Kenya is expected to widen the tax bracket, freeze employment and put more civil servants on contracts as part of the conditions by IMF for its $2.4 billion (Sh261 billion) loan.
On Monday, the visiting staff of the international lender approved the 38-month program under the Extended Funds Facility (EFF) and Extended Credit Facility (ECF) arrangement for Kenya to help in the post Covid-19 economic recovery initiative.
In a statement after the meeting, the IMF's delegation praised Kenya for reversing some of the earlier extraordinary tax measures introduced at the outset of the Covid-19.
''Kenya aims at reducing debt vulnerabilities through a multi-year fiscal consolidation effort, centred on raising tax revenues and tight control of spending, which would safeguard resources to protect vulnerable groups,'' IMF's statement read in part.
Kenya went back to the initial tax packages early this year after easing them to cushion households against the social-economic vagaries of Covid-19.
It reinstated Value Added Tax to 16 per cent after dropping it to 14 per cent. Pay as You Earn Tax for those earning above Sh24,000 went back to 30 per cent as well as corporate tax which had been lowered to 25 per cent.
Despite these measures, IMF wants Kenya to further widen its the tax streams going forward.
A private sector player who attended the IMF engagement forums held December 9 to 17, 2020, and from February 4 to 15, 2021 told the Star that the lender wants Kenya to review upwards its tax packages to boost revenue collection.
''The loan is pegged on tough tax conditions that will raise the cost of living for households. It is like the government is trading its citizens' lives for loans,'' he said, pleading to remain anonymous due to the sensitivity of the matter.
This is not the first time IMF is pushing Kenya to heighten the tax regime for loans.
In 2015, the lender pushed Kenya to introduce value-added tax (VAT) on petroleum products among other conditions in order to access a Sh63 billion credit line.
It also compelled Kenya to reintroduced capital gains tax after a three-decade break. The tax charged at the rate of five per cent of the difference between the selling price and the acquisition price less any transactional costs.
The National Treasury is yet to comment on the loan details, a day after IMF cleared it.
IMF also wants Kenya to drastically freeze employment and if possible place more servants on contracts to lower the high wage bill.
Contracts will reduce the burden of pension which has been a big financial burden for the National Treasury.
The government has already introduced a contributory pension scheme for civil servants and teachers a shift from the fully state funded pension scheme.
Besides, Kenya has been told to tighten the fight against corruption and address weaknesses in some state-owned enterprises (SOEs) in an effort to strengthen transparency and accountability.
Kenya has also agreed to strengthen the monetary policy framework and support financial stability.
The new loan if approved by the IMF board will escalate the soaring public debt which stood at Sh7.28 trillion by the end of December, equivalent to 65.6 per cent of gross domestic product in nominal terms, according to government data.
This, despite the country struggling to repay, forcing the exchequer to negotiate debt relief avenues by creditors.
The recent global events of civil and political unrest that started in the US have brought to the fore the complex dynamics of urban memorialisation.
The protests have, in some places, led to renewed scrutiny of certain urban symbols such as commemorative statues – what they represent and how they are perceived and interpreted.
Unlike monuments and statues, place names (toponyms) are intangible, and less imposing, but nevertheless, an indispensable part of the urban symbolic landscape. Their inscription, erasure and re-inscription is highly political.
In a study of toponymy in Nairobi, Kenya, my colleague and I analysed how streets got their names. It’s important to examine this as street naming and renaming allows us to remember and forget events and people in history. It also articulates what values exist in pursuit of political or national interests.
We explain how street names are imbued with symbolic references of power structures within a society. During the period of British rule (1895–1963), toponymy was used as an exercise of power – it reflected British control. Soon after Kenya gained independence, streets were renamed as a way to renounce the colonial regime and its ideology.
But today, Kenyans are starting to question the naming of important public spaces after a few individuals, their families and political affiliates – the ‘political dynasties’.
In 1964, after Kenya had gained independence, a street naming subcommittee was formed under the town planning committee of Nairobi’s city council. This subcommittee came up with names or received suggestions from the public. There was then a vetting process and proposals were eventually sent to the Minister of Local Government for approval. Since then, different laws have been established to guide the naming and numbering of streets and properties, but the process has remained very much the same.
Looking forward, the government should consider honouring other people who have contributed to the growth of Kenya as a country – for instance its athletes, academicians and artistes.
