Governing by Lying: On the Death Cards of Drought, Deceit & Delinquency

By Sitati Wasilwa

“Everyone is entitled to his opinion, but not to his own facts.” – Daniel Patrick Moynihan

Kenya’s current administration is without doubt an archetype of incompetence and delinquency based on the high levels of misgovernance witnessed over the last six years.

A legendary distinction of the Jubilee administration in comparison with the country’s past administrations is governing not just by lying, but by repeatedly doing so even when Kenyans are dying and suffering because of drought.

In an assemblage of what may be termed as “a grand presentation and sanctification of alternative, erroneous and disturbing facts”, the administration’s purported “machinists” denied any deaths resulting from drought that has largely affected Turkana and Baringo counties as well as counties in the Northern Frontier region.

Contrary to the “facts” presented by the “machinists”, there is undeniable evidence that Kenyans are dying because of the ravaging effects of drought.

Development Agenda

Featured twice on Jubilee’s agenda for the much touted but hardly evident development is creation of a food secure state; first through its manifesto, “Agenda for Kenya 2013-2017” harmonized with the second medium-term plan (2013-2017) of Vision 2030; and secondly, through its 2017 manifesto integrated with the third medium-term plan (2018-2022) commonly known as the “Big Four Agenda.”

A vague and totally empty campaign promise that now offers comic relief to politically conscious citizens regards the expected miraculous productivity of the Galana-Kulalu Food Security Project, the regime’s much acclaimed signature programme.

While launching Jubilee Party’s election manifesto in 2017, its deputy party leader William Ruto, in a utopic frenzy, remarked that the Galana-Kulalu Food Security Project would produce 30,000 bags of maize each month beginning July 2018. This remains a politically fat and equally irrelevant statement.

The Galana-Kulalu Food Security Project is one of the regime’s cash cow, a soon-to-be white elephant. A recent article revealed the irrigation project as Jubilee’s equivalent of the infamous Goldenberg Scandal, a fact confirmed by an unnamed wheeler-dealer of the administration.

Unsurprisingly, the irrigation project has been dogged by corruption. The Auditor General has raised fundamental questions about the usage of finances allocated to the project. Green Arava, an Israeli firm contracted to develop a model farm at the irrigation scheme, threatened to abandon its operations this year after not being paid as per the contractual agreement.

Additionally, the regime’s intention to construct dams with the aim of enhancing food production in regions perennially affected by drought and famine has turned out to be a scandalous affair. Ridiculously and unintelligently, the Cabinet Secretary in charge of Agriculture claims that thirty one dams will be constructed before the onset of the long rains. Are Kenyans – politically conscious Kenyans – that stupid to be lied to?

Deceitful PR: Of Food Relief Pilgrimages

To be a gallant politician one must be a master opportunist, a firm believer in propaganda and a “saviour” of the poor, needy and desperate masses.

Close to six decades since the British imperialists ceded political power to Kenyans, ordinary folks are still economically impoverished because of the invisible hand of the tiny elite that has strangulated the country’s economy by plundering resources.

The politico-economic tyranny occasioned by the tiny elite has dominated Kenya’s post-colonial history, a true indication of lack of economic and political independence for ordinary Kenyans. The success of this tiny elite is through the creation of a kleptocratic political monopoly that oversupplies short-term solutions and undersupplies long-term solutions.

We’ve got to remember that the yearly food relief pilgrimages are consequences of short-termism fashioned by Kenya’s tyrannical tiny elite.

Such short-termism keeps the masses in a perpetual state of dependence on the tiny elite and acts as fodder for gaining political capital. Acts of benevolence especially by politicians in helping desperate and poor citizens qualify as deceitful public relations exercises, and such is the case with the food relief distribution activities in the affected counties.

Voting & Political ‘Misleadership’

A country’s economic well-being or lack thereof depends on the nature of its political leadership. But the nature of the political leadership is an outcome of the voting patterns of the majority, and a reflection of the thought processes of a significant number of citizens.

High affinity to short-term solutions meant to address perennial challenges such as drought and famine would be avoidable only if the republic’s politics was based on relevant political ideologies. But as Bryan Caplan notes in his book, The Myth of the Rational Voter, “in real-world political settings, the price of ideological loyalty is close to zero…” No wonder ideologically deficient politics is the order of the day in Kenya.

A handful of Jubilee administration supporters who voted twice in 2017 to endorse the regime’s corruption and misgovernance have suddenly turned into its critics. This is pretence and ignorance.

In fact, Caplan further notes in his book that “voter ignorance opens the door to severe government failure”, and Kenya would have avoided such a failed government if only voters made right decisions at the ballot by not ignoring the terrible record of most of the politicians. 

County governments especially in the regions affected by drought need to prioritize agriculture which is a devolved function.

The only way forward for Kenya to avoid embarrassing situations like deaths resulting from drought, and food relief pilgrimages is to collectively root out the corrupt, tyrannical and imperialistic tiny elite that promotes state capture hence political ‘misleadership.’ Is this possible? Only if the misled significant majority embraces progressive thinking.

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Of the Chinese Fish, Imbalanced Trade, Debt & Market Captivity

By Sitati Wasilwa

“Debt is a cleverly managed reconquest of Africa.” – Thomas Sankara.

“He who feeds you, controls you.” – Thomas Sankara.

While acknowledging the importance of borrowing as a measure aimed at financing key projects and economic activities for a country, the primary concern remains the sustainability of debt, and how debt financing affects the overall economic performance.

With a number of debt analysts, for instance the Jubilee Debt Campaign, pointing out to an impending debt crisis for African countries, it would be fundamental to first consider the politics and economics of external debt, and secondly, the conditionalities attached to it.

In regards to the politics and economics of external debt, the late Thomas Sankara aptly summarizes it in terms of the reconquest of Africa. Essentially, loans advanced by various entities are repaid with interest, and this generates income for the creditors. As such, more Chinese debt for the African countries means more income for China, a similar case with the World Bank and other creditors.

Politically, geopolitical ambitions fuel the need for the formation and adoption of the so-called mutual trading partnerships. Elementally, such partnerships largely benefit the foreign entities that issue out loans to the developing economies.

Africa is a card shuffled by foreigners for ages resulting in dehumanizing statements such as “whoever controls Africa controls the world.” From the Arab slave trade, the Trans-Atlantic trade, colonialism and currently the neo-colonialism era, foreigners dictate the pace of Africa’s game at the global stage.

Part of the foreigners’ games of strategy include foreign aid whose failures override its successes. Advancing foreign aid in form of loans and grants comes attached with conditionalities. The World Bank and the Western states especially in the 1980s and 90s often offered foreign aid with calls for adoption of democratic institutions and market-oriented economic policies. This changed following China’s increased presence in Africa with African countries preferring to partner with the Dragon on the account of issuing loans without conditionalities.

The perception that the Chinese loans come with no conditionalities is a lie! It is commonsense economics that there is no free lunch and there must be a trade-off between cooperating entities. Therefore, for China, issuing loans to African countries is not enough. Access to African markets is a condition inherently pegged on the Chinese loans.

Recently, Uhuru Kenyatta banned the importation of fish from China arguing that the local fish market was on a free-fall. In response to the supposed ban, China, through her ambassador to Kenya Li Xuhang termed it as a trade war while threatening to impose trade sanctions including cutting funding for the economically unviable standard gauge railway line. However, the threats by the Dragon never took effect following the suspension of the ban by the Kenyan government.

Back to the moral sentiments of the indefatigable Thomas Sankara, whoever feeds you controls you. Signing of economic partnerships between African countries and foreign entities involves so many underhand deals that are never disclosed to the public. Such covert deals, in the case of China, seek to create markets for the Chinese goods, and employment for the Chinese people. The government’s suspension of the ban on Chinese fish and China’s threats exemplify the Sankarist view on foreign aid, and dispel the notion that China’s loans are free from conditionalities.

Ordinarily, trade relationships between two countries need to be a win-win affair but the so-called economic partnerships propagated by China can best be classified as highly parasitic and imbalanced.

Take a look at the trade statistics between Kenya and China and notice how it is highly imbalanced. According to the July-September 2018 issue of the Policy Monitor magazine published by the Kenya Institute of Public Policy Research and Analysis (KIPPRA), Kenya imported Chinese goods worth Kshs.390 billion in 2017 and exported commodities worth Kshs.9.9 billion to China in the same year.

An anachronistic plan hatched by China in 2016 to lure the East African Community member states to signing a free trade agreement with her indicates an aggressive ambition by the Asian nation to capture and control the markets of the region.

Luckily, the Kenyan government rejected the trade arrangement which would have led to the death of the Kenyan industries especially the medium and small microenterprises. In as much as this move may be termed as protectionist, it is necessary that the Kenyan government adopt highly protectionist policies to promote the growth and development of the manufacturing sector, key in creating a high number of employment opportunities.  

Free trade favors advanced economies and leaves the poor, developing countries worse off. China’s intentions to convince the East African Community member states to sign the free trade agreement ignores the global economic history of development. China and the Asian Tigers realized faster economic growth and development on the basis of policies protecting the infant industries, the same case with the now classified developed economies like the USA, Germany, Britain and others.

