The Kenyan Supreme Court’s BBI Judgment – Part I: On Constitutional Amendments and the Basic Structure15 min read.
This is the first of three articles in which Gautam Bhatia analyses the judgments of the High Court, the Court of Appeal and the Supreme Court following the constitutional challenge to the BBI Bill.
On 5th April 2022, a seven-judge bench of the Kenyan Supreme Court delivered judgment in The Hon. Attorney General and Ors v David Ndii and Ors [“the BBI Appeal”]. The judgment marked the judicial culmination of the constitutional challenge to the BBI Bill, which had proposed seventy-four amendments to the 2010 Constitution of Kenya. Recall that the case came up in appeal from the judgments of – first – the High Court of Kenya, and then the Kenyan Court of Appeal, both of which had found the Bill unconstitutional for a variety of reasons. The Supreme Court, thus, was the third Court to hear and decide the issue; and over a period of one year, as many as nineteen judges heard and decided this case. The Supreme Court framed seven issues for judgment, which can be found in Martha Koome CJ’s lead judgment and the seven judges wrote individual opinions.
In the course of three articles, I propose to analyse the judgments in the following manner. In this first article, I will consider the issue of the basic structure. In the second article, I will consider the issue of the popular initiative to amend the Kenyan Constitution under Article 257, and some of the remaining points in the judgment(s). In the final article, I will examine some of the potential implications of the judgment(s) going forward (for example, on the issue of whether referendum questions for constitutional amendment must be distinct and separate). It is safe to say that, as with the judgments of the two other superior courts, the range and novelty of the issues before the Court mean that its verdict will be studied across the world for a long time to come.
On the Basic Structure: An Introduction
Recall that the High Court and the Court of Appeal had both held that the basic structure doctrine was applicable in Kenya. In addition, both Courts had also held that in concrete terms, this meant that any alteration to the basic structure of the Kenyan Constitution could take place only through an exercise of the People’s primary constituent power, which existed outside of the Constitution. The primary constituent power was essentially the power to make or remake a Constitution, and could therefore only be done under the framework within which the 2010 Constitution had originally been drafted. This – according to both Courts – required a four-step sequential process: civic education, public participation, a Constituent Assembly, and a referendum. The correctness of these findings was at issue before the Supreme Court.
The formal disposition of the Court indicates that on this point, the judgments of the High Court and Court of Appeal were set aside by a 6-1 majority (Ibrahim J the sole dissent); that is, the Supreme Court rejected the applicability of the basic structure doctrine and of the four-step sequential process in Kenya, by a 6-1 majority. I believe, however, that a close reading of the seven opinions reveals a somewhat more complex picture, which I will now attempt to demonstrate.
Hyper-Amendments and Tiered Constitutional Amendment Processes
In addressing the question of the basic structure, several judgments of the Supreme Court begin at a common starting point: what was the specific historical mischief that the Kenyan Constitution’s amendment procedures (set out under Chapter XVI) were attempting to address? The answer: a culture of “hyper-amendments” to Kenya’s Independence Constitution. In the years after Independence, the old Constitution was often seen as an impediment by the Presidency, and as a result, a series of far-reaching amendments were passed that more or less entirely devalued its status as a founding charter (and invariably concentrated power in the office of the Presidency, at the cost of other State organs and the People (Ouko J, paragraph 1918, quoting Ghai/McAuslan). Upon Kenya’s return to multi-party democracy in the 1990s, and the eventual constitutional reform process, this culture of hyper-amendments was prominently in the minds of the People and of the drafters (see Koome CJ, paragraph 189 – 191; Mwilu DCJ, paragraph 521; Lenaola J, paragraphs 1415 – 1417; Oukuo J, paragraph 1802).
In the years after Independence, the old Constitution was often seen as an impediment by the Presidency.
Up to this point, the opinions of the Supreme Court are in agreement with those of the High Court and the Court of Appeal. Drawing upon the historical record, the Supreme Court opinions then go on to argue that the Kenyan People therefore devised a solution to the problem of hyper-amendments, and constitutionalised it; in other words, the hyper-amendments were to be addressed by a solution internal to the 2010 Kenyan Constitution. This solution is to be found in Chapter XVI of the Constitution, and – in particular – in the tiered amendment process that it sets up. Article 255(1) of the Constitution “entrenches” certain provisions of the document. For these “entrenched” provisions, the amendment procedure is far more onerous than for un-entrenched provisions, requiring a referendum with certain conditions (Article 255(2)), in addition to (or complementing) the Parliamentary amendment route (under Article 256) or the popular initiative route (in Article 257). This tiered amendment process, according to the judges, thus creates a balance between constitutional flexibility and constitutional rigidity, and also “tames” the mischief of hyper-amendments (see Koome CJ, paragraphs 192 – 197; Ndungu J, paragraphs 1161 – 1162; Lenaola J, paragraph 1418; Ouko J, paragraph 1803).
