Kenya, a failed state, now headed to the dogs

Unfortunately for Kenya, all that holds the coalition together now is mutual greed and pressure from abroad.

From The Economist


AFTER the horrendous violence that followed Kenya’s flawed general election in 2007, the mediation of Kofi Annan, a former secretary-general of the United Nations, was acclaimed for pushing the two main political parties into a coalition government. This at least stopped the bloodshed. Now, however, the deal is unraveling—fast. At a recent summit feuding government ministers could not even agree on what to discuss in order to find common ground. The Orange Democratic Movement (ODM) of the prime minister, Raila Odinga, stomped out before the meeting had even begun, accusing President Mwai Kibaki’s Party of National Unity (PNU) of blocking the agenda.

Among the foreign diplomats looking on, optimists refer to the squabbling coalition as an “unconsummated marriage”. The less charitable say Kenya does not have a functioning executive at all, just an unholy alliance of fierce rivals. A schedule of constitutional, electoral, judicial, security, land and economic reforms was laid out in the original agreement between the two parties. A domestic tribunal to judge those responsible for the post-election mayhem was supposed to be set up and a truth commission established. Yet more than a year later the ODM and PNU have failed to agree on any of these issues.

New corruption scandals, confined to no party, are regularly revealed by Kenya’s papers. With so many senior figures from the main parties co-opted into the government—which has 94 ministers and deputies, each earning over $15,000 a month—Kenya has become almost a one-party state. Ministers constantly squabble over pay, protocol, seniority and even who gets the best rooms at government get-togethers. The churches, NGOs and foreign diplomats are left to play the role of opposition, cajoling and threatening from the sidelines.

The infighting and bickering have also confounded hopes for measures to tackle the causes of the post-election violence, or even the country’s increasing gang violence. For example, Mr Odinga backed calls for the resignation of the soldier turned chief of the police, Major-General Hussein Ali, after he had been heavily criticised by human-rights groups and the UN over the activities of police death-squads. But Mr Kibaki, who appointed Mr Ali, has refused to let him go, despite an agreement to have a civilian head of the police. This week clashes in central Kenya between villagers and gang members of a criminal sect known as the Mungiki, who belong to the Kikuyu group, Kenya’s biggest, left another 40 or so people dead.

Parliament reconvened this week. The next elections are not due until 2012, but so grave is the impasse that politicians are already attending to their political futures rather than present troubles. Martha Karua, who resigned as justice minister on April 6th in protest at Mr Kibaki’s decision to appoint judges without consulting her, has said she will run for president. She gives press interviews, addresses crowds and lambasts the government she so recently abandoned as if a national poll were due for next week. Ms Karua is popular because she gives voice to the disgust felt by ordinary Kenyans towards their politicians. Her resignation is seen as a rare display of principle.

Unfortunately for Kenya, all that holds the coalition together now is mutual greed and pressure from abroad. Despite everything, foreign donor governments are nonetheless determined that the coalition should not collapse entirely. They believe any government is better than none, fearing yet more violence.

Mr Annan may intervene again. Within a few months, unless the domestic courts deal with the matter properly, he promises to hand over to the International Criminal Court the names of ten people considered by a special Kenyan commission to be responsible for the post-election violence. The removal of these figures from Kenya’s politics, and even from the cabinet itself, might give a useful jolt to the country’s dysfunctional political system.

Kenyan Blog Reveals identity of US Visa-Ban minister

A controversial Kenyan blog, kumekucha.blogspot.com today revealed the identity of a Kenyan minister who has been banned from ever setting foot in the US.

The blog describes the minister as "very upset" by the move because there are indications that his family members and business associates will also be affected.

When issuing the Visa ban notice earlier in the week, US ambassador to Kenya, Michael Rannebager declined to give the name of the minister in question.

The blog says that the decision to ban Agriculture minister William Ruto was reached after an investigation conducted by the FBI, whose content are still secret. "It is sad that the contents of that investigation are secret because it would have been of great interest to long-suffering Kenyans" Kumekucha says.

As controversial as Kumekucha has been in the past (or seem to be currently), the blog has on numerous occasions accurately provided reliable information unavailable in the mainstream media.

However Kumekucha does not state whether it independently verified the information about the identity of the minister issued with a visa ban - only dwelling on information provided by what the blog calls "My information".

Kenya's Leading Paper (The Standard) Endorse Barack Obama for President

The Standard, a Kenyan Newspaper whose tagline reads "for fairness and justice" has endorsed Barack Obama for the Presidency of the United States. The Standard joins numerous other Newspapers and media houses around the world who have publicly declared their support for the democratic party candidate.

However, this particular endorsement is not surprising given Senator Obama's roots to Kenya, a country in which his father (Barack Obama Snr) was born. Such a befitting endorsement would only come naturally.

The newspaper said "Fittingly, Obama’s rallying call is hope. Our endorsement of Obama for President, which we present unequivocally, is because we believe he is the right man for the job"

"Barack Obama, who traces his roots to this country (Kenya).....represents the best of America and its values. As US newspaper editors endorsing his candidacy have agreed: "He is no lone rider. He is a consensus builder, a leader."

The paper praised Obama for his support for press freedom. In 2006, Kenyan media was up in arms due to what they called "Suppression of press freedom" after masked gunmen invaded The Standard Group and confiscated computers, destroyed newspapers and other media equipment. The attack happened just before Senator Obama's African tour in 2006.

"His character and temperament in the gruelling campaigns have impressed all. As for the ideas and values he articulates, we are proud to have heard first-hand of his support for Press freedoms when he visited the Standard Group’s offices in 2006, not long after an illegal police raid."

The paper described Obama as "the best man to fix the mess" that has been created by the Bush administration over the last 8 years.

"In these troubled times of America’s diminished influence overthe world, he (Senator Obama) presents the best chance to fix the mess that the US has put itself, and in turn, the world."