Going back to the reaction by the Chinese ambassador to Kenya, he bluffed that Kenya’s ban on imported Chinese fish was against “the principle of free trade, the rule of law, adherence to bilateral agreements and the rules of the World Trade Organization (WTO).” All these aforementioned trade doctrines will never work in favor of developing countries including Kenya because of their skewed nature working to the advantage of the advanced economies.

Fast forward, was the ban on the imported Chinese fish doomed to fail? Possibly yes. In June this year, the not-so-competent Cabinet Secretary in charge of the Ministry of Agriculture, Mwangi Kiunjuri, came to the defense of the importation of the Chinese fish stating that the supply in the local market never met the demand. Quite logical.

But there are fundamental issues which if addressed would ward off the importation of fish from China. The first issue is to incentivize the production of fish especially in geographical areas where fishing is one of the main economic activities. Additionally, fish farming has to be encouraged but this should be among communities familiar with fishing.

As matter-of-factly, the Kshs.60 million fish processing factory built in Nyeri County in 2015, following the introduction of fish farming in the region as part of the 2009/2010 Economic Stimulus Programme (ESP), is now considered to be a white elephant with its location among a community not accustomed to eating fish heavily influencing its collapse.

Lack of initiative by the Jubilee administration to address the root cause of the increased importation of fish from China is deliberate. Kenya is China’s captive market and with the Chinese loans and/or debts, the Mandarins will dictate what they want in exchange for their financial and technical assistance.

Failure of Kenya and other African countries to learn from history is the bane for their economic floundering. Western powers considered African countries to be captive markets during the colonial era and thereafter in the post-colonial period. The same script is being played by China; on advancing ‘cheap’ loans and controlling the markets. This is neo-colonialism and lack of economic independence.

Therefore, increase in the importation of Chinese fish has got more to do with Kenya being a captive market as a consequence of borrowing finances from China than the purported high demand and lower supply in the local fish market.

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When Austerity Measures Become the Answer: On Statements of Convenience

By Sitati Wasilwa

“…But we still face a financing gap. This measure will not suffice to balance our budget, as required by law. It is my responsibility to put Kenyans first. I must balance between short-term pain and long-term gain.” – Uhuru Kenyatta.

“We must grow the economy, and we can only do this through additional taxes, so Kenyans must dig deeper into their pockets for this to happen.” – Henry Rotich.

When desperate situations dictate that desperate measures be adopted, then wobbly, wanton statements of convenience such as the above two become common.

I still find it ridiculous that members of the general public are up in arms against the proposed taxation measures contained in the Finance Bill 2018 signed into law by Uhuru Kenyatta.

Any sober Kenyan ought not to be surprised by the Executive’s desperate attempts to clutch at a straw considering that the Jubilee administration has a record of being in favour of contorted economic policies, a clear demonstration of its incompetence.

Economic mismanagement under the Jubilee administration is no longer news with the undemocratic process of passing the Finance Bill in the National Assembly sending a signal of a broke government managed by masters of “brick and mortar development.”

“Brick and mortar development” in this case refers to the development narrative fashioned by the current administration that hugely focuses on very costly infrastructural projects with lower returns on investment than say agriculture whose potential in terms of reducing poverty levels is quite high.

Kenya’s public finance is faced with the problem of unnecessary spending which the Executive is running around like headless chicken to curb.

It is on record that the Jubilee administration has adopted the liking for huge budgets with massive deficits. Financing these massive deficits necessitated increased borrowing in the name of prioritizing flagship mega projects none of which seems to have yielded any returns or promising to do so in the long-term.

Good examples of such projects include the standard gauge railway line and the Galana-Kulalu food security project whose dismal performances raise serious doubts on whether feasibility studies were conducted before being commissioned.

Just like business enterprises or organizations which collapse majorly due to poor cash flow management, the case is not different for countries which are brought down because of poor management of public finances.

Each spending ought to be accounted for but owing to Kenya’s disturbing public finance history then the misses in regards to spending are highly visible. It is well known that a third of the country’s budget is never accounted for, a fact ignored by the Executive and Parliament, and leads to billions of shillings being lost.

Big budgets have no merit at all if the process of accountability is not taken seriously. In as much as the Jubilee administration would want to pretend to be keen on driving the development agenda, the truth of the matter is that development cannot be achieved by failing to take into account the fundamentals that occasion socio-economic progress.

Fundamentals such as allocating financial resources to sectors where the poor eke out their living like the informal sector in addition to running a clean, mean and lean government are prerequisites for moving all people up the escalator.

One of the unnecessary narratives sold at the moment by the Jubilee administration is the legacy of one Uhuru Kenyatta premised on the 2022 succession politics. I believe his legacy was framed during his first term in office and there is nothing much he can convincingly do to be in the right books of Kenya’s politico-economic history.

With the austerity measures targeting to cut spending by Kshs.52 billion, there are grave concerns on how Treasury will plug the Kshs.600 billion deficit for the current financial year. The country’s economic woes in regards to raising revenue and spending primarily stem from the borrowing which the Jubilee administration has used as a tool to pursue its development agenda hinged on mega projects.

Economically speaking, the most suitable way to address an economic challenge is to identify its root-cause. For the current situation, the root-cause lies first in the administration’s big budgets with huge deficits and secondly, the excessive borrowing.

Fronting austerity measures would not be the ideal policy prescription to curb the budgetary constraints. Rather, the most viable policy at this time would be to heavily cut on borrowing though it is a policy that can’t be used in isolation. It can best be used by combining it with significant cuts on spending. 

Governments facing financial crises have always turned to austerity policy measures as shock therapy to address their economic difficulties. Austerity measures hardly lead to economic progress since people’s levels of income in the economy do not rise in line with the tax increases. In fact, considering the tax increases that lead to a rise in the cost of living, people’s level of income actually falls.

Historically, when governments are suddenly compelled to pursue austerity policies there is no doubt that they are staring at economic crises.

Good politics, as they say, is bad economics. This has highly been exemplified by the Jubilee administration. Amid concerns that the debt level was spiraling upwards at an alarming rate due to excessive borrowing, the issue turned political with the administration defending itself on the basis of various globally approved metrics.

Firstly, the administration’s top guns and ignorant supporters would state that the World Bank’s threshold for public debt to GDP ratio for developing economies is 74%. Kenya’s current debt to GDP ratio is 60%. Secondly, unintelligent comparisons of the country’s public debt with that of other developed or strong emerging economies would be put up.

There is a fundamental problem when a country spends half of its revenue on debt repayment. Such is Kenya’s case with Treasury having allocated Kshs.870 billion towards repayment of debt against targeted revenue of Kshs.1.8 trillion for the 2018/2019 financial year.

Elementally, the World Bank’s metric on debt to GDP ratio ignores the fact that the 74% has to be considered in the context of an economy’s productivity. Kenya’s debt repayment taking half of the revenue is a sign of the economy’s low productivity.

Drawing comparisons between Kenya’s debt level with those of advanced economies misses the mark. More developed economies are highly productive and repay their debts at lower interest rates unlike Kenya.

As a matter of fact, comparing the debt situation with say USA (105% of GDP) or Japan (253%) or any other advanced economy is a statement of convenience. Folks fond of propagating this argument would never want to mention some of the African countries whose economic fortunes faltered with relatively high debt levels.

Ghana, for instance, experienced financial problems when its debt to GDP ratio hit above 65%. Mozambique’s ratio was 115% as at 2017 with the country’s economy grinding to a halt forcing government officials to endlessly knock the doors of the International Monetary Fund (IMF). Zambia’s debt to GDP ratio in 2017 was 62% yet the country is experiencing economic difficulties due to debt distress. These are examples of what the supporters of the regime failed/fail to mention.

Reality of the austerity measures has suddenly enraged the administration’s supporters to regret their voting decision. This is pretence. Jubilee has messed up the economy from 2013 and it has nothing new to offer Kenyans except presiding over more economic misery.

Uhuru Kenyatta definitely lied about short-term pain and long-term gain. Kenyans should instead prepare for long-term pain with the gain not in any way in sight.

Rotich bears the tag of Kenya’s most incompetent Treasury chief since 1963. Additional taxes cannot grow the economy, instead they are bound to increase inequality and make the society worse off.

But even as Kenyans complain loudly about Jubilee’s incompetence it should serve as a reminder on why elections are moments to evaluate those in power and vote them out for their failures. Let the administration increase taxes the way it wants after all it is the government of the so-called majority that voted without serious thinking.

Sometimes enduring moments of pain does not necessarily lead to making a gain, and that is the case when administering shock therapy (austerity policy prescriptions) to a mismanaged economy.

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On IMF’s Visible Hand: A Look into the Outcry on the Fuel Prices, Policy Missteps & the Dishonesty about It.

By Sitati Wasilwa

It’s a herculean task to be a Kenyan, a situation exacerbated by the policy missteps and misgovernance of the Jubilee administration.

From the plundering of trillions of money, the implementation of cost-ineffective projects, the dominance of two ethnic communities in government, a dejected and highly unemployed youth, hoarding of maize, consumption of poisonous food products, wanton increase in taxes and many others, it requires the common Kenyan some world-class grit to go through all these necessary evils.

But considering the concerns raised by the Kenyan public in regards to the aforementioned issues, one should not forget the dishonesty that is conveniently sidestepped while debating on these policy matters.

A good example is the debate on the recent increase in prices of petroleum products which has to be revisited while drawing out the facts and fallacies, the faults and dishonesty about it.

