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Securing Kenya’s Electoral Integrity: Regulating Personal Data Use
13 min read.The Data Protection Act needs to be fully operationalised As Kenya heads into the 2022 election cycle and a sensitisation exercise undertaken concerning the use of personal data in campaigns.
In considering the various threats posed to electoral integrity by digital platforms, it is imperative to discuss the use and regulation of personal data. The link between access to personal data on the one hand and the commission of electoral fraud or voter manipulation on the other has been examined severally in academic articles and news media. The pertinence of this discussion in Kenya is clear considering two major developments have occurred since the last election cycle – parliament enacted the Data Protection Act (DPA) and approved the appointment of a Data Commissioner. The nature of our discussion in this article revolves around whether these changes are likely to result in a positive material change in the conduct of campaigns, and if not, what can be done to ensure this. We focus on the use and regulation of personal data in the context of political messaging/campaigning.
Political communication
Political messaging is central to electoral integrity. How political actors conduct themselves in the dissemination and crafting of their messages can either promote or undermine a democracy. The aim of political messaging is often persuasion. Through their messages, political actors hope to convince voters to support their policy positions or candidature. In the not-so-recent past, political messaging in Kenya—and generally around the world—was aired through traditional broadcast media. Radio, newspapers, and television served as the primary means through which political actors could reach their audiences. The nature of these means of communication, and the context surrounding their use, often meant that political messaging was easily discernible from regular content. In other words, audiences could easily tell when they were looking at a political advertisement due to the overt nature of the means and message. Further, since these are mass forms of communication, there existed little opportunity for targeted messaging – differentiating the type of messages disseminated based on the receiving audience and thereby disguising the political aims sought through the message. This meant that the electorate often had a shared experience of elections because they were subjected to uniform persuasion tactics by political actors.
Nevertheless, even when using one-to-many forms of communication, there were attempts to use targeted messaging. During the 2007/8 elections, for example, some local language radio stations were used to fan the flames of ethnic violence by exploiting the homogeneity of their respective listeners to disseminate messages of hate. In another example, bulk text messages targeted at specific communities were used to divide Kenyans along tribal lines to the extent that the then Safaricom CEO, Michael Joseph, considered blocking text messaging services.
The premise of targeting is simple. With basic demographic information, a person crafting a message can do so in a manner that appeals to specific subsets of the target population with a view to persuading the recipients. The demographic information required for targeting is often clearly observable and easily obtainable—names, ethnicity, age, occupation, etc. Through targeting, the messages disseminated to members of one demographic may vary considerably from messages sent to the rest. Targeting has been shown to be practically effective, and in some cases beneficial. In Wajir, community radio has been used to educate the local community on the effects of climate change as it relates to them. The fact that the information has been presented in the community’s language Somali, coupled with the relation of the messaging to their lived experiences, has led to robust community engagement on the topic. In political contexts, targeted messaging may be used to raise awareness around key policy or legislative decisions to ensure affected individuals are involved in the decision-making process. However, it may equally be used to achieve undesirable outcomes as we noted in relation to the bulk text messages used in the 2007/8 elections.
Targeting and microtargeting: why split hairs?
One election cycle later, political parties involved in the 2013 elections had significantly increased their reliance on digital campaigning and engaged in more detailed targeting. With an increased rate of internet connectivity and smartphone penetration in the country, political actors were better able to reach audiences at an individual level. For example, messaging targeting younger audiences appealed to their concerns about unemployment, while older audiences were informed of candidates’ plans for national stability. This was perhaps aided by the fact that a lot more demographic information was readily available on social media, and there existed no legislation regulating the collection and use of such personal data. However, the use of this ordinary targeting did not reflect the state of technology at the time.
Through the introduction of social media, and the large-scale collection of personal data that takes place on such platforms, the nuance applied to targeting had considerably developed by the 2013 election cycle. The sheer amount and scope of personal data available to political actors through these platforms meant that the precision of targeting could be infinitely refined. Essentially, there was a shift from targeting to microtargeting, with the major difference being the amount and scope of personal data used. While targeting involves using basic demographic data to craft messages for subsets of the target audience, microtargeting makes use of a wider range of data points such as online habits gleaned from trackers on social media platforms. With a broad enough range of data points, individuals conducting microtargeting can create profiles on each audience member and tailor individual messages that are a lot more subtle and convincing than ordinary targeting.
If a political actor were deploying ordinary targeting, their messaging would focus on the homogeneity of the receiving audience, assuming that the factors that would persuade them lie in their homogeneity. In microtargeting, the audience, despite being homogenous, would be further broken down at a granular level, bringing out each individual’s unique profile, and the motivations behind their political positions. The messaging targeted at such individuals is often presented in a seemingly organic manner. For example, by tracking an individual’s social media use either directly or through analytic firms, political actors can create a profile on the said individual and use that to inform the type of online advertisements they would purchase and organically place on the individual’s social media feed. In essence, microtargeting campaigns hone in on the specific trigger points of an individual or small blocs of voters, seeking to influence their behaviour during campaigns and on voting day in subtle ways.