It would also be important to point out how gender exclusive the street names are. For a long time, there was only one street named after a woman – Mama Ngina Street, Mzee Jomo Kenyatta’s wife. And later, after much lobbying, a street was named after Wangari Maathai, the 2004 Nobel Peace Prize winner. And in 2017, after the death of the firstborn daughter of Jomo Kenyatta, Margaret Wambui Kenyatta, Mugumo Road in Lavington was quietly renamed after her.
How streets are named, or renamed, serves as an important indicator of the values of a society – and what those in power might want to remember, or forget.
A colonial city
The vital role of street toponymy in Nairobi emerged at the inception of the city, at the beginning of the 20th Century.
Street names were used by the British colonisers to remove the indigenous identity of the previously marshy plain, known as Enkare Nyirobi (a place of cool waters), to create a new idyllic British city. Names such as Victoria Street, Coronation Avenue, Kingsway, Queensway and Elizabeth Way marked the modernising city to celebrate the British monarchy.
In addition, names such as Whitehouse Road and Preston Road were named after railway officials. George Whitehouse, for instance, was the chief engineer of the Kenya-Uganda Railway. This is because Nairobi started as a railway depot.
Other streets were named after administrative and political leaders of the time such as Hardinge, Elliot, and Sadler, all of whom were commissioners of the British East Africa Protectorate.
Leading settler farmers and business people also had their names imprinted on the landscape. They included: Grogan Road after Sir Ewart Grogan – a pioneer businessman, and Delamere Avenue, after Lord Delamere – a pioneer settler farmer.
Apart from the British and European street names, there were a few Indian names such as Bazaar Street and Jevanjee Street. This is because of the large Indian community in Kenya, many of whom originally came to Kenya as railway workers. “Bazaar” refers to a business area or market, while Jevanjee was a prominent Indian businessman in early Nairobi who owned the first newspaper company – The East African Standard.
What was starkly missing were African street names during that period. This was a clear indication of the political and social dynamics of the time that put the European first, the Indian second and the African third.
Decolonising and Africanising
There was a shift at Kenya’s independence, in 1963. The city’s streets were redefined as symbols of nationalism and pan-Africanism. The process was not devoid of challenges. There were inconsistencies – for instance in terms of ethnic representation – owing to the diverse interests that needed to be accommodated. It was an enormous task for the new government.
Generally, under the new government, street names acted as sites for the restitution of justice (for those that suffered under British rule) and symbols of memory, ethnic diversity and unity.
The renaming of the streets happened in waves. The first was in 1964, with Delamere Avenue (which cuts the central business district into two) being changed to Kenyatta Avenue, after the first president of Kenya – Jomo Kenyatta. Hardinge Street was changed to Kimathi Avenue after the leader of the Mau Mau Movement – Dedan Kimathi.
The streets were often renamed after the political elite, a good number of whom came from the Kikuyu community, such as Kenyatta Avenue, Koinange Street, James Gichuru and Harry Thuku Road.
There’s a lot of political consideration that goes into street renaming too. For instance, in 1969, a street was named after Tom Mboya, a popular Minister who was assassinated that same year. Some called for Government Road (along which he was assassinated) to be named after him, others proposed St. Austin’s Road, along which he lived. Both options were rejected by the government, Government Road being too central and St. Austin’s being too peripheral. Victoria Street was the compromise. Government Road was later renamed to Moi Avenue and St. Austin’s Road to James Gichuru Road.
In independent Kenya the purpose of the toponymic changes was twofold: to erase names of the colonisers who were deemed as imposters and to celebrate the new heroes: Kenya’s political leaders and freedom fighters. The latter, such as Dedan Kimathi being celebrated superficially by the new political bourgeoisie.
Additionally, in the spirit of pan-Africanism, other African leaders such as Kwame Nkrumah, Albert Luthuli and Julius Nyerere were celebrated through street names. Beyond the African continent, leaders who fought for black liberation and civil rights in America, such as Ralph Bunche and William Du Bois were also honoured.
The future of street naming
Nairobi’s street names are like a small history lesson. The County Government should consider putting up signs that tell people their former names, to show how the city has evolved over time.
More must also be done to ensure these spaces celebrate future heroes. There is a need to enforce the Kenya Information and Communications (Numbering) Regulations 2010 and the establishment of a National Addressing System as proposed by the Communications Authority of Kenya in 2016. In addition, a national body for dealing with place names, similar to the South African Geographical Names Council, should be instituted.
