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Turnover Tax: Days of Extortion, Days of Revolt

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Informal micro and small businesses are being unfairly targeted by a new tax that is considered by many as extortionist and punitive. How can the government morally justify a tax on a sector it has done little to assist? Will the new tax force these businesses to close down or to revolt?

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Turnover Tax: Days of Extortion, Days of Revolt
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Our government has decided to extort money from the smallest businesses and is trying to make a virtue of it. Imposing the 3 per cent turnover tax (TOT) on informal micro and small businesses is monstrous, and an insult to poor Kenyans. Though legal, TOT is IMMORAL. I echo the prophetic declaration: “Woe to those who make unjust laws, to those who issue oppressive decrees, to deprive the poor of their right and withhold justice…” (Isaiah 10:1 NIV)

The micro and small-scale businesses, which include kiosks, small grocery stores, hair salons and small market traders (generally those at the bottom tier of the informal sector) now have to pay TOT. TOT is a new tax demanded of any resident person whose turnover from business does not exceed or is not expected to exceed Sh5,000,000 ($50,000) during any year of income. It will be payable from 1st January 2020. This tax rate is on the gross sales/turnover and is a final tax.

Mrs. Elizabeth Meyo, the Commissioner of Domestic Taxes at the Kenya Revenue Authority (KRA), states that “from January 2020, if one operates a salon, butchery, or grocery store, you will be required to declare your sales online and pay the taxes on the 20th of each month.” And for one to get a business licence from one’s county government, one will have to pay an extra 15 per cent of the permit fees to KRA as presumptive tax. In complying to these new demands, Mrs. Meyo further claims, “the business owners will have fulfilled their patriotic duty for a better Kenya”.

Various economic findings acknowledge the substantial contribution of the informal sector to GDP in most developing countries. The informal sector is one of the biggest employers in Kenya, and accounts for over 80 per cent of employment opportunities. It is a shame that attention is turning to this sector only for their moolah, and to bridge the gap resulting from dwindling revenue from the formal sector. According to a Kenya National Bureau of Statistics survey published in 2016, the monthly expenditure on salaries and wages for unlicenced micro small and medium enterprises (MSMEs) was Sh9 billion, which translates to 25 per cent of total outlays a piece.

The neglected informal sector

The colonial market design continues to define the contours of our economy, which conditions us to think of the informal sector as inferior to the formal sector. We still perceive it as “traditional”, marginal or peripheral, having no links to the formal economy and making no contribution to modern industrial development. We have therefore neglected this sector.

Some economists have argued that the informal sector is a dead-end for a pool of labour comprising workers who could not gain entry into the preferred formal sector. Others, like Jeffery Sachs, have even gone to pronounce the informal sector’s obituary, stating that it would cease to exist once Kenya achieves sufficient levels of economic growth and industrialisation.

The informal sector is one of the biggest employers in Kenya, and accounts for over 80 per cent of employment opportunities. It is a shame that attention is turning to this sector only for their moolah, and to bridge the gap resulting from dwindling revenue from the formal sector.

Others see the potential of the informal sector’s small businesses. In his book, The Mystery of Capital (2001), the Peruvian economist Hernando de Soto views these informal businesses as a sign of entrepreneurial dynamism, a real force in the market. They could also be useful in an industrial take-off due to their resilience and ability to withstand market shocks over the long haul, as Shem Watako observed in his doctoral studies of micro and small businesses in Kariobangi.

This hubris in the informal sector has got the taxman’s attention. But the challenge is in how they will implement the TOT. Mrs Meyo identifies this difficulty while responding to why Kenya resorted to TOT for small businesses. She explained that “lack of formal structures and a tax framework that suits the [informal] sector have been major drawbacks in the taxman’s quest to tap revenue from this sector”.

The ethical reasoning of those calling for micro and small-scale businesses to pay taxes as demanded is implausible because it does not raise the second order question. Is it moral to make these demands on the poorest of Kenyan businesses? Is it moral to treat the poor with partiality when the new tax regime would disenfranchise them?

A turnover tax is like a sales tax or a value-added tax (VAT), with the difference being that it taxes intermediate and capital goods. It is on an ad valorem basis (based on the value of the good in question, rather than being flat taxes), applicable to a production process or stage. TOT makes the poor pay another indirect tax, while those whose turnover exceeds Sh5 million pay direct tax, which is a better tax plan for their businesses.

Let us consider a hypothetical case of Nyamulu Beauty  Salon, a business run by Achieng’ in Kariobangi, a low-income area of Nairobi, to illustrate this point. With her revenue turnover of Sh100,000 for January 2020, she would enlist for TOT.

NYAMULU BEAUTY SALON, KARIOBANGI TRADER SCENARIO

ITEM REVENUE/COST GOVT TAXES &LEVIES  
Revenue 100 clients @ 1000                  100,000    
Less cost      
Electricity                    (5,000) VAT +Levies                (901)
Supplies (oils, hair pieces, etc.)                  (30,000) VAT @16%            (4,800)
Rent for stall                  (12,000) Rent Tax @10% Incl            (1,091)
Casual workers 2 @500 a day                  (30,000)    
Mshwari fees[1]                    (5,850)    
County license                    (1,250) county license            (1,250)
Operating Trade Profit                    15,900 Total Taxes & Levies            (8,042)

Assumptions

VAT is standard rated for all goods and services

SCENARIO 1 -TOT
Operating trade profit                    15,900    
Less Turnover Tax                    (3,000) Total Taxes & Levies          (11,042)
Net Profit                    12,900   11.04%

 

SCENARIO 2- Personal Income Tax (PIT)
Trade Profit                    15,900    
PIT -After Relief                          (362) Total Taxes & Levies            (8,404)
Net Profit                    15,538 Effective Tax Rate 8.4%

 

SCENARIO 3 Personal Income Tax and VAT Registered[2] (PIT + VAT registered)
Operating Trade Profit                    15,900    
Add-Input VAT recovered      
Electricity                            664    
Supplies                       4,800    
Net Profit/Taxable Income                    21,364    
PIT – After Relief                    (1,182) Total Taxes & Levies            (3,760)
Net Profit                    20,182 Effective Tax Rate 3.76%

Scenario 3 encourages small traders to register for VAT, which is passed through to consumers; the net effect is increased transparency and increased VAT collection for KRA.