There was a shift from targeting to microtargeting, with the major difference being the amount and scope of personal data used.
There is not enough publicly available evidence to assess the extent to which political actors in Kenya engaged in microtargeting during the 2013 and 2017 election cycles, perhaps other than the documented use of social media advertising. However, in both cycles, it is widely reported that Cambridge Analytica rendered its services to various political actors in the country. Cambridge Analytica’s involvement in Kenya—which it described as “the largest political research project ever conducted in East Africa”—entailed a large-scale gathering of Kenyans’ data through participant surveys. This, coupled with the personal data it had already improperly acquired through Facebook, ostensibly allowed it to carry out microtargeting. It claimed to be able to craft messages specific to individuals as opposed to broad demographics. In particular, it admitted to developing messaging to leverage voters’ fears of tribal violence.
The risk posed to electoral integrity by practices such as microtargeting are clear – an inability on the electorate’s part to discern organic content from political advertising calls into question their democratic autonomy and the legitimacy of political processes. The lexicon adopted by some commentators in relation to these practices—“digital gerrymandering” and “computational politics”—is therefore unsurprising. The progression of political messaging from a relatively transparent and clearly discernible practice which was uniformly applied to the electorate, to a subtle, insidious process which is based on a sophisticated level of differentiation is possible, in large part, due to the unregulated collection and use of personal data.
Personal data use in targeting and microtargeting
The idea that one can sort personal data based on certain traits and analyse it for purposes of targeting is not novel. Neither is the audacity of the attempt. In her book If Then: How One Data Company Invented the Future, Professor Jill Lepore chronicles how Simulmatics Corporation—a company founded in 1959—laid the foundation for the type of microtargeting Cambridge Analytica was engaged in. Simulmatics, through its “People Machine”, purported to be able to predict voter behaviour by making use of predictive models it developed using large swathes of personal data which it categorised into 480 subsets. Their aim was to breakdown voter profiles as granularly as possible, and to predict how each subset would respond to political stimuli. They sought to forecast voter behaviour and influence the 1960 US elections. They failed. In their pursuit of this aim, however, they foreshadowed and contributed to current microtargeting practices, which appear to be significantly more effective. They certainly highlighted the centrality of personal data to the development of such predictive models, long before average voters began publishing vast amounts of personal data on social media platforms.
As we previously discussed, the type and scope of personal data required to conduct regular targeting is basic. In Kenya, such data has previously been easy to obtain, with little-to-no controls on its usage. In everyday life, Kenyans encounter dozens of vectors through which their personal data is collected. From mobile money payments to entry logs at government buildings, Kenyans are forced to part with crucial personal data to obtain various services. The value of this personal data for commercial advertising has been recognised by data brokers who reportedly harvest such data for direct marketing. Political parties have also collected personal data from such brokers for targeting.
The lexicon adopted by some commentators in relation to these practices—“digital gerrymandering” and “computational politics”—is therefore unsurprising.
For political parties and candidates, the avenues through which they can harvest personal data are not limited to brokers. In an article on political microtargeting in Kenya, Hashim Mude helpfully identifies four additional avenues. The first of these is the register of voters which is publicly accessible during election periods by virtue of Section 6 of the Election Act. The second avenue is the membership lists compiled by the political parties themselves by virtue of their compliance obligations under Section 7 of the Political Parties Act (i.e., parties have to demonstrate that their composition is sufficiently representative). More traditionally, political parties also conduct direct collection through their grassroots networks – this is the third avenue. Finally, political parties are also able to collect personal data from other registered parties through the publicly accessible members’ lists under Section 34(d) of the Political Parties Act.
The data collected through these means primarily serves political actors in regular targeting; microtargeting would require them to gather a much broader set of data points to complement the basic demographic data they have access to. While political parties may not be able to gather such specific data sets themselves, they are often able to either contract analytic firms such as Cambridge Analytica to do so, or to leverage the data gathered by social media platforms by purchasing advertising whose audience is curated to fit the needs of the political party. This notwithstanding, evidence suggests that political parties primarily engaged in regular targeting, i.e., crafting and disseminating communications based on broad demographics such as ethnicity.
Despite Cambridge Analytica’s implication that the scope of personal data it harvested enabled it to conduct microtargeting, the evidence that is publicly available seems to suggest that basic targeting through bulk messaging along tribal lines was the primary outcome of their operation. However, one of the material differences arising from their involvement was the vast amount of personal data they collected both directly and indirectly, likely rendering this regular targeting even more potent than usual. They were able to collect such data due to Kenya’s weak regulatory framework. As Cambridge Analytica’s CEO at the time explained, Kenya’s virtually non-existent privacy laws provided them a conducive environment for their activities. This is arguably one of the main reasons political actors have been able to get away with the improper harvesting and use of personal data for both targeting and microtargeting in the past. With the enactment of the DPA, it is hoped that this will change.