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Also read:
1.The Economist Say "Obama deserves the presidency"
2. The New York Times - World Respected Newspaper Endorse Barack Obama for President
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"Obama’s complex heritage offers him a perspective bereft of the baggage that has burdened and blighted his opponent’s campaign. Judging from the way he has run for office, Obama has displayed the knowledge and the wisdom that would avert many worries for the world, the sort that Bush has plunged it into.

The Iraq debacle, preceded by the one in Afghanistan, convey the senseless plunder that has made the world poorer, indelibly scarred and increasingly dangerous. Its legacy is a loss in the trust in the US to act responsibly in global affairs.

With uncertainty and crisis spreading across the globe, the return of an America more tolerant and respectful of the international community is keenly awaited. The American people deserve some relief as do the rest of the world.

Still, the most abiding motif that Obama would represent is encapsulated in the Latin expression: ‘Ex Africa semper aliquid novi!’ which means, ‘something new always comes out of Africa’.

Safaricom Shares: To go Short or Long Term? The Right Way Revealed

By Mohamed Shabir (Emerging Africa Capital)

To say either one of them is the best solution is definitely being biased. This is because every individual is unique. The decision on which way to go really depends on an individual’s investment personality and risk profile.

There are risks in both long term and short term trading. The latter exposing an investor to greater risk. Generally, volatility and risk diminish over time. The longer you hold on to your investment, the higher the probability of you earning a profit.

With short term trading, you have to speculate which shares are going to be most volatile. In this case you see profits immediately but if you speculate on the wrong stock, you might end up losing part of your investment capital. If the company you are vested in is fundamentally strong with a strong upside potential, you will lose out on big potential gains if you were to cash out too early.

When thinking about long term investment you can take advantage of dividends payout. Many stocks can pay out dividends to their shareholders month after month. This could produce a monthly income for you.

With long term investing, although there is a higher probability of earning a profit, you would need to be particularly patience. Many times, it takes over a year to earn a significant gain.

You do not have to do much with a long term investment. Long term investors are proactive while short term traders are reactive. A long term investment plan requires much less time to set up, manage and evaluate than any other form of investing.

With short term investments you would see more instant returns. In this case, however, you require quick action on information as this is one variable that changes a stock’s price in the short term. If you read into information fast enough, profits would usually not be far behind.

One of the advantages of short term investing is the compound effect. If you need your investment to grow, reinvest what you make in the short term and reap even greater returns in the long term (if you maintain your good speculative run).

Most importantly, when considering short term investing, you need to realize that you will be paying more commissions and hence to make actual gains, your sell and buy prices must reflect profits even on deduction of commissions.

Both short term and long term trading depend on how you trade. The things to consider in deciding which way to go include;

1. What system fits with your personality, are you a risk taker or are you risk averse.
2. What is your level of knowledge on the market?

These questions, once answered will reveal ‘the right way’ for you. Invest, long term or short term. It’s your call.


(Mohamed Shabir is a Financial Adviser with Emerging Africa Capital)

Michael Joseph of Safaricom highlights the promise—and peril—of doing business in Africa

The Economist (print edition)


THIS is a vexing time for those looking to invest in Africa. There are prophets of doom, who predict that population growth and climate change will condemn Africa's cities and dry countryside to crisis and collapse. But there are also optimists, such as Michael Joseph, the head of Safaricom, a Kenyan mobile-phone operator. His is a remarkable African success story.

When Mr Joseph arrived at Safaricom in 2000, the company had 20,000 customers. It was controlled (as it still is today) by Vodafone, a giant British group that is one of the world's largest mobile operators. Vodafone's bosses reckoned that the Kenyan market would top out at 400,000 customers. Yet Safaricom alone now has 10.5m. It is the most profitable business in eastern and central Africa, earning profits of $223.7m in the financial year to the end of March, up 16% on the previous year. Despite a political crisis in January in which over 1,200 Kenyans died and 300,000 were displaced, the firm is expected to report even better results this year. And a public offering of 25% of the firm—a stake that belongs to the government—is expected to raise at least $800m, much of it from retail investors who queued up to buy the firm's shares, which will begin trading on June 9th.

Mr Joseph arrived in Kenya in 2000 having spent a freezing winter in Hungary, where he had set up that country's third mobile-phone network. He quickly decided to go after “pay as you go” customers, who pay for mobile airtime in advance, and therefore do not pose a credit risk to the operator, though they spend much less than wealthier (and less numerous) contract customers. He introduced billing by the second—a big deal for those earning just pennies a month. And he revamped the firm's brand, reasoning that the poorest customers are the most price-sensitive, and that a strong brand can help keep them loyal.

Keeping the Safaricom name inherited from Telkom, the state fixed-line monopoly, Mr Joseph and a local advertising firm set out to create an “emotional connection” between Kenyans and Safaricom. He took an “old school” approach, playing on the company's status when it had been established a decade earlier as a symbol of national pride—as the first mobile operators were in many countries at the time. These days only Kenya's national beer, Tusker, with its elephant label, can match Safaricom for national appeal. A typically shameless television advertisement shows Masai herdsmen gathering cattle before a dusky Rift Valley sunset to the backing of the English hymn “I Vow to Thee, My Country”. Some think Safaricom offers a lesson to mobile operators in Europe and the Middle East: take advantage of your affiliation with a multinational brand when it comes to technological know-how and buying equipment, but keep quiet about it to your customers, and dress up your network in national colours.

Mr Joseph was picked for the Kenyan job because he lacked the finishing-school polish required to be a European boss. In some ways it was a homecoming. A self-described “Bolshevik character” in his South African youth, he fled the country in the 1980s when the strictures of apartheid tightened. He had made his name there as a “network man”, upgrading the coal railway through East Transvaal and setting up electric pylons in the Drakensberg mountains. He pitched up in America just as the mobile-phone revolution was about to start. He then worked on bids to set up networks in Spain, Greece, South Korea and Brazil. His proudest engineering moment was building Argentina's first mobile network, “the fastest-built in the world,” he says.