TOT PIT PIT +VAT Reg
Profit                  12,900                  15,538              20,182
Effective Taxes                  11,042                      8,404                  3,760
Effective Taxes% 11.04% 8.4% 3.76%

An alternative tax plan to TOT would give a different result. If the above scenario described her business, then under scenario one, where she paid TOT, her profit would be Sh12,900. Under scenario two, where she pays personal income tax, her profit would be Sh15,538. And if she were registered for VAT and also pays PIT, she would have made profit of Sh20,182.

The individual tax plan would, therefore, be more favourable to the poor income business groups than the TOT. Notice also that her business has contributed indirectly to the government’s revenue by more than Sh8, 042. Then, if subjected to the TOT of Sh3,000, she would have contributed Sh11,042 to the government coffers.

Is it moral for a tax regime to erode the business capital of the poor?

The start-up capital of small businesses usually comes from family resources. This tends to limit the size of the businesses, the number of workers they hire, and the level of profits they generate. So they have a limited amount available to reinvest.

In 2016, the Kenya National Bureau of Statistics found that licenced micro establishments reported spending 45.3 per cent of their net income on investments, either as reinvestment or investing in new businesses and investment in agriculture, while expenditure on household and family needs accounted for 44.5 pervcent. In 2016, small and medium establishments spent a significantly large part of their net income on investment, at 63.4 per cent and 69.7 per cent, respectively.

The erosion of capital from small business via the TOT will delay their growth. Rather, by allowing them to grow capital we would help debunk the notion held by some, including the International Labour Organisation (ILO), that these businesses are doomed to remain small. Yet a significant number of entrepreneurs in the informal sector earn more, on average, than low-skilled workers in the formal sector, according to some studies.

It is immoral to deny the poor a fair chance to compete in the market by imposing a tax on their businesses.

Governments have used taxes to shut out a section of the economy. N. Cheeseman and R. Griffiths (2005)[3] point out that turnover taxes can also be punitive when designed to create a disincentive for buying particular products. They say that environmental regulations sometimes encourage this practice.

Despite the expansive nature of the informal sector, aiming at the bottom end of the pyramid is suspect. We must keep in mind that the current regime is struggling with a debt burden that is uncreative and evil. TOT could be an attempt to cut off informal sector traders from the market. There are 1.3 million micro and small enterprises in Kenya, which, according to a government survey, employed about 2.4 million people – 17 per cent of the total workforce in Kenya – in 2009. They were engaged in the following: close to two-thirds (64.1 per cent) of all enterprises were in the trade sector; retailing made up 62 per cent of all trading in Kenya; manufacturing comprised 13 per cent, while services accounted for 15 per cent.

It is immoral for the government to burden the poor.

In a liberal democracy, argues Prof. Nicholas Wolterstorff of Yale Divinity School, the state should act impartially when distributing burdens and benefits to its citizens. Our government is absent in the lives of poor citizens because of skewed development priorities. The poor live in squalour with children attending overcrowded schools. They have dismal access to healthcare and are the main users of public transport on what is left of roads.

But the government now finds it expedient to tax these businesses operating on the margins of our nation, either in the slums of our cities and towns or in the rural areas. Yet it is through their businesses that low-income households have managed to improve their lot, not through any government subsidies or incentives.

There are 1.3 million micro and small enterprises in Kenya, which, according to a government survey, employed about 2.4 million people – 17 per cent of the total workforce in Kenya – in 2009.

We can use taxes for the public good, to even out the inequalities in society and to provide essential services to all citizens. Eric Nelson, a Harvard professor, explains the idea that the state should coercively maintain an egalitarian distribution of property because it is the business of the state to engage in the redistribution of wealth through taxation, thus ensuring the welfare of the poor; this idea is the genesis of welfare states in many European countries.

Forcing a blanket tax without considering the business conditions of payees is reminiscent of the colonial administration’s hut and poll tax of the 1920s. Then, local leaders and community representatives defended their people against the colonial extortion. Responding to the tax demands, Luo leaders in Nyanza consulted and convened a a general meeting at Lundha in Gem on 23 December 1921. About 9,000 people attended from all parts of Nyanza to discuss the hut tax. During the meeting, Chief Ogada Odera of Gem in Central Nyanza lamented: “As regards our taxes, they used to be 3 shillings. Mr John Ainsworth [the Nyanza Provincial Commissioner in Kisumu from 1906] told us that the amount would be increased to 5 shillings. We agreed. The government then increased it to 8 shillings. It is very heavy. Besides, we do not want our women taxed.”

Forcing a blanket tax without considering the business conditions of payees is reminiscent of the colonial administration’s hut and poll tax of the 1920s.

Chief Ogada made a perceptive comment: “As regards the word colony, the government came here and found us occupying the land and now it calls us ‘wasumbni’ [their slaves].”

Most commentators on TOT have sided with the government’s position and made a virtue of the extortion of poor businesses by calling the tax fair, patriotic, and easy to compute and complete. I think they are misguided. Kamotho Waiganjo reflected this distorted thinking when he commented in the Standard:  “But the government was getting no tax benefit from these businesses…those who operate in the formal sector, and who are therefore in the taxman’s spotlight…cough up 30 per cent of annual profits as tax…businesses in the informal sector means that many of the operators in this expansive sector escape the taxman’s dragnet. Not anymore.”

This assumption – that the poor in the informal sector churn out a considerable volume of revenue but do not contribute to the tax pool – is erroneous. TOT is an indirect tax on businesses and not a tax based on income from business profits. Informal sector businesses already pay other indirect taxes that are levied on fuel, electricity, VAT on their goods and rent taxes collected from rental income. Shouldn’t their cost of goods, business expenses, and other costs also be considered, as they are with formal businesses?

Most commentators on TOT have sided with the government’s position and made a virtue of the extortion of poor businesses by calling the tax fair, patriotic, and easy to compute and complete. I think they are misguided.