General Understanding

A general understanding of the visible hand of the International Monetary Fund (IMF) in view of Kenya’s situation is elemental bearing in mind that this debate is full of misinformation.

To begin with, it would be important to look at the primary role (s) of the IMF for the benefit of the general public and the pseudo-economists.

IMF has three main functions: monitoring of economic and financial developments and offering policy advice to prevent economic/financial crises; offering loans to countries facing balance of payments difficulties; and provision of technical assistance and training in line with its scope of work.

As matter-of-factly, the institution’s Stand-By Arrangement (SBA) and Standby Credit Facility (SCF) are primarily lending frameworks that are intended to help countries facing the balance of payments difficulties.

Essentially, the balance of payments difficulties refer to a situation whereby a country is importing more goods, services and capital than what it is exporting. Thus, the SBA is a lending framework that allows the IMF to provide financial assistance mostly to the middle-income and advanced economies in the event of a financial crisis. On the other hand, the SCF is a framework that allows the IMF to provide financial assistance to low-income countries with the goal of correcting the short-term balance of payments problems.

Kenya’s agreement with IMF comprises of an SBA of $989.9 million and SCF of approximately $494.9 million.

Fundamentally, access to the SBA and SCF is based on the criteria determined by the IMF and at its minimum, the consenting countries are expected to implement conditionalities fronted by the Fund and pursue policies aimed at correcting the balance of payment problems.

Genesis of the Current Situation

In 2013, the Executive through The National Treasury and the Central Bank outlined a raft of policy measures meant to improve revenue collection and general economic performance of the country.

On 28th of March 2013, through a letter signed by the Treasury Cabinet Secretary Henry Rotich and then Central Bank Governor Njuguna Ndung’u, the Executive was committed to full implementation of the proposed changes to value-added tax (VAT).

Among the proposed changes to the country’s VAT structure was to do away with VAT exemption on petroleum. Parliament’s intervention saved face as the VAT proposals were put on hold for three years till 2016.

Amendments to the Finance Act 2016 on August 31st 2016 extended the exemption of the VAT on petroleum products for two years with the exemption coming to an end on September 1st 2018.

Subsequent extensions by Parliament to postpone the implementation of VAT on petroleum products among others can only be termed as symptomatic responses to the hazy economic policies pursued by the Jubilee administration.

Ascending to power following the highly divisive 2013 general elections, the Jubilee administration was out of favour with half of the Kenyan citizenry and the West. Therefore, it was out to mend fences by embarking on ambitious infrastructural projects which would ordinarily require to be highly financed either through borrowing or revenue collected.

Institutionalization of various infrastructural projects was intended to improve the administration’s political fortunes. With the desire to increase the collected revenue, the Executive engineered the move to restructure the VAT system.

Being in good books with the IMF would aid the Jubilee administration just in case Kenya’s economy was to be hit by a crisis. We should not forget that IMF and extensively the West have proved to be the chief lenders of last resort when economies of poor countries experience economic crises.

In any case, if the Kenyan economy was to be hit by an economic crisis under a Jubilee administration not in good terms with IMF, then regime change – a common foreign policy tool fashioned by the West – would possibly be sanctioned.

With the country’s public debt level running into headwinds, Kenyans are left with no choice but to pay high taxes to finance the costly mega-projects which make little economic sense, though politically sensible to the current administration.

Rationale of VAT on Petroleum Products

No rocket science is required to know whether the government is broke or not. Levying VAT on petroleum products is meant to raise more revenue for a Republic whose Executive and Legislature have failed in view of essentials of public finance.

Details captured in an IMF Country Report dated March 2018 indicate the commitment of the Kenyan government in implementing a number of policies.

Key among these policies include cutting expenditure, increasing revenue and the removal or significant modification of the interest rate caps. In regards to cutting expenditure, lower-priority capital projects are not to be financed.

Few weeks ago, Uhuru Kenyatta apparently issued an order stopping any new projects from being sanctioned with majority of Kenyans thinking it is a move meant to curb corruption. Essentially, the order is rooted in the administration’s commitment with the agreement reached by IMF.

Levying of the VAT on petroleum products is expected to generate Kshs.71 billion in revenue. Considering, however, the amount of finances lost through corruption, tax evasion and unnecessary tax holidays, then Treasury is clearly missing the boat.

Treasury expects that the revenue to be collected this financial year would amount to Kshs.1.92 trillion. At the beginning of the last financial year (2017/2018), Treasury targeted to collect Kshs.1.7 trillion in revenue before revising the estimates to Kshs.1.4 trillion. For the last five financial years, Kenya Revenue Authority (KRA) has never been able to achieve its targets in regards to revenue and the current financial year won’t be an exception.

Rotich’s bravado not to concede to the public’s outcry on the increase in prices of petroleum products is an indication of how Treasury is desperate to raise funds bearing in mind that grave concerns have been raised on the administration’s zeal for borrowing.

Dishonesty

Inherently, the current uproar on the fuel prices and the administration’s hell-bent nature to effect the VAT on petroleum products is a game of absolute dishonesty.

Firstly, the Executive is dishonest on this policy issue. Was it not aware about this policy that would occasion a rise in the cost of living? This is incompetency at its best.

Secondly, the Treasury chiefs are a bunch of dishonest bureaucrats. For the last five years, the country’s budgets have been characterized with massive deficits. Though revenue collected has significantly increased, it is the nature of KRA to continually miss targets, and this has raised concerns on Treasury’s fiscal approach and KRA’s inefficiency.

A 2015 joint report by the African Union and the Economic Commission for Africa pointed out that Kenya loses over Kshs.600 billion as a result of tax evasion. In six months leading to August 2018 tax evasion at the port of Mombasa, as reported, amounted to Kshs.100 billion. In a report published by Oxfam in January 2017, it is estimated that Kenya loses over Kshs.100 billion annually due to tax exemptions given to global corporations.

One should also consider that a third of the national budget is never accounted for then think about the billions of shillings lost. So, who is fooling who? The government should be busy sealing all these loopholes that lead to trillions of money being lost instead of pursuing policies that will ultimately generate unintended consequences. Treasury’s ineptness certainly means that looking at the bigger picture is a mirage.

Parliament as usual is full of dishonest individuals who are starkly corrupt and lack any intellectual capacity to prioritize weighty policy issues. Did Parliamentarians not foresee the impending rise in prices of petroleum products? Some have come out making claims on how the Treasury duped them to passing the VAT Act 2013 on the account that the country was expected to produce oil which would stabilize domestic petroleum prices.

Lack of Parliament’s independence is a factor that has incapacitated the institution from representing citizens in a dignified manner. Parliament operates under the wings of the Executive particularly for the ruling party, the Jubilee Party. Rigorous debates cannot take place under such conditions.

Voters are also to be blamed in regards to this game of dishonesty. It was pretty clear that the economic policies of the Jubilee administration were deeply flawed but this hardly convinced a significant number of voters to vote otherwise.

Elections need to be a matter of assessing policies aimed at improving the lives of the citizens. In the event that policies pursued by the ruling political formation lead to more misery than prosperity, then morally such an entity does not deserve to be voted in.

The IMF is dishonest about the austerity policies that it recommends for countries. Historically, IMF has fashioned this policy misstep which ignores the fortunes of residents of countries that they push to adopt policies that cut spending and raise taxes.

Spending may be reduced especially for the case of Kenya where public funds are largely wasted. Increasing taxes raises the cost of living but the IMF seems to be hell-bent in fronting this policy recommendation.

Implications & the Future

An increase in the prices of petroleum products is bound to trigger ripple effects across other sectors of the economy and social structure. Prices of other products will definitely go up as a result of the increase in the transportation costs. With the income earned by Kenya’s residents expected to be fairly stagnant then inflation will certainly occasion a rise in the cost of living, a diabolical economic and social outcome.

Furtherly, postponement of levying VAT on petroleum products would definitely lead to a catch-22 situation. In the event that Uhuru Kenyatta assents to the Finance Bill 2018, it would just be two years before we voice out our disappointment at the economically imprudent Jubilee administration.

Failure to implement the VAT on petroleum products, in CS Rotich’s words, will occasion difficulties in financing the country’s budget thus necessitating more borrowing or increasing the VAT rate on other products from 16% to 18%.

Either way, my hunch is that VAT will soon be levied on other non-VATable products as the Treasury desperately seeks to raise finances through taxation with the room for further borrowing fast contracting.

Politically, there will be no consequences going by the nature of majority of Kenyans who forget rather quickly. If a significant majority of the Republic’s voters would be voting on the basis of policy proposals and performance of the incumbents, perhaps the noises being made would only be grave wishes.

Voting is not enough. Constitutionally, citizens are empowered to air their concerns on issues affecting them. I long for the day when Kenyans will march on the streets en masse to demonstrate against nefarious policies pursued by government institutions.

On how not to manage the economy, CS Rotich and the Presidency offer crucial lessons for historical purposes. Running an economy depends on getting the fundamentals right. Trading-off an economy’s cost of living with poor, inefficient and punctured policies is a validation of getting it wrong on the fundamentals. The goose is cooked!

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On Kenya’s Oligarchy, Twisted Democracy & Dashed Hopes of the Third Liberation

By Sitati Wasilwa

A year after Kenyans took to the polls, a number of political events have occurred, and have shaped the country’s political landscape in some respects.