Towards regulation: is there a practical difference?
As a starting point, it must be noted that Kenya’s constitution guarantees every person the right to privacy. However, until 2019, Kenya did not have a centralised law detailing how this right should be respected and fulfilled, particularly in an increasingly digital age. The DPA therefore seeks to regulate the processing of personal data. By putting in place restrictions on the collection, use, sharing and retention of data relating to identifiable natural persons, the DPA is expected to mitigate the improper handling of personal data and safeguard the right to privacy. It applies to all persons handling personal data, including political parties and candidates.
Practically, the enactment of the DPA means several things for political actors seeking to make use of personal data. For one, the obligations introduced by the DPA would invariably hamper political actors’ ordinary collection and use of personal data. Since the DPA contains prescriptions at each stage of the data lifecycle (collection, storage, use, analysis, and destruction), political actors have to be a lot more careful. For example, while it was previously easy to collect personal data indirectly and indiscriminately, political actors now have to do so directly seeking the consent of the individuals to whom the data relates (data subjects).
In everyday life, Kenyans encounter dozens of vectors through which their personal data is collected.
The collection and use of personal data would also have to be grounded in a lawful basis. Further, the principles that underpin the DPA would operate to restrict some of the microtargeting practices political actors are engaged in. In requiring that political actors only collect and make use of the minimum amount of data required for the lawful purpose they are engaged in, the DPA forecloses, to some extent, microtargeting which relies on a wide scope of personal data. The DPA also brings the practices around personal data collection and use under the supervision of the Data Commissioner, with whom these political actors would be required to register.
It is not yet clear what tangible effects (if any) the DPA has had, or will have, on the practice of targeting and microtargeting other than, perhaps, a broader awareness of privacy rights among individuals. It is also too soon to measure this because the operationalisation of the DPA is, at the time of writing, still ongoing. To be clear, the DPA is fully in force and is binding. However, key components such as the draft regulations are yet to be put in place; they were only recently developed. Without these, the Data Commissioner would be unable to, among other things, register data controllers and data processors (in our case political parties and candidates) to ensure that their activities are monitored. The proposed regulations, for example, would require individuals and entities involved in canvassing for political support to mandatorily register under the DPA, enhancing the Data Commissioner’s visibility of such actors, and facilitating enforcement action (if required).
The fact that the DPA is yet to be fully operationalised has not prevented Kenyans from relying on it to hold institutions accountable. The Data Commissioner commendably provides the public with an opportunity to file a complaint through its website even though the regulations relating to compliance and enforcement are yet to be enacted. In June of this year, a large number of Kenyans discovered—through the Office of the Registrar of Political Parties’ (ORPP) online portal—that they were registered as members of political parties without their knowledge or consent. After receiving over 200 complaints, the Data Commissioner held a meeting with the ORPP to arrange for the deregistration of those individuals. Less than a month after the ORPP scandal, the guest list of an upscale hotel in Nairobi was leaked online for purposes of revealing that a certain politically connected individual had resided there for a period of time. Shortly thereafter, an advocate filed a public interest complaint with the Data Commissioner. In response, the Data Commissioner indicated that it would look into the possibility of a data breach.
The implications of these complaints to the Data Commissioner are twofold. On the one hand, it is a positive development that Kenyans are aware of the office and its mandate. However, on the other, it is concerning that the improper handling of personal data is still common nearly two years after the enactment of the DPA. Such practices are indicative of either the absence of a sufficient understanding of the DPA and its requirements, or a blatant disregard of those requirements, though the two are not mutually exclusive. Putting in place the systems and infrastructure required to operationalise the DPA is important. However, it may not be very effective if the culture around data use is not reformed.
The fact that the DPA is yet to be fully operationalised has not prevented Kenyans from relying on it to hold institutions accountable.
From the improper handling of personal data, it is apparent that broad sensitisation around digital rights is required. Innovative initiatives such as Nanjala Nyabola’s Kiswahili Digital Rights Project which seeks to “translate and popularise’” key digital rights terms into Swahili may serve as a useful starting point for the sensitisation of individuals. Indeed, one of the Data Commissioner’s functions under the DPA is raising awareness around data protection. Synergistic collaborations with academics, civil society, and even the private sector can greatly contribute to a better understanding of data protection concepts, and how various actors are to conduct themselves. These efforts may also increase the electorate’s understanding of how microtargeting works, and the steps they can take to reduce their susceptibility to targeted messaging, such as using search engines that do not allow trackers for example.