Finally, public participation should be an integral part of the street naming process, because people are the primary producers and users of names.
UK retail chain Tesco has suspended the purchase of avocados from multinational Kakuzi and its majority shareholder Camellia Plc, following a class action suit levelling accusations of gross human rights violations in and around their 42,000-acre Murang’a plantation.
Britain's biggest grocery retailer announced the move after law firm Leigh Day said Sunday it had initiated legal action against UK firm Camellia, whose subsidiary runs the site.
The lawsuit, filed on behalf of 79 Kenyans at London's High Court, accuses the subsidiary Kakuzi of employing security guards alleged to have perpetrated horrific abuses since 2009.
They include killings, rape, attacks and false imprisonment.
Leigh Day said former Kakuzi employees at the 54-square-mile (140-square kilometres) plantation in central Kenya, which is also a major source of macadamia nuts, pineapples and timber, are among the 79 claimants.
Britain's Sunday Times newspaper, which first reported on the legal action, said Kakuzi supplies avocados to several UK supermarkets, including Sainsbury's and Tesco.
A Tesco spokesperson said: "Any form of human rights abuse in our supply chain is unacceptable.
"We have been working closely with the Ethical Trading Initiative (ETI), alongside other ETI members, to investigate this issue and ensure measures have been taken to protect workers.
"However, in light of additional allegations published, we have suspended all supply whilst we urgently investigate."
Sainsbury's told the Sunday Times: "We continue to work closely with other UK retailers and the Ethical Trading Initiative (ETI) to urgently investigate and address these reports."
Tesco’s move is expected to rally other retailers in dumping Kakuzi, whose parent firm Camellia risks paying billions owing to a class action suit by 79 Kenyans who were assaulted, raped or had their relatives murdered in the Murang’a plantation.
Tesco is one of Kakuzi’s biggest clients as it sources thousands of the Murang’a-grown avocados every year. The supermarket said it does not condone any form of human rights abuse in its retail chain and that it has been working with various authorities to weed out any such actions by its suppliers.
Details of the class action suit were first published by The Times, a UK paper, on Sunday. The court papers paint a gory picture of horror and impunity, as security guards in the plantation seemingly did whatever they wished to Murang’a residents as police officers covered up any attempts to bring culprits to book.
In 2013, a 51-year-old woman was collecting firewood in Rwanda Forest within the 42,000-acre plantation when she was stopped by a security guard who accused her of theft.
The security guard tried to grab a rope the woman had, and while they were still struggling, he kicked her and she fell to the ground. The guard then removed her clothes and raped her before leaving her on the ground.
The woman tried to report the matter to the police, who asked her to go home and return the following day. When she returned, she was told to come back the following day.
Eventually she asked the officers why they were reluctant to take up the case and she was told it was her fault she was raped because she “was disturbing Kakuzi”.
Feeling helpless the woman went home and dropped her quest for justice. A year later, she started feeling unwell and went to hospital where she was diagnosed with HIV.
Four years later, a 58-year-old woman found herself in a similar situation after walking for 45 minutes to Rwanda Forest. She met two security guards who demanded a bribe to let her continue collecting firewood.
When the woman said she had no money, they took turns raping her before ordering her to leave. Just over a month after the incident, the woman sought medical assistance and was also diagnosed with HIV.
At least 10 other women also contracted HIV in similar circumstances, documents filed in the UK courts and seen by the Nation reveal.
On Monday, Kakuzi Plc issued a statement insisting that very few of the 79 claims had been reported to local authorities and that the publication of a story by The Times is part of a smear campaign against it and its clients.
The firm says it has asked Director of Public Prosecutions Noordin Haji to order an investigation into the claims. Camellio’s sister companies Linton Park Plc and Robertson Bois Dickson Anderson Ltd have been enjoined in the suit as they provided managerial support to Kakuzi.
At least seven Kakuzi Plc workers are among claimants in the suit.
The workers were accused of theft, beaten brutally before being taken to the police station and finally, court. Even though the cases against them collapsed, they incurred heavy medical bills to treat the effects of the violence.
Kakuzi is registered in Kenya, with Camellia holding a 50.7 per cent stake. Camellia, a global conglomerate which employs 78,000 people worldwide, said in a statement it bought that stake in Kakuzi in the 1990s but that it did not have "operational or managerial control".
