two groups results in the political and economic exclusion of other groups, there is no guarantee that electoral or other types of violence will not remain an option for the disenfranchised – with or without the ICC. The article by Kahura also suggests that the pact between the Kikuyu and the Kalenjin is built on a fragile foundation that can easily be destabilised by the threat of future violence.
The ICC cases against Uhuru and Ruto collapsed due to lack of sufficient evidence. It is entirely possible that key witnesses were intimidated, killed or silenced in other ways. However, Kenyans also know that the perpetrators of the violence are still walking freely in Nairobi, Naivasha, Nakuru, Eldoret, Kisumu and other places. Men who gang-raped grandmothers and chopped of their neighbours’ hands have not been arrested or charged with any crime, nor have they been ostracised by their communities.
Nor did Kenya establish Rwanda-style “Gacaca” courts to bring about reconciliation among aggrieved parties. The wounds of 2007/2008 have thus not yet healed. If true, the claim by William Ruto during a recent interview on NTV that the ICC case against him is being revived by his opponents to finish him will not heal these wounds either as many communities, not just the Kikuyu, also lost loved ones during that dark period. It would be naïve to believe that the ICC will deliver justice to the post-election violence victims because Ruto is now back in the dock.
The original sin
However, Kenyans’ wounds run deeper than the 2007/2008 trauma. These wounds can only heal if processes are put in place and serious efforts are made to address the structural and systemic causes of violence and greed in our society.
Structural and systemic violence has been part of Kenya’s DNA since before independence, and has often manifested itself in the forced eviction or displacement of people from their land. British colonialism in Kenya was in essence a violent land grab.
The first large-scale post-independence land grab began during the first few years of Jomo Kenyatta’s presidency when a resettlement scheme was implemented to “buy back” one million acres of land from white settlers in order to resettle displaced (mostly Kikuyu) Kenyans. Kenyatta had argued then that since the British colonialists and white settlers had taken land away from indigenous African communities, they were obliged to fund a large-scale settlement programme – using long-term loans with easy repayment conditions – to provide land to the landless.
It would be naïve to believe that the ICC will deliver justice to the post-election violence victims because Ruto is now back in the dock
However, a group led by Oginga Odinga, Bildad Kaggia and Paul Ngei opposed the buying of land for resettlement; they argued that Africans could not buy back land that was originally theirs, a contention that did not go down well with Kenyatta because “there were no free things and that land was not free, but must be purchased”. Kenyatta’s position mirrored that of the outgoing British colonial administration that made it clear that “African settlers could not get free land but were expected to either purchase it directly with their money or borrow the loan that was to be repaid to the British government”.
This first betrayal would be followed by many others. As the scheme operated on a “willing-seller-willing-buyer” basis, hundreds of thousands of people, particularly in the coast and Rift Valley regions, remained landless.
Interestingly, the scheme also offered loans to Africans who were not landless. In this group fell a select group of people who had been loyal to the colonial administration – the so-called homeguards – who gobbled up prime land in Central Kenya and the Rift Valley. Among this group were provincial commissioners, ministers, permanent secretaries and others within Kenyatta’s inner circle who would go on to become Kenya’s new ruling elite.
According to the report of the Truth, Justice and Reconciliation Commission (TJRC), “rich businessmen and businesswomen, rich and powerful politicians who were loyal to the colonial administration, managed to acquire thousands of acres at the expense of the poor and the landless.” Hence, “instead of redressing land-related injustices perpetrated by the colonialists on Africans, the resettlement process created a privileged class of African elites, leaving those who had suffered land alienation either on tiny unproductive pieces of land or landless.”
These alienated “lesser Kikuyus”, particularly those residing in the Rift Valley, have remained vulnerable to violence perpetrated by other ethnic groups as well as by their own ethnic group. (Recall the politically-instigated “ethnic cleansing” in the Rift Valley in the 1990s during the Moi regime and the shoot-to-kill-Mungiki order given by the late John Michuki in 2007.)
When Kenyatta died in 1978, there was a fear that his successor, President Daniel arap Moi, would reverse the Kenyatta-era land-related and other injustices by targeting Kikuyu elites who had benefitted from Kenyatta’s patronage. This fear, however, was unfounded – not only did Moi follow in Kenyatta’s footsteps by grabbing land for himself, he also entrenched a patronage network that mostly benefitted members of his own ethnic group, the Kalenjin.