From nullification of the outcome of the presidential election, the repeat presidential election boycotted by Raila Odinga, the historical swearing-in of Odinga as the people’s president, the muzzling of dissenting voices by the administration of the day to the unexpected handshake, it’s been a political melodrama of sorts.

Reflecting on the pre-election and post-election happenings, Kenya comes out as a flourishing oligarchy and a failing democracy, a twisted one for that matter.

Fundamentally, a democracy is a political system characterized by a free, fair and credible electoral process. On the other hand, the electoral process in an oligarchy comes out as fraudulent, fake and crooked.

Basing on the credibility of the electoral process in the lead up to the 2018 general elections, it is correct to assert that Kenya’s trajectory towards a vibrant democracy is twisted.

Historically, Kenya’s political system, and extensively the economic system, only benefit few individuals who control the means of production and the balance of power. This is an explicit manifestation of an oligarchy.

Kenya’s pre-supposed democratic tendencies, to say the least, are far-fetched and illusionary. Politically and economically, the majority, whom democracy accords the right to call the shots, have never had their way in the country with the exception of the formation of the NARC administration and the institutionalization of the current constitutional dispensation.

An honest rumination in view of Kenya’s political and electoral malfeasance wouldn’t take place without weighty consideration of the compromised Independent Electoral and Boundaries Commission (IEBC), the role and influence of the Western states – the so-called masters and defenders of democratic ideals, the excessively irrational average voter, the highly deceptive public relations (PR) and political consultancy firms, and the Third Liberation whose conceptualization is fast waning.

Basically, an institution is as good or bad as the people charged with the mandate to steer it. From the family – the basic unit of social organization, a school, an organization, a football team and a government, competence is a tenet necessary for the success or failure of an entity.

In the run up to the 2018 general elections IEBC’s senior officers proved to be partisan and compromised thus jeopardizing the independence of the electoral body.

Independence of an electoral body is the foremost step in having a free, fair and credible electoral process. The independence of the IEBC is interfered with right from the appointments of the commissioners and other senior officers of the country’s electoral body.

The embattled chair of IEBC Wafula Chebukati has proven to be quite incompetent but this is not a surprise anyway given his subpar performance while being vetted by Parliament for the hot seat. He was not the best out of the other candidates and being appointed to chair the IEBC fixed him in a corner.

Other commissioners were clearly partisan and their political intentions well known. We can’t have a clean electoral process with such poisoned minds running an exercise that determines the fate of Kenyans economically, socially and politically.

Western states – the masters of impunity and double-standards – supported a corrupt regime out of geo-political and geo-economic interests. Led by the American government, they pronounced the legitimacy of an administration which they were not in favour of in 2013.

Who offers support and confers legitimacy to a regime whose rogue police officers killed and injured innocent Kenyans including harmless children?

Setting the record straight, political correctness is the language preferred by the governments of the Western states. Kenya’s case and other immoral governments across Africa being cheered on by the West is largely informed by their (Western states) intentions to counter China’s influence on the continent.

If the likes of the American, British, French and other Western governments are champions and crusaders of democracy, then it would make sense if they were not funding undemocratic regimes and toppling legitimate governments around the world.

As matter-of-factly, Western governments have never condemned the rogue and undemocratic regime in Saudi Arabia. They wreaked havoc in Afghanistan, Libya, Yemen, Syria and other nations but only as a divide and rule scheme driven by paranoia and economic interests.

Apart from the political relief offered by the West, the deception and destruction caused by the global political consultancy firms such as Cambridge Analytica should never be forgotten going forward.

The political consultancy firms are in pursuit of profits, economic capital and economic power as the political parties and formations are hell-bent in pursuit of political capital and political power. But to what extent is the price to be paid for the trade-off between business profits and political power?

Apparently, the price is costly and takes the form of a disintegrated country. These firms pursue their profits by optimizing on the structural weaknesses of a country.

For instance, in Kenya, Cambridge Analytica which was responsible for running the Jubilee Party’s political campaign ostensibly capitalized on the ethnic fault lines that are highly visible in the Kenyan society.

So far no serious step has been made in banning such firms from operating in Kenya especially in running political campaigns. This country is a joke. Pressure from various entities eventually forced Cambridge Analytica to shut down its operations.

In South Africa, PR firm Bell Pottinger, known to work for despots, was chased from the country after running racially charged campaigns especially on economic reform and the prevalent socio-economic inequalities in the country.

But unlike in Kenya where the public never protested about Cambridge Analytica’s divisive campaign, the publics in Britain and South Africa were vocal on the firms’ PR gimmicks.

Involvement of these firms in Kenya’s political space with the intention of driving narratives that are misleading and dangerous casts the country as a twisted democracy.

Embers of the Third Liberation that flamed up following the flawed electoral process flickered out as soon as the ‘handshake’ between Raila Odinga and Uhuru Kenyatta came to the fore.

Doubts have been cast on the supposed Building Bridges Initiative and yours truly is among the doubters. Judging from Kenya’s political history the ‘handshake’ is as good as any other political deal and its abandonment would not be a surprise.

Political (electoral) justice and economic justice should be the key drivers of the Third Liberation. But with political interests taking centre stage the hopes for a new Kenya are dashed.

Failure to address injustices committed in recent times and long before that will not actualize building bridges on the social, political and economic issues that divide Kenyans. Ignoring the implementation of the recommendations put forth by the Truth Justice and Reconciliation Commission (TJRC) only sets the country on a path for intensified calls for secession, massive socioeconomic inequality and electoral skullduggery in the near future.

In view of the aforementioned weighty issues, where does the Kenyan public stand? There is no hope for a better Kenya considering the dubious electoral and political decisions made by majority of members of the public.

Can the Kenyan public dislodge the oligarchs that have patronized the country’s politics and economy since the dawn of independence? This is a question of fundamental importance. But with a significant number of Kenyans voting in an unintelligent fashion and being unapologetic about their ethnic political ideologies there is no hope of Kenya transitioning to a nation.

Kenya has never been a nation. All the episodic moments of nationhood – independence, the Second Liberation, dethronement of the rogue and despotic KANU regime and promulgation of the current Constitution – involved elements of disenchantment with individuals at the centre of the government preferring to subscribe to the ideals of an oligarchy.

Let’s not pretend to pursue national unity in the spirit of the ‘handshake’ and the doctrine of accepting and moving on while escaping from addressing the country’s problems. That is not how a nation is built.

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For the many? A look into the 2018/2019 Budget Policy Statement

By Sitati Wasilwa

The 2018/2019 Budget Policy Statement (BPS) that was recently presented in the National Assembly seeks to promote prosperity among Kenyans of all walks of life. The would-be large-scale prosperity is aptly captured by the budget’s theme: “Creating Jobs, Transforming Lives and Sharing Prosperity.”

There is no doubt that socio-economic inclusion is a fundamental tenet that promotes robust economic growth in the long-run, and consequently, structural transformation. Hence, the need for the Executive, through The National Treasury, to align its policy agenda with development blueprints such as the national Vision 2030, East Africa’s Vision 2050, Africa’s Agenda 2063 and the global 2030 Agenda for Sustainable Development.

In pursuit of shared prosperity among the many – the country’s hoi polloi – Cabinet Secretary (CS) Henry Rotich presented a Kshs.3.07 trillion budget to the National Assembly. However, there is discrepancy between the actual amount of the budget and the amount that Mr. Rotich read out in the National Assembly.

Why the Discrepancy?

Playing “safe politics” is the root cause of Mr. Rotich’s lie that the national budget amounts to Kshs.2.556 trillion. The actual amount of the budget is Kshs.3.07 trillion and this implies that there is a difference of about Kshs.514 billion that the CS didn’t offer an explicit explanation about it.

It should be noted that the difference is what constitutes the principal debt amortization and rollovers which in essence refer to the repayment of both the domestic debt and the external debt.

Primary Concerns

With the 2018/2019 Budget Policy Statement being the largest ever in the country’s history, concerns have been raised in regards to raising finances to fund the expenditure, and the chain effect triggered by the financing plans outlined by CS Rotich.

For instance, with a deficit of Kshs.558.9 billion, it is certain that the government will borrow to plug the deficit. It is expected that the government will borrow Kshs.287 billion from external sources and Kshs.271.9 from domestic entities.

Borrowing will automatically impact on the national debt which, according to the debt statistics by the Central Bank of Kenya, stands at Kshs.4.88 trillion. With basic reasoning, it is therefore true to assert that the public debt will be over Kshs.5 trillion in the 2018/2019 financial year.

Treasury has resigned itself to defensive play in view of the rising public debt which it considers to be safe. The regime’s sympathizers have also joined the bandwagon of defending the excessive borrowing and branding the critics of the sky-rocketing debt as “unnecessary alarmists, cynics and irritants.”

One particular line of defence put up by the Treasury and the Executive is that even developed countries have extremely high debts to GDP ratio some to the tune of over 150% and 200% compared to Kenya’s currently at 60%. This is misleading.

A major way of analyzing economic policy is sizing up economic issues and dissecting them as per the given context. Developed countries are able to easily sustain their debt levels because of high economic productivity and the low interest rate repayments pegged on the borrowed finances.