But his most enduring achievement is likely to be M-PESA, a pioneering service that enables Safaricom's customers to send money to each other by text message. Cheaper and faster than ordinary money transfers, it now moves $1.5m a day across Kenya, in mostly tiny transactions, and is being rolled out in India, Tanzania, Afghanistan and elsewhere. Mr Joseph brazenly calls it the mobile-phone industry's greatest ever innovation. That is an exaggeration—but not a very big one. Mobile banking could be the next stage of mobile-driven economic transformation.
Dial T for trade

Some have criticised Mr Joseph and Safaricom for failing to reveal the owners of a mysterious 5% stake in the company, built into the original deal, which probably enriched people close to the previous government. But by the turbid standards of corporate Africa, the company is clean. Can Safaricom's fairy-tale be matched in other industries? Mr Joseph is bullish. He refused to buckle under immense pressure from Kenyan intelligence to ban text-messaging during the riots and never lost hope during Kenya's political crisis, though he admits the country may have been only two weeks away from collapse. It would be folly, he insists, to bet against a continent as rich and resilient as Africa.

Mr Joseph wants M-PESA to offer new services, such as mortgage payments. He also wants to plough funds into expanding internet access in Kenya using high-speed “third-generation” mobile networks. At 62, Mr Joseph reckons he has three more years left at Safaricom before retiring, perhaps to the house he keeps in northern Kenya, circled by rhino and leopards. Until then he must fend off competition. Not from Celtel, Kenya's second provider, which seems content to earn dividends in Safaricom's shadow, but from France Telecom, which recently bought 51% of Telkom, the state fixed-line monopoly, and Econet, a new Indian-owned network.

Mr Joseph is not shy in weighing in on the perennial question of aid versus trade. The ability to get a phone line without an address or credit for less than $1, he says, “has been hugely more efficient than aid”. Since 70% of the economy is informal and government services are ragged, there is probably some truth in his claim that Safaricom has done more to help Kenya than decades of aid. At the very least, it offers a powerful lesson for would-be investors in Africa: it can pay to bet on the poor.

Top secrets: Gaddafi plotted to bomb Kenya

by KAMAU NGOTHO (Daily Nation)
Like with politics, espionage knows no permanent friends or enemies, only the convergence of interests.

Said to be the second oldest profession, at times it appears to have even lesser morals than the first.

No surprise that when relationship between Nairobi and Washington were at the ice cold, it was still business as usual for legendary Kenyan spy chief James Kanyotu and the Central Intelligence Agency of the United States.

Early one morning in February 1991, Mr Kanyotu found himself with a difficult assignment. His friends in the CIA had called with an urgent and unusual request.

They had with them 600 Libyan dissidents they wanted sequestered in Kenya before they could be flown to a safe haven out of the reach of mercurial Libyan leader, Col Muammar Gaddafi.

The dissidents had been spirited out of Libya in a daring secret move and first flown to the then Zaire, now Democratic Republic of Congo.

But the CIA was not confident that Zaire was a safe haven. (Post Continues Below)

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Last Week's Top Post
Democracy, reforms can end fear of instability
By Raila odinga (Kenya's Prime Minister)
While we are rightly proud of having constructed Africa’s first ever Grand Coalition Government as a way to bring a halt to post-election violence and division, the fact remains that it is a novel experiment in which both coalition partners and Members of Parliament are trying to figure out how to do things the right way....(click to Read More)

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The country’s dictator, Marshal Mobutu Sese Seko was a US ally and had himself come to power in the 1960s as a CIA protégé.

But the Americans considered him unstable, unreliable and unpredictable.

His avarice and love of money was legendary, and it would not be beyond him to cut a deal with Col Gaddafi and turn over the dissidents in exchange for handsome sums wired to his numerous Swiss bank accounts.

The Americans wanted their charges out of Congo speedily, and Kenya seemed like the best choice.

But there was one problem. President Moi at that time had no time for the US.

Kenya was in the throes of the multi-party campaign and the US had come out strongly in favour of the push for democratisation.

Mr Moi was particularly irked by President George Bush’s ambassador in Kenya, the outspoken Smith Hempstone, who consorted openly with and supported the growing opposition of the day and had been dismissed as the Nyama Choma (roasted meat) ambassador.

An approach through Mr Hempstone would not work, for Moi would have loved nothing better than to tell the envoy to ‘shove it’.

A direct approach from Washington, either through the Secretary of State or the President himself, was also considered but none wanted to chance reaching Moi when in one of his foul moods and risk a humiliating rejection.

So the CIA turned to Mr Kanyotu to soften President Moi for them. It was a difficult assignment on two grounds. First of course was Mr Moi’s growing anger with the United States.

Then there was the security risk for Kenya in crossing Mr Gaddafi, who might find a soft target on which to hit back at the US.

The Libyan leader by then was on the American list of unfriendly regimes.

He was fiercely anti-American, and was accused of financing Middle Eastern terrorist groups that were increasingly aiming at targets in the West.

The Libyans at the time were also moving aggressively to position themselves in sub-saharan Africa, unlike many other North African countries, which viewed themselves primarily as members of the Arab world.

That was where Mr Kanyottu found the chink in President Moi’s armour.

Libyan interests in the region had in the past few years been viewed suspiciously by Kenya, which was alarmed by the countries seeming support for dissident movements.

From the early 1980, the Libyan embassy on Loita Street had become a popular calling place for radial student activists from nearby University of Nairobi.

Usually it was to pick up freebies in the form of Mr Gaddafi’s writings, including his famous Green Book, and other literature and posters on Libyan and on the Palestinian cause.

Mr Kanyotu’s agents kept a close watch around the embassy, paying particular attention to student leaders whom they thought might be tempted into going beyond mere infatuation with Gaddafi and enlisting into something sinister.

Libya at the time already had a strong presence in neighbouring Uganda, which under President Yoweri Museveni had become the favoured transit point for Kenyan dissidents fleeing the country for exile in Europe.

By early 1991, Kenya had already severed diplomatic relations with Tripoli after accusing the northern African country of sponsoring anti-Moi elements.

Some student leaders at the University of Nairobi had also been arrested and charged with espionage for allegedly spying for Libya.