Structural and systemic violence has been part of Kenya’s DNA since before independence, and has often manifested itself in the forced eviction or displacement of people from their land
Having experienced violence during the Moi regime, and having suffered under Kikuyu leadership (not even Mwai Kibaki could protect the Kikuyus in the Rift during the post-election violence of 2007/8) why would these Kikuyus now trust Moi’s protégé William Ruto and a (former?) Uhuru ally to protect them?
And if indeed, as Kahura notes, the choice is between the “devil and the deep blue sea”, why choose someone whose reputation is tainted with corruption and other misdeeds, including Youth for Kanu 92 shenanigans, not to mention crimes against humanity? Ruto is known to be a scheming and vindictive politician, a man who has the capacity to crush anyone opposed to him. Do we need someone with such a Machiavellian temperament at the helm?
As for Raila, after the famous “handshake” between him and Uhuru, even some of his most ardent supporters are questioning whether he ran an opportunistic and cynical campaign as leader of the opposition and whether his main objective has always been to gain political power, not to fight for the rights of ordinary Kenyans. Many Kenyans are still recovering from his about-turn after being sworn in as the “People’s President” on 30 January 2018 at a rally attended by thousands, and after so many lives had been lost unnecessarily, including that of Baby Pendo.
Listening to the Building Bridges Initiative (BBI) rally in Mombasa on 25 January this year, one got the impression that none of the politicians present at the rally had any political ambitions, that Kenya was now one big happy family where everyone was expected to get along and think about the country first.
Politicians present at the rally, including Raila and his lieutenant James Orengo, urged wananchi not to think too much about the 2022 elections but to focus on nation-building. The rhetoric had an eerie resemblance to the “accept and move on” mantra of the Jubilee government when it took power in 2013. It was a hoodwinking exercise that made people believe that every single politician on the podium that day was not preparing a war chest with which to retain their seats in the next polls.
What was also omitted was the fact that the Independent Electoral and Boundaries Commission (IEBC) remains as inept and as corrupt as it was during the 2013 and 2017 elections, and that what worries Kenyans is whether they can trust this electoral body to conduct a free and fair election in 2022.
The endorsement of BBI by Kipchumba Murkomen, a diehard Ruto supporter, also suggested that the BBI was a national project that had nothing to do with personal ambition. The cooption of Ruto’s allies into the BBI fold could be just a survival tactic (or perhaps a form of deception?) to ensure that they do not miss out on the “eating”. As development consultant Jerotich Seii so aptly put it on Twitter, “The slices of the 2022 Succession Pie just got a little thinner because Tanga Tanga has brought itself firmly into the mix.”
Kilifi governor Amason Kingi emphasised that historical land injustices in the coast region must be addressed by the BBI, but there was no mention of the post-election violence victims, many of whom are still displaced, nor of the fact that the government of Mwai Kibaki spent millions of shillings on the TJRC whose recommendations on historical and other injustices have yet to be implemented.
The BBI is being sold to us as a project that in one fell swoop will wipe out all the evils in our society, including tribalism. But as other commentators have noted, if the Ndung’u Land Commission’s report and the TJRC report could not bring about radical reforms in Kenya, what hope is there that the BBI will? There is simply no political will to bring about reforms, particularly on land, because too many rich and powerful people will be adversely affected.
Between the devil and the deep blue sea, the only option in this case would be to choose neither. For the sake of Kenya, both Raila and Ruto should step aside and let someone who has a clean governance record vie for the top leadership in 2022. This would make the Uhuru succession politics less toxic and less polarised.
This leader’s top priorities would be to steer the country out of the deep economic morass that the Jubilee administration headed by Uhuru Kenytatta has got us into and to slay the twin dragons of corruption and tribalism that have bedevilled this country since independence. Hopefully, he or she will also be committed to implementing the myriad recommendations that have come out of the umpteen reports and commissions that aimed to make Kenya a more just and inclusive country.