Some argue that the cost of compliance is low and that all that these small businesses need to do is record their sales. Those paying turnover tax will not need to worry about tracking their expenses; their tax is only on turnover. They say keeping proper business records will benefits business owners because proper records would help them evaluate their business performance, monitor purchases and sales, and make crucial business decisions.

However, the consequences of eviscerating small businesses would be catastrophic owing to sector’s significance in the economy. It may arouse two major reactions from the poor:

First, if the small businesses sense extortion, they may disappear into thin air. These businesses are supersensitive to extortion by the authorities and would hibernate, adjusting their operations till conditions change. The damage in the wake of their disappearance could be devastating. Mr. Francis Atwoli, the Secretary-General of the Central Organisation of Trade Unions (COTU), warned that further taxation on small and medium businesses will not only destroy the fastest growing sector of the economy but also render many Kenyans jobless.

The 2016 Kenya National Bureau of Statistics survey shows that approximately 400,000 micro, small and medium enterprises do not celebrate their second birthday. Few reach their fifth birthday, leading to concerns about the sustainability of this vital sector.

Second, if poor business owners interpret this tax as oppression, they will revolt. Implementation of TOT will conjure up the pain of the colonial era. The colonial hut and poll taxes became a heavy burden on the people of Kenya in the 1920s. B A Ogot[4] (2009:772) observes that it was made worse by the method of collection, which was ruthless and arbitrary. In Nyanza, the colonial regime collected the hut tax from all huts in a kraal, including the cattle sheds. When many people refused to pay these taxes, the colonial authorities, including chiefs and tax clerks, resorted to brutal methods of collection, ordering policemen, chiefs and sub-chiefs to raid villages, set houses on fire, and confiscate property or food stuff such as grains, bananas and cassava.

Since TOT will eat into the livelihood of these business owners, they will revolt. But the authorities will crush their revolt due to their lack the organisational capacity, unlike the UK’s anti-poll tax groups of 1990. Introducing an unpopular “poll tax” is credited for forcing Mrs. Margaret Thatcher out of office in November 1990. The Green Paper of 1986, Paying for Local Government, proposed the poll tax, which charged a fixed tax per adult resident for the services provided in their community, hence the term poll tax. It was a change from payment based on the worth of one’s house to a resident individual. The tax was, therefore, criticised as being unfair, and needlessly burdensome on those who were less well-off. What followed were protests and riots that prompted the abolishing of the tax following the change of government in November 1990.

What should KRA do with poorer businesses?

The government and the KRA, the implementing tax collection authority, can act morally and avoid hurting small-scale businesses. They can make it a priority to rationalise the informal sector rather than wipe it out through harsh tax policies.

Turnover tax, as currently enacted, is elective. Therefore, qualifying small businesses can opt to register for the standard tax system. This move would allow them to be recognised like other businesses. And with sound records, they may take advantage of comprehensive inclusion rules and a reduction process that requires maintaining proof of expenditure. We should make efforts in aiding small-scale businesses to maintain proper business records and wean them into an alternative tax regime.

The government and the KRA, the implementing tax collection authority, can act morally and avoid hurting small-scale businesses. They can make it a priority to rationalise the informal sector rather than wipe it out through harsh tax policies.

This government should heed the words of Hubert Humphrey, the former US Vice President, who on November 1, 1977, said: “The moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; those who are in the shadows of life, the sick, the needy and the handicapped.”

The tinders are there waiting for something to ignite them. If the poor interpret TOT as extortion, we may as well have ushered in days of revolt.

 

[1] Trader uses Mshwari for working capital, interests at 7.5% per month.

[2] Allow Voluntary registration for traders who are below the threshold for compulsory VAT registration.

[3] Cheeseman, N., & Griffiths, R. (2005). Increasing Tax Revenue in Sub-Saharan Africa: The Case of Kenya. Oxford Council on Good Governance, Economy Analysis, 6.

[4] Ogot BA. 2009: A History of the Luo speaking people of Eastern Africa. Kisumu Kenya Anyange press ltd.

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Rev. Canon Francis Omondi, is a priest of The Anglican Church of Kenya (1998), serving as an attached clergy in the All Saints Cathedral Diocese, Nairobi. Was made Canon of Kampala Diocese in the Anglican Church of Uganda (2008). He is an Adjunct Lecturer at St. Paul’s University, Limuru, Kenya, and International Director of The Sheepfold Ministries.

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The Role of Kenyan Civil Society in Democratic Governance

Kenyan civil society has played a critical role in holding the State to account and in promoting a human rights-based approach to governance.

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The Role of Kenyan Civil Society in Democratic Governance
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In defense of democracy, human rights and the rule of law is the motto of conscientious human rights defenders. A human rights defender is any person fighting for a cause to improve the well-being of human beings or to correct a violation to human dignity or breach of law for remedy. Human rights are rights that belong to everyone simply because they are human beings. By belonging to everyone it means that every person is a holder of these rights and they may not be taken away or denied because of a person’s social or economic status. Human rights are universal. They belong to everyone. They are interrelated, interdependent and indivisible. No right is greater than the other.

The primary obligation to promote and protect human rights rests with the State. However, every individual, and other non-State actors also have the responsibility and duty to respect the rights of his or her fellow human being. It is vital that in the establishment of a human rights culture that no one is excluded and that the most vulnerable are included. For democracy to prevail, it is imperative that it reaches every citizen. It is often said that it is easier to struggle for democracy but more difficult to sustain it.

This is critical especially in situations where people have limited respect for and trust in the government. The world is facing the greatest test – the COVID-19 pandemic. It is my personal experience that pandemics or upheavals in countries and societies have always had serious consequences to human trights democracy and rule of law. In most cases, such occurrences exacerbate existing human rights violations. It is the moment when human rights defenders in their active and vibrant civil society are necessary to hold the State accountable, especially because the State capitalises on such calamities to grab more power and cause egregious violations.

