Tag: Uhuru Kenyatta

Expert Analysis: Interest Rates Capping, A Populist Move By President Uhuru Built On Sand Disastrous To The Economy In Long Run

President Uhuru signs into law the interest capping bill in Statehouse.

By Philip Makokha

That same day Jesus went out of the house and sat by the lake.2 such large crowds gathered around him that he got into a boat and sat in it, while all the people stood on the shore. 3 Then he told them many things in parables, saying: “A farmer went out to sow his seed. 4 As he was scattering the seed, some fell along the path, and the birds came and ate it up. 5 Some fell on rocky places, where it did not have much soil. It sprang up quickly, because the soil was shallow. 6 But when the sun came up, the plants were scorched, and they withered because they had no root. 7 Other seed fell among thorns, which grew up and choked the plants. 8 Still other seed fell on good soil, where it produced a crop—a hundred, sixty or thirty times what was sown.

The above text comes from the book of Matthew chapter 13. It piqued my interest because, government policies are like seed. The sower is the government- legislature, judiciary and executive. Assuming, an ordinary man immediately appeared after the seeds had started germinating, he would have been thrilled by the seeds sown on rocky ground that had sprung up quickly. I bet, he would even thank the sower.

It is human nature, to live in the present and enjoy facades, which are our daily lives. On August 24, 2016, H.E President Uhuru Kenyatta assented to the Banking amendment Act (2015) which among other things introduces interest rate ceilings and floors. In his statement after signing the law, the president says “…Upon weighing carefully all these considerations, on balance, I have assented to the Bill as presented to me. We will implement the new law, noting the difficulties that it would present, which include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms.

First, let us start from the very basics. Interest is the price charged on money. Since it is presented as a percentage, we refer to it as a rate. Interest rate ceilings/restrictions/caps refer to the maximum interest rate charged by the lender to the borrower. On the other hand, interest rate floor refers to the minimum interest paid on bank deposits i.e. deposit rate. The difference between the two is the SPREAD.

Ordinarily, these interest rates are driven by market forces- demand and supply. Market forces work best in a perfect competition market. This is a market where among other features; it has many buyers and sellers. Other markets are monopoly, oligopoly etc. It is not possible in practice, to find a market that is 100% its type e.g.100% perfect competition or oligopoly. Ordinarily, we characterize a market as perfect competition if the features of a pure competition dominate features of alternative market structures. Other than markets, we also need to look at different types of economies. An economy can be Command, free or mixed. Generally, Kenya is a free market economy. As to whether, the banking sector in Kenya is oligopoly or pure competition, I do not know. Theoretically however, it is a pure competition. The Kenyan economy is majorly free enterprise where an owner of capital can put it in any sector and await returns. Of course, there are regulations governing each of the sectors that an entrepreneur may venture into. These regulations are not necessarily barriers to entry.

INTEREST RATE AS PRICE FOR MONEY AND ITS DETERMINATION

Let us throw this animal called interest rate out of the window for a moment. Let us talk about and ordinary good-sugar. How is price for sugar determined? In any business transaction, there are two parties involved. The buyer (demand) and the seller (supply). The buyers want to buy at the lowest possible prices while the sellers want to sell at the highest possible price. So how is the price determined? The sellers will set a price that covers their production costs plus a mark up. The buyer wants to buy at a price that gives them value for money. In a market with only one seller and many buyers, the seller is likely to exploit the buyers while in a market with only one buyer and many sellers, the buyer is likely to benefit. In practice, there exist many buyers and sellers and therefore prices of items are determined at an equilibrium point. On a graphical presentation, this is the level where quantity demanded equals to quantity supplied. QUANTITY DEMANDED IS NOT DEMAND! The prices will generally hang in this range. The interest rate is determined in a similar manner.

BANKING IN KENYA: OLIGOPOLY OR PERFECT MARKET?

The answer to the above question depends on who you ask. Generally speaking, financial industry is a pure competition. There are many sellers and information is readily available. For example, you can easily know what Bank X charges as interest rate compared to Bank Y. Thanks to the Central bank of Kenya. Some people argue that banking industry is an oligopoly- there is a small number of sellers who control the market. To some extent, this is true. Kenya is dominated by less than 10 banks even though we have in excess of forty banks in operation. These banks, it is argued work in a cartel-like manner thereby charging unnecessarily high interest rates. What high interest rate is, am yet to understand.

WHY INTEREST RATE CEILING AND ‘FLOORS?’