Two conclusions follow from this, according to the Supreme Court. The first is that this history – and structure – of the 2010 Kenyan Constitution therefore distinguishes it from jurisdictions such as India (where the basic structure doctrine first gained judicial acceptance). In India, where Parliament possesses the plenary power to amend the Constitution, the basic structure doctrine arises as a judicial response in order to protect the Constitution from parliamentary abuse. However, what in India requires the basic structure doctrine, is already provided for in Kenya through the tiered amendment process; in other words, the tiered amendment process does the job that the basic structure doctrine is supposed to do (Koome CJ, paragraphs 217; Mwilu J, 401-402; Lenaola J, paragraphs 1439 – 1442, 1451 – 1453; Ouko J, paragraphs 1763 – 1781, 1811). And secondly, the tiered amendment process – and its history – demonstrates that the People – in their capacity as framers of the Constitution – intended to make the amendment process gapless.
The three pathways provided for under Articles 255 – 257 are exhaustive, and for this reason, the High Court and the Court of Appeal were incorrect to introduce a “judicially-created fourth pathway” to amendment (Koome CJ, paragraph 200). Koome CJ also frames this another way, noting that the High Court and the Courts of Appeal failed to demonstrate what the lacuna was in Chapter XVI that necessitated the judicial creation of the four-step process (Koome CJ, paragraphs 200; Mwilu J, 406).
This snapshot, I believe, is an accurate summary of the reasoning of a majority of the judges in this case. To my mind, however, it also raises two interlinked issues, which – when scrutinised closely – somewhat complicate the final holding of the Court.
Amendment, Repeal, and the Basic Structure
It is, of course, entirely correct to say that the plenary power of parliament to amend the Constitution (as in India) is significantly distinct from the tiered amendment process under Articles 255 – 257; and, further, that this distinction is relevant when considering the question of the basic structure. However, it is equally important not to overstate the sequitur: it does follow from this – as I have argued previously – that the version of the basic structure doctrine as developed in India (i.e., a judicial veto over amendments) cannot be transplanted into the Kenyan context. However, this was not what the High Court and Court of Appeal did. Precisely because of the tiered structure of amendments under the Kenyan Constitution, the High Court and the Court of Appeal articulated a much more reduced role for judicial review: not a substantive veto over amendments (thus making every provision potentially amendable), but a procedural role to ensure that alterations to the basic structure could be done only through the primary constituent power.
Secondly – and connectedly – this flows from a conceptual point that is left unaddressed by the summary of the Supreme Court’s argument that I have provided above: the distinction between amendment and repeal (express or implied). The tiered amendment process, the onerous requirements under Article 257 to prevent hyper-amendments, and the balance between flexibility and rigidity ensure that as a practical matter, in most circumstances, the basic structure doctrine will not need to be invoked, because the Constitution’s internal mechanisms are far more effective for dealing with potential constitutional destruction (as opposed to, say, the Indian Constitution). The fact that the basic structure doctrine will almost never need to be imposed does not, however, address the point that it exists because of the conceptual distinction between amendment and repeal, and the fact that the Constitution – as conceded by Ouko J – “does not provide for its own replacement” (paragraph 1847).
Precisely because of the tiered structure of amendments under the Kenyan Constitution, the High Court and the Court of Appeal articulated a much more reduced role for judicial review.