For the use of personal data in campaigns, the involvement of political parties and candidates in these sensitisation efforts is especially crucial. As noted by the UK’s Information Commissioner’s Office (ICO) “the true ethical evolution of political campaigning in the long term will only be possible if political parties recognise that they are drivers in ensuring a high standard of data protection through the whole system”. In fact, the ICO proposed that such sensitisation be carried out by political parties and candidates in collaboration with electoral commissions (in our case the IEBC) and data protection authorities. By consulting with the two authorities, political parties and candidates would also be able to agree on standards that would guide their use of commonly held data such as that derived from the voter register and party membership lists. These efforts could perhaps even dovetail into public commitments by political actors to shun the improper use of personal data in campaigning. An example of such a commitment is the Pledge for Election Integrity developed by the Transatlantic Commission on Election Integrity.
Content regulation
The efforts to improve the culture around personal data use in campaigns could further be supplemented by regulation of the actual political messaging that results from this data use. The result of microtargeting campaigns is often political advertising that is precisely targeted and subtle. Kenya’s legal framework governing political advertising is currently underdeveloped. Aside from the Communication Authority’s (CA) guidelines on bulk messaging, there are no detailed guidelines on how political advertising ought to be carried out and how transparency can be achieved. The CA’s guidelines effectively aim to increase the transparency of political advertising done through bulk text messages. This is the aim of the regulation of political advertising – reclaiming the transparency lost over time through advancements in technology. Considering the subtle nature of messaging derived from microtargeting campaigns, an increase in transparency would likely contribute to restoring (or at least safeguarding) some level of autonomy for the electorate.
The CA guidelines would sufficiently cover the use of ordinary targeting in the form of bulk text messages as we head into the 2022 elections. However, further prescriptions may be required to deal with microtargeting conducted through social media. Such prescriptions could include disclosure obligations on the part of political parties and candidates when running advertisements. They could also include transparency obligations on the social media platforms which host these advertisements. For example, some platforms have taken to labelling accounts which are government-affiliated or are running political advertisements.
There are no detailed guidelines on how political advertising ought to be carried out and how transparency can be achieved.
Armed with the knowledge that a particular piece of content is sponsored by a certain political actor, a voter may at least have an opportunity to question the motives pursued. Authorities such as the IEBC and the Data Commissioner may be able to work with social media platforms to identify appropriate transparency tools that could be deployed in the forthcoming elections. Such a collaboration would have to be alive to unique local contexts. For example, applying labels to the accounts of political parties and candidates may not be sufficient considering the practice of hiring third party groups to push certain messaging online. One such group is known as the 527 militia, its name being derived from the amount of money each member is paid to run with a campaign – KShs527 (approximately US$5).
Heading into the 2022 election cycle, Kenya ought to do a few things. First, the DPA should be fully operationalised. Second, the Data Commissioner should collaborate with political actors and the IEBC to engage in widespread sensitisation around data protection and the use of personal data in campaigns. Third, political parties should commit to the proper use of personal data in their campaigns, perhaps even signing public pledges as a show of goodwill. Fourth, political advertising on social media platforms should be more closely regulated to ensure transparency. Finally, the Data Commissioner and the IEBC should work with social media platforms to develop appropriate tools that would be applied in Kenya to enhance platform accountability and transparency of messaging.
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Part 1. Securing Kenya’s Electoral Integrity in the Digital Age
This is the second of a five-part op-ed series that seeks to explore the use of personal data in campaigns, the spread of misinformation and disinformation, social media censorship, and incitement to violence and hate speech, and the practical measures various stakeholders can adopt to safeguard Kenya’s electoral integrity in the digital age ahead of the 2022 elections. This op-ed series is in partnership with Kofi Annan Foundation and is made possible through the support of the United Nations Democracy Fund.
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Op-Eds
How Bureaucracy Is Locking Kenya Out of Transshipment Business
But for the bureaucracy bedevilling Kenya’s shipping sector, Indian Ocean Island nations could look to Lamu for transhipment while Mombasa has the capacity to attract major shipping lines in order to tap into this emerging business.
The transshipment business, which involves the handling of cargo for other ports, is now an area of keen focus for many ports the world over. However, administrative bottlenecks created by the Kenya Revenue Authority (KRA) have stymied Kenya’s transshipment business even as the Mombasa and Lamu ports face increasing competition from the other regional ports that are modernizing their operations even as new ones emerge.
But the tide is set to change if the new Managing Director of Kenya Ports Authority (KPA) Captain William Ruto makes real his promise to confront the issues that have made it difficult for the port to tap into an emerging business line that has led to the growth of other successful ports.
Ruto has indicated that he will impress upon the KRA to simplify their procedures by adopting industry standards practiced elsewhere—such as at the Tangier Med port in Morocco, where 85 per cent of the cargo handled is for other ports, translating to 7.17 million Twenty-Foot Equivalent Units (TEUs).
In an ideal situation, according to the new MD, the KRA is only supposed to approve the ship manifests once the shipping lines lodges them online, which in not the case in Kenya where the KPA is required to physically handle the transshipment containers that are landed at the ports. According to global standards, however, shipping lines, are only required to give notification of the ships that will carry the transshipment containers from the ports to the final destination. Simplified procedures have seen ports such as Singapore and Salalah in Oman handle over 90 per cent of their cargo as transshipment.