Hon. Jude Njomo, having studied the cartel-like behavior of commercial banks and their high interest rates, deemed it appropriate to regulate the interest rates that banks charge in order to cushion the common man-Wanjiku. From what I gather, Wanjiku is a group of people at the bottom of the economic pyramid. Members of parliament therefore, deem it unfair and predatory for the banks to continue exploiting these members of the society. The attempt to cap interest rate is a third one since the last two decades. The other two attempts having been made by the former mp Joe Donde and Hon. Jakoyo Midiwo. The bill, now the Act addresses many things, among them interest rate capping. This is what this article is about. Many countries have tried capping interest rates including Zambia in 2013. The law has since been abolished. Around the world, approximately 76 countries have some sort of interest rate capping. Some sort because, not all interest rate capping work as the one we have enacted.

A study by Samuel Munzele Maimbo and Claudia Alejandra Henriquez Gallegos titled,
‘Interest Rate Caps around the World Still Popular, but a Blunt Instrument’ reports:
‘In this exercise, we found that the main reasons for using interest caps on loans were to protect consumers from excessive interest rates, to increase access to finance, and to make loans more affordable. Most countries regulate interest rates with the broad aim of protecting consumers, as in the case of Spain. Other countries provided more specific objectives, such as protecting the weakest parties (Portugal); shielding consumers from predatory lending and excessive interest rates (Belgium, France, the Kyrgyz Republic, Poland, the Slovak Republic, and the United Kingdom); stopping the abuses arising from too much freedom (Greece); controlling over-indebtedness (Estonia); and decreasing the risk-taking behavior of credit providers (the Netherlands). Similarly, in Thailand authorities stated that the purpose of the caps was to make finance affordable for low-income borrowers.3 Finally, Zambia’s authorities introduced the caps to mitigate the perceived risk of over indebtedness and the high cost of credit, as well as to enhance access to the underserved.
The Zambia law was abolished three months later.

WHAT INTEREST RESTRICTIONS WILL DO

There are two probable things that restricting interest rates will do. One, what the government tells us that will happen and the second happening is what economic theory supports. I will talk about both cases.

According to the government and the supporters of the law, low interest lending rates will increase access to credit by Micro, small and medium enterprises. It will also increase access to credit by families that could not afford credit facilities under a regime without the caps. This will boost productivity and ultimately improve economic growth. Jobs will be created and we shall be a few steps away from achieving a million jobs a year as promised by Jubilee. The government will also achieve greater financial inclusion rates for the Kenyan citizen.

On the other hand, interest rate floors set for saving deposits (deposit rate) will encourage a savings culture thereby ultimately, boosting our economic growth. After all, a saving economy is a growing economy. It is however, misleading to think that limiting deposit rates at 70% of CBR will encourage savings. According to the Central bank, the deposit rate as of April 2016 was 6.92% .With the new low; it will be at least 7%. I do not think a marginal increase of 0.08 will do anything to encourage savings. With the 6.92% of deposit rate, our saving rate is at a mere 1.4%. The interest rate floor will thus, have negligible effect, if any. Low lending rates encourage investment as well as consumption and both these activities are good for economic growth. By controlling deposit rates, the government will be able to arrest any inflationary pressure that would have occurred because of availability of cheap loans. Whereas these arguments are convincing, they are flawed.

However, according to economic theory, two scenarios are more likely to occur. First, availability of cheap loans will increase liquidity in the economy. The question that begs is what is the effect of an increase in money in circulation? An increase in money in circulation will automatically increase consumption. If the increase in money is not accompanied by a commensurate increase in production, as is likely to be the case in Kenya, there is likely to be inflation.

There will be too much money chasing too few goods! This inflationary pressure will lower the purchasing power of our money. The real value of our shilling will be eroded. For example, Ksh.1000 will buy less than it could have bought prior to interest rate restriction. As a result of this pressure, workers will demand more pay. This will cause industrial unrest and production will plunge further because of time wasted on pay negotiations.

If employers will agree to increase salaries, the cycle will continue. This policy therefore, creates a vicious cycle that is a zero-sum game.
The second likely event to occur according to economic theory is credit rationing. A key component of interest rate is the risk aspect. Banks generally weigh the risk profile of a client and adjust the rate accordingly before advancing a facility.

A client either has low risk profile or high risk profile. A client with a good credit history and a regular stream of income is less risky than a client who is probably borrowing for the first time. In a regime where interest rates have no upward limit, banks will accommodate the riskier client by adjusting the rates accordingly. On the other hand, if the rate has a cap, and the risk profile of a client cannot fit within this regime, the best alternative is to deny that client the facility all together.

These clients are SMEs and Wanjiku. Apparently, the very people this legislation intends to protect. From my experience, when someone wants money, the cost is not their priority. The priority is AVAILABILITY. And this is why; Shylocking is a thriving business in Kenya. This ‘locking out’ of potential borrowers, will lead to establishment of more informal lending businesses that are likely to exploit the public much more. The president notes this in his statement. Kenyans will be exploited much more by the unregulated sector of shylocks!

WHAT WORKS?