Considering the African context, Ghana courted a debt crisis in 2016 as a result of irresponsible borrowing. Recently in the month of March, Mozambique defaulted on its debt with the public debt to GDP ratio at 128%. This month, the Zambian government has adopted austerity measures in light of the country’s worsening debt crisis.

A stale argument advanced by the Treasury is that in the medium-term and eventually in the long-term, Kenya’s public debt will significantly decrease. But if previous public finance data are to be scrutinized, it seems as if the medium-term and the long-term periods will never materialize as the debt keeps on accumulating and this is the genesis of a debt trap and crisis.

Financing the so-called and much-touted ‘Big Four Agenda’ was a major highlight of the BPS. It is expected that this policy agenda will be financed to a tune of Kshs.460 billion, but a closer look at the budget reveals otherwise; only Kshs.73.75 billion has been allocated to the ‘Big Four’ while the rest is to be expended on the enablers of the ‘Big Four’.

Contents of the Big Four – a vibrant manufacturing sector, food security, universal health coverage, and affordable and descent housing – are not new policy propositions in the country. By the way, these items featured on the policy agenda of the Jubilee administration between 2013 and 2018 that was tainted by plundering.

Expenditure for food security is ridiculous considering the propositions of key benchmarks such as the Malabo Declaration which requires that African governments allocate at least 10% of the public expenditure towards financing the agricultural sector. The Jubilee administration, for the sixth year running, has consistently allocated not more than 5% of the budget for financing agricultural activities.

What is Kenya planning to export and how will it establish a vibrant manufacturing sector if the budgetary allocations for the agricultural sector are lower? Kenya has the capacity and advantage of producing huge amounts of agricultural products and facilitating value addition on them and this can act as a basis for establishing a strong manufacturing sector.

Taxation measures proposed by the Treasury are majorly intended to raise revenue critical in financing the budget. Of great concern, however, is whether the Kenya Revenue Authority will be able to meet the targeted revenue of Kshs.1.74 trillion.

To hit the targeted revenue, Treasury has proposed a series of changes in relation to the country’s tax structure which are highlighted in the Finance Bill set to be presented in Parliament for approval.

In as much as these changes are intended to redistribute income, prevent environmental degradation, protect local industries among other goals, the overarching objective is financing the administration’s over-ambitious budget and servicing the ballooning public debt. This in fact informs the need to expand the tax bracket with the informal sector, betting and gambling activities as well as mobile money transactions being targeted.

Repealing the Banking Amendment Act (2016) that introduced interest rate caps is welcome. The cap on the interest rates is an economic policy that has failed to achieve its intended objective; increasing access to credit through lower interest rates.

However, the proposed measures to protect consumers from predatory and reckless lending by the credit providers as contained in the Financial Markets Conduct Bill, emasculates to some extent the mandate of the Central Bank of Kenya.

The Bill seeks to establish the Financial Markets Conduct Authority (FMCA) which CS Rotich claims that “it will only be limited to protecting consumers in the areas that have not been covered by existing regulators including the Central Bank.” Why not strengthen the existing regulators? Why would public funds and other resources be wasted in setting up the FMCA? FMCA is unnecessary.

Having the budget is one thing while seamless implementation of it is a different issue. Challenges such as corruption and failure to collect the targeted revenue are pitfalls that will deny the many average Kenyans the benefits envisaged in the 2018/2019 BPS; shared prosperity, employment opportunities to be created and transformed lives.

Public Finance History

Three fundamental issues characterize Kenya’s public finance history and trajectory; corruption, low absorption rate of development expenditure, and the failure by Kenya Revenue Authority (KRA) to meet the targeted revenue.

Kenya loses one-third of its budget every year due to corruption. If this is the case, then about Kshs.1 trillion of the 2018/2019 budget will be directed from the public purse to private pockets. Accountability of the spending is a big challenge considering that Parliament itself goes to bed with the Executive thus jeopardizing the independence of the former.

Unimportant allocations and expenditures are pursued with the aim of wealth accumulation at the expense of initiating development projects. What worsens the situation is the looting that takes place in various government agencies and institutions. The Office of the Auditor General attempts to raise queries on the unaccounted for spending but Parliament and the Executive have failed spectacularly in providing the necessary political will.

Revenue collection is characterized by unrealistic targets that KRA is expected to attain. This stems from the massive deficits that Treasury has presided for the last five financial years. For instance, in the 2016/2017 financial year, the shortfall in revenue amounted to Kshs.66.64 billion.

For the current fiscal year 2017/2018, the situation will be similar bearing in mind that as by December 2017, as documented in the Post-Election Economic and Fiscal Report, there was a shortfall in the total cumulative revenue by Kshs.68.3 billion. The 2018/2019 financial year will not be different in any way.

Absorption rate of the development expenditure is poor with finances allocated for various development projects embezzled. Stalled infrastructural projects are an indication of the poor absorption rate of the finances set aside for development. With Kshs.671.6 billion allocated for development expenditure, perhaps only 50% of it will be utilized.

Regular and annual commentaries on the Budget Policy Statements should take into consideration the hits and misses of the spending of previous financial years.

The recently read budget will not be effective; the public debt is set to increase, various taxes are set to go up and of course shortfalls in revenue are expected. This is not a budget for the many considering the high and exaggerated expenditure. And since a huge chunk of it will be looted, then there is nothing to smile about.

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The Political Economy of the South Sudan Conflict

By Sitati Wasilwa

It is close to five years since civil war broke out in South Sudan with negotiations failing to seal a peace deal between the warring groups. The unending conflict that started in December 2013 has resulted in destitution with thousands murdered and millions displaced.

The Council on Foreign Relations estimates that 50,000 South Sudanese have died since December 2013 when the war began. The Human Rights Watch approximates that 2 million South Sudanese have been internally displaced due to the conflict, while a further 2 million have sought refuge in the neighboring countries.

Of the 2 million refugees beyond the borders of South Sudan, 1 million are in Uganda. Of the 2 million people that are internally displaced, 230,000 are camping at various United Nations’ bases across the country.

As war ravages Africa’s youngest state, the country’s economy has collapsed. As highlighted by the African Development Bank, the economic growth of the South Sudanese economy is on a freefall with the country’s real Gross Domestic Product (GDP) contracting. For instance, the country’s GDP shrank by 5.3% in 2015, contracted by 13.1% in 2016 and it is estimated to have declined by 6.1% in 2017.

Additionally, the country’s inflation rate reveals the ebbing of the economy’s fortunes with the latest figures indicating that the rate of inflation is 161%.

Following the economic hardship experienced in South Sudan, President Salva Kiir recently fired the Governor of the Central Bank and his deputy over the failure to deal with inflation. This was a symptomatic gesture bearing in mind that the country’s sinking economy is only reacting to the volatile political situation, and the sacking of the two officials is a scapegoat of the structural challenges that bedevil South Sudan.

Structurally, the primary reason why the conflict in South Sudan will not be ending anytime soon regards the distribution of wealth and the proceeds generated from the wealth. Internally and externally, conflicting interests among various groups have stalled the peace process and in any case, these groups continue to fuel the civil strife.

Internally, the desire to amass wealth is driving more entities into the war. Recently, Paul Malong, a former chief of staff of the army formed a rebel movement with the intention of fighting against the current administration which he considers to have failed in regards to restoring peace in the country.

Each of the existing militia groups seeks to impose some form of territorial control over the regions which are considered to be highly endowed with natural resources. The corrupt nature of the Salva Kiir led administration prompted the onset of the crisis with his family members and cronies looting the country’s national wealth at the expense of the ordinary South Sudanese citizens.

Transparency International ranks South Sudan at position 179 out of 180 countries as per the 2017 Corruption Perception Index report. This implies that South Sudan is an excessively corrupt state.

The question of who controls what in view of the natural resources is fundamental in understanding the genesis and nature of the conflict. From the exploration of oil, to gold mining activities as well as poaching and trafficking of wildlife, few individuals have strategically positioned themselves to benefit from the country’s natural resources.

With the economy grounded, oil exploration activities seem to be on a lull. But illicit trading of fuel is vibrant in the country an act that occasioned President Salva Kiir to issue a stern warning to the illegal fuel traders in July 2017.

However, the warning by the incompetent president can be regarded as a sideshow if the information documented in the Sentry Report is factual. The Sentry Report, titled “Fueling Atrocities: Oil and War in South Sudan”, outlines how funds from the oil exploration activities are used to fund militia groups and in due course aggravate the conflict.

According to the report, several militia groups exist among the Dinka community (Salva Kiir’s ethnic group) and they are tasked with protecting the oil reserves, an act that has led them to be widely known as the “Oil Protection Force.” The report further highlights on how the government finances the activities of the militia groups allied to the government.

Externally, geopolitical and geoeconomic factors continue to exacerbate the conflict in South Sudan. Both regional and foreign states have a hand in the unending crisis. The scramble for the natural resources in South Sudan and the benefits derived from the war occasion a number of states to hatch strategies intended to prolong the war.

In as much as the USA is vocal in pushing for the South Sudanese president to restore peace mainly through the use of sanctions and other threats, it cannot be denied that the American government is also responsible for the chaos.

With hindsight, the USA government played a primary role in the creation of the South Sudanese state. In fact, as highlighted by the Foreign Policy magazine, George W. Bush prioritized the creation of South Sudan in his foreign policy agenda.