The port of Mombasa handled 1.43 million TEUs in 2021 compared with 1.35 million TEUs handled in the same period in 2020, representing an increase of 75,986 TEUs or 5.6 per cent. However, the KPA’s transshipment traffic was at an abysmal level, recording only 220,489 TEUs in 2021, a slight increase compared to the 175,827 TEUs recorded in 2020.
Lamu Port has the potential to become the biggest competitor to Salalah Port in Oman and the Port of Durban in South Africa in the transshipment business. Mombasa is also better placed than Durban to handle transshipments from Europe, China, and Singapore, all major world exporting countries; smaller vessels can be used to move cargo from the port of Mombasa to others on the Southern African coast.
Lamu Port could attract transshipment cargo for Tanzania, Mombasa, Somalia, and the Indian Oceans Islands of Comoros, Madagascar, Seychelles, and South Africa.
Although the KPA has striven to market Mombasa as a transshipment hub, reforms to tap into the business have been painstakingly slow even though the increased infrastructure at the port of Mombasa—dredging of the channel, rehabilitation of the berths, and the construction of the second container terminal—has increased the potential of the Mombasa port to handle more transshipment cargo.
Over seven years ago, a joint task force of the KPA and the KRA created a working template to increase the transshipment volume after collecting views from all the stakeholders involved in this trade and recommended a major transformation that, once fully implemented, would have seen more shipping lines find Mombasa port attractive for transshipment cargo.
In 2015, the joint task force visited three ports in Europe, Asia, and Africa that were close to Mombasa in size—and which have recorded significant growth in transshipment—to gather guiding lessons for the Mombasa port transshipment initiative. The selected ports were Tangier Med in MorrocoMorocco, Colombo in Sri Lanka, and Malta’s Freeport.
According to the team’s report, one of the major factors for the success of these ports is the manner in which they have simplified the processing of transshipment cargo, a vital lesson that Kenya, which has been associated with lengthy processes, could embrace. When the team visited the three ports iIn 2015, the transshipment process in Malta took less than 24 hours to approve, Colombo and Tangier Med both took less than 12 hours, whereas at the port of Mombasa it took 8 to 10 days.
“The shipping business is a complex affair that rides on predictable trends,” said Captain Ruto, a member of the delegation.
In all the ports visited, the transshipment business has been simplified through the use of Electronic Data Interchange (EDI) for faster clearance and approvals. Shipping lines in the three ports are only required to lodge manifests with customs for approval whereas in Kenya nine steps are involved, causing delays, with the ships earmarked to deliver cargo departing without loading the containers.
“The shipping business is a complex affair that rides on predictable trends.”
Delaying a ship is very costly and the daily average additional vessel operating costs incurred by shipping lines can range between US$20,000 and US$35,000 depending on vessel size, a demonstration of how crucial it is for lines to save time in the shipping industry.
Kenya has made significant strides following the fact-finding mission to the three ports. Vessel processing at Mombasa port went paperless when the Single Maritime Window System went live in June 2021, allowing shipping lines to lodge documents online and thus significantly improving clearing and turnaround times.
KenTrade, which runs the online cargo clearing system, worked with the Kenya Maritime Authority (KMA) to implement the system that facilitates ship clearance procedures by providing a single online portal for the sharing of information on the arrival, stay and departure of ships between the shipping lines/agents and the approving government agencies involved.
Since 8 April 2019, it is a mandatory requirement for national governments to introduce electronic information exchange between ships and ports. The objective is to make cross-border trade simpler and the logistics chain more efficient for the over 10 billion tons of goods that are traded by sea annually across the globe.
The requirement is part of a package of amendments in the revised Annex to the International Maritime Organization’s Convention on Facilitation of International Maritime Traffic (FAL Convention) adopted in 2016. It is intended to reduce or eliminate the manual, decentralized, duplicated, and unnecessarily lengthy processes in the maritime sector, which are affecting ships’ turnaround times and increasing costs at the port of Mombasa.
The FAL Convention recommends the use of the “single window” concept whereby the agencies and authorities involved exchange data via a single point of contact.
Another advantage of Mombasa as a transshipment hub is its capacity to attract major shipping lines. There are over 20 shipping lines currently using the port at Mombasa, the majority of which handle containers.
But what should concern Kenya most is the growing competition that is coming with the development of other regional ports and the emergencemergencee of new ones. Tanzania is inching closer to realizing several plans and strategies that have been initiated over the years to enhance its potential as a maritime country.
There are over 20 shipping lines currently using the port at Mombasa, the majority of which handle containers.
The country has direct access to the Indian Ocean, with a long coastline of about 1,424km at the centre of the east coast of Africa. It has the potential to become the least-cost trade and logistics facilitation hub of the Great Lakes region.