"Kakuzi is investigating the allegations so that if there has been any wrongdoing, those responsible for it can be held to account and if appropriate, safeguarding processes can be improved," it added.
Kakuzi was initially served with a demand notice indicating that the Kenyan operation would be enjoined in the suit, but the 79 claimants eventually opted to only go for Camellia, Linton Park and Robertson Bois Dickson Anderson.
UK-based law firm Leigh Day is representing the 79 claimants, with the support of the Kenya Human Rights Commission and the Centre for Research on Multinational Corporations (SOMO).
The law firm filed the case on June 27, 2019 and served the documents on Camellia on July 10, 2020.
Camellia and its sister companies are yet to file responses. After being made aware of the intention to sue last year, Camellia and Kakuzi sought an out-of-court settlement on condition that the identities of the complainants were revealed.
It also insisted that all cases must be withdrawn before the parties pursue alternative dispute resolution processes.
After Camellia claimed that Leigh Day and its clients rejected alternative dispute resolution, the law firm said that the British multinational is the one unwilling to use a process that will be safe to the complainants.
“Second, it is the victims who have insisted on anonymity since they fear reprisals by Kakuzi guards and others. They have offered to disclose their identities to the defendants in a manner which allows the claims to be investigated but which meets their security concerns. Camellia has flatly refused this and insists that the identities of the victims should be disclosed without any safeguards,” Leigh Day said in a statement.
The UK lawsuit has reopened the controversy into Kakuzi’s land lease, which expires in 2022. Kakuzi has filed a case to stop the National Land Commission’s (NLC) historical land injustice committee from looking into eight complaints filed by different groups against its leases.
The NLC committee suspended hearings pending the outcome of Kakuzi’s case, but ordered that the lease not be renewed until the complaints are determined. Kakuzi has challenged the NLC order as well in court.
Murang’a Governor Mwangi wa Iria said the legal provisions spelt out in the Constitution must be adhered to in granting lease renewals in the county, saying the current stalemate that involves Del Monte has to be settled through an all-inclusive dialogue.
Land rights crusader Phillip Kamau, who chairs the Kandara Residents Association, said Kakuzi occupies 42,000 acres of prime land, whereas Del Monte occupies 22,500 acres, all committed to 99 years lease.
“Kakuzi has since gone to court to restrict our agitation to auditing its lease even when we are aware that it has 20,000 of the holding being idle. We have leased land to them, which they do not require … the same case with Del Monte which does not utilise 12,000 acres,” he said.
Source: The Nation / AFP
Conversations in Kenya have started around the upcoming 2022 presidential elections. Elections in Kenya tend to be highly contentious and there is often concern that, in some places, violence may erupt.
Political violence has a long history in Kenya. It extends back to the British colonial state’s use of violence to control people, expropriate land, and suppress dissent.
In independent Kenya, the regimes of Jomo Kenyatta and Daniel arap Moi continued to use violence as a way to control land and intimidate political rivals.
With the reintroduction of multi-party elections in 1992, politicians used violence to shape electoral outcomes. In the 1992 presidential elections, around 1,200 people were killed and 300,000 people were displaced from their homes. Following the 1997 elections, between 300 and 1,000 people were killed and about 10,000 were displaced. And in the 2007 general elections, Kenya experienced its most violent election to date: around 1,500 people were killed and another 600,000 displaced.
Studies of political violence tend to focus on how the electoral incentives of political leaders shape the use of violence. But the occurrence of violence is often a joint production between political elites and ordinary citizens.
Violence escalated when the incumbent candidate, Mwai Kibaki, was announced as the president reelect. The main opposition party, the Orange Democratic Movement (ODM), disputed the results and party leaders encouraged members to mobilise. Protests quickly turned violent and escalated across the country.
Importantly, however, there was significant local variation in the sites and scale of violence. This raised questions that are central to my new book, “Political Violence in Kenya: Land, Elections, and Claim-Making”. Specifically, I ask: how do leaders organise political violence, and more so, why do ordinary citizens participate?
I carried out several years of fieldwork for the book. This included hundreds of interviews and a household survey with residents across the Rift Valley and Coast regions. I found that electoral violence is most likely to escalate where there is:
1) Moderate (rather than significant) inequality in land rights between two nearby and ethnically distinct groups.
2) Salient and contentious narratives around land between these two groups.
3) A strong leader who can use these land narratives to convince or compel ordinary citizens to participate in violence.