Historically, the USA has greatly been involved in countries that are rich in oil and South Sudan is not an exception. The USA has a penchant of creating chaos and instability in order to profit economically from natural resources in states perceived as fragile. With Chinese presence in South Sudan being visible, USA may be using the chaos as a counter-strategy of China’s commercial interests in the country.

It is on record that the USA government declared President Salva Kiir as “an unfit partner.” Later on speaking before the United Nations Security Council, US Ambassador to the UN Nikki Haley warned that “words are no longer sufficient” in regards to the ongoing civil war. Such sentiments are an indication of a gloomy situation perhaps involving the violent removal of Salva Kiir from power.

But the forceful removal of Salva Kiir as president will be recipe for more chaos and the state building process will be even harder than it is at the moment. History shows that USA’s violent interventions result in the formation of puppet governments working for the interest of USA rather than for the collective interest of the citizens.

Though China has actively intervened in the conflict contrary to the fundamental ideals of its hands-off foreign policy, it cannot be ruled out that Beijing supports the Kiir administration with weapons to fight the various rebel groups.

Furthermore, Ukraine was accused in May last year for supplying arms to the South Sudanese government. It cannot be ruled out at the moment that such a similar activity is going on.

Regionally, various states are responsible for the civil strife in South Sudan. For instance, Sudan has a hand in the chaos rocking the world’s youngest state. Before gaining independence, the south battled with the north for a record 22 years between 1983 and 2005 in what has come to be referred to as the Second Sudan Civil War.

Origin of the Second Sudan Civil War can be traced to the attempt by former Sudanese president, Gaafar Mohamed el-Nimeiri to create an Islamic state, a move which forced the southerners under the leadership of John Garang de Mabior to put up an armed struggle.

With the independence of the southerners, however, Khartoum’s nosiness in the affairs of Juba is a fundamental factor that has prolonged the conflict. This follows the disagreement between the north and the south over the oil-rich region of Abyei.

Abyei belongs to South Sudan but since it is endowed with a lot of oil, the north keeps preying on the oil with total disregard of the Abyei Protocol which required that the region holds a referendum to decide whether it belongs to the south or the north.

Currently, Khartoum continues to run the affairs of Abyei with President Omar al-Bashir declaring in February last year that the region was part of the north and ordered the residents to apply for identification documents as per the laws of Sudan.

Khartoum offers support, financially and militarily, to some of the rebel groups in South Sudan in order to prolong the conflict and in due course profit from the oil in Abyei.

Uganda’s interests in South Sudan play a major role in the conflict. Uganda is South Sudan’s largest trading partner with various Ugandan entities engaged in the trading of oil, agricultural produce like maize among other commodities. As reported in February last year, Uganda was set to import gold from South Sudan.

Military interventions of the Ugandan army serve to protect the interests of Kampala in South Sudan. Additionally, driven by the paranoia of the Lord’s Resistance Army (LRA), President Yoweri Museveni finds a justification to stir the waters in South Sudan. The Ugandan government collectively supports the South Sudanese government and various militias so that Uganda can continue profiteering from the civil strife. Uganda is home to 1 million South Sudanese refugees and this means money from the West to the government and its cronies.

In January 2018, Adama Dieng, the U. N secretary general’s special adviser for the prevention of genocide, accused Kenya and Uganda of fueling the conflict by allowing weapons and ammunitions destined for South Sudan to pass through their territories.

The corrupt nature of the Kenyan and Ugandan governments is a precipitating factor for the shipment and transportation of large quantities of weapons and ammunitions to South Sudan.

Kenya and Uganda host a large number of South Sudanese nationals. Majority of the South Sudanese government officials and their families lead opulent lifestyles in Nairobi and Kampala. The rich government officials and their cronies as well as the wealthy individuals financing the militias profit from the civil war as the average and poor South Sudanese languish in destitution.

Resolving the conflict calls for setting up mechanisms to look into the distribution of the natural resources and/or wealth in the country. Until the question of “who profits from the natural resources” is effectively answered, chaos will continue rocking South Sudan.

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On Africa’s Free Trade Initiative: Grand Illusion or Breakthrough?

By Sitati Wasilwa

On 21st of March 2018 in the city of Kigali, 44 member states of the African Union (AU) ratified the establishment of the Continental Free Trade Area (CFTA). Ratification of the CFTA was the main agenda during the Extraordinary Summit on the African Continental Free Trade Area.

The Extraordinary Summit was a culmination of a series of meetings seeking to boost the intra-African trade which, according to the 2017 African Economic Outlook report, is estimated to be at 15% of Africa’s total trade. Comparatively, Africa’s trade with China and the European Union is at 15% and 30% respectively of the continent’s total trade.

Countless efforts have been made in the past to boost the intra-African trade, but it was during the 18th Ordinary Session of the Assembly of Heads of State and Government of the AU held in Addis Ababa in January 2012, that a definite plan was formulated to increase trade among African countries.

For instance, the Action Plan on Boosting Intra-Africa Trade (BIAT) was launched during the 18th Ordinary Session, and it highlights seven key clusters to promote trade among African countries. The pillars include trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information and factor market integration.

Basis of CFTA Establishment

The overarching objective of the CFTA is the creation of a single continental market for commodities through the free movement of people and investments across Africa. CFTA is deemed as the precursor of the yet to be established Continental Customs Union and the African Customs Union.

With hindsight, approval of the Lagos Plan of Action in 1980 signaled the intention of African countries to promote economic development with the major highlight of the blueprint being the proposal to establish the African Common Market by the year 2000.

Furthermore, the foundation of the CFTA can also be traced to the Abuja Treaty of 1991 on establishing the African Economic Community (AEC), ratified by 51 heads of governments and states under the auspices of the then Organization of African Unity (OAU).

The Abuja Treaty envisages the establishment of the AEC by strengthening the regional economic blocs in the continent. As such, the Treaty outlines the establishment of the AEC within a period not exceeding 34 years from 1991, through a series of six stages.

Thus, as per this policy document, the AEC should be fully established by 2025 which is impossible bearing in mind the current realities.

More categorically, the sixth stage of the Abuja Treaty outlines that the establishment of the AEC will involve setting up of: the African Common Market, the African Monetary Union, the African Central Bank, and a single African currency among other integration activities.

Additionally, CFTA also has its foundations in the Tripartite Free Trade Area Agreement (TFTA) consented to on 10th June 2015 by 26 member states of the Common Market for Eastern & Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC).

TFTA is expected to hasten trade activities between the ratifying states through elimination and harmonization of tariffs and non-tariff barriers.

African countries hope to achieve socio-economic development through cross-border trade enhanced by the CFTA framework.

Possible Opportunities?

For decades, Africa has been referred to as the continent with a very high potential in regards to socio-economic prosperity. Afro-optimists have even taken the game of potentiality to another level, a higher one of course, by coining the term ‘Africa Rising.’

A disturbing fact is that Africa has only lived to be defined on the basis of the aforementioned description. It is a subtle affirmation of why the ‘Africa Rising’ narrative is an amorphous view of the purported progress that Africa is making.

I do not endorse the general perception that Africa is rising. Africa cannot be rising as a whole when civil strife is the order of the day in a number of African states. Africa cannot be rising when poverty levels are on the increase. Africa cannot be rising when neo-colonialism is on an upward trajectory. It is that simple.

Far from that, African countries are set to unlock their high economic potential through the CFTA. With a population of 1.2 billion people it is expected that such a population will be a catalyst for the continent’s structural transformation – at this juncture it sounds as if the CFTA is the continent’s magic moment for socio-economic prosperity.

A high population can be advantageous as well as disadvantageous. It is advantageous in the sense that it offers a ready market for commodities and the European Union (EU), China and lately India have shown us that. However, this has to be reinforced with other factors critical in promoting economic growth and development such as innovation among others.

A high population is only disadvantageous when rates of economic growth and development registered are poor. And this has been the challenge facing African countries for decades.

The United Nations Conference on Trade and Development (UNCTAD) estimates that operationalization of CFTA first by cutting the intra-African tariffs could generate $3.6 billion in welfare gains to Africa majorly through increased production and cheaper goods.

Africa’s economic potential will be unleashed by the CFTA primarily if free movement of people and commodities will take place. But during the launch of the CFTA in Kigali only 30 states signed the free movement protocol. This restricts the movement of people from one African country to another, with the mobility regarded as beneficial at least to some extent.

Challenges to CFTA

Establishment of the CFTA has been lauded as a crucial step towards the economic transformation of Africa, but there are challenges which threaten its take-off.

One of the challenges is neo-colonialism advanced by foreign powers. With China’s heightened global ambitions and take-over of Africa, in addition to the geo-political activities of nations such as USA and others, the expected rollout of the CFTA is set to falter.

An ambitious Africa is a threat to the global ambitions of the foreign states that control political and economic activities in the continent.

It will only take a few Forum on China-Africa Cooperation (FOCAC) conferences and the United States-Africa Leaders Summit meetings to change the CFTA equation, with Beijing and Washington organizing these conferences on the basis of “renewed interest in Africa” theme.

In addition, the flippant nature of majority of Africa’s political leaders is a challenge to the success of the CFTA. On several occasions, Africa leaders have gracefully appended their signatures to a number of declarations seeking to promote social, economic and political development of the continent.

But amid all the fanfare witnessed during such declarations, implementation of the approved policy proposals is done in an erratic manner and dubious fashion. Take the case of the Malabo Declaration and the Maputo Declaration meant to address Africa’s food insecurity and food production levels.