Spain is among the few countries that have a law similar to what the president assented to on August 24, 2016. Does it work? Whereas interest rates are low in Spain, studies show that it boasts of notoriously high charges. This means, what the banks cannot make through interest, they make through other charges. This is also a possibility. If these charges too, are capped, the banking industry is going to be a no-go zone for investors. Investors like to put their money where it generates the highest possible returns. Since the major role of management is to maximize shareholder value, caps limiting their ability to achieve this goal can only mean one thing: COST REDUCTION.

A huge percentage of total costs for many businesses are labour related and thus, banks may be forced to freeze hiring of new staff or reduce their workforce so as to continue making profits. Is this job creation? Banks are henceforth going to invest much more in technology and less in human labour in order to return value to shareholders.

The best alternative of handling the high interest rates would have been more of moral than legislative. For example, the government through CBK would have advised bank executives to set aside some percentage of their loan portfolio for SMEs and Wanjiku. This alternative accompanied by threats of legislation would have yielded much better results in the long run. We can think of this as setting up of EPZ in the manufacturing industry. In fact, the government could even decide to tax income generated from this portfolio at a lower rate or give it a tax holiday. This would boost credit access to the marginalized without interfering with the banks’ independence. This is more likely to stimulate economic growth and development. Controlling interest rates is sowing on a rock; the seeds will spring quickly because the soils are shallow. They will however, not live for long as they have no roots. Let’s sow in deep fertile soils. It may take long for the seeds to germinate, but when they do…they will grow to maturity and yield maybe thirty times or more of what we sow!
Finally, s I conclude, I would like to paraphrase Dr, Ndii, no amount of growling at critics is going to make foolish policy wise.

The writer Is a degree holder in Commerce, specializing in Finance from JKUAT And a hustler with ideas that can change the world.
Twitter: @pcmakokha | Facebook: PC Makokha | IG: PC Makokha

Disclaimer: This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email:[email protected]

August 29, 2016
Sh2B To Be Spent On Jubilee Party Launch With Uhuru And Ruto Next Month

President Uhuru and DP William Ruto at Statehouse

The ruling coalition Jubilee Alliance Party (JAP) will be transformed into Jubilee Party (JP) in a three-day event to be held in Kasarani as they renew and plot to intensify campaigns to retain power in the next election.

The transformation and solidifying the coalition by merging all the parties to one Jubilee Party will entail amending the party’s name, change officials, symbol, slogan and colour, rules and regulations.

Plans have taken top gear as organizers tip the event will be a hit. From reports Kenya Insights is getting, the three days events with expected over 10,000 delegates drawn from across the country will be flanked with a ray of musicians both local and international.

The event that will kick off from the 8th September and go through till 10th will see additional of estimated 100,000 people attending the launch besides the delegates.

It is expected that close to Sh500 million will be spent in the event. The expenditure will include facilitation of the delegates for food and accommodation, payment for international guests from the various parties across the globe and the artists.

Banners with the party colours, T-shirts, caps, decoration for the parties’ events and the eventual final convention are also expected to take up much of the funds. Uhuru and Deputy will be the chief guests.

Costs will also include live broadcast of the event across major channels in Kenya and also intensified social media campaigns.

The event is only comparable to the inauguration of President Uhuru in 2013 that saw millions off taxpayers being spent on it. Here’s a breakdown of the Uhuru’s inauguration budget.

1. Sh50 million was spent on hospitality for President Kenyatta and retired President Kibaki.

2. Sh10 million for gifts which were given to retired President Mwai Kibaki.

3. Sh10 million on a State luncheon attended by 1,000 people. A plate of food was going for Sh5,000. The rest of the money went to hiring of tents (Sh5 million), flowers (Sh100,000) and soft drinks (Sh100,000).

4. Sh850,000 paid the Ministry of Public Works to mark Kasarani grounds in readiness for the event.

5. Sh14.6 million was spent on accommodation of 10 Heads of State who attended the event despite some travelling to their respective countries the same day.

6. Sh5 million spent to hire vehicles to transport leaders. Each leader was allocated three vehicles.

7. Sh6.7 million spent on paying traditional dancers from counties, gospel singers and bands and for entertainment during the State Luncheon.

8. Sh957,000 was paid to traditional dancers who entertained guests during their arrival and departure.

9. Sh7.2 million spent on a legal committee. In the budget, there is research and drafting of legal documents (hiring of legal experts) for election purposes .

10. Sh6 million spent on printing of oaths used for swearing in President Uhuru and Deputy President Ruto.

11. Sh1 million for producing portraits for President Kenyatta.

12. Sh50,000 for producing portraits for Deputy President Ruto.

Francis Kimemia prepared a budget of Sh1.2 billion, which then Treasury PS Joseph Kinyua slashed to Sh279 million. There was also a separate budget of Sh64 million which was funded by the Judiciary, bringing the total cost of the ceremony to Sh374 million.