A new United Nations report on the global response to COVID-19 has noted the central role of a human rights-based approach to the pandemic. “This is not a time to neglect human rights; it is a time when, more than ever, human rights are needed to navigate this crisis in a way that will allow us, as soon as possible, to focus again on achieving equitable sustainable development and sustaining peace,” stated the report. This is a time when, more than ever, government needs to be open and transparent, responsive and accountable to the people they are seeking to protect. Civil society organisations, particularly grassroots community-based organisations, are better placed to reach exposed populations quickly and in ways that factor in the specific sensitivities of each community and that ensure that critical information reaches diverse segments of the society.

Perhaps the biggest challenge that human rights defenders and civil society in general have faced during this pandemic is the State taking advantage of the pandemic to grab and consolidate more power. States have turned COVID-19 into a security matter, giving themselves enormous powers to curtail crucial freedoms and rights while remaining covertly opaque in their decision-making processes. This poses a dilemma for civil society on how to respond while being sensitive to the public’s concerns.

Who constitutes civil society?

In my own understanding, civil society is not what many Kenyans see as particular individuals and/or the organisations they work for. No! Civil society should been seen in the context of the heterogeneity of an entire range of organised groups, individuals, and institutions that are independent of the state, voluntary, and at least to some extent self-generating and self-reliant. This includes those individuals and organisations that the majority of Kenyans see as the being the civil society, as well as independent media, think tanks, universities, and social and religious groups.

To be part of civil society, such individuals and groups, formally or informally, must have respect for the rule of law, for the rights of individuals, and for the rights of other groups to express their interests and opinions, and must also exercise tolerance and the accommodation of pluralism and diversity of ideas and formations.

States have turned COVID-19 into a security matter, giving themselves enormous powers to curtail crucial freedoms and rights while remaining covertly opaque in their decision-making processes.

 There is consensus that civil society in all its different formations and characters needs to ensure its own legitimacy, openness and transparency. Legitimacy stems from several sources:

Firstly, from a strong moral conviction, through acting on the basis of universally-recognised rights and freedoms of speech, assembly and association to articulate public concerns that are inadequately addressed by the government.

Secondly, from a political and civic legitimacy or credibility, through approval of the community or constituency represented by the voluntary association, asserting people’s sovereignty and community control.

Thirdly, from competence or performance legitimacy, by delivering results through being closer to local reality than governmental institutions, helping to bridge a government-community gap and promoting social cohesion.

Fourthly, from legal recognition, although laws may prevent truly independent civil society from functioning, or formal registration may undermine rather than enhance their reputation.

And finally, and most importantly, from the legitimacy that comes from accountability and transparency in its work.

A strong civil society is one in which voluntary formations are effective and strategic organisations that work cohesively in influential networks or coalitions in an environment governed by civil norms, such as respect, reciprocity, tolerance and inclusion. Such norms promote open discourse and citizens’ engagement in informed dialogue.

A narrow view of civil society results in a failure to develop civil society organisations that keep the government in check and nurture democratic practices and values as a multi-generational effort. A broader view of civil society requires cultural and attitudinal changes to help people understand, support, and protect civil society organisations as representatives of their interests. Yet goverments are able to keep replenishing and tapping good ideas and brains to help them overcome citizens’ pressure. Civil society, which is facing very turbulent times on many fronts, will have to become more innovative in enabling collaboration and improving practices in order to remain relevant and effective in influencing public policy. It cannot remain conventional with the same traditional approaches.

In my view, there are several important principles to follow in seeking to strengthen civil society. Firstly, it is critical to start where civil society is: measures to strengthen its capacities need to be based on local needs, assets and institutional ecosystems. Civil society organisations need to know their own strengths. Outsiders cannot necessarily connect with local society.

Secondly, decision-making needs to be in the hands of those undertaking the strengthening measures, so it is informed by indigenous values, concerns and environment. Thirdly, action must be based on well documented and analysed data and evidence and sustainable resources to inform local engagement across sectors and levels. A people-oriented participatory approach is key. It creates constituency and legitimacy. Fourthly, action should support and reinforce existing compatible interventions. This will need to have a combination of multidimensional tools for execution. For instance, how do online actions combine and reinforce offline actions? Fifth, there should be realistic time horizons since institutional development does not occur instantaneously.

Finally, building alliances within a sector or domain will support individual sector members or issue-based communities. This leads to improved information through sharing best practices and avoiding duplication. Through collaborative action in alliances there can be a greater impact at the policy level, and a means to set standards in accountability. Alliances and networking create solidarity. Bridge-building across sector boundaries strengthen both by generating a larger body of interest and also new resources, for example, through cooperation with the public or private sector. Transnational or international engagement enhances civil society roles in different spheres of public discourses.

In my experience with civil society, I see have seen it playing pivotal roles of advocacy, watchdog and service provider of public goods. The roles are intertwined. Perhaps what have been different are approaches, which has created unnecessary frictions and misunderstanding. As dynamic and multidimensional entities, civil society moves from one role to another and/or assumes several roles. This can be illustrated by an organisation whose initial role is service delivery; it turns to advocacy to overcome problems it meets in fulfilling its service provision role; and it subsequently becomes a watchdog in trying to prevent the recurrence or worsening of the problems while continuing to provide its original services. The role of service delivery is regarded, at least by governments, as the least controversial function of civil society. However, many people express concern that while civil society is performing a crucial activity, the government can take advantage of this service provider role and fail to assume its own responsibilities and obligations.

Most agree that Kenyan civil society has contributed enormously towards both the substance and process of democracy and human rights. Civil society has been an important driver of the State’s democratisation process by providing a vital link between citizens and the State as well as by mobilising communities for collective actions. It also provides an environment that can be used to enhance community cohesion and decision-making. Information is vital to civic participation and also encourages inclusive development and participatory democracy. When people get better informed, they are more likely to participate in policy discussions and communicate their ideas and concerns freely.

Achievements of Kenyan civil society

The following is a summary on the role civil society played in Kenya in advancing human rights, democracy and the rule of law in different contexts. (The list is not exhaustive.)