Election violence tended to happen where a group believed that their participation in violence would advance their personal interests, or those of their community.
The book highlights the importance of land tenure reform as a key policy tool to mitigate and prevent violent conflict in Kenya. It can also help to explain or anticipate patterns of election violence based on local inequalities, for instance over land, jobs, or other resources.
It’s about land
In Kenya, and many other agrarian-based economies, control and ownership over land shapes identity, livelihood, and power. Yet land tenure institutions are often weak and highly politicised. This can give rise to certain narratives that elites and citizens can use to coordinate the use of violence.
In Kenya, for example, the belief that “outsiders” have invaded the ancestral land of “insiders” has justified violent evictions, often during elections.
I compared areas where ethnically-distinct farming communities border one another. I selected several cases from Nakuru County, in the central Rift Valley, where predominantly Kalenjin farming communities bordered Kikuyu communities. Political leaders have long pitted these communities against one another in struggles over access to land and political representation.
Many Kalenjin have come to view the Rift Valley as their ancestral land and see Kikuyu as ethnic outsiders. Many Kikuyu, meanwhile, argue that because they have purchased the land and hold title deeds, they are the rightful claimants.
For instance, after the results of the 2007 elections were announced, violence erupted when Kalenjin residents from Mauche crossed into the neighbouring area of Likia and burned property belonging to Kikuyu residents.
However, a short distance away in Ogilgei, where Kalenjin residents border the mostly Kikuyu community of Kerma, violence never escalated.
A key difference between these two cases is the degree of land tenure security, and specifically, what I describe as “moderate land inequality”.
Residents in Likia and Mauche are small-scale farmers. But in 2007, most Kikuyu residents in Likia held title deeds while most Kalenjin farmers in Mauche did not. For many Mauche farmers, this lack of tenure security shaped a defensive logic: “evict them before they can evict us”.
By contrast in Ogilgei, both Kalenjin and Kikuyu residents held title deeds. Neither side linked the election outcome with their tenure security, and thus had few reasons to engage in violence.
In another example, I ask why many communities in the coastal counties of Kwale and Kilifi experienced far less violence than those in the Rift Valley.
I find that a key mitigating factor was the significant land inequality between a small, but powerful group of “landlords”, alongside a large population of landless “squatters”.
Landlords tend to be of Arab, Indian, or European descent, while most landless identify as Mijikenda. The main cleavage line tends to be class, rather than ethnicity.
Though the Mijikenda are the electoral majority, such significant land inequality means that their own local leaders tend to remain beholden to the interests of the landed elite, rather than their land-poor constituents.
Hence, while there are contentious land narratives, many citizens tend to see their elected leaders as weak: unwilling or unable to alter land rights in their favour.
This means that elections are far less high-stake than in the Rift Valley where many believe that the outcome determines who gets evicted and who can remain.
While the dynamics of violence that I describe in the book draw specifically from the case of Kenya, there are a number of broader implications. The book can help explain or anticipate patterns of election violence. This dynamic has played out in countries such as Zimbabwe, Cote d’Ivoire, the Democratic Republic of Congo, Indonesia, and Bangladesh.
It also highlights the importance of strengthening land tenure institutions so that a citizen’s access to land does not hinge on a particular electoral outcome.
Finally, it provides insights into how political elites use particular appeals to divide populations, consolidate political support, and in some cases, incite violence.
In order to prevent or mitigate violence, there needs to be a better understanding of how and why particular narratives – built around identity, rights, and citizenship – gain resonance compared to others.
Tanzania banned Kenya's national airline from entering the country effective Saturday, in the latest move in a deepening row triggered by Tanzania's controversial handling of the coronavirus pandemic.
Tanzania said Kenya Airways flights were being banned "on a reciprocal basis" after Kenya decided against including Tanzania in a list of countries whose passengers would be permitted to enter Kenya when commercial flights resumed on 1 August.
"Tanzania has noted... its exclusion in the list of countries whose people will be allowed to travel into Kenya," Tanzania Civil Aviation Authority director general Hamza Johari said in a letter sent to Kenya Airways on Friday.
"The Tanzanian government has decided to nullify its approval for Kenya Airways (KQ) flights between Nairobi and Dar/Kilimanjaro/Zanzibar effective August 1, 2020 until further notice," Johari wrote.
"This letter also rescinds all previous arrangements that permit KQ flights into the United Republic of Tanzania."