Its unclear but we can predict who will foot the Sh500M bill for the JP launch. Talking of Uhuru’s inauguration there’s still cries from sections of Kenya musicians who performed at the event that they were shortchanged and never paid. The Statehouse entertainment cartel led by Big Ted is keen on maximizing gains on this launch just like the rest that have past.

August 28, 2016
President Uhuru Signs Into Law Banking Bill Capping Interests To 4pc Of Central Bank Rates

President Uhuru Kenyatta

Finally, after bustles and tussles around the matter with the Bankers pleading with the President not to sign into law the Interests rates amendments, Uhuru finally inked it into law. On July 28, 2016, the National Assembly passed the Banking (Amendment) Bill, 2015. The Bill intends to regulate interest rates that are applicable to banks’ loans and deposits, capping the interest rates that banks can charge on loans and must pay on deposits. The bill proposed a ceiling on loans at no more than four per cent of the Central Bank of Kenya’s recommended rate.

The Bill was then forwarded to the President for approval. “Since receiving this Bill, I have consulted widely, and it is evident to me from those consultations that Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks. These frustrations are centred around the cost of credit and the applicable interest rates on their hard-earned deposits. I share these concerns.” Says the President.

This is the third time that the National Assembly is attempting to reduce interest rates to affordable levels. In the previous two instances, dialogue and promises of change prevailed and banks avoided the introduction of these caps. In those instances, banks failed to live up to their promises and interest rates have continued to increase along with the spreads between the deposit and lending rates.

Despite having one of the most efficient and effective financial markets, Kenya has one of the highest returns-on-equity for banks in the African continent. Banks need to do more to reduce the cost of credit and ensure that the benefits of the vibrant financial sector are also felt by their customers.

The President has assented to the Bill as presented. The Government will now implement the new law, noting the difficulties that it would present, which include credit becoming unavailable to some consumers and the possible emergence of unregulated informal and exploitative lending mechanisms. This law is a win for borrowers who’ve had to repay dearly given existing borrowing rates as high as 21%. Now that the Bill will Cap interest rates at 4% above Central Bank Rates that is currently at 10.5%, Interests rates are expected to go down to 14.5%

August 24, 2016
Raila’s Good Days are Behind Him, The Luo Nation Should Focus On His Successor

CORD Leader Raila Odinga (Pic Courtesy)

By Nicholas Olambo

While many have described the Former Prime Minister Raila as the kingmaker, the enigma of Kenyan politics, crowd puller and the best player in confrontational politics who is never short of surprises, Raila’s best moments are behind him as Prof. Makau Mutua puts it. I don’t think Tinga has more cards close to his chest to pull, his opponents have studied and known him. In fact, President Uhuru Kenyatta is causing him sleepless nights via proxies. What if he comes direct?

The former premier must be acknowledged for nurturing many politicians most of whom have turned to be his sworn enemies. He has not nurtured any from his back yard, Luo Nyanza despite Kenyan politics being so tribal. No one from Nyanza has received Raila’s blessings in case he quits the political stage which can’t be too long after 2017 polls. From where I sit, possibilities of ‘Luo Nation’ not voting as a block in post-Raila era are extremely high.

Only Kidero comes out as the Luo politician with the might to take after him, but sycophants and Raila followers from his native Central Nyanza are not ready to back any politician from South Nyanza where the Nairobi Governor, Dr Evan Kidero hails from. Raila has every right to run for president in the coming 2017 polls but after three unsuccessful shots, the experienced politician must also think of passing the Burton. Right now he comes out as one who thinks he is the only Luo who can be president.

As much as it’s said that Raila has been betrayed by the same individuals whose political careers he helped built, he must change his tactics and try new avenues. Politics is a game of numbers, but Raila has been unable to keep his house intact, he has been busy putting off rebellion fires in his party when his opponents are planning for 2017 polls. Money also plays a great deal, and Jubilee is seriously moneyed, but Odinga has been accused of sitting on the wallet when his foot soldiers are being ‘bought’ like toffees. So many broke politicians stand for nothing but gullible to shift allegiance for the love of the money.

Opportunity only comes once in a lifetime they say, and Raila let the presidency slip from his hands in 2007 and that moment will never come again. Believers in the say like Alassane Ouattara of Ivory Coast never allowed his win slip away from him; he fought to the very end and took over from Laurent Gbagbo, a dictator who is now facing war crime charges at the Internal Criminal Court (ICC). Raila was fixed through the deal that saw the formation of a grand coalition government that he shared with the then president, Mwai Kibaki. The deal was the last nail in the ‘coffin’ of his presidential ambitions.