First, civil society has been an incubator and supplier of ideas on content and strategies on State transformation and building an open pluralistic society. Perhaps the struggle for multipartyism and a new constitutional order culminating in the progressive Constitution of Kenya 2010 amplifies this critical role of civil society. Today, there is a growing movement of civil society on the implementation of the constitution and championing of devolution of powers and resources under the banner of Tekeleza Katiba Movement. Further, civil society has not shied away from working and organising political parties into a formidable socio-political movement. This capacity was demonstrated in 1997 and 2002.

The role of service delivery is regarded, at least by governments, as the least controversial function of civil society. However, many people express concern that while civil society is performing a crucial activity, the government can take advantage of this service provider role and fail to assume its own responsibilities and obligations.

Secondly, civil society has been a strong deterrent and catalyst in defanging the power of the State. A true democracy needs a well-functioning and legitimate State.  Kenyan civil society has been highly successful in deploying different methods to ensure that the State is tamed through checking, monitoring, and taking actions to restrain the power of political leaders and State officials. Civil society actors have been aggressive watchdogs on how State officials and agencies use their powers through raising public concern and awareness about any abuse of power and robustly taking advocacy actions ranging from public demonstrations to picketing and litigation.

Thirdly, research and documentation to expose the corrupt conduct of public officials and demands for accountability and improved governance have been a great success. This is also very important in collection and preservation of evidence. Civil society in its different formations has been a leading light in tackling corruption, especially through push for public access to information, whistle blowing and public campaigns. This is upon realising that even where anti-corruption laws and bodies exist, they cannot function effectively without the active support and participation of civil society. Civil society have come up with transparency and accountability tools as some potential solutions to some of the corruption problems in that they allow communities to identify breakdowns and hold responsible agents or decision makers to account. A fourth function of civil society is to promote political and public participation.  Civic education on citizens’ rights and obligations has been a bulwark in developing citizens’ skills to work with one another to solve common problems, to debate public issues, and express their views.

Fifth, civil society has been a major player in conflict mitigation efforts and propagating values of democratic life, such as tolerance, moderation, compromise, and respect for opposing points of view.  Without this deeper culture of accommodation, democracy cannot be stable. Civil society understands that these values cannot simply be taught; they must also be experienced through practice and interlocutors. Civil society has developed formal programmes and training of trainers to relieve political and ethnic conflict and teach groups to solve their disputes through bargaining and accommodation. This brings the crucial connection between policy and practice in civil society work.

Sixth, civil society has been an arena for the expression of diverse interests. One role of civil society organisations has been to push for the needs and concerns of their members, as women, students, farmers, environmentalists, trade unionists, lawyers, doctors, and so on.  Civil societies, in all their diversity, have been presenting their views and those of different constituencies they represent to different State institutions for redress.  They also establish a dialogue with relevant government ministries and agencies to lobby for their interests and concerns. And it is not only the resourceful and well-organised whose voices have been heard.  Over time, groups that have historically been oppressed and confined to the margins of society have organised to assert their rights and defend their interests.

Kenyan civil society has been highly successful in deploying different methods to ensure that the State is tamed through checking, monitoring, and taking actions to restrain the power of political leaders and State officials.

Seventh, different civil society platforms have been vital focal points for strengthening democracy in actions by providing new diverse forms of interests and solidarity.  For civil society, democracy cannot be stable if people only associate with others of the same social, political or status identity orientation.  When people of different religions, ethnic identities, professionals backgrounds and sectors come together on the basis of their common interests as women, artists, doctors, students, workers, farmers, lawyers, human rights activists, environmentalists, and so on, civic life becomes richer, more complex, and more tolerant. Civil society has very efficiently provided this platform. Historically, groups and individuals never saw themselves as part of civil society; today there find crucial space for civic engagement.

Eighth, civil society provides a training ground for political, civic and private leaders.  Civil society has helped to identify and train new types of leaders who have dealt with important public issues and are recruited to run for political office at all levels and to serve in local and national positions, both in politics and private/professional sectors.  Evidence shows that civil society has been a particularly important arena from which to recruit and train women leaders in different fields.

Ninth, civil society has helped to inform the public about important public policy issues.  This is not only the role of the mass media, which is also part of civil society, but individuals or groups of organisations coming together to provide fora for debating public policies and disseminating information about issues that affect the interests of different groups, or of society at large, using different methods. Civil society leads in taking action that safeguards public interest like litigating and drafting petitions and policy papers and presenting those policy positions to the relevant State institutions.

Tenth, civil society organisations have played vital role in monitoring electoral processes and management.  This has seen a broad coalition of organisations unconnected to political parties or candidates deploying neutral monitors at all the different polling stations to ensure that voting and vote-counting is entirely free, fair, peaceful, and transparent.  It is very hard to have credible and fair elections in a democracy unless civil society groups play this role. The outcomes of such vital civil society processes have been useful as evidence in electoral disputes.

Twelfth, civil society has been very instrumental in advocating for fair rules in the digital world and influence at the policy level. This has been important in establishing spaces for civil society to engage and bring social change through digital activism.

Finally, it is important to stress that civil society is not simply in tension with the State.  Because civil society is independent of the State does not mean that it must always criticise and oppose the state.  In fact, by making the State at all levels more accountable, responsive, inclusive, and effective, and hence more legitimate, a vigorous civil society strengthens citizens’ respect for the State and promotes their positive democratic engagement with the State. However, Kenyan civil society is in the state of fluid transition as global dynamics shift.

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Food Crimes: Why WFP Doesn’t Deserve the Nobel Peace Prize

The UN’s food assistance agency has neither improved conditions for peace in conflict-affected countries nor prevented the use of hunger as a weapon of war. On the contrary, it is responsible for prolonging conflict in some countries and suppressing local food production in others.

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Food Crimes: Why WFP Doesn’t Deserve the Nobel Peace Prize
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Those who believe that food aid does more harm than good were probably flabbergasted by the decision by the Norwegian Nobel Committee to award this year’s Nobel Peace Prize to the World Food Programme (WFP) for “its efforts to combat hunger, for its contribution to bettering conditions for peace in conflict-affected areas and for acting as a driving force in efforts to prevent the use of hunger as a weapon of war and conflict”.