Even without the Libyan link, President Moi at time viewed President Museveni as a dangerous radical all too keen to spread his ideology across the region.

Kenya and Uganda had engaged in a brief shooting war across the common border only a few years previously, and still regarded each other with deep suspicion.

With all the information at his fingertips, Mr Kanyotu was able to convince President Moi that the real threat lay not in US support for the multi-party campaign in Kenya, but in Libyan support for dissidents who might want to forment a revolution via neighbouring Uganda.

Mr Kanyotu thought, Moi — even for ego purposes only — would relish the moment to show both Col Gaddafi and Mr Museveni who was boss in the region. Mr Moi gave his nod, and working under the strictest security, Mr Kanyotu’s men and the CIA hurriedly constructed a camp to hold the Libyans at a remote point off the Thika-Garissa highway. Within a week, a makeshift barracks was in place complete with a borehole and a fully-equipped dispensary.

To throw off-scent any nosy characters, signposts were erected purporting that American peace-corps were coming to help sink boreholes in the remote reaches of Mwingi District.
On D-Day, Mr Kanyotu joined the CIA team at the Jomo Kenyatta International Airport shortly after midnight. Also present was Mr Hempstone.

As Nairobi slept, two US Air Force jets taxied at the far end of the apron. Unmarked buses from the Kenya Army were in place to transport the delicate human cargo.

Before dawn, the Libyan exiles were sound asleep in their new, but temporary, Kenyan home.

Mr Gaddafi, probably through Ugandan and Soviet intelligence sources in Nairobi, soon came to learn about the presence of Libyan dissidents in Kenya.

He was furious, and immediately set about planning how to retaliate.

A Libyan commando force assembled near the Entebbe Airport in Uganda, ready to strike once the exact location of the secret camp holding Libyan dissidents in Kenya was established.

Gaddafi’s first option was lightning air strike to bomb the camp and kill as many of the residents as possible.

The other was to bring in a commando squad by land, raid the place and capture some of the dissidents.

To keep him off-scent, Mr Kanyotu and the CIA put up several decoys that kept the Libyan intelligence operatives on a wild goose chase.

Meanwhile, the Americans found a permanent refuge for the dissidents, and before the Libyan forces could strike they were secretly flown out of Kenya under cover of darkness.

After ranting and raving for a period, Mr Gaddafi concluded the Kenyan leader was no pushover and offered to make peace.


TO READ THE REST OF THE BLOG CLICK HERE

Democracy, reforms can end fear of instability

By Raila Odinga
It is now three months since the National Accord and Reconciliation Agreement mediated by former United Nations Secretary-General Dr Kofi Annan was signed.

But Kenyans are still savoring and expressing their relief over the restoration of peace.

People tell me they feel a great sense of reassurance when they see President Kibaki and myself working together to build a new Kenya.

Never has the value of peace been so resonantly and keenly felt by a people who had enjoyed an essentially violence-free past until the results of the disputed election were announced.

Every one of us must do everything possible to ensure that this peace holds, and is made sustainable. The burden of that responsibility falls first and foremost on the Coalition Government and Members of Parliament.

We must work closely together to speedily address people’s most urgent and compelling concerns, and create the new laws and reforms that will entrench democracy, good governance, the rule of law and the enhancement of an ethical and equitable Public Service.

While we are rightly proud of having constructed Africa’s first ever Grand Coalition Government as a way to bring a halt to post-election violence and division, the fact remains that it is a novel experiment in which both coalition partners and Members of Parliament are trying to figure out how to do things the right way.


How to agree within the Coalition Government on the best way to resettle the displaced was the first major challenge.

Right now there is an intense and passionate debate about the large number of Kenyans being held merely for taking to the streets to demonstrate their fury over the disputed election results.

And within both main parties, backbenchers who enjoy the enshrined right of opposing government policy are struggling to find a way to exercise that right within the new arrangements.

But despite these and a number of other teething problems, it is clear that we must seize with gusto the opportunity that the Grand Coalition provides.

In doing so, we can finally achieve the reforms that Kenyans so overwhelmingly voted for in 2002 and last year.

As things stood in Parliament following the General Election, neither the Orange Democratic Movement nor the Party of National Unity alliance had the numbers to push through a new Constitution and all the other reforms on its own.

(Article Continues Below)

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Together, however, the two parties can entrench in the Constitution democracy and equity so that no Kenyan and no community feel marginalized.

And we must adopt policies, which will drive economic growth to the levels that are needed to effectively address the crises in land, impoverishment and joblessness.

I am committed to doing everything possible to make this Coalition Government succeed.

But I am not blind to the fact that success will only be possible if the bulk of our people perceive that the two sides are indeed genuinely sharing power, and that their most compelling concerns are being addressed.

So even as I stress that Government ministers must support policies that are agreed within the Cabinet, that in no way is meant to stifle debate on issues that are on people’s minds and on which policy has not yet been agreed.

Support for the Grand Coalition Government must not be based on blind faith or coercion.

That is why I have publicly called for the speedy resolution of issues surrounding post-election violence, as a means of ensuring that the restored peace we enjoy is not undermined by the pursuit of short-term measures.

At the same time, as Prime Minister I am in regular touch with President Kibaki and ministers to influence both policy and actions that I believe will heal wounds and promote reconciliation.

Some of these discussions must necessarily be conducted in private, but other issues can be handled publicly.

For example, I will be shortly visiting with the relevant ministers the vital Mau Forest, which is one of the nation’s water towers, to see for myself how an amicable settlement to the problems afflicting the communities there can be quickly arrived at.

Similarly, even as I have stated my concern about the impact the formation of a Grand Opposition in Parliament might have on our overall goals, I am committed to respecting the right of backbenchers to organize themselves in ways which will enable them to exercise their hallowed right to be the watchdogs of the people and oppose government policies they consider inimical.

As someone who has spent so many years in opposition fighting for people’s rights, no one should imagine that I would ever allow that fundamental democratic right to be abridged.