There is the planned expansion and modernization of Dar es Salaam port under the Dar es Salaam Maritime Gateway Project (DMGP). The DMGP will increase Dar es Salaam port’s capacity from the current 15 million metric tonnes annually to 28 million tonnes.
The improvement of maritime hard infrastructure has gone hand in hand with the overhauling of the soft infrastructure. The Tanzanian government has already introduced electronic systems that have made cargo processing and clearing easier. These systems include the electronic single window, which has reduced paperwork and has also removed the need to physically visit multiple government agencies and regulatory bodies to lodge documents as all this can be done digitally through the Tanzania Customs Integrated System (Tancis).
In May 2016, global port mega-operator DP World agreed to develop Berbera Port in Somaliland and manage the facility for 30 years, a move that is set to make it the most modern port in the Horn of Africa. Ethiopia has acquired a 19 per cent stake in the project, the other partners being DP World, with a 51 per cent share, and Somaliland with a 30 per cent share. The total investment of the two-phased project will reach US$442 million. DP World will also create an economic free zone in the surrounding area, targeting a range of companies in sectors from logistics to manufacturing, and a road-based economic corridor connecting Berbera with Ethiopia.
Port Berbera is now the closest sea route to landlocked Ethiopia, a journey of 11 hours by road. It has opened the route needed for growth in the import and export of livestock and agricultural produce.
Djibouti has undertaken significant developments in all its ports. The Djibouti International Free Trade Zone (DIFTZ) was officially inaugurated in July 2018. The initial phase, a 240-hectare zone, is the result of a US$370 million investment and consists of three functional blocks located close to all of Djibouti’s major ports.
The project has also created major business opportunities for Djibouti and East Africa as the region’s export manufacturing and processing capacity is expanded in key sectors such as food, automotive parts, textiles and packaging.
The Djibouti ports of Doraleh Multipurpose, Ghoubet and Tadjourah have all been completed in recent years. Doraleh Port is particularly strategically located, connecting Asia, Africa, and Europe. It can handle two and six million tonnes of cargo a year at its bulk terminal and breakbulk terminal, respectively.
Port Berbera is now the closest sea route to landlocked Ethiopia, a journey of 11 hours by road.
Another key milestone for the Djibouti ports is the standard gauge railway (SGR). A 750-kilometer SGR line connecting Addis Ababa with the ports in Djibouti has been constructed, cutting a three-day journey down to 12 hours.
Djibouti has also received global attention due to its strategic location. Virtually, all of the sea trade between Asia and Europe passes through the Red Sea on its way to or from the Suez Canal. As a result, Gulf and Middle Eastern powers, China, the United States, and France have developed great interest in this route and the country today hosts 5 military bases.
Having made significant gains in automating cargo clearing procedures and also expanded the port of Mombasa by constructing a second container terminal and a new port in Lamu, there is great need for the KRA to work with the other industry players to simplify transhipment cargo procedures. The capacity of Lamu Port—which is ideal for transhipment cargo owing to its deeper channel that can receive bigger vessels—has been under-utilised. In spite of its strategic location as a transshipment hub, the port has received less than 20 vessels since the three berths were commissioned in May 2021.
Op-Eds
The Perfect Tax: Land Value Taxation and the Housing Crisis in Kenya
The Kenyan government has proposed a compulsory housing levy from workers salaries to support contractors to build affordable homes for the working class. As incomes are squeezed and living standards collapse, Ambreena Manji and Jill Cottrell Ghai argue that the case for asking workers to bear the cost of housing development has not been made.
The proposal in section 76 of Kenya’s Finance Bill 2023 to amend the Employment Act 2007 so that employers will compulsorily deduct 3% from workers’ salaries and send that, plus a further 3% contributed by the employer, to the National Housing Development Fund has met with widespread consternation.
The levy is expected to raise around £460 million a year for the National Housing Corporation that administers the fund. Following legal action, earlier proposals for a housing levy under the previous regime had been made voluntary and set at a lower rate of 1.5%. Now, the 3% levy will begin with civil servants before being extended to other parts of the formal and non-formal sectors.
The money will be used both to support developers and building contractors to build 200,000 affordable units and to subsidise mortgages for low- and middle-income households who would be offered an interest rate of 7%, half the market rate. By some calculations, affected employees’ net monthly salaries will be cut by about 52% when all statutory deductions including tax, the National Health Insurance Fund and the National Social Security Fund, as well as this new deduction, are taken into account.
Trade unions have spoken out against the levy, arguing that a variation in employment law cannot be imposed without consultations. The Kenya Constitution of 2010, Article 118, says that Parliament must facilitate public participation in its legislative work.
According to the 2022 Kenya Economic Survey, there were 2,907,300 employed in the formal sector and an annual rate of affordable home construction by the national government of around 500 units a year. It is not clear under the Constitution that the national government has this responsibility, as opposed to the devolved government at county level.