Political leaders in Africa have to endear themselves to the ideals of the CFTA and show unrivalled commitment. CFTA is bound to fail with subpar political goodwill.

The notion of open borders is not only a threat to the success of the CFTA but also to the unity of Africans. There are various research studies in support for open borders with one such study being a working paper by the National Bureau of Economic Research.  

A common argument for open borders is the increase in productivity for a country where immigrants settle with such people remitting a significant proportion of their earnings or transferring essential skills and technology to their mother countries.

However, various dynamics must be taken into consideration regarding the notion of open borders in view of free movement of people among African countries. African countries have higher rates of unemployment and this is dangerous with the idea of open borders.

Africa’s largest economies by GDP, the most advanced economies, and generally economically stable countries are naturally bound to attract immigrants. But such countries including Nigeria, South Africa, Botswana, Kenya and others have high rates of unemployment.

So, an influx of immigrants to such countries will create tensions with the citizens who will harbor perceptions of their jobs being taken away by non-citizens. The xenophobic attacks in South Africa over the years offer insight into this matter, and perhaps it informed the decision by the governments of South Africa, Nigeria and others not to sign the free movement protocol.

Nationalist sentiments centred on immigration spawned by open borders may occasion some of the African countries to withdraw from the CFTA arrangement or maybe the AEC in the event that the envisaged transition takes place. Brexit and USA’s imminent exit from NAFTA offer insightful lessons.

CFTA will create economic prosperity in Africa, but its success depends on institutional factors such as eradication of corruption, peace, economic and political rights, and generally, competent political leadership.

And depending on what happens next, CFTA can either be a grand illusion or a breakthrough for Africa’s economic prosperity.

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How Will Recent Political Events in China Affect Africa?

By Sitati Wasilwa

On Saturday March 17th 2018, China’s legislature – the National People’s Congress – approved the reappointment of Xi Jinping as the nation’s president with no term limits. This political event was a follow up to the 19th National Congress of the Communist Party of China  (CPC) held in October 2017 during which Xi was confirmed as the General Secretary of the CPC for a second five-year term.

Apart from Jinping’s confirmation as CPC’s General Secretary for another term, the 19th National Congress also immortalized the Chinese president by indoctrinating his ideologies – the Xi Jinping Thoughton Socialism with Chinese Characteristics for a New Era – into the party’s Constitution.

Lately, there are grand intentions to also incorporate the Xi Jinping Thought into the national Constitution of the People’s Republic of China.

Xi Jinping’s speech delivered to the 19th National Congress of the CPC highlighted key principles which his administration seeks to pursue and strengthen.

The immortalization of Xi Jinping’s ideologies, the Xi Jinping Thought, follows a precedence set by the CPC to indoctrinate the policy agenda of the party’s revered leaders as the ultimate guiding principles/ideologies of the ruling party.

Previously, the CPC adopted the Mao Ze Dong Thought as the guiding ideology in 1945 during the party’s 7th Congress though its ‘leftist mistakes’, as documented in the Educational Philosophy & Theory Journal, were corrected during the 12th Congress in 1982.

At the party’s 15th National Congress in 1997, the Deng Xiaoping Theory of Socialism with Chinese Characteristics was established as CPC’s guiding theory. This had been preceded by the indoctrination of the Deng Xiaoping Theory into the party’s constitution during the 14th Congress held in 1992.

Additionally, Jiang Zemin’s Theory of Three Represents was incorporated into CPC’s constitution in 2002, and Hu Jintao’s theory, the Scientific Outlook on Development was ratified into the party’s constitution in 2012.

It can be observed that Mao’s and Xi’s policy agenda are classified as “thoughts” while Jiang’s and Hu’s policy frameworks are described as “theories.” As noted by Zoe Jordan, a Thought, in view of CPC’s constitutional doctrine, “incorporates a body of related ideas into a shared worldview whereas a Theory reflects a mandate relevant to a specific era or relative state of thinking”.

Thence, it follows that Xi Jinping is considered the second most powerful leader of the People’s Republic of China after Mao Ze Dong.

Generally, Xi’s Socialism with Chinese Characteristics for a New Era endeavors to strengthen the Deng Xiaoping Theory that has guided China’s development, internally and externally, for close to four decades.

Externally, in terms of foreign policy and strategy, Deng’s ideology fronted a China that focuses on self-advancement without exhibiting aggressive tendencies to shape international affairs. As written by Son Daekwon, Deng Xiaoping stated that, “keep a low profile and bide your time”, and also remarked at one time that, “By no means should China take the lead.”

But with the New Era premised on the Xi Jinping Thought, China is poised to rejuvenate her ambitions as a global power and leader based on Xi’s speech at the 19th Congress as quoted by Daekwon; China will actively pursue a more nuanced global role as “constructor of global peace, a contributor to development of global governance, and a protector of international order.”

Therefore, what does this mean for Africa?

Africa in Context of China’s New Era Ambitions

For Africa, Xi’s intention of a globally powerful and rejuvenated China is not as threatening as it is to the West. The West for a long time discredited China’s model of economic development and political system but China has consistently proven that democracy and market fundamentalism, as known to the West, are not prerequisites for structural transformation and development.

However, as Daron Acemoglu and James Robinson argue out in the book “Why Nations Fail”, democracy is not a necessary condition for kick-starting the process of development, but it helps in sustaining the virtuous circle of economic prosperity for eternity.

With the inroads that China has made in Africa over the past decade having been based on “development” and “non-interference” with the political affairs of African states, that perhaps is bound to change with the re-invention of Xi Jinping’s global politico-economic ambitions.

China’s economic conquest of Africa outfoxed the foreign policy strategy that the West has pretended to champion for ages; promoting the establishment of democratic institutions. But one wonders why the West led by the nosy USA has had a penchant of supporting autocratic regimes in Africa.

That doesn’t mean that China’s foreign policy strategy is the most preferred, unless by majority of African leaders who exhibit autocratic tendencies. China is well known for not prioritizing the rights of individuals and her political history supports this statement.

Formalization of the Xi Jinping Thought and invention of Socialism with Chinese Characteristics for a New Era imply that Chinese engagement with African states may shift from one anchored on “development” and “political non-interference”, to a foreign policy strategy where the Chinese seek to alter the political architecture of African countries.

What escapes most people’s minds is that China cannot hotly pursue the world’s superpower status through economics alone. It has to tilt the global geo-political and geo-economic scales by influencing the political order of a significant number of countries in the world like what the Soviet Union did during the Cold War.

Africa is likely to witness a resurgent China that will be exporting her political ideologies to the continent. This doesn’t augur well for most Africans who have relentlessly pursued the ideals and values of democracy.

In regards to Africa’s political trajectory, majority of African countries will nonetheless embrace the Chinese political model and ideologies. As a matter of fact, Africa’s political space is marked by a low level of democratic capital and a high level of democratic deficit.

This creates a favourable political environment for the African states to retrogress from establishing democratic institutions, and to embark on building and strengthening a political trajectory that fashions autocratic institutions.

And with majority of African governments being tied to China’s development agenda through the so-called cheap Chinese government loans, the assured long association between Africa and Beijing will certainly create fodder for the latter to export her political ideologies to African states.

It won’t be a surprise that a few years from now majority of African states would have drifted away and departed from the idea of democracy while gladly and blindly embracing the notion of autocracy with the so-called benevolent dictators roaming wild in the continent.

The West Responds, Africa Suffers

Former colonial masters and thereafter passionate neo-colonialists, but nonetheless colonialists, the West continues to influence social, political and economic activities in Africa. Long before China officially bagged Africa as her overseas neo-colony, Western states largely controlled the affairs of African countries though they still do so at the moment.

From granting African states cosmetic independence to shuffling them like cards during the Cold War; to wrecking and crippling their economies through the nefarious and nebulous economic policies known as structural adjustment programmes (SAPs); to orchestrating coupe d’états, and advocating for democratic institutions while at the same time supporting dictators, Africa has seen enough of the West’s experiments.

With China’s emergence as Africa’s new neo-colonial master, the West changed tact in Africa as evidenced by the covers of The Economist magazine in a span of ten years; in 2000, it was “The hopeless continent”, and in 2011 it was “Africa rising.” Was Africa rising because of China?

The Economist’s cover title of “Africa rising” came two years after China surpassed the USA as Africa’s largest trading partner, and so the title was one way of informing the Western governments that they should be more aggressive in Africa as the Chinese had taken over. It wasn’t about Africa rising!

Daggers are drawn! With the invention of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the West is watching particularly the USA. USA and her allies will intensify their activities in Africa.

China’s entrance into the so-called New Era already began with Xi’s global ambitions; first, through his politico-lingual invention of the Chinese Dream, and secondly through the ambitious One Belt One Road Initiative (OBOR).

Response by USA plus her allies to China’s New Era ambitions may negatively affect majority of African states. USA and the Western league at large will use any means necessary to counter China’s move. They will increase their support for despotic and dictatorial regimes in Africa if need be as long as it proves to be an effective strategy in countering China.

Africa is set to witness an increase in the amount of aid from the West as a counter measure strategy to China’s New Era ambitions. As it has been the norm, whether the aid will be directed to address the fabricated goals or will be embezzled or even unaccounted for won’t bother the West as long as the geo-political objectives are achieved.