Now, how do the judges of the Supreme Court deal with this point? Let us first consider the judgments of Ibrahim J (formally in dissent) and Dr Smokin Wanjala J (formally in the majority). Ibrahim J’s judgment is straightforward: he agrees with the High Court and the Court of Appeal on the distinction between amend and repeal, the primary constituent power, and the four-step sequential process (see, in particular, paragraphs 724 – 725). Let us now come to Smokin Wanjala J, because this is where things start to get interesting. Wanjala J objects to the abstract nature of the enquiry that has been framed before – and addressed by – the superior courts below (paragraph 1000). He notes:
Speaking for myself from where I sit as a Judge, and deprived of the romanticism of academic theorizing, it is my view that what has been articulated as “the basic structure doctrine”, is no doctrine, but a notion, a reasoning, a school of thought, or at best, a heuristic device, to which a court of law may turn, within the framework of Article 259(1) of the Constitution, in determining whether, a proposed constitutional amendment, has the potential to destabilize, distort, or even destroy the constitutional equilibrium. (emphasis supplied)
But when you think about it, this is – essentially – the basic structure “doctrine” (or the “basic structure heuristic device” if you want to call it that), without being explicitly named as such. It is an interpretive method whose purpose is to prevent amendments that “destabilise, distort, or destroy the constitutional equilibrium.” Importantly, both here – and in his disposition – Wanjala J explicitly considers Article 259(1), which requires the Constitution to be interpreted in a manner that promotes its values and principles – as a substantive limitation upon constitutional amendments, in addition to the requirements of Chapter XVI. This is particularly clear from paragraph 1026:
In this regard, I am in agreement with the observations by Okwengu and Gatembu, JJ.A to the effect that a proposed amendment must pass both the procedural and substantive test. Where I part ways with my two colleagues is at the point at which they base their substantive test not on the constitutional equilibrium in Article 259, but on a basic structure (Gatembu, J.A–Article 255(1) and Okwengu, J.A–the Preamble). By the same token, I do not agree with the submission by the Attorney General to the effect that any and every proposed constitutional amendment would be valid as long as it goes through the procedural requirements stipulated in Articles 255, 256 and 257 of the Constitution. Courts of law cannot shut their eyes to a proposed constitutional amendment, if its content has the potential of subverting the Constitution. (emphasis supplied)
Now, with great respect, one may choose not to call something “the basic structure doctrine”, but the statement that a Court of law can subject constitutional amendments to judicial review on the question of whether its “content has the potential of subverting the Constitution”, one is doing what is generally understood to be basic structure review. It might be the case that its long association with the specific form taken in India has turned the basic structure doctrine into a bit of a poisoned chalice. In that case, there should of course be no problem in dropping the term, and simply stating that “constitutional amendments that subvert the Constitution are subject to judicial review.” And in his disposition at paragraph 1122, Wanjala J agrees that while the four-step sequential process will not apply to constitutional amendments, it would nonetheless apply to “seismic constitutional moments” when the People are exercising their primary constituent power.
It is an interpretive method whose purpose is to prevent amendments that “destabilise, distort, or destroy the constitutional equilibrium.”
We therefore already have a more complicated situation than what the final disposition of the Court suggests. That disposition suggests that a 6-1 majority rejected the basic structure doctrine. That is true, because Wanjala J does not believe that the basic structure doctrine is a “doctrine”. But we already have two judges who accept the distinction between constitutional amendments and constitutional repeal (or subversion), and accept that in the latter case, the primary constituent power (with its four-step process) will apply.
I now want to consider the opinions of Lenaola J and Ouko J. To their credit, both judges recognise – and address – the issue of constitutional amendment versus constitutional repeal. In paragraph 1464, Lenaola J states:
My point of departure with my learned colleagues is that the process presently in dispute was squarely anchored on Article 257 as read with Articles 255 and 256. I shall return to the question whether the Amendment Bill was in fact a complete overhaul of the present constitutional order or whether it was an amendment as envisaged by these Articles (emphasis supplied). Suffice it to say that, should the Kenyan people, in their sovereign will choose to do away with the Constitution 2010 and create another, then the sequential steps above are mandatory and our constitutional history will be the reference point.
Thus, in paragraph 1464, Lenaola J explicitly recognises the distinction between “a complete overhaul” and “amendment”, and also recognises that the 255 – 257 procedure only deals with the latter category. Indeed, his primary point is that the BBI Bill was not, as a matter of fact, a “complete overhaul”: in paragraph 1472, he asks, “why would dismemberment take centre stage when the issue before the courts below was amendment?” And most definitively, in paragraph 1473, he quotes Richard Albert’s distinction between “amendment” and “dismemberment”, with approval (paragraphs 1474 – 1475). Indeed, in the paragraph he quotes, Albert specifically notes that “a dismemberment is incompatible with the existing framework of the Constitution because it seeks to achieve a conflicting purpose” – lines very similar to Wanjala J’s articulation of constitutional “subversion”.
It might be the case that its long association with the specific form taken in India has turned the basic structure doctrine into a bit of a poisoned chalice.
There is, admittedly, something of an internal tension in Lenaola J’s opinion here: he appears, for example, to suggest later on that dismemberment necessarily requires formally enacting a new Constitution (see paragraph 1485). It is crucial to note, however, that this need not be the case: a Constitution’s structure and identity (the language used by Richard Albert, which Lenaola J cites with approval) can be “overhauled” by something as technically innocuous as changing a single sentence – or even a single word – in a single constitutional provision. For example, an amendment changing a polity from a multi-party democracy to a single-party State can be accomplished through a single sentence, but it is undoubtedly a constitutional dismemberment. Another historical example is the Indian Supreme Court judgment in Minerva Mills, where the Constitutional amendment at issue had essentially made the Indian Constitution’s bill of rights non-justiciable, as long as the government stated that it was carrying out a social policy goal. This had been accomplished by amending a part of a sentence in a sub-clause of one provision of the Indian Constitution.