Fredrik S. Heffermehl, a Norwegian lawyer and long-time critic of the political and bureaucratic processes behind the awarding of the Nobel Peace Prize, for instance, stated: “We recognise the great value of the World Food Programme, but the 2020 prize is much less ambitious than [Alfred] Nobel’s idea of ‘conferring the greatest benefit to humankind’.”

Mukesh Kapila, a former United Nations representative to the Sudan who blew the whistle on atrocities committed by the Sudanese government in Darfur, and who is now a professor of global health and humanitarian affairs at the University of Manchester, was even more scathing. “It’s a bizarre choice, and it’s a complete waste of the prize, in my opinion,” he told Devex. “I don’t think the World Food Programme needs this money, and I really object to awarding prizes to people or organisations who are just doing their paid jobs.”

Apart from the fact that WFP’s raison d’être is to deliver food to vulnerable populations, and its staff are paid generously to deliver food aid, critics who know the food aid business have in the past pointed out that food aid is, in fact, detrimental in the long run because it suppresses local food production, making it harder for poor or conflict-ridden countries to feed themselves. In fact, studies have found that direct cash transfers are a much more efficient and effective method to alleviate hardship and improve the overall welfare of beneficiary communities.

A few years ago, none other than the European Union (EU)’s representative to Somalia, Georges-Marc André (now retired), admitted this to me when I was researching for my book War Crimes, which explores how foreign aid has negatively affected Somalia. He told me that United Nations agencies such as WFP might have actually “slowed down” Somalia’s recovery by focusing exclusively on food aid instead of supporting local farmers and markets. “The EU is against food aid that substitutes local food production,” he said.

His views are also shared by Michael Maren, a former food aid monitor for the United States Agency for International Development (USAID) in Somalia, whose book, The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity, chronicles how aid became a political tool in Somalia that was manipulated by both the donors and the recipient country. Maren, who lived and worked in Somalia in the 1980s, believes that food aid to Somalia may have actually prolonged the civil war in the country. “I had learned to view development aid with skepticism, a skill I had hoped to put to good use to help ensure that aid projects, at worst, didn’t hurt people. But Somalia added a whole new dimension to my view of the aid business. My experience there made me see that aid could be worse than incompetent and inadvertently destructive. It could be positively evil,” he wrote.

In his book, Maren quotes a former civil servant working for Somalia’s National Refugee Commission during President Siad Barre’s regime who told him that traditionally, Somalis never relied on food aid, even during droughts. There was a credit system; pastoralists would come to urban areas where they would take out loans that they would repay when things returned to normal. Aid essentially destroyed a centuries-old system that built resilience and sustained communities during periods of hardship.

Food aid hurts local farmers

Food aid also suppresses local food production. Many Somali farmers have reported that NGOs working with WFP are notorious for bringing in food aid just before the harvest, which brings down the price of local food. They have also complained that the food aid is imported, rather than bought locally. At the height of the famine in Somalia in 2011 (which many believe was exaggerated by the UN), for example, WFP bought food worth £50 million from Glencore, a London-listed commodities trader, despite a pledge by the UN’s food agency that it would buy food from “very poor farmers who suffer because they are not connected to local markets”.

Let us be clear about one thing – food aid is big business and extremely beneficial to those donating it. (“Somebody always gets rich off a famine”, Maren told Might Magazine in 1997.) Under current United States law, for instance, almost all US food aid (worth billions of dollars) must be purchased in the US and at least half of it must be transported on US-flagged vessels.

Aid essentially destroyed a centuries-old system that built resilience and sustained communities during periods of hardship.

Most of this food aid is actually surplus food that Americans can’t consume domestically. Under the US government’s Food for Peace programme (formerly known as Public Law 480), the US government is allowed to sell or donate US food surpluses in order to alleviate hunger in other countries. Famines in other countries are, therefore, very profitable to the US government and to highly subsidised American farmers, who benefit from federal government commodity price guarantees. (Interestingly, since 1992, all WFP Executive Directors have been US citizens. This could be because the US is the largest contributor to WFP, but it could also be that the Executive Director of the UN’s food agency is expected to promote US policies regarding food aid.)

In a 1988 paper titled “How American Food Aid Keeps the Third World Hungry”, Juliana Geran described Food for Peace as “the most harmful programs of aid to Third World countries”, and urged the US government to discontinue it. She noted that US food aid often distorts local markets and disrupts agricultural activity in recipient countries.

For example, massive dumping of wheat in India in the 1950s and ‘60s disrupted India’s agriculture. In 1982, Peru “begged” the US Department of Agriculture not to send any more rice to the country as it was feared that the rice would glut the local market and drive down food prices for farmers who were already struggling. “But the US rice lobby turned up the heat on Washington and the Peruvian government was told that it could either take the rice or receive no food at all,” wrote Geran.

But what happened in Guatemala was truly catastrophic, as Geran narrates: “In 1976, an earthquake hit Guatemala, killing 23,000 people and leaving over a million homeless. Just prior to the disaster, the country had harvested one of the largest wheat crops on record, and food was plentiful. As earthquake relief, the US rushed 27,000 metric tons of wheat to Guatemala. The US gift knocked the bottom out of the local grain markets and depressed food prices so much that it was harder for villagers to recover. The Guatemalan government ultimately barred the import of more basic grains.”

Stealing food to aid militias

One of the most evident distortions caused by food aid (apart from the fact that farmers have no incentive to grow food when the market is flooded with free food) is the temptation to steal it. There have been reports of blatant theft of food aid under the not-so-watchful eyes of WFP. UN monitors have routinely reported the theft of food aid to Somalia, for example, but to no avail. In its 2010 report, for instance, the UN Monitoring Group on Somalia and Eritrea reported that local NGOs (known in development circles as “implementing partners”), WFP personnel and armed groups that controlled areas where food aid was being distributed were diverting up to half of the food. WFP vehemently denied these allegations, even though an Associated Press report the following year showed American, Japanese and Kuwaiti food aid being openly sold in Mogadishu’s markets.

It is also important to remember that WFP’s international staff usually do not distribute food directly in conflict or disaster zones; instead they hire local NGOs to do the work. Many of these NGOs are not vetted; in fact, in Somalia, some of them have even been linked to militias who act as “gatekeepers”, deciding who gets the aid and who doesn’t.