Kenya Airways chief executive Allan Kilavuka said Saturday he was "saddened" by the letter and hoped the situation would soon be resolved.
Tanzania has taken a controversially relaxed approach to tackling the coronavirus pandemic and began reopening the country two months ago.
President John Magufuli's refusal to impose lockdowns or social distancing measures, and to halt the release of figures on infections since late April, has made him a regional outlier and caused concern among Tanzania's neighbours and the World Health Organization.
Magufuli declared Tanzania free of coronavirus in June, thanking God and the prayers of citizens for the disease's defeat disease.
The diplomatic spat between Kenya and Tanzania erupted soon after the outbreak of the pandemic in East Africa, when Kenya blocked Tanzanian truck drivers from entering the country, fearing they would spread the disease.
The COVID-19 pandemic has revealed the extent of Africa’s reliance on imports.
As global supply chains and the flows of manufactured goods around the world have been disrupted by lockdown restrictions, African countries have faced the prospect of mass unemployment and curtailed economic growth in a way which more self-reliant developed countries have not, as noted by the African Union in its research paper titled Impact of the Coronavirus on the African Economy.
As leaders globally consider the trade-off of permitting sectors of their economies to operate while still minimising the risk of transmission of the virus, the imperative of long-term, sustainable economic development in Africa through coordinated initiatives has never been clearer. Investment in industrialisation is a key lever to moving the economic growth needle over the long term, as demonstrated by the last few decades of economic growth trends globally.
Those countries that have industrialised and exported manufactured goods have become the most resilient and diversified economies. In the wake of global supply chain disruption, Africa faces a golden opportunity for governments to provide incentives for industrialisation and the development of local value chains. Industrialisation cannot happen in a vacuum: governments need to work hand in hand with development finance partners who can provide the funding that manufacturers and suppliers require to scale up production and manufacture appropriate goods to meet market demands.
Joel Jackson, CEO of Mobius Motors, based in Nairobi, Kenya, says during COVID-19-induced lockdown Mobius has continued to focus on testing and development of a new vehicle model which will be uniquely tailored to the African environment, but once restrictions are lifted and economic activity can resume in full, will scale up production and distribution of its vehicles to the wider African market.
“With a vehicle designed for African operating conditions and sold at an unparalleled price point, Mobius is driving down the cost of vehicle ownership; playing an important role in catalysing economic development in Africa, on two fronts. First, the pandemic and subsequent lockdown have shown how profoundly important mobility is to a fully functioning economy and healthcare system. Second, vulnerabilities of global supply chains to pandemics have highlighted the importance of localisation and self-reliance to build resilience in national and regional manufacturing ecosystems” he says.
Jackson says African economic recovery will require doubling down on industry potential and working with development funders who recognise the benefits of greater self-reliance in Africa’s future growth story.
“This kind of event fundamentally undermines global supply chains and import-dependent markets, making it even more crucial for African countries to build their long-term resilience through a stronger and more localised supplier landscape in the manufacturing sector. Governments need to expand incentives to companies and business models that have the potential for a disproportionate impact on job creation and up-skilling.”
Mobius is currently in discussions with the Kenyan government about incentives for local industrialisation and skills development. “The more we invest in industrialisation, the more we enable a self-fuelling flywheel of economic growth and consumer market development,” Jackson says.
He cites a recent research paper by McKinsey, Reopening and Reimagining Africa: How the COVID-19 crisis can catalyze change, which states that Africa cannot rely on business as usual to come back from the brink. In recovering from the crisis, Africa has the potential to create a reshaped and more resilient manufacturing sector, “provided that governments and businesses tackle long-standing barriers to industrialisation and cooperate to seize new opportunities”.
“We estimate that, for every dollar of manufactured product, Africa imports approximately 40 cents in inputs from outside the continent—higher than most other regions in the world. Over five years, a serious push to reduce reliance on global supply chains could add an initial $10-20 billion to the continent’s manufacturing output if 5 to 10 percent of imported intermediate goods can be produced within the region. In addition to supply-chain resilience, the shift could also benefit exporters in countries experiencing devaluation, if they could capture the upside of increased export attractiveness with less burden of more expensive imported inputs,” the report says.