The Economic Cost of Conflict of Interest: The Kenyatta Dairy Industry Case
8 min read. The main talking point of his speech to the nation two weeks ago was Kenyatta’s directive asking the national Treasury to release Sh500 million to the New Kenya Co-operative Creameries (New KCC) to purchase milk from farmers, and another Sh575 million to revamp two of its processing plants in Kenyatta’s central Kenya political base. The dairy farmers’ woes are blamed on cheap milk imports from Uganda but why the Kenyan market is attracting Ugandan milk has little to do with Uganda’s demand-supply balance, and everything to do with Kenya’s consumer price which is a reflection of the market power exercised by Brookside.
Two weeks ago, Uhuru Kenyatta called the country to order to make what I gather was anticipated to be a very consequential address to the nation. When a country is in as much political and economic turmoil as Kenya is, it is understandable that a rare formal presidential address to the nation would be highly anticipated.
It is difficult to say whether it met expectations. It certainly did not overwhelm. I don’t get the sense that the country came out of it with a clearer sense of direction of either politics or economics.
The political highlight was without doubt the dismissal of agriculture Cabinet Secretary Mwangi Kiunjuri. Kiunjuri promptly called a press conference at which he intimated that he’d endured a fair amount of humiliation, and had been pretty much prepared for the dismissal. A master of Gīkūyū orature, he shrugged off the sacking by saying mumagari nī wa njũa igīrī (when you leave home it is wise to carry a spare garment), meaning in politics you need to have a “plan b”. Figuratively, it’s the equivalent of a middle finger.
But the main talking point of the speech was Kenyatta’s directive asking the national Treasury to release Sh500 million to the New Kenya Co-operative Creameries (New KCC) to purchase milk from farmers, and another Sh575 million to revamp two of its processing plants in Kenyatta’s central Kenya political base. This was one of a raft of financial bailouts of various troubled agriculture sub-sectors that Kenyatta said were his plan to put money in people’s pockets.
Kenyatta’s family enterprise, Brookside Dairies is the largest milk processor in Kenya. It achieved this through a string of acquisitions executed since Kenyatta became finance minister and subsequently president. The reason why Kenyatta’s directive is a talking point is because, since he assumed power, Brookside has been taking money out of people’s pockets. When he took office, processors bought milk from farmers at between Sh30 and Sh35, and sold it to consumers at between Sh60 and Sh65, obtaining a margin of about the same, i.e. Sh30 to Sh35. By the end of Kenyatta’s first term, the consumer price had increased to between Sh110 and Sh120 (i.e by Sh55 to Sh60 per half-litre packet), while the producer price remained unchanged, raising the processors’ margin to the Sh75-Sh90 range.
Over the last two years, the squeeze has shifted from consumers to producers. In August last year Brookside reduced the purchase price of milk from Sh30 to Sh25 per kilo. By December, the media reported that farm-gate prices had fallen to Sh20, and to as low as Sh17 in some places.
The dairy farmers’ woes are blamed on milk imports from Uganda. It has been alleged that some of this milk is sourced from elsewhere and passed off as Ugandan. Kenya and Uganda being part of the East African common market, there is little Kenya can do to protect its market from Ugandan products, but transhipment would violate rules of origin and give Kenya reason to restrict Ugandan imports. In response to these allegations, the Kenyan government dispatched a fact-finding mission to establish whether Uganda had the capacity to export that much milk to Kenya. The trade Principal Secretary was quoted saying that not only did the delegation not find any evidence of transhipment, it had established that Uganda’s milk production has increased significantly in recent years.
The reason why Kenyatta’s directive is a talking point is because, since he assumed power, Brookside has been taking money out of people’s pockets
There’s plenty of information in the public domain on Uganda’s growing dairy export industry. A paper published by the Economic Policy Research Centre (EPRC) shows that Uganda’s dairy exports have grown steadily from virtually zero a decade ago to $79m in 2017. We did not need to go to Uganda to know this. According to the EPRC paper, the Kenyatta-owned Brookside Dairies is the third-largest milk processor in the country in terms of installed capacity at 500,000 litres/day (19 per cent) but second in terms of production at 450,000 litres/day (29 per cent). Still, the allegations have degenerated into a trade row. Last week the Ugandan government sent a formal protest note objecting to what it termed illegal seizures of Ugandan milk, and demanding immediate release.