Kenya’s skewed land ownership
Whilst there is manifestly a need to address Kenya’s dire shortage of affordable homes, it is important to diagnose fully the reasons for this. Land shortages and the high costs of building materials are important causes as Steve Biko Wafula has argued. Kenya’s skewed land ownership is attributable to long-term land grabbing, going back to the colonial period. Importantly, one constitutional provision designed to address this – which calls for the development of minimum and maximum land ceiling laws – has been studiously ignored, especially the setting of a maximum holding. The housing levy will not address this problem: it cannot increase the supply of land for housing.
The levy is designed to encourage developers to enter the affordable housing market by offering them lower land and construction costs and providing tax exemptions, as well as guaranteeing contracts with the government. However, Wafula has also pointed out that the administration of the housing fund is not clear because it relies ‘on a complex system of collection, allocation, and disbursement of funds that could be prone to errors, delays, and fraud’.
Moreover, Kenyans have seen funds such as the National Housing Development Fund used as a revenue kitty. The 2005 Ndung’u report on Illegal and Irregular Allocation of Public Land detailed how state corporations were in effect forced into buying grabbed land, as ‘captive buyers of land from politically connected allottees’. The primary state corporation targeted to purchase land was the Kenyan workers’ pension scheme, the National Social Security Fund (NSSF). It spent Ksh30 billion (£175 million) between 1990 and 1995 on the purchase of illegally acquired property.
At a time when the government is desperate to increase its resources through raising taxes, Kenyans are also understandably suspicious that some of this money, at least, will end up in general government coffers rather than in the fund for which it is statutorily earmarked – other than that which ends up in party or private pockets, of course.
Household incomes
Whilst some prospective home-owners may be lured by the offer of lower interest rates and longer repayment plans, the proposed fund is also being seen as an unwelcome compulsory saving scheme. Funding can be drawn down after seven years or at retirement whichever is the sooner. But with standards of living being severely squeezed by inflation and with longstanding constraints on wages, as well as existing deductions which yield little benefit, many households will struggle to take a further cut to their take home pay.
Indeed, government workers were not paid their salaries earlier this year due to cash flow problems caused by the country’s mounting debt. It is ironic then that the proposal is in effect asking Kenyans formally to agree to defer a portion of their wages. Furthermore, because contributions are payable from income that has already been taxed and are taxed again when the funds are drawn down, workers are exposed to double taxation.
Workers are being asked to stake their long-term security on the success of a housing fund about which many have unanswered questions. If the promised housing materialises, how can we be sure that it will not be developers and landlords who benefit rather than the intended beneficiaries? There are real prospects that the housing units will be taken up by landlords and that Kenyan workers – having already accepted lower wages because of the housing levy deduction – could still find they have to pay high rents to access housing. What guarantees will there be that the housing will not be financialised in such a way as to put the notion of housing – as shelter and personal security – at grave risk?
Building on Serap Saritas Oran’s work on the financialisation of pensions in Turkey which theorises pensions from a political economy perspective and argues that pensions are fundamental to working class standards of living, we can see how the housing levy proposal similarly financialises a right to housing. Housing is a critical factor in social reproduction, that is, in how life is maintained and labour power reproduced. Turning housing from what Oran calls ‘a social right’ into an individualised personal investment, the levy creates opportunities for speculation and extraction. In this schema, there is a real risk that some who should be the beneficiaries of affordable housing will find that because of interest rates or the accrual of high rent arrears, they in fact become debtors.
Progressive taxes
We recognise that providing affordable housing is an important goal but we believe other, much fairer ways of raising much needed revenue for housing should be considered.
Might the time have come to have a well-informed national conversation about Land Value Taxation? Given Kenya’s worsening gini coefficient which demonstrates how skewed the country’s wealth is, why should workers bear the brunt of the government’s house building programme?
Land Value Taxation is a progressive tax which ensures that the tax burden is instead borne by landowners who can well afford it. Because land ownership generally correlates with wealth and income, it is much fairer to require those already advantaged to fund the needs of those who do not yet have homes.
Land Value Capture should also be considered. This taxation can be used for example if a road is built or other infrastructure such as a park is improved, causing a rise in the value of neighbouring properties. The principle is that these property owners should share some of their unearned gain with the public.
Elsewhere in the world, funds raised in this way have been used to build lower-cost housing. In addition, the money raised could also be used to fund ongoing operational costs such as maintenance of local roads, schools, and parks. Wouldn’t that be a fair and – given the infrastructure boom of recent years which has bestowed windfall gains on many property owners – very effective way to tackle the shortfall in affordable housing?
A raid on wages
Speaking on Kenya’s NTV news channel Mercy Nabwire, Kenya Medical Pharmacy and Dentistry Practitioners Union National Treasurer, recently described the proposed housing levy as ‘a raid on workers’ wages.’ The economy is in bad shape and public services are threadbare, but the case for asking workers to bear the cost of righting this – especially when their incomes are squeezed and their standard of living plummeting – has not been made. Still less the case for compelling them to surrender their already precarious wages for some nebulous future promise.