The writer is the Prime Minister of the Republic of Kenya

READ THE REST OF THE BLOG HERE

Kenya tea loses its flavour in Pakistan

From The Business Daily
May 12, 2008: A tactical manoeuvre by Pakistan into bilateral free trade arrangements with several Asian neighbours is threatening to throw its multi-billion shilling-a-year-tea trade with Kenya into a spin.

For many years, Pakistan has been the single largest buyer of Kenyan tea, taking up more than 28 per cent of its total exports worth an estimated Sh12 billion a year.

But in a surprise twist, the tea trade between the two nations has been on a slump over the last three years with analysts warning that the trend is likely to carry on.

“The trend has been noted over the years and the trade in tea between the two countries is slumping further,” Dr Amjad Iqbal, the head of trade affairs at the Pakistani High Commission in Kenya told Business Daily in an interview.

Statistics obtained from the Tea Board of Kenya (TBK) confirmed the decline, both in value and volume. For instance in 2005, Kenya exported 98 million kilogrammes of tea worth Sh12 billion to Pakistan, but this gradually shrunk to 80 million kg worth Sh10 billion in 2007.

The trend was evident over the first quarter of 2008 when Kenya tea exports to Pakistan dropped 52 per cent, confirming fears that commodity trade ties between the two countries were getting loose.

Analysts trace the weakening to a decision by Pakistan to enter into Free Trade Area (FTA) pacts with several of its neighbours under the ambit of the South Asian Association for Regional Cooperation (SAARC).

An FTA is a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most if not all goods between them.

SAFTA involves the free movement of goods, between countries through elimination of tariff and non-tariff restrictions on the movement of goods, and other equivalent measures.

A section of members of South Asian Free Trade Area (SAFTA) such as India and Sri Lanka directly rival Kenya in the tea business.

Other member nations in the SAFTA pact are Bangladesh, Bhutan, Maldives and Nepal. The SAFTA pact was signed in Islamabad, Pakistan in January 2004 during the 12th Summit of SAARC. It came into force on January 1, 2006. Member countries have up to January 1, 2016 to comply with the entire SAFTA deal.

Seeking to take an early ride on the FTA, Pakistan and Sri Lanka struck a deal soon after the pact came into force exchanging preferential market access to each others’ exports by way of tariff concessions.

Sri Lanka would be able to enjoy duty free market access on 206 products in the Pakistani market including tea, rubber and coconut. Pakistan, in return, would gain duty free access on 102 products in the Sri Lankan market. These products include oranges, basmati rice and engineering goods.

Pakistan also has an FTA arrangement with China that is also elbowing Kenya out of the vintage position in tea business. The Pakistan-China FTA was signed in November 2006 between Presidents Pervez Musharraf and Hu Jintao with Pakistan winning an overall market access at zero duty on industrial alcohol, cotton fabrics, bed linen and other home textiles, leather articles, mangoes, citrus, fruits and vegetables, iron and steel products among others.

In the deal China also promised to reduce its tariff by 50 per cent on fish, dairy sectors, frozen orange juice, plastic products rubber products, knit wear and woven garments.

In return Pakistan gave market access to China mainly on machinery; organic; and inorganic chemicals, fruits & vegetables, medicaments and other raw materials for various industries including engineering sector, intermediary goods for engineering sectors. As the new FTA arrangements take shape, Kenya’s traditional tea trade with Pakistan is already feeling the pinch.


“It is definite that one would turn to the best partners and the existing FTA arrangements are doing quite well. Much of the business is going to nations with which Pakistan has FTA arrangements,” Dr Iqbal told Business Daily. For instance, statistics from the Sri Lanka Commerce Department showed that the FTA deal had prompted growth in tea exports to Pakistan.

As at 2006, the value of Sri Lankan tea shipments to Pakistan climbed 13 per cent to $8 million, just one year after the free trade pact was penned on to paper.

“The tariff rate quota of 10,000 metric tonnes granted by Pakistan for export of tea at zero duty under the FTA would help Sri Lanka to regain its market share over time,” the Sri Lankan Commerce Department said in a statement. Pakistan is already courting upcoming tea producers in Africa such as Rwanda and Malawi for possible FTA arrangements that would ease trade ties.

“We are in negotiations with Rwanda for an FTA because their tea production is improving both in terms of quantity and quality,” revealed Dr Iqbal “I believe a similar efforts is on going with Malawi”.

He said tea exports from Rwanda to the Pakistani market had climbed impressively and now accounted for about eight per cent of the total market share compared to six per cent three years ago.Malawi today enjoys seven per cent of the total Pakistani tea market share compared to five per cent in 2005. “Kenya should see the sense in this and enter an FTA with Pakistan. Our proposal for an FTA has been pending with the Kenya Government since 2001. Seven years is not a long time and we are hopeful,” Dr Iqbal said.

Analysts however said though Kenya had the provisions to negotiate an FTA with Pakistan it would be difficult to find one that doesn’t infringe on the current FTA it has with other member countries of the Common Market for Eastern and Southern Africa (Comesa).

“The WTO does not bar a nation from entering more than one FTA arrangement but any such new arrangements must not be better than the existing ones because that would be tantamount to short-circuiting those already in existence,” a senior official at the Trade Ministry in Nairobi told Business Daily.

But apart from the threats of Pakistan’s new FTA partners, Kenya faces another major hurdle in protecting its prime tea market next year should the East African Community (EAC) change the import duty currently charged on Pakistani rice shipments into the country.

For many years, Kenya and other EAC nations pegged the common external tariff (CET) on rice imports from Pakistan at 75 per and an extra 35 import duty in line with the provisions of the harmonised community description and coding system. But in a surprise move, Kenya, Tanzania and Uganda unsuccessfully tried to start charging all rice imports at 75 per cent duty from January 1, 2005.

This drew the wrath of Pakistani rice exporters who then pressured their Government to arm-twist Kenya into deferring the duty or slap them with a reciprocal raise in the import duty of tea.