No African car brand has been able to establish a presence in local markets at scale, and Jackson says a coordinated effort with governments and funders can overcome structural challenges to scale up local production and content. Mobius was founded in 2011 and has focused on manufacturing a multi-use transport platform that can “plug in” a range of different modules to enable a myriad of transport applications – something imported vehicle models are unable to do in meeting African challenges.
“There is a clear and significant gap in the market: durable and affordable vehicles, offering the versatility consumers want. We have donated two of our first-generation Mobius II vehicles to the Kenyan government for the COVID-19 community relief effort, and the advantages of a locally tailored vehicle platform are demonstrable. The next step is to progressively scale our next-generation Mobius 2 vehicle across the continent and drive positive and sustainable socio-economic change,” Jackson says.
Pakistan overtook Uganda to become the biggest buyer of Kenyan goods in the first five months of the year after supplies to Kampala were largely slowed by coronavirus-induced delays at the border.
Earnings from exports to Pakistan, predominantly tea, bumped 19.37 percent to Sh24.13 billion($224m), pushing the world's fifth most populous country back to the summit of top importers of Kenyan products for the first time since 2017, official data shows.
The data collated by the Kenya National Bureau of Statistics (KNBS) shows supplies to the land-locked Uganda, Kenya’s largest overall trading partner, dropped 5.65 percent to Sh20.22 billion, largely hurt by delays in April and May due to a requirement for truckers to have Covid-free certificates.
That slowed delivery of goods – including vegetable oils, fuel, iron and steel as well as paper and paperboard– to Kampala, pushing the country down to third biggest buyer of Kenya’s after being leapfrogged by the United Kingdom (UK).
Revenue from exports to the UK, the former Kenya’s colonial master, grew at the fastest pace of 30.06 percent to Sh21.49 billion on increased demand for fresh farm produce such as fruits, cut flowers and vegetables.
Kenya Flower Council, the lobby for large-scale flower farms, said demand for Kenyan fresh produce in Europe and other key destinations has been rising since April at about 30 percent of targeted sales to current levels of nearly 75 percent.
Delivery has, however, been hurt by erratic freight services with most airlines prioritising medical supplies in the fight against contagious Covid-19, KFC chief executive Clement Tulezi said on phone.
“The biggest challenge we have at the moment is freight. It is only the UK which has remained open for the longest even when we were in the heat of Covid shocks two months ago,” said Mr Tulezi.
“Our hope is that as Europe and other markets start to open, and increased demand and less supplies comes in, we should be able to attract more freighters into Nairobi.”
Overall, Kenya’s exports rose 6.73 percent (or Sh16.98 billion) in the January-May 2020 period to Sh269.13 billion, spurred by increased sale of tea and horticultural products.
Tea earnings jumped 18.90 percent to Sh58.62 billion, cut flowers by 4.23 percent to Sh51.14 billion, while income from sale of fruits surged 78.91 percent to Sh11.09 billion.
A key objective of Kenya’s agriculture growth and transformation strategy and the Big Four Agenda is increasing smallholder productivity and incomes.
The strategies also aim to enhance value-addition and agro-processing, which could create employment in agricultural value chains. The overall goal is to transform rural economies into commercially viable concerns.
But the government sometimes pursues policies that undermine these objectives.
Sorghum farming is a case in point. In Kenya, sorghum is mainly grown in areas characterised by low rainfall and high temperatures. For decades, there was little incentive to grow the crop because production costs were high, market integration low, and yields consistently low at about 0.7 tons per hectare. Ethiopia has consistently attained a national yield of 2.5 tons/ha. Farmers were unable to break even. Production was mainly for domestic consumption.
But thanks to the government policy supporting the use of sorghum for commercial beer brewing in 2004, through waiver of the excise duty, demand for sorghum increased, giving smallholder farmers an opportunity to transform their agriculture and livelihoods.
First, sorghum beer processing provided a stable market. Contracts entered between the main brewer and farmers guaranteed farmers a market and stable prices. Farmers responded by increasing their production. Some attained up to 3.3 tons/ha, which translated to an increase in incomes of about 220%.
Contract farming for sorghum beer processing expanded from three counties in 2010 to the current ten counties, with four more in the pipeline. During this period, the number of farmers has grown from 2,300 to 48,000 and farm-gate price per kilogram from 23 to 37 KES. Yield has improved due to better agronomic services and inputs provided on credit by the industry.
Second, researchers have been given an incentive to support the industry and responded by doubling the number of improved varieties from 20 in 2012 to 40 in 2017. These improved varieties are higher yielding, drought tolerant, pest and disease resistant and tailored for specific soils, rainfall and temperature.