When Maren was in charge of monitoring food aid donated by the US government to refugees fleeing the Ogaden war of 1977-78, he found that about two-thirds of the food went missing. Trucks would arrive at the Mogadishu port, collect the food and disappear, never to be found again. Even when food arrived at the refugee camps, much of it would be stolen.

Aid thus became a profitable source of income for criminal elements within Somalia. And Siad Barre learned to exploit this well. In fact, Maren believes that international aid not only sustained the dictator’s regime but also facilitated the unravelling of Somali society.

The looting of aid continued even after Barre was ousted in 1991. Battles between warlords were won or lost depending on how much aid each warlord had access to. However, it was not just the warlords who profited from food aid; corrupt NGO cartels also benefitted. Because many parts of Somalia were considered a no-go-zone by international humanitarian agencies, and therefore rendered inaccessible, enterprising Somalis formed NGOs that liaised with these agencies to provide humanitarian assistance and services on the ground. These businesses-cum-NGOs signed lucrative contracts with aid agencies; some controlled entire sectors of the aid industry, from transport to distribution. Others were run by warlords, who often diverted food aid, which was then sold openly in markets to fund their militias.

“By engaging with the warlords to ensure the delivery of aid, the United Nations and other actors only encouraged the spread of the conflict and the establishment of a thriving aid-based and black market economy,” wrote political scientist Kate Seaman in Globalizing Somalia: Multilateral, International and Transactional Repercussions of Conflicts. “In essence they became a party to the conflict, losing their neutrality and only serving to perpetuate the conflict by providing resources which were then manipulated by the multitude of armed groups operating within Somalia.”

Battles between warlords were won or lost depending on how much aid each warlord had access to. However, it was not just the warlords who profited from food aid; corrupt NGO cartels also benefitted.

When an international humanitarian agency comes in to provide food to starving people, bad governments are let off the hook, and are allowed to continue with their bad policies that can lead to more famines in the future. Internationalising the responsibility of food security to UN institutions, international NGOs and foreign governments makes practically everyone across the globe a stakeholder in famine relief. “The process of internationalisation is the key to the appropriation of power by international institutions and the retreat from domestic accountability in famine-vulnerable countries,” wrote Alex de Waal in his book Famine Crimes: Politics and the Disaster Relief Industry in Africa.

Bad management practices at WFP

If the Norwegian Nobel Committee had bothered to find out how WFP staff view the organisation they work for, it might not have been so quick to award WFP the prestigious Nobel Peace Prize. Like at many UN agencies, senior staff at WFP have been accused of abusing their authority, an allegation that has tarnished this Rome-based agency’s reputation. A confidential internal WFP survey of staff attitudes (whose findings were first leaked to the Italian Insider, and then to other news organisations, such as Foreign Policy in October last year) found that 35 per cent of the more than 8,000 WFP employees surveyed reported experiencing or witnessing some form of abuse of authority, the most typical being the granting of “preferential treatment” for recruitment to close associates.

“The senior leadership of the World Food Program – once one of the most highly regarded United Nations agencies – have abused their authority, committed or enabled harassment, discriminated against women and ethnic minorities, and retaliated against those who spoke up in protest,” wrote Colum Lynch in Foreign Policy on 8 October 2019.

What was evident in the survey was that WFP, like the rest of the UN, is extremely hierarchical and authoritarian. Respondents admitted that senior managers “aimed to further their own self-interest rather than the mission of WFP, and abuse their power to further themselves and their favorites”.

Moreover, 29 per cent of those surveyed said they had witnessed some form of harassment, while 23 per cent said they had encountered discrimination. Some 12 per cent of staff said they had experienced some form of retaliation for speaking up about abusive practices (which is fairly common in the UN, where protection for whistleblowers is virtually non-existent, as I have illustrated here). An even more alarming finding was that 28 of the WFP employees interviewed had experienced “rape, attempted rape or other sexual assault” while working at the agency.

What was evident in the survey was that WFP, like the rest of the UN, is extremely hierarchical and authoritarian. Respondents admitted that senior managers “aimed to further their own self-interest rather than the mission of WFP, and abuse their power to further themselves and their favorites”.

The results of the WFP survey (which was conducted by an independent management consultancy) are consistent with other UN surveys on staff attitudes and experiences. Results from a UN Staff Union survey conducted in 2018 in response to the #MeToo movement showed that sexual harassment made up about 16 per cent of all forms of harassment at the UN; 44 per cent of those surveyed said that they had experienced abuse of authority and 20 per cent felt that they had experienced retaliation after reporting misconduct. The survey also found that a large number of staff members’ complaints were never investigated.

It is, therefore, difficult to understand why the Norwegian Nobel Committee found it fit to award WFP the Nobel Peace Prize, given that the UN’s food agency has failed to adhere to almost all best practices in human resources management, and has not done enough to protect those who report internal abuse or wrongdoing. Nor has WFP improved conditions for peace in conflict-affected countries or prevented the use of hunger as a weapon of war, as I have illustrated above.

What then could have motivated the Committee to award WFP the prestigious Nobel Peace Prize – apart from some misguided notion that what the world needs most right now is food hand-outs? In a world that is being ravaged by the coronavirus pandemic, increasing xenophobia, racism and sexism, a global recession and climate change (all of which threaten peace and security), couldn’t the Committee have picked a more worthy candidate?

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‘Why Are Africans Not Dying?’

If the coronavirus has taught us anything, it is that not even a pandemic can erase the inherent racism in the Western media and in humanitarian organisations.

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‘Why Are Africans Not Dying?’
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Western experts and international media are apparently bewildered by COVID-19 figures emerging from the African continent that suggest that African countries might have “flattened the curve” much faster than countries in the West, whose infection and death rates continue to rise.

Various theories on why Africans are not dying in large numbers have been proposed, ranging from Africa’s youthful population to the continent’s hot climate. Few have dared to suggest that some African countries might actually have been better at handling the pandemic than countries in the West because this might topple the “West knows best” narrative. Uganda, Senegal and Rwanda, which successfully contained the virus through a series of rigorous measures and strategies, are not being hailed as success stories in the fight against COVID-19, nor do we hear much about Vietnam, where only a few dozen people have died from the virus since the start of the pandemic.