Faced with a limbo over its tea exports Kenya sweet-talked other members of the EAC into deferring the new import tariff for another two years. The deferment is set to expire by June next year, raising fresh fears that trade between the two countries could be hard hit should the tariff structure for rice change.

Kenya Tea Development Agency (KTDA) managing director Lerionka Tiampati said urgent consultations were needed between EAC members states to avoid hurting bilateral trade ties like those between Kenya and Pakistan. “If it (changes in rice import tariff) were to happen, it would be really bad on us. I hope it does not happen,” he told Business Daily. Mr Tiampati felt Kenya should negotiate another extension with its EAC partners.

Dr Iqbal said though the EAC import tariff issue was futuristic, failure to address it on time would have great impact on the bilateral pact of Kenya and Pakistan. “We hope that Kenya will ensure regular and sufficient supply of rice to its consumers when this time comes.

Kenya produces about a third of its annual rice demand of 250,000 tonnes with a bulk of the shipments coming from Pakistan alone. Statistics showed that IRRI-6 rice shipments to Kenya accounted for about 70 per cent of the Pakistan market share.

Kenya's Largest IPO opens amid protests over Rogue Stockbrokers

By JUSTUS ONDARI (The Daily Nation)
Rogue stockbrokers, not the electronic trading system, are to blame for the financial crisis facing Nyaga Stockbrokers and other ills afflicting the Kenyan stock market.

According to a survey carried out by the Nation, adequate discipline backed by harsh penalties for any transgression would rid the Nairobi Stock Exchange (NSE) of such wayward brokers.

Noting that similar systems have been successfully employed in other markets worldwide, including the London and New York stock exchanges, many of the people interviewed said the NSE had no option but to embrace information technology (IT).

Mr Bob Karina, the Faida Securities Ltd managing director, said failure to move with the times could keep the NSE off the competitive global financial market. “We cannot reverse the clock. It is either we move with time or perish,” said Mr Karina, whose firm is a member of the NSE.

As investors welcome the Safaricom initial public offering (IPO), which is opening today, human error has been singled out as the main challenge facing the market where greedy brokers dip their fingers in clients’ investments cookie jars illegally.

For Fred Mweni, the Tsavo Securities Limited MD, the developments at the NSE are a manifestation of lack of integrity and corporate governance structures in some of the brokerage firms.

“The system is not to blame because, like any other, it does what man commands it to do even if it is illegal (command),” said Mr Mweni.

Describing the NSE trading system as efficient, versatile and robust, Mr Mweni said: “If individual brokers cannot keep their fingers off their clients money, we should not shift the blame to the system.”

In the wake of the NSE placing Nyaga Stockbrokers under statutory management early this month over financial problems — a year after another stockbroker, Francis Thuo & Partners went under, accusing fingers were pointed at the market’s automation programme.

Many commentators, including Mr Kassim Bharadia, the CEO of ApexAfrica Investment Bank, criticised the system, saying it gives brokers an undue advantage over clients’ investments, a situation that enables some of them to illegally sell clients’ stocks.

The NSE established the Central Depository System Corporation (CDSC) in 2004 before introducing the Automated Trading System (ATS) in 2006, which greatly improved the speed with which transactions and settlement of traded securities are effected.

Besides the buying and selling of stocks going electronic, the former system in which investors had to deal in stocks by physically signing share certificates was phased out through immobilisation. And this has been cited as one of the loopholes being exploited by the brokers to illegally trade in their clients’ money.

However, Mr Karina and Mr Mweni said that is not an issue and singled out weak monitoring and supervision by the market regulator, Capital Market Authority.

Drawing a parallel with the banking industry, which faced many collapses in the 1990s but is currently riding on a profit wave, they said stringent Central Bank of Kenya supervision has kept banks in the straight and narrow path.

Mr Mweni said that even if the bankers have unfettered access to all their depositors’ money just like the stockbrokers, they are wary of misusing it for fear of CBK’s action.

“On top of losing the licence, if a broker who steals a client’s shilling were to be made to pay, say, Sh100,000 and Sh100 to pay Sh1 million no one will try to steal,” he added. Echoing the sentiments, Vincent Kimani of Capital World Limited said it is time CMA acted tough on the brokers.

“Banks are more than stockbrokers and yet CBK effectively oversees their operations. Why does CMA not do the same with the brokers?” said Mr Kimani.

Indeed, following the collapse of the Nyaga Stockbrokers with investments of 130,000 clients, there have been calls for investment banks and stockbrokers to start publishing their quarterly financial results as a way of promoting accountability and good governance in the stock market.

Leading the calls is Mr Bharadia of ApexAfrica Investment Bank, who said that brokerage firms are not different from banks and insurance companies that are forced by law to publish their results.

“It is extremely important that we start publishing the results as the first step to transparency,” Mr Bharadia told a media briefing in Nairobi recently.

Mr Bharadia, whose investment bank’s turnover reached Sh22 billion in 2007 up from Sh2 billion in 2003 to emerge the top investment bank at the NSE, said such a move will enable investors to know how firms managing their investments were performing.

Rush to sell Safaricom raises moral questions

Source: Business Daily
With all indications showing that a large number of small investors are likely to be locked out of the forthcoming Safaricom sale, the spotlight must turn to Finance minister Amos Kimunya over his timing of this offer that is billed as East Africa’s biggest.

Mr Kimunya has defied all counsel that his ministry should first deal with credibility issues — some of which are of criminal nature — that investors are facing in their interaction with stock brokers to launch the issue.

Last Friday, as he braved the questions hanging over the haste with which he has moved to bring Kenya’s most profitable company to the market, it became clear that the minister, despite the reconciliatory mood the country has embraced since the signing of the peace deal between President Kibaki and ODM leader Raila Odinga, remains hell bent on playing politics with the Safaricom sale.

This he has done since last year when he insisted on selling the firm in the thick of electioneering in December.

Then, he often invoked investors’ name in his pursuit of a very personal and political agenda that became only too clear.

With all the opinion polls showing the opposition ODM in the lead only a few weeks to the December 27 vote, Mr Kimunya and a faction of business politicians around him were getting uneasy over the prospect of someone else presiding over the sale.