More fundamentally, why the Kenyan market is attracting Ugandan milk has little to do with Uganda’s demand-supply balance, and everything to do with Kenya’s consumer price. As observed earlier, the retail price of processed milk has doubled from Sh65 to Sh120. In Uganda, a litre of processed milk retails at between USh2,800 and USh3,000 which translates to an average of Sh80, i.e. Sh40 per half-litre packet, compared to Sh60 in Kenya. Ugandan producers are not obliged to satisfy their domestic market when a more profitable market is available across the border. If consumer prices had increased at the rate of inflation faced by Kenyan manufacturers, as measured by the producer price index (2.5 per cent per year), the retail price in Kenya today would be in the Sh70-75 range, which is well below the Uganda retail price.
In a competitive market, Uganda should sell milk to Kenya until the profits for producers in both markets are equal. But the consumer prices in Kenya are not a reflection of market forces. They are a reflection of the market power exercised by Brookside. Why Brookside? Why not New KCC and Githunguri Dairy, or collusion between the three? The answer is simple enough. New KCC and Githunguri Dairy are public entities, the former a state corporation, the latter farmer-owned. They have nothing to gain from a fat bottom line as their mandates are to maximise farmers’ earnings. Whether they pay a decent producer price or distribute dividends, the money ends up with farmers.
Why the Kenyan market is attracting Ugandan milk has little to do with Uganda’s demand-supply balance, and everything to do with Kenya’s consumer price
But even if in the place of New KCC and Githunguri Dairy we had purely capitalist enterprises in the same market position, Brookside, as the market leader, would still be the culprit. In the economics of industrial organisation, the branch that informs competition policy, we call a market dominated by a few players an oligopoly. In an oligopoly, the market leader is the price maker. When the market leader raises prices, the weaker players benefit also. You don’t need a conspiracy to get a cartel. Each of the players acting in their self-interest can result in cartel-like behaviour. We call this non-cooperative collusion.
In essence then, the problem of the milk industry is not an agricultural policy one. It is not a trade policy one either. It is a problem of competition policy. Having sanctioned the Brookside acquisitions, the Competition Authority was obliged to keep an eye on the market to ensure that cartelisation did not occur. As noted, normal prices should be in the order of Sh75 a litre, Sh80 at most, compared to Sh120 today. This is prima facie evidence of abuse of dominance.
I am frequently asked, including by people close to Kenyatta, what it is that he, Kenyatta should do to turn around the economy. My answer is invariably is that there is a world of difference between what can be done, and what Kenyatta can do. The reasons are clear. Kenyatta is so severely enmeshed in the conflict between his family’s business and the public interest that there is hardly a sector of the economy in which the required reforms do not conflict with his personal interests.
For the last four years, the economy has suffered the consequences of ill-advised populist interest rate regulation. Kenyatta expressed reservations about the law, but he went ahead and signed it anyway. The banking industry vigorously opposed the law, and as a bank owner, Kenyatta may not have wanted to be seen to be on the side on which his bread is buttered. If Kenyatta had no personal interest, he would have been in a much stronger position to argue against, and veto the law.
Consumer prices in Kenya are not a reflection of market forces; they are a reflection of the market power exercised by Brookside
Two years ago, a sugar import scandal of monumental proportions unfolded. Initial reports pointed to traders of Somali ethnicity who were reportedly repackaging contaminated contraband sugar and passing it off as “Kabras Sugar”, a local brand owned by West Kenya Sugar Company. The government was threatening damnation. So much so that the CEO of the Kenya Bureau of Standards (KEBS) was slapped with an attempted murder charge for allowing the contaminated sugar, said to be laced with copper and mercury, to enter the country. But soon, mountains of sugar, way beyond the capacity of the contraband traders, was discovered in warehouses associated with the owners of the West Kenya Sugar Company, who also happen to be Kenyatta family business associates. It turned out that just before the elections the Government had opened the floodgates and allowed in 990,000 tonnes of duty free-sugar. West Kenya Sugar imported a quarter of it. As soon as this was exposed, the matter died.
The convergence of family and state is best exemplified by Stawi, a mobile phone-based lending platform owned by NCBA Bank—another Kenyatta family enterprise—that is being passed off as a national policy initiative to provide affordable credit to small businesses. Kenyatta himself first spoke of it in his 2019 State of the Nation address, and again in his Mombasa address two weeks ago:
“Measures to enable MSMEs access affordable credit include the recently launched Stawi. This will provide unsecured credit to MSMEs, which, because of their informal nature and lack of collateral securities, had been locked out of the formal credit market. Five commercial banks have set aside 10 billion shillings to be lent to MSMEs at an interest rate of 9 percent per annum, in loan amounts ranging between 30,000 to 250,000 shillings.”