This is in sharp contrast to the massive death toll in the United States. The latest figures from the US show that nearly 7.5 million Americans have been infected with the coronavirus and more than 200,000 have died. Had such horrifying figures been emanating from the African continent, there would by now have been a massive fundraising drive and countless media reports on dying Africans. But there has been no such response for the United States. While there is acknowledgement by the US medical fraternity that there is something that the US is not doing right, there is no international outcry or fundraising initiative. Nor has any country threatened sanctions against Donald Trump for bungling the COVID-19 response which has resulted in the death of his own people.

To be fair, it is not entirely the Western media’s fault for expecting a catastrophe in Africa. Everyone, from billionaire philanthropist Bill Gates to the United Nations Secretary General, predicted that millions of Africans would die from the virus, and they were all geared up for a fundraising campaign for the continent. But on this one, Africa disappointed them. Africans just did not die in sufficient numbers. Yet instead of congratulating African countries for bucking the trend, the Western media and Western experts began looking for reasons that border on racism.

This racism also extends to the Asian continent. Writing in the Medium, Indi Samarajiva talks about a New York Times article where a journalist wondered whether “there is a genetic component in which the immune systems of Thais and others in the Mekong River region are more resistant to the coronavirus”.

Samarajiva calls this racist reporting. “Instead of looking at what the Thai people did, they’re asking if it’s something in their veins. Because Thai people couldn’t possibly just be competent, it must be alchemy”, he wrote.

The truth is if Thailand or Uganda were European or North American countries, we would be showcasing them as “best practices” and manuals would be written on how to deal with a pandemic based on their experiences.

Part of the problem is that the aid and development sector – which the Western media relies on for figures and logistical support when reporting disasters in African countries – is imbued with what an anonymous writer in the Guardian newspaper referred to as a “white supremacy problem”. White supremacy is what drives Western journalists to write paternalistic – and quite often exaggerated – stories about “starving African babies” and other tragedies that not only generate pity (and therefore funds) for Africans, but contempt as well. The anonymous author of the article (who most likely works in the aid sector) explains the inherent bias in international aid organisations:

The insidious racism by white leadership devalues local hires who are predominantly non-white in the countries we work in, and is exemplified by organisations that deem it acceptable to operate with continuous six-month contract commitments for international staff. They ship around highly mobile young people, who have limited contextual and institutional knowledge. Aside from the obvious inefficiencies, to imply this is preferable to hiring locally is an insult to staff, communities and authorities. All these factors lead to a situation where those least affected by decisions are the ones making them. The way that organisations rationalise these actions is deeply perplexing . . . Instead, the prevalence and persistence of white international staff in senior leadership and the continued devaluing of local expertise and people, brings back echoes of the white civiliser, offering superior skills, convinced this is the natural and inevitable order of things.

This quote reminded me of a time when I wrote to a Belgian official working for a UN agency in an Asian country to ask if there was any possibility of me working there. Despite my nearly two decades of experience in the UN and in the development sector, my Asian ancestry and the fact that I speak three Indian languages, he was quick to tell me that I did not have “enough Asian experience”, so I could not be considered for any position. (And there was also the issue of the “budget”.) How a European man felt he was more qualified to work in Asia than a Kenyan Asian woman like me beats me.

There is also the fact that people from rich donor countries who work for aid or humanitarian organisations feel that the appointment of an African or Asian to a managerial position is doing them a favour. The mindset is that these people and their countries are beneficiaries of aid from rich countries, and so their appointment to a high-level position is an extension of that aid. This kind of paternalism also extends to women, who continue to remain underrepresented in senior management positions.

Rosebell Kagumire, a writer and award-winning blogger, says that her short stint at a United Nations agency made her feel like a “token black woman” and a “diversity hire”. At the height of the Black Lives Matter (BLM) protests around the globe, Kagumire wrote an article where she talked about how white privilege and institutionalised racism operate in an organisation committed to human rights and racial and gender equality. She quoted a former colleague from southern Africa who told her, “A white intern can become your supervisor in the blink of an eye, and they will always tell you ‘budget’, but the same budget is not an issue for white people”.

Kagumire talks about how black people are expected not only to work harder than white people, but are also expected to perform better. “One case I’m aware of involved a new recruit from a conflict country who was tasked with producing a key document for the unit – a big task for someone coming from outside the organisation. A few days in, a supervisor, a European white man, said: ‘If she doesn’t have my strategy by the end of the day I will put her on the next plane back’. She had literally fled that country, bullets raining, and survived as a refugee before joining the organisation”, recalled Kagumire.

Another former colleague from Haiti told her: “They wanted my contribution but not my voice at the table because they wanted me to act like I don’t see the injustice. I was the department help and made to feel that I must be grateful to be sitting at the table. The department’s toxic culture eventually got me fired because I refused to act grateful and demanded to be treated equally and to be heard. Eventually, I was no longer allowed at the table and was silenced”.

Kagumire’s article was particularly timely because it came just after UN Secretary-General Antonio Guterres had issued a memo to UN staff based in New York ordering them not to participate in BLM protests in the city, ostensibly because as international civil servants, they were expected to remain apolitical and neutral.

The UN Secretary-General’s directive made many wonder what the UN really stands for. If the UN could not support BLM at a time when people around the world were bringing down statues of slavers and colonial administrators, then what was the point of the UN? Was the Secretary-General afraid that by supporting the movement, the UN might be accused of offending the US government, the biggest contributor to the UN’s budget?

Guterres later said there was no ban on “personal expressions of solidarity or acts of peaceful civic engagement, provided they are carried out in an entirely private capacity”. In other words, if a UN staff member wants to defends human rights (a stated goal of the UN Charter), then that support should be a personal matter.

If COVID-19 has taught us anything, it is that not even a pandemic that has disproportionately affected European countries and the United States can erase the racism inherent in the Western media and in humanitarian organisations.

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