Hence the aura of urgency he brought in the matter citing a wide range of fiscal and monetary commitments that would not be met if Safaricom was not sold. These have since come to naught many months after the December sale failed to materialise.

Mr Kimunya’s silence over these commitments while he speeds on with the sale is informed by the reality on the ground.

He can no longer tell Kenyans for certain that programmes or projects will fail to materialize this financial year if Safaricom is not immediately sold because he knows that Treasury cannot have the proceeds in its coffers any time before July when the new fiscal year begins.

Aside from the practicalities of balancing the books at Treasury, bringing Safaricom to the market at this point in time raises a number of important questions.

Ordinarily, privatizations need to pass a number of tests including transparency of processes, legal and moral authority to sell public assets as well as credibility of the sale judged by the vendor — in this case the people of Kenya — getting value from the disposal of their asset.

As things stand, the Safaricom sale cannot be said to have passed any of these tests. First, many questions have been raised over the transparency of the process, including its initiation while a new law on privatization remained frozen in the cooler for more than two years, leading to court battles last year.

Queries were also raised over the scoring of technical and financial bids in the run up to the picking of advisors for the sale and the opening of one of the bids before due date.

Then there is the moral question of the authority of what is basically a transition government under which Mr Kimunya is serving as Finance minister to undertake such an important exercise only a few days before a new government is formed.

Indications that President Kibaki may form a new government before the end of this week after Parliament passes the necessary Bills only leave the grim prospect that the minister’s action is driven by personal and sectarian interests.

The sale must go on at this time just in case the President appoints someone else under the coalition agreement to take charge at Treasury and deny him and his allies the privilege of presiding over Kenya’s biggest IPO ever. Protection of such partisan interests, in our view, should never be the drivers of decisions made by public servants.

Kenya's Collapse

from THE WALL STREET JOURNAL EUROPE
January 31, 2008

A rigged election, ethnic violence, economic dysfunction and now a political assassination -- the crisis in Kenya has hit a sad superfecta. Worse, the politicians who loosed these forces don't look capable of reining them back in.

It's been a month since this once-placid country exploded. When incumbent President Mwai Kibaki was declared the winner of the December 27 election, supporters of challenger Raila Odinga took to the streets. They claimed Mr. Kibaki, who had been trailing in opinion polls, stole the election through massive fraud. International observers say the vote was such a shambles that it's impossible to know who really won.

Hopes that the civic outrage at electoral fraud was a sign of democratic maturation were fast shattered. The death toll surged, with reports that police were ordered to put down the early protests with lethal force if necessary. Now human-rights groups claim the opposition has been organizing brutal attacks on members of Mr. Kibaki's Kikuyu tribe -- a charge that Mr. Odinga denies. In all, at least 850 Kenyans have been killed and more than a quarter of a million have fled their homes. Another spate of interethnic killings was triggered by the apparent assassination in Nairobi Tuesday of a moderate lawmaker aligned with Mr. Odinga.

Messrs. Kibaki and Odinga have ill-served their own people by doing little to nothing to mend the political rift -- which, in the meantime, turned into a potentially far more dangerous tribal conflict. Both politicians are to blame for the machete-wielding men and innocents burned to death in village churches, bloody episodes that are eerily reminiscent of Rwanda in 1994. Some in Kenya now wonder whether either man still wields control over his ethnic faction.

A political solution, perhaps involving a form of power-sharing until calm returns and a fresh election can be called, is a prerequisite to stopping the violence. But it will be difficult to pull off. One possibility that's been floated would have Mr. Odinga serve as Prime Minister alongside President Kibaki. But the Odinga camp may not trust Mr. Kibaki to follow through, since the President earlier reneged on a deal to make Mr. Odinga the Premier in exchange for his support in the country's 2002election.

Rerunning the election soon, or recounting the December tally, would also be highly problematic. At this point, there's little reason to believe that the loser, whether the Kibaki or the Odinga side, would accept the results. The vote itself, one Kenyan democratic activist says, would have to be either beyond reproach or result in a landslide win for one candidate. A democracy in which only large margins are respected isn't really a democracy.

Even if a political deal can be struck, the violence may not end quickly. The Luo tribe of Mr. Odinga, along with the Kalenjin and other clans, feels that the Kikuyus have kept too many of the spoils of independence and recent economic growth. Unhappiness with inequalities in wealth and land ownership are as much of a sore point as who gets political power. The two sides are forming militias -- in many cases, we're told, with the help of organized crime -- that will not necessarily be satisfied by seeing the politicians playing nice.

A lasting peace will have to include a shift away from granting power and wealth solely on the basis of tribal identity. This favoritism is a form of corruption, one of the most persistent ills across all of Africa. Rooting out such an ingrained system won't be easy. The democratic institutions that so far haven't stopped the current ethnic violence will have to be strengthened. They include an independent judiciary to review vote-fraud allegations and law enforcement that citizens respect.

Messrs. Kibaki and Odinga could best help their countrymen by finding a way to work toward these goals. Otherwise, they're merely arguing over who gets to preside over the next African tragedy.

READ THE REST OF THE BLOG HERE

Freedom in the World 2008: Global Freedom in Retreat (Kenya among the Worst Perfomers)

The year 2007 was marked by a notable setback for global freedom, Freedom House reported in a worldwide survey of freedom released today.

The decline in freedom, as reported in Freedom in the World 2008, an annual survey of political rights and civil liberties worldwide, was reflected in reversals in one-fifth of the world’s countries. Most pronounced in South Asia, it also reached significant levels in the former Soviet Union, the Middle East and North Africa, and sub-Saharan Africa. A substantial number of politically important countries whose declines have broad regional and global implications—including Russia, Pakistan, Kenya, Egypt, Nigeria, and Venezuela—were affected. Kenya is now being pronounced in the same breath as the Lawless Somalia among other unstable countries in the world all because of the last elections that many believe was openly stolen in full glair of the media in favour of the incumbent. Kenyans have reacted angriliy with many retaliating as evidenced in the spate of violence that has rocked the once peacefull and stable East African State over the past one month.