So, with China’s bold entrance into the New Era theatre and with USA’s much expected response, Africa will gain in terms of aid and infrastructural development but will also lose; drifting away from the idea of democracy, intensified economic dependence, loss of political independence, proxy wars and economic stagnation.

Will African states find their footing amid China’s renewal of her global ambitions?

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Lest we forget USA is also a “Sh*thole”

By Sitati Wasilwa

Spitting fire and fury over his dislike for Blacks and other non-White people, the unrestrained political mongrel in the name of Donald Trump bluffed that immigrants from ‘shithole’ countries in Africa including Haiti and El Salvador are not welcome in USA.

Nobody would have imagined that a president of the so called world’s superpower state would utter such racist and divisive sentiments. But then, it isn’t a surprise since the 45th occupant of the White House is a man terribly short of insight with a delusional penchant for courting attention.

Facing economic, social and political despondency for decades, African states and other poor non-African, non-White countries ashamedly carry along the ‘shithole’ tag.

Precisely, the nature and behaviour of most of the African governments make it prime for the ‘shithole’ classification to ideally define the African governments. Why ‘shithole’ African states?

Look around the continent and realize how African states are infested with corruption, poverty, socio-economic inequalities and disparities, political injustice among other challenges which majority of the states have deliberately refused to address or pretend to be addressing.

Decades after gaining the oft-exaggerated political independence, the filthy majority of the African states are facing the same socio-economic and political problems they sought to effectively deal with at the time the cunning colonialists ‘declared’ them politically independent.

But most people often forget, or at least pretend to forget that African countries would be miles ahead socially, economically and politically were it not for the colonization and neo-colonization of the Black man’s continent.

Who are responsible for colonization and neo-colonization of Africa? The foreign powers, with their mad rush to Africa premised on the classical rivalry between the Western and Eastern hemispheres of the world, though the greedy African political leadership is also to be blamed.

The West has been led by USA for years following the crumbling of the British Empire. Taking advantage of the historical and apocalyptic fall of the British Empire, the USA took over the world’s leadership with her hegemonic global agenda fueled by the much famed ideology of American Exceptionalism.

During the Cold War, African states were vulnerable to the antics of the world’s superpowers at that time, the USA and the former Union of Soviet Socialist Republics (USSR), before the latter’s cataclysmic disintegration. African countries were enticed by ‘gifts’ from the capitalist axis led by USA and communist axis under USSR’s leadership.

Neo-colonialism, which Africa’s former colonial masters had institutionalized, intensified as a result of the Cold War. Foreign powers offered financial and technical assistance to African states that cooperated with them with some going to an extent of facilitating the toppling of governments.

Of particular concern is the role played by the notorious USA and nosy France in overthrowing legitimate governments across Africa.

USA, for instance, was instrumental in engineering the military coup in Ghana then under the leadership of the charismatic pan-Africanist, Osagyefo Kwame Nkrumah. The aim of the coup in Ghana was to trigger a stream of chaos or put in place a puppet regime so that USA could get as much cocoa as possible at extremely cheaper rates.

Across Africa’s Great Lakes Region in the lush Congo Forest, the Democratic Republic of Congo (formerly known as Zaire) was not spared either by the covetousness of Washington. The USA government was behind the ousting of the influential pan-Africanist Patrice Lumumba who was captured, tortured and executed.

Lumumba was replaced by the flashy dictator, Mobutu Sese Seko, whose puppet regime went to bed with the USA government to loot the minerals at the expense of the Congolese citizens, majority of whom are poor.

Disguising herself as the champion of democracy across the world, the USA didn’t bother to promote democratic principles in DRC, choosing instead to confidently support a dictatorial regime led by the despotic Mobutu. Currently, USA’s multi-national corporations walk into DRC, collect minerals and walk out in fashion under protection of DRC’s authoritarian regime and the USA government.

Nigeria also endured a lengthy period of political instability characterized by coups that the USA partly orchestrated. They saw the oil and voila, they triggered chaos in Africa’s most populous country. Washington shipped the oil as poor Nigerians wallowed in poverty.

In dubious fashion, the USA government continues to be hell bent in supporting non-democratic regimes in Africa and interfering with the sovereignty and territorial integrity of other states.

Ethiopia, Uganda, Kenya, Djibouti and other states that have non-democratic governments continue to enjoy the support of Uncle Sam. Ethiopia has a terrible human rights record but Washington cannot advocate for the rule of law to be observed owing to the fact that the former is a strategic military partner to the USA government.

Having mastered the art of double-standards, the USA cannot condemn the authoritarian regime of East Africa’s longest-serving despot, Yoweri Kaguta Museveni. In Kenya, the USA government is supporting the corrupt and rogue Jubilee administration without showing utmost concern for social and political injustice brought to light before, during and after the electioneering period.

By the way, I’m exasperated by the dictatorial antics of the despotic Jubilee administration that rekindles the memories of the anti-democratic KANU regime. Kenya’s democratic gains have been eroded under the Jubilee administration and unapologetically, Kenya is acquiring a peculiar statehood of being a shithole of shitholes. Washington, the champion of democracy, would pretentiously ignore this.

Uncle Sam wouldn’t raise a finger and condemn Djibouti’s strongman, Ismail Omar Guelleh as the tiny Horn of Africa nation plays host to the former’s military base. Apart from the USA, Djibouti has allowed France, Italy, Japan, the United Kingdom, Saudi Arabia and India to set up military bases.

Libya is experiencing a civil war as a result of the invasion by the USA-led NATO forces dating back to 2011. Libya, then under the able leadership of Brother Leader Muammar Qaddafi, was peaceful with the Libyan people guaranteed of access to high quality social amenities with the country not having any foreign debt.

Because of her voracious appetite for oil, USA orchestrated the fall of Libya by arming militants and crafting evil conspiracy theories that Libyans were tired of Qaddafi’s dictatorial regime and were demanding for establishment of democratic systems and structures.

Afghanistan, Iraq, Syria and Yemen have been ravaged by wars instigated by USA in the name of “War on Terror”. America’s destruction of Afghanistan began after the 9/11 attack with Washington riding on the paranoia that the Taliban was cooperating with Al Qaeda in promoting terrorism. USA invaded Afghanistan when the 9/11 attackers were from Saudi Arabia!

Iraq was destroyed by USA because the Washington government was eyeing the former’s oil. George W. Bush, then serving as the 43rd USA president, lied to the world on how Iraq had ‘Weapons of Mass Destruction’.

Unknown to many, Iraq had a stockpile of these weapons but destroyed them in 1991 and ceased all its nuclear and biological weapons programmes in the same year due to pressure exerted by USA and her allies. Since then, the Iraqi people are strangers to peace and stability with puppets regime established by the USA. And by the way, if Iraq had such weaponry, would the USA have invaded her?

Syria and Yemen are war-torn states with the USA drooling at the oil fields of these countries. But the shithole USA government claims that the Syrian and Yemeni governments are unpopular with the masses and they must fall. USA financed destitute militants to hold anti-government demonstrations in Syria and Yemen, a similar case with Libya, in the wake of the contorted and highly skewed Arab Spring.

Crafting of propaganda and hatching of conspiracy theories is USA’s well-mastered game. Having faced moments of non-cooperation with the Libyan, Syrian and Yemeni governments, the USA government played the opportunist card, triggered chaos and siphoned the oil while lying on why ‘democratic’ governments must be established in these countries.

The double-faced USA government cannot condemn whatsoever the undemocratic regime in Saudi Arabia. The cooperation between USA and Saudi Arabia dates back to February 1945 when the then US President Franklin Roosevelt met with King Abdul Aziz of Saudi Arabia aboard a US warship.

Roosevelt met with King Aziz on his way to the USA after attending the Yalta Conference on the future of Europe following the end of the Second World War. Since then, USA and Saudi Arabia have been close allies with geopolitical interests and oil being the agenda of the American government.

Saudi Arabia is used as a proxy by USA to generate political instability in the Middle East. Through her military partnership/cooperation with Saudi Arabia, USA finances militants to fight legitimate governments in the Middle East with the objective being to cause confusion and steal the oil. Saudi Arabia has a dubious distinction and distinguished notoriety of arming militants, case in point the current civil war in Yemen. But USA is silent.

Closer home, South Sudan is muddling through a civil war that erupted in December 2013. Recently, the USA denounced South Sudan’s President Salva Kiir and declared him as an ‘unfit partner’. But nobody is questioning the role the USA government has been playing in fueling the civil strife in South Sudan. Remember USA is siphoning oil in Africa’s youngest state.

I bet a deal between USA and Salva Kiir has gone sour and Washington has made an about turn on supporting him and is hell bent on deposing Kiir and establishing another puppet government. Folks, it is the oil.

What do you call a state that interferes with the sovereignty of other states, supports dictatorial regimes and promotes war in the world as a divide and rule strategy to loot natural resources? You call it shithole! Never mind that Africa is shithole but my mother country, Kenya, is the shithole of shitholes.

And by the way, at the recent African Union (AU) Summit in Addis Ababa, African political leaders shelved the idea of demanding an apology from the not-so-well read USA president after he sent them a letter expressing his respect for Africa! African political leaders are compromised and intoxicated by neo-colonialism. But, don’t you see both are shitholes?

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