Third, the policies on flour blending provide additional uses for sorghum in agro-processing. Despite this growth, Kenya remains a net importer of sorghum.
But the sorghum value chain, which is now years in the making, faces severe disruption. The National Treasury now seeks to reduce the excise duty waiver for beer made from locally grown sorghum, millet or cassava or any other agricultural produce from 80% to 60%. This measure is of course intended to increase tax revenue for the government.
But this policy will likely result in increased prices for the end consumers. This will in turn force the processor to cut down on production, and thereby reduce demand for the raw material. It is important to note that the main objective of changing the policy in 2004 was to fight illicit brews by making sorghum beer more affordable for people with low incomes.
Reduced demand will not only lower sorghum prices but increase costs for farmers forced to invest in storage and management of unsold produce. And more jobs will be lost along the value chain as economic activity scales down.
Learning from past policy failures
Existing evidence shows that such a policy move is counterproductive. In 2013, a similar proposal was implemented when a 50% excise duty was introduced. As a result, the price of sorghum beer increased as the added tax was passed on to consumers. The demand for sorghum plummeted as the beer processors scaled down processed volumes and also cancelled contracts for farmers.
This had a negative impact not only for farmers, but for others in the value chain, like input sellers, grain aggregators and transporters. Instead of the government raising revenue, it actually lost Ksh 2 billion in forgone tax revenue due to losses accruing to the sorghum beer processors and others in the chain.
The policy measure was rescinded in 2015.
The new regulation is ill-timed. This year, the agriculture sector has suffered several shocks. From December 2019, the desert locust invasion affected most of the arid and semi-arid lands. Also, excessive rainfall has been experienced in most parts of the country. Although the former did not pose a severe threat to sorghum farming, the latter posed a significant threat to productivity arising from flooding and waterlogging.
The COVID-19 pandemic has disrupted the economy in a way never experienced before. The demand for sorghum beer was already depressed following the closure of bars, restaurants and hotels in March 2020. Curtailing the industry during such economic shocks can only lead to worse effects for the economy.
Inconsistent policy choices
The adverse policy also contradicts other government’s policies and investments. The government, through support from development partners such as the World Bank and European Union, has also invested heavily in the sorghum and millet value chains through the projects like Kenya Climate Smart Agriculture Project, the National Agricultural and Rural Inclusive Growth Project and the Kenya Cereal Enhancement Programme. Several counties have prioritised sorghum as an essential food and commercial crop.
The president opened a Ksh 14 billion plant in Kisumu County two years ago which is serving as a key market for farmers in the western region. Another processing plant is being set up in Nakuru County. These investments have been made as a result of a stable and predictable policy environment that has existed in the past.
Across the value chain various players have invested and continue to do so with the expectation that this environment will persist and guarantee them a return on their investments. These actors include seed breeders working on sorghum varieties, seed companies, grain processors and investments in post-harvest storage and management.
The proposed regulation will be a disincentive to such investments, especially by the private sector, and possibly lead to capital flight.
Kenya has overtaken Angola as the third-largest economy in Sub-Sahara Africa, International Monetary Funds’ (IMF) fresh estimates released Friday has shown.
The East Africa’s largest economy, that has been the fourth largest economy in the Sub-Sahara Africa, has surpassed Angola to become third-largest economy in dollar terms.
Kenya now is behind Nigeria (1) and South Africa.
Bloomberg reports that Angola has contracted every year since 2016 as oil output declined, and the kwanza was devalued in 2019 while Kenya’s shilling held steady.
The coronavirus pandemic and restrictions to limit its spread will probably see Angola’s gross domestic product contract 1.4 percent in 2020, while Kenya’s is projected to grow by one percent, according to the IMF report.
According to IMF, Angola, an oil dependent country, recently had its national assembly approve a package of revenue and expenditure measures to fight the COVID-19 outbreak in the country and minimize its negative economic impact.
Additional health care spending, estimated at $40 million (Sh4billion) was announced. Tax exemptions on humanitarian aid and donations and some delays on filing taxes for selected imports were granted.
While Kenya has earmarked Sh40 billion (0.4 percent of GDP) in funds for additional health expenditure and funds for expediting payments of existing obligations to maintain cash flow for businesses during the crisis, among other tax relief incentives.
Read More: Daily Nation