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This article was first published by ROAPE.
Op-Eds
America’s Failure in Africa
It is evident that only an investment of this type – in capital, in human resources and in qualified training – can allow the United States to leave a real mark of progress in Africa, following a counterpoint strategy to that of China.
Gone are the days when Melania Trump traveled to Africa in tropical colonial clothes, showing the complete lack of interest of the United States, led by her husband, in the continent. Since then, official American policy has changed significantly.
Africa is, once again, a continent disputed by the great powers. This dispute results from the new race for raw materials and markets, the search for influence in the world chess, namely African votes in the United Nations, and also the presentation of a social laboratory to show the world which recipe for prosperity works best. : the developmental authoritarian Asian or the liberal western.
All of this, in the context of the new competitive dispute with China, led the United States to once again focus its attention on Africa and place it at the forefront of its foreign policy priorities.
In recent months, American initiatives related to Africa and the trips of high dignitaries have been constant. Vice President Kamala Harris, Secretary of the Treasury Janet Yellen, First Lady Jill Biden, to mention just the most important recent trips (Harris, March 2023; Yellen, January 2023; Biden , February 2023). Only Joe Biden’s tour is missing to culminate this high-level political-diplomatic offensive.
However, the impression that remains from these trips is that, apart from beautiful speeches, splendid photographic opportunities and some circumstantial financial support, they add nothing to the resolution of African problems and, above all, they do not diminish the supposed Chinese influence, nor do they oppose it.
The problem is in the model adopted by the Americans. It is a model that is not very interactive and does not address African structural problems. Essentially, US leaders distribute smiles and marketing, warn of the Chinese danger, announce small foreign aid and refer the big questions to the International Monetary Fund (IMF), talking with greater or lesser intensity about good governance. Janet Yellen’s visit to Zambia was emblematic of this failure. When Hichilema was elected, he became a sort of poster boy for American good intentions.
However, what is certain is that Zambia has a serious foreign debt problem and has defaulted, finding itself in an endless labyrinth between China and the IMF, which ends up greatly harming the population. It is not enough to say that China is to blame and order the IMF to move forward, which in turn makes everything depend on agreements with China, which is waiting for the country to agree with the other creditors, getting into a tailspin – prolonged pong.
This kind of attitude will only lead to the US being criticized for talking but doing nothing.
The truth is that China’s entry into Africa from the 2000s onwards was not due to any historical relationship, practically irrelevant, but to a void, a void left by the West. Now, it is this void that persists, despite the new rhetoric and the countless initiatives, trips and forums held in the American capital or in Europe.
Africa does not need economists with their Harvard and MIT textbooks, which apply recipes from developed market economies unable to serve African populations and leading to their impoverishment. The manual to be applied must be the previous one, that of the very creation and structuring of economies and markets. Bringing consultants, economists, managers and people of intentions ashore doesn’t help – it only complicates things.
Obviously, to be successful, the North American perspective has to be different, resembling what was done in Europe after the Second World War (1939-1945). In other words, launching their money helicopters over Africa, while creating domestic markets on the continent.
Very simply put, the US will only compete with the Chinese in Africa if it replaces them, if it spends money. Arriving in Africa empty-handed or with promises of future private investment, which may or may not materialize, is no use.
Strictly speaking, if they really want to help Africa, the Americans should start by swapping the Chinese debt, that is, lending financial funds to African governments at lower interest rates and higher maturities, so that governments pay China. In this way it would certainly be possible to introduce competition into the African debt market and remove the monopoly from China.
In the same vein is the financial support for structural projects on the continent, from the massification of electricity and basic sanitation to digitization.
It is clear that the American people may disagree with this option and politicians may not want to embrace it, but the only realistic path is this and not another — this is how the US has gained influence in the past.
Furthermore, in addition to real capital, Africa needs specialists: not economists or consultants, which are in abundance, but professionals in essential areas, such as doctors, nurses, engineers, IT professionals, teachers, etc.
It is necessary to recover the initial spirit of the Peace Corps, idealized by President Kennedy, and massively send to Africa “men and women from the United States qualified for service abroad and available to serve, if necessary under difficult conditions, to help people in areas that help countries meet their needs” (Peace Corps Goals).
Finally, good governance should not focus on the constitutional apparatus, but on something simpler and more fundamental: public administration.
What is essential is to prepare public administrations in African countries to function efficiently and effectively, even if governments do not meet their objectives. Shifting the focus of good governance from the executive to the administration is a structuring element of any functioning society, overcoming disagreements and fears of political interference.
It is evident that only an investment of this type – in capital, in human resources and in qualified training – can allow the United States to leave a real mark of progress in Africa, following a counterpoint strategy to that of China. Otherwise, good intentions will be just that: good intentions without results.
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