They say history repeats itself, and Kibaki became President at the age of 74, and Muhammadu Buhari of Nigeria became president on the fourth attempt. Raila may be hanging his hopes on these thin and weak threads, but the generational change in Kenyan politics punches another big hole on Odinga’s dreams.

The incumbent Uhuru Kenyatta was elected the fourth president at the age of 51, this kind of generational change makes it hard for him to be elected to succeed Mr. Kenyatta.

He has now and after 2017 polls to give direction to the Luo nation that has strongly been with him through his political career especially the south, many will be waiting to see if Central Nyanza can back a leader from the South.

This article expresses the author’s opinion only. The views and opinions expressed here do not necessarily represent those of Kenya Insights or its Editors. We welcome opinion and views on topical issues. Email: [email protected]

August 2, 2016
The 30 Police Armoured Vehicles Bought From China That Uhuru Kenyatta Launched Broke Down The First Day

Months after they were acquired, there has been not a single mission of successful deployment of the VN-4s to report. Key components, including shock absorbers and air conditioning, don’t work. Kenyan officers have misgivings about them; they do not even know how to operate them properly, let alone maintain them. Almost all have been parked since they were commissioned

They were supposed to be the machines that made the difference in the war against terror in the Kenyan story; the ones to turn cops into heroes, and the bad guys into, well, not heroes. But the chronicle of the 30 armoured personnel carriers (APCs) purchased by the Kenya government, in a shroud of secrecy, from China is one that speaks of wanton waste and abundant ineptitude.

At the commissioning of the APCs in February this year, President Uhuru Kenyatta was evidently excited. He extolled the “important milestone” that his administration had attained, in its mission to modernisation the police service. It was, he said, one thing his government had done differently from its predecessors in decades, which would give the cops that much-needed boost in the fight against terrorism, banditry and other forms of crime.

The cost of the APCs was never publically disclosed – no police or military purchase ever is – but they are believed to cost less than US-manufactured ones, which go for close to $1.2 million (Sh120 million) per unit. Available information indicates that Kenya was the second country to acquire the VN-4 APCs, manufactured by China North Industries Corporation (NORINCO) Group.

The only other country known to have the same hardware is the Venezuelan National Guard, under the repressive regime of President Nicolás Maduro. The vehicle’s armour is welded shut and primarily provides protection from small arms fire and splinters from explosives. According to armyrecognition.com, the VN-4 is fitted with an open-roof, and a small turret mounted at the front top hull, armed with a 12.7mm heavy machine gun. Three smoke grenade dischargers are mounted on each side of the turret. It has a top speed of 115 km/h and efficient range of 700 kilometres.

The Nairobi Law Monthly’s investigations have returned a damning verdict, which points to a mega scandal within the Presidency, specifically the Ministry of Interior and Coordination of National Government – the same ministry has previously been accused of appropriating billions of shillings in the space of days in inexplicable expenses; the journalist who reported the story was later arrested for ‘questioning’, and was only released after a public outcry

By the time the APCs landed at the port of Mombasa from China, they had not been tested locally; neither had Kenyan police officers, who were to be the primary users, undergone any form of training on how to use or maintain them.

Don’t miss out to get your copy of the August release of Nairobi Law Monthly when they hit the streets the first week of August and get the finer details of what would be one of the biggest scandals to ever hit Jubilee government after Eurobond and NYS scandal.

July 29, 2016
Uhuru Fires Dennis Itumbi, PSCU Team Kicked out of Statehouse

Former Director of Digital communication Mr.Dennis Itumbi

Following consistent complaints from online and offline users over poor communication strategies, President Uhuru has eventually disbanded the Itumbi led a team. According to the memo signed by the deputy head of Public service, the directors were shown red card over concerns of unstructured communication and a series of gaffes.

The affected directors include The Senior Director Public Communications, Minyori Buku, Digital and Diaspora Communications Director, Dennis Itumbi, Head of Messaging docket at the Presidency, Eric Ng’eno and James Kinyua, who handled the Branding and Events Directorate in the Presidential Strategic Communication Unit(PSCU).
Reports also indicate the disbanded team has since been denied access to State House.

Manoah Esipisu retains his position as the State House spokesperson and head of communication.

According to insiders, there has been a mileage disconnection between the Itumbi’s team and Manoah’s. Critics have maintained that PSCU was an amateurish team and often used for pushing propaganda and unjust wars. The latest being the response to NY Times and Nominated senator Njoroge on 2022 COMMENT.

Veteran journalist Macharia recently described the unit as forever snapping at its heels. In a punchline directed at them, Gaitho slammed, “there’s more to communications than insults and big words.” PSCU is known for giving anger field statements primarily oriented towards the opposition. Communications analysts have faulted their strategies.

According to a highly placed source, the Presidency was concerned over the increasing cases of unstructured communications that have been sent out in the recent past.