A very similar tension is present in Ouko J’s opinion. In paragraph 1838, he notes:
Therefore, it is true to say that it is the prerogative of the people to change their system of government, but only by the people’s exercise of their constituent power and not through the amendment procedure. And that is the difference between primary and secondary constituent powers, the former is the power to build a new structure by the people themselves and the latter, the power to amend an existing constitution. Today, under Chapter Sixteen, this power is exercised by the people and their elected representatives.
Once again, we see the distinction between “amendment” and – in this case – “building a new structure” or “changing the system of government.” This comes to a head in paragraph 1846, where she notes:
It ought to be apparent from the foregoing that, I must come to the conclusion that a constituent assembly is an organ for constitution-making. An amendment of the Constitution under Chapter Sixteen does not recognize constituent assembly as one of the organs for the process. This Constitution, like the former Constitution does not contemplate its replacement.
And in paragraph 1849:
Therefore, the question to be determined here is whether the proposed amendments would lead to such egregious outcome. That they had the effect of repudiating essential elements of the Constitution—concerning its structure, identity, or core fundamental rights—and replacing them with the opposite features; a momentous constitutional change.
Once again, with respect, one may choose not to call this “basic structure review”, but what is happening here seems awfully close to “basic structure review” when courts or scholars do call it that. As with Lenaola J, Ouko J’s primary discomfort appears to be with the Courts below having labelled the BBI Bill as akin to constitutional dismemberment. In paragraph 1858, he labels this as “overkill”. The point, however, is that this admits the principle: if indeed any kind of formal “amendment” was possible under Articles 255 – 257, then the question of substantively assessing the amendments themselves wouldn’t even arise. Indeed, it doesn’t arise in Ndungu J’s opinion, which is very clear on the point that there is no constitutional alteration that is outside the scope of Chapter XVI.
An amendment changing a polity from a multi-party democracy to a single-party State can be accomplished through a single sentence, but it is undoubtedly a constitutional dismemberment.
Thus, we now have an even more complicated picture. Two judges out of seven (Ibrahim and Wanjala JJ) accept, in substance, the proposition that the four-step process applies to radical constitutional alteration that cannot properly be called an amendment. Two other judges (Lenaola and Ouko JJ) accept the principled distinction between constitutional “dismemberment” and “amendment”; Lenaola J appears to suggest that in the former case, you would need the four-step process, as it is akin to making a new Constitution, while Ouko J accepts Professor Akech’s amicus brief on the point that the four-step process was not, historically, how the 2010 Constitution was framed; it is only an “approximation.” Thus, we now have a situation where, in the disposition, six out of seven judges have rejected the applicability of “the basic structure doctrine”, but (at least) four out of seven judges have accepted that there is a conceptual distinction between constitutional “amendment” and “dismemberment”, the latter of which is outside the scope of Chapter XVI amendment processes (with three out of those four seeing space for the four-step process, and the fourth holding that it is an “approximation” of the founding moment).
What of the opinion of Mwilu DCJ? In paragraph 407, Mwilu J notes that:
In my view, whether a Constitution is amendable or not, whether any amendment initiative amounts to an alteration or dismemberment and the procedure to be followed is a matter that would be determined on a case to case basis depending on the circumstances.
After then noting the distinction between “amendment” and “alteration” (paragraphs 418 – 419), she then notes, at paragraph 421:
The court always reserves the constitutional obligation to intervene provided that a party seeking relief proves to the court’s satisfaction that there are clear and unambiguous threats such as to the design and architecture of the Constitution (emphasis supplied).
While this is also redolent of basic structure language, Mwilu J later goes on to note that while constitutional alteration must necessarily be an “extra-constitutional process” outside the scope of Articles 255 – 257, the exact form it might take need not replicate the manner of the constitutional founding: it may be through the “primary constituent power” or through “any of the other mechanisms necessary to overhaul the constitutional dispensation.” (paragraph 437)
It is not immediately clear what these other mechanisms might be. Mwilu J’s basic point appears to be that the mechanism by which fundamental constitutional alteration takes place cannot be judicially determined, as it is basically extra-constitutional. The corollary of this surely is, though, that to the extent that these fundamental alterations are sought to be brought in through the amendment process, they are open to substantive judicial review, as Mwilu J explicitly notes that those kinds of alterations “are not subject to referendum” under Article 255. In other words, Mwilu J’s problem appears to be not with judicial review of formal constitutional amendments in order to decide whether or not they are fundamental alterations, but with what follows, i.e., the judiciary deciding that, in case it is a fundamental alteration, that it must be done through the four-step test. But the only other alternative that then reconciles all these positions is for the judiciary to invalidate radical constitutional alteration that is disguised as an amendment via the 255 – 257 route; in no other interpretation does paragraph 421, which calls for judicial intervention when the threat is to “the design and architecture of the Constitution”, make sense.