This is sleight of hand, also known in trade lingo as mis-selling. First, the Stawi platform belongs to NCBA, the other four banks are agents. Second, the interest rate of 9 per cent per year, while true, amounts to mis-selling. The true cost of credit is given by the Annual Percentage Rate (APR) which combines both interest and other fees. In addition to the 9 per cent per year interest, there is a facility fee of 4 per cent of the loan amount, a 20 per cent excise duty on the facility fee and a 0.7 percent insurance fee. All in all, these add up to an APR of 14.5 per cent for a one-year loan, 20 per cent for a six-month loan, 31 per cent for a three-month loan and 75 per cent for a one-month loan.
"We’re pleased to see the new scheme, Stawi, under which loans will be made available to SME's at 9%. Our young people and our small scale traders hard work and innovation deserve our support; with the Stawi loans, they’ll get it." ~ @KanzeDena pic.twitter.com/VcoqGMBG20
— State House Kenya (@StateHouseKenya) June 18, 2019
Kenyatta has spoken out against conflict of interest on a number of occasions, including quite recently when he made a big hullabaloo about lawyers who are also senators representing county governors in court. The conflict of interest here is actually tenuous, since all that would be required to avoid it is for the lawyers to recuse themselves if their client’s case comes before the Senate. It remains a profound mystery whether Kenyatta is unaware how egregiously conflicted he is, or it is impunity, or perhaps he suffers from multiple personality disorder. Remarkably, throughout his presidency, no journalist has found it fit to ask Kenyatta this question. It needs to be asked.
Whatever the case, Kenyatta cannot have been unaware that personally wading into the dairy industry was inviting scrutiny of Brookside’s role in the dairy industry mess. That he did so suggests that he may be finally waking up from whatever reverie led him to wonder aloud not too long ago why Kenyans are broke. He may even be finally making the connection between the economic despondency in the country, and the popularity his deputy and now nemesis is enjoying in his central Kenya backyard.
Having sanctioned the Brookside acquisitions, the Competition Authority was obliged to keep an eye on the market to ensure that cartelisation did not occur
And of course, that his administration’s borrowing binge has the government in financial dire straits can no longer be denied. Mr Kenyatta has little to show for the debt. The SGR railway, his flagship project, has become a bugbear that is bleeding the country dry. It costs more and is less efficient than road haulage. The only reason it is running is because importers are forced to use it, gutting the Mombasa economy in the process. Even then, it cannot cover the management fees we are paying the Chinese to run it, let alone service its debt. It is bleeding taxpayers, consumers, importers, business and Mombasa—the only beneficiaries are China and whoever was bribed to build it.
A legacy of economic delinquency is one that Kenyatta cannot be relishing. We can expect him to be increasingly preoccupied with salvaging what he can. He has his work cut out. The government is in negotiations with the World Bank and the IMF for a financial bailout. If that goes through, Kenyatta is likely to spend the rest of his term hemmed in between an IMF straightjacket and his myriad conflicting interests, amidst a brutal vacuous power struggle between his deputy and Raila Odinga, neither of whom, if truth be told, inspire confidence in terms of economic stewardship.
Gakīīhotora nīko koī ūria karīina (one does not adorn for dance without knowing how they will dance) which is to say, as you make your bed, so you must lie on it.
Politics1 week ago
Moi and the Simplification of the Kenyan Mind
Politics2 weeks ago
Customers, Not Patients: The Nairobi Women’s Hospital Saga
Ideas2 weeks ago
A Wake-up Call to Youth, Kenya’s Most Important ‘Tribe’
Op-Eds6 days ago
How Not to Run a Country: Further Reflections on Moi’s Presidency
Politics1 week ago
Moi and the Erasure of Memory
Reflections1 week ago
The Contested Narratives of a Dead Man’s Legacy
Culture2 weeks ago
A Street Named Bi Pendo
Politics2 weeks ago
Media Ethics in the Internet Age