PSCU will, however, according to State House, be reconstituted in the shortest time possible, with emphasis on more organised communication.

Elsewhere, from those close to Itumbi and team, the disbandment has been rushed following their opposition to the recommendations of the National Security Council to have the social media sphere be regulated. The council is plotting on implementing stiff regulations on online users as the country goes to elections next year. Itumbis have been arguing that such policies need public participation to draft contrary to the NSC recommendations.

Those in the circles say Itumbi and PSCU team can come in handy in discharging propaganda agenda a critical campaign tool that will come in handy for the Jubilee team. There are high chances the disbandment is a strategic move to relocate the team to another communication organ in the campaigns secretariat

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June 29, 2016
President Uhuru Kenyatta Rise to Glory Coincided With Rise of Mungiki; New York Times Rattles Statehouse

Luis Moreno Ocampo the former Prosecutor of the ICC

New York Times’ James Verini did a month’s long investigated story looking into how International Criminal Court (ICC) embodied the hope of bringing warlords and demagogues to justice. The story then goes to see how the then Prosecutor Luis Moreno-Ocampo took on the heir to Kenya’s most powerful political dynasty. The article, which has since gone viral, is causing stomach upsets amongst those severely mentioned. President Kenyatta has bashed the magazine for being inconsiderate terming the publication a falsehood and done in bad faith.

President Kenyatta from the onset has been a fierce critic of the court where he was charged alongside the famous Ocampo six for crimes against humanity. All the suspects have since been exonerated with the last defendants to escape noose being his counterpart in Jubilee government Deputy President William Ruto and radio presenter Joshua Sang.
Uhuru Kenyatta’s rise coincided with the rise of Mungiki, the group Moreno-Ocampo would later accuse him of conspiring with in the post-election violence, writes James Verini. Started as a tribal revivalist movement, Mungiki grew into a militaristic political fraternity and then into a criminal gang. Around the time Mungiki fought to take over the lucrative private bus lines that are the primary form of transport in Kenya, in the early 2000s, the gang staged a massacre in northern Nairobi that left severed heads scattered in the streets.

Uhuru Kenyatta Follows proceedings at the ICC

By then, Mungiki was being described as a “state within a state,” with up to two million members, according to reports. They swore an oath of loyalty to the Kikuyu tribe and the Mungiki leader, a charismatic, ruthless man known as Maina Njenga. According to the ICC, new recruits “were told they would be killed if they violated the oath or left the organisation.” When clashes broke out between Kikuyu and other tribes, Njenga dispatched his men to fight.

He also persuaded politicians to take the Mungiki oath. Paul Muite, a Member of Parliament at the time and now a lawyer who represents Njenga and other members of Mungiki, which is still active, told me that almost every Kikuyu politician of consequence he knew during that era took the oath. For Njenga, it was “a way of collecting” power, Muite says. According to Muite and a former lieutenant of Njenga’s with whom NY Times spoke to, one of the politicians who took the oath, before becoming president, was Kibaki.

Some Mungiki members, including Njenga, supported Kenyatta’s 2002 presidential campaign. Kenyatta denounced the group and would later tell Moreno-Ocampo in court that “I have always publicly condemned and stated that I have no association whatsoever with Mungiki.” Njenga’s former lieutenant, however, described to me a series of meetings he attended with Kenyatta and Njenga in 2002, saying that Kenyatta was friendly with Mungiki. But, he added, Kenyatta didn’t like or trust Njenga.

In the 2007 election, Kenyatta did not run, instead supporting Kibaki in his race against Raila Odinga. By the close of Election Day, two days after Christmas, the vote was too close to call. The count was delayed. The tally centre in Nairobi was mysteriously broken into. Then on Dec. 30, the government suddenly announced Kibaki had won. He was hurriedly sworn in, and a media blackout was imposed. Odinga instructed his followers to protest. By New Year’s Day, Kikuyu were being slaughtered. Mungiki began striking back in January.

Former Mungiki Leader Maina Njenga

The government did little to stop the post-election violence, but afterwards, it set up a commission of inquiry. Known as the Waki Commission, it issued a 529-page report in October 2008. The Kenya National Commission on Human Rights, an autonomous government agency, published a comparably exhaustive report.

Each was damning. Officials in Odinga’s party had planned violence months in advance, while envoys of President Kibaki met with Mungiki to plan retaliatory attacks. Security agents and the police had conspired with the gang. “There were no good guys,” a Waki commissioner, Pascal Kambale, told me. “There were only bad guys.”

Moreno-Ocampo, who monitored the violence as it was happening, travelled to Nairobi to speak with Kibaki. He encouraged Kibaki to refer Kenya to the ICC, as Congo and Uganda had made referrals. Government capacity wasn’t the problem, Moreno-Ocampo knew. Kenya was capable of trying the suspects.