We now have a situation where, in the disposition, six out of seven judges have rejected the applicability of “the basic structure doctrine”.
Finally, what of Koome CJ’s opinion? While Koome CJ is clearest on the point of the tiered amendment process achieving the balance between rigidity and flexibility, her judgment does not address the distinction between “amendment” and “repeal.” In paragraph 226, Koome CJ notes that any amendment to the Constitution must be carried out in conformity with the procedures set out under Chapter XVI; but that leaves the question unaddressed – what if it is alleged that the impugned amendment is not an amendment, but an implied repeal? In her summary of findings, Koome CJ notes further that the basic structure doctrine and the four step process are not applicable under the Constitution (paragraph 360). This is true, but also in substantial agreement with the case of the BBI challengers: the basic structure doctrine does not kick in as long as the formal amendment is actually an amendment, and as long as we are within the existing constitutional framework. It only applies when we are no longer under the Constitution.
Formally, by a majority of six to one, the Supreme Court rejected “the applicability of the basic structure doctrine” in Kenya. However, as I have attempted to show, a close reading of the seven judgments reveals a more complex picture. Consider a hypothetical future situation where a proposed amendment to the Constitution is once again challenged before the High Court, on the basis that it is not an amendment at all, but implied repeal, or repeal by stealth, or constitutional dismemberment. When the High Court looks to the Supreme Court for guidance, it will find the following:
- A majority of six rejecting the applicability of the basic structure doctrine (from the disposition)
- A majority of five accepting the distinction between “amendment” and “repeal” or “dismemberment”.
- A plurality of three explicitly noting that this distinction is subject to judicial review (with two others not taking an explicit position on this).
- A plurality of three holding that in case an “amendment” is actually a disguised “repeal”, the four-step test will apply (with an equal plurality of three against it, and one – Koome CJ – silent, as she does not draw a distinction between amendment and repeal).
In such a situation, how will the High Court proceed? That, I think, is something that time will tell.
Two final remarks. I think that a close reading of Koome CJ’s judgment came close to resolving the bind outlined above, without explicitly saying so. In paragraph 205, she notes:
The jurisprudential underpinning of this view is that in a case where the amendment process is multi-staged; involve multiple institutions; is time-consuming; engenders inclusivity and participation by the people in deliberations over the merits of the proposed amendments; and has down-stream veto by the people in the form of a referendum, there is no need for judicially-created implied limitations to amendment power through importation of the basic structure doctrine into a constitutional system before exhausting home grown mechanisms.
Koome CJ dwells at length upon the extent and depth of public participation required under Articles 256 and 257, and effectively equated the process with the four step test, sans the constituent assembly: running through her judgment is a strong endorsement of the civic education, public participation, and referendum (after adequate voter education) prongs of the test. What this suggests is that it might be open to argue that the procedures for participation under Articles 256 and 257 do not codify the primary constituent power (because that is a conceptual impossibility), but reflect it. In other words, if you are following the procedures under Articles 256 and 257 (in the sense of deep and inclusive public participation, as set out in Koome CJ’s judgment, and we will discuss some of that in the next post), you are exercising primary constituent power, and therefore, fundamental constitutional alterations are also possible as long as public participation happens in all its depth. This, I would suggest, might reconcile some of the potential internal tensions within some of the judgments, and also essentially keep the High Court and Court of Appeal’s judgments intact, just without the Constituent Assembly.
Secondly, one thing that appeared to weigh with the Court was the fact that in the twelve years since 2010, there has been no successful attempt to amend the Kenyan Constitution, and all attempts – whether under Article 256 or Article 257 – have failed. This is true; however, what is equally true is that were the BBI Bill to succeed, we would go from no amendments in twelve years to seventy-four amendments in twelve years, making the Kenyan Constitution one of the most swiftly-amended in the world. If it is true, therefore, that the purpose of the tiered amendment structure is to find a balance between flexibility and rigidity, while also ring-fencing entrenched provisions, then this has certain inescapable conclusions for the interpretation of Article 257 – including the question of single or multiple-issue referenda. This will be the subject of the next two posts.
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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.
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.
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.
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.
This article was first published by ROAPE.
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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