Uhuru Kenyatta in one of his ICC appearances at the Hague Court

The problem was as it had been in Argentina: The government was the criminal. And not only the government. The National Commission on Human Rights report listed more than 200 suspected inciters and funders of the violence, including presidential cabinet members, legislators, businessmen, shopkeepers, farmers. In a moment of collective insanity, Kenyan society had turned on itself.

Still, Moreno-Ocampo continued to press Kenyan officials to begin prosecutions. In 2009, the Kenyan Parliament voted against a tribunal — unsurprisingly, as the Parliament itself was full of suspects — and Moreno-Ocampo requested that the ICC judges allow him to open an investigation. They did. It was the first time he invoked his power to seek charges on his authority, without a referral.

In a part, the magazine reflects back to Kenyatta senior reign, After Jomo was freed and elected president of an independent Kenya in 1964, his revolutionary impulses didn’t persist. He stocked the government and businesses with family members and fellow Kikuyu.

The Waki report didn’t name Kenyatta, but the National Commission on Human Rights report did, saying that he reportedly “attended meetings to plan for retaliatory violence by the Kikuyus” and “contributed funds.” Kenyatta was considered by many Kikuyu, including many Mungiki, to be their leader, and was understood to be the richest man in the country. If anyone had the motivation and funds to back an ethnic war, Moreno-Ocampo’s investigators reasoned, it was Kenyatta.

Maina Njenga in company of CORD lEADER rAILA oDINGA SHOWING HIS WOUNDS AFTER A FAILED ASSASSINATION ATTEMPT ON HIS LIFE THAT LEFT HIS AIDES KILLED

The court considered charging Maina Njenga, the Mungiki sect Chairman. When Njenga was questioned by Kenyan investigators, he pleaded ignorance. But to the ICC investigators, he came clean. He detailed the structure of his organisation and its role in the violence. Njenga claimed to his lawyer, Paul Muite, that he had personally administered the Mungiki oath of loyalty to Kenyatta, though whether Njenga told this to ICC investigators is unclear. Njenga was “very forthright,” Muite told NY Times, and he later agreed to testify in The Hague.

In a punchy conclusion, the writer notes having spoken to a former Mungiki high ranked leader, like many Kenyans he was talking with, says he regrets the violence but believes it was necessary. The Kikuyu, his tribe, faced a massacre, he is convinced. The last time we met, I asked if he thought Kenyatta was guilty of the ICC charges.

A Luo PEV Victim displaying his wounds to a NY Times photographer

He recounted a meeting he attended in January 2008, in the midst of the postelection violence, where Kenyatta was the chief guest and Mungiki were present. In the meeting, Kenyatta was careful never to mention violence explicitly nor the gang by name. But he collected cash donations. I asked the former lieutenant if it was possible Kenyatta did not understand violence was being planned.

“No,” he said, “it is not possible.”

I asked again.

“No,” he repeated. “With capital letters.”

Adapted from New York Times Magazine

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June 26, 2016
Season of Rewarding as President Uhuru Recycles Old Guards in New Appointments

President Uhuru Kenyatta

In his latest appointments, President Uhuru Kenyatta has revoked the appointment of Kenya Airports Authority (KAA) Chairman David Kimaiyo. In a gazette notice dated June 24, the President appointed retired Chief of Defence Forces Julius Karangi to replace the former police boss. Mr Kimaiyo has held the position since December 31, 2014.

Former legislators have also been rewarded with positions in state corporations. Former Changamwe MP Ramadhan Kajembe, who has since fallen out with ODM and Raila, has been rewarded as the new Kenya Ferry Services chair. Former Rarieda MP Raphael Tuju will now be the head of Lake Basin Development Authority a position that he takes from TNA’s Secretary General, Onyango Oloo.

Ronald Osumba, who contested the 2013 elections as the running mate of Kenya National Congress’s Peter Kenneth, has been appointed Youth Fund board chairperson.

Former NACADA Chair, John Mututho was transferred to Transport Licensing Appeals Board. Former Committee of Experts chairman Nzamba Kitonga as the chair of Council for Legal Education. Suspended Labour Cabinet secretary Kazungu Kambi appointed as the chairperson of the National Government Constituency Development Fund (NGCDF). Kambi was linked to corruption deals at the National Social Security Fund (NSSF) and the EACC recommended for him to be charged withgraft. He’s yet to clear his name.

Former Bumula MP Bifwoli Wakoli

Former Bumula MP Bifwoli Wakoli, who had earlier declared his support for Jubilee, has been named to chair the Agricultural Development Cooperation while Patrick Osero, a close ally and business partner to Deputy President William Ruto is the new Tourism Finance Corporation Board chairperson.

Patrick Osero is implicated in a land grabbing scandal of 1200 acres in Ruai meant for Nairobi County Gov’t Sewerage using a company called RENTON Co. LTD. Osero is also listed as one of the directors of Weston Hotel and at a point during the helm of Langata Primary School land grab fiasco, he was named as the ‘owner’ of the hotel. The Deputy President after vehement denials later owned up and admitted ownership of the hotel.

Appointments to state corporations as country gears for the next general elections in months, couldn’t have happened at a better time when the president and the opposition are strategizing on how to capture votes. Historically, such appointments have been used to gain political favours, rewarding friends and not awarded necessarily on merits since the appointed are meant to return hand by campaigning in favour during the elections.

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June 25, 2016
Corruption in Kenya… and the president is always watching

The story of corruption in the post independent Kenya is a long one.

Ever since attaining her independence in 1963, Kenya has suffered from widespread corruption not only in the public but in the private sector too. The ominous part of it is that the scandals have in a way or the other touched on the Presidency. This has overtime degenerated into a monster-like culture of impunity where the elite have notably whizzed their way out of obvious corruption allegations scot-free! I look back and here’s what historians have;

Mzee Jomo Kenyatta, the corruption founder and grand land thief

Kenya has many problems but land is capital and has always been the Elephant in the room.

All this land problems in Kenya emanate from one man – Mzee Jomo Kenyatta, Kenya’s 1st President after independence.

See when the white Settlers came came in Kenya, indigenous Africans were displaced and their land converted to large commercial farms. The MAUMAU led pro independence war erupted forcing the Britons to hand over power to Kenyans. Jomo Kenyatta took advantage of the confusion and awarded himself the relinquished land.

Secret papers of the late Sir Michael Blundell, the white settler leader who acted as the liaison between Kenyatta and the British government indicate that Mr. Jomo Kenyatta backstabbed his fellow war comrades and signed secret pact with the British government not to interfere with the skewed land distribution at independence. The narrative is corroborated in the secret notes of Kenya’s second vice-president, the late Joseph Murumbi, deposited at the Kenya National Archives.

The land question haunts the country to this day, an entire generation after Jomo Kenyatta’s death. That was Kenya’s foundation – Land grabbing and corruption.

Moi the Golden-berg Kingpin

In 1978 Daniel Moi took over as Kenya’s second president. During Moi’s reign, corruption was honing. Notable enough was the 1990s Goldenberg scandal and subsequent cover-ups. The Goldenberg scandal is thought to have cost Kenya the equivalent of more than 10% of the country’s annual GDP. Half-hearted inquiries that began following pressure by foreign aid donors but they never amounted to anything substantial during Moi’s presidency.

Kibaki, the man who is thought to have rigged his way to the presidency

Kenya’s third President, Mwai Kibaki, was elected on an anti-corruption platform in 2002. During his two term regime, his regime suffered several corruption scandals, some at the heart of the presidency and earlier than imagined.

We all recall in 2007, when Kibaki was declared a victor in the presidential elections amidst unending allegations of electoral manipulation and bribery involving the election officials. What followed was a historic violent turmoil causing the deaths of more than 1000 people.

I will not go into other scandals that followed suit.

Uhuru Kenyatta – The president who even knows that Kenyans are corrupt

In 2013, another regime change was beckoning and another round of presidential elections were held. This time under a new constitutional dispensation. Relative peace was experienced but again, there were further allegations of vote- rigging. Notable enough are the allegations that the Supreme Court Judges accepted bribes to rule against Uhuru Kenyattas close rival, Raila Odinga in 2013 Presidential Petition.

More than a dozen corruption scandals have dogged Uhuru’s regime. All at the heart of the presidency.

“experienced in stealing and perpetuating other crimes”

Kenya’s President Uhuru Kenyatta seems to be fully aware of this shameful and damaging statistics. His recent public rebukes say it all; During an address in Israel while on a state visit, Mr. Kenyatta himself said that Kenyans are “experienced in stealing and perpetuating other crimes” in an address during a state visit to Israel. From the speech in Israel, many argued that the president’s speech was rhetoric, and the comments were seen as an attempt to encourage Kenyans to develop their country like Israel.

In a renewed attack, this time during a burial ceremony of former MP and Assistant Minister George Ndung’u Micigi in Muranga County, Mr. Kenyatta accused Kenyan leaders of going against the wishes of their people.

This are just two instances I have selected indicating that he knows the corruption levels in a country he is leading. The worrying bit is that Mr. Kenyatta is just talking about it hence concerns that even the president is not serious about tackling corruption.

So what can be done?

The president needs to realise that he has been doing a lot of mouth service. His first term is almost over and there is still no effort that convince anyone that he is ready to swipe against corruption!

The president needs to stop talking and instead let the actions speak for themselves. Everybody is tired of the empty talk. Somebody needs to take out the vultures devouring Kenya before it too late.

March 18, 2016