“This year’s results show a profoundly disturbing deterioration of freedom worldwide,” said Arch Puddington, director of research at Freedom House. “A number of countries that had previously shown progress toward democracy have regressed, while none of the most influential Not Free states showed signs of improvement. As the second consecutive year that the survey has registered a global decline in political rights and civil liberties, friends of freedom worldwide have real cause for concern.”

While the profile of world freedom as measured by the number of countries designated in Freedom in the World as Free, Partly Free, or Not Free changed little during the past year, there were many negative changes within these broad categories. In all, nearly four times as many countries showed declines during the year as registered improvement.

Many of the countries that moved backward were already designated Not Free by the survey. The past year saw the intensification of an effort by authoritarian regimes -- Egypt and Pakistan are two examples -- to consolidate power through the suppression of democratic opposition, civil society, and independent media in their own societies. Especially important in carrying out this assault on freedom of association was a group of market-oriented autocracies and energy-rich dictatorships, including Russia, Iran, Venezuela, and China.

Not one of the countries that registered the lowest possible scores in the Freedom House index -- the “worst of the worst” -- exhibited signs of improvement. This represents a break from a trend formerly observable even in past years when world freedom stagnated or declined, in which progress was registered in some of the world’s most tightly controlled dictatorships.

Just as concerning, countries that had made progress towards freedom in recent years took significant steps backwards. The deterioration within Nigeria and Kenya, two of Africa’s most important countries, should be of great concern for those who had hoped that the incremental gains of recent years would continue. Two countries that had “color” revolutions in past years

While sub-Saharan Africa has made incremental if uneven progress in the last several years, 2007 saw an overall deterioration of freedom on the continent. Fifteen countries registered reversals, while six countries marked improvements. Togo moved from Not Free to Partly Free, and Mauritania was designated an electoral democracy this year. Two countries that were conflict zones, Cote d’Ivoire and Sierra Leone, showed major improvements, as did Mozambique and Rwanda. However, political manipulation of ethnic tensions and intolerance by many of the region’s leaders were important factors in the declines of a number of countries, including Kenya, the Democratic Republic of Congo, and Nigeria. Mali and Niger registered declines in civil liberties, while in East Africa, Somalia’s already low score declined further. Other countries that showed declines included Cameroon, Chad, Central African Republic, Comoros, the Republic of Congo (Brazzaville), Guinea-Bissau, Lesotho, Madagascar, and Malawi. Freedom House, an independent nongovernmental organization that supports the expansion of freedom around the world, has monitored political rights and civil liberties around the world since 1972.

Kenya's Kibaki sheds gentleman image

NAIROBI (Reuters) - When President Mwai Kibaki was inaugurated on December 30, 2002, a million Kenyans thronged a city park to hail him as savior after 24 years of repressive rule.

Five years later, he was hurriedly sworn in, watched by a few close aides, on the lawn of his heavily guarded residence, as smoke rose from protests in nearby slums.

The contrasting ceremonies mirror Kibaki's changed reputation both inside and outside Kenya after his disputed re-election and tough handling of the turmoil afterwards.

"Sorry for the cliches, but the popular 'reformist president' is beginning to look a bit more like an old-fashioned African strongman these days," one Nairobi-based diplomat said.

There was nationwide euphoria when Kibaki beat the party of authoritarian former President Daniel arap Moi in 2002.

Though some Kenyans later became disillusioned over issues like corruption, there was still respect for a man regarded as a gentleman, statesman and "Mzee" -- Swahili for respected elder -- above the messy fray of daily politics.

Now, however, Kibaki has turned into a hate figure for many who believe he stole the December 27 presidential vote and is crushing protests with brutality.

The man with a penchant for P.G. Wodehouse novels and a round of golf at the colonial-era Muthaiga Club, who was previously often satirized as a genial but bumbling leader, has shown unexpected steel in facing the crisis.

After swearing himself in within minutes of being declared winner from a hotly-contested vote count, Kibaki, 76, has gone on to outlaw public demonstrations, put hardliners in his cabinet, deploy riot police daily, and ban live TV broadcasts.

"We are seeing a creeping regression to the totalitarian methods of the past," said Kenyan columnist Macharia Gaitho.

"The government is going out of its way to curb the inherent rights of the people to associate, express themselves, communicate and assemble."

Not so, cry Kibaki supporters, who say opposition leader Raila Odinga is forcing the government to take tough action by whipping up civil disobedience and ethnic massacres.

"NOT ZIMBABWE"

Diplomats are beginning to ask if Kibaki is following in the footsteps of others -- like Meles Zenawi of Ethiopia, or Yoweri Museveni of Uganda -- whose authoritarianism cut short their early status as favorites of the West.

Kibaki opened up the economy, which stagnated under Moi, to achieve average annual growth of five percent, and ended many restrictions on free expression. He was also seen as a reliable Western ally against al Qaeda.

But question-marks that began emerging towards the end of his first term, when, for example, police controversially raided a newspaper office, are now seen as an early warning signal.

"He risks going down as the president who squandered the opportunities of the post-Moi democratization in Kenya, even though he was the one who first enabled them," said Patrick Smith, editor of Africa Confidential newsletter.

"The old stereotype of the genial but weak leader surrounded by bad people does not fit any more. That image was gradually chipped away. Then events since December 30 finished the process."

Analysts point out, however, that Kibaki has still led from the shadows during the crisis rather than become a dominant frontman like, say, Meles or Museveni.

And U.S. ambassador Michael Ranneberger was adamant that comparisons made by Kibaki's most strident critics with Zimbabwean President Robert Mugabe were wrong.

"Kenya is nowhere near anything like Zimbabwe so such comparisons are completely beyond the point," he said.

Still, there is a mounting chorus of criticism from Kenyan rights groups and activists who say Kibaki staged a "civilian coup" and is looking increasingly dictatorial.

"The decline into a police state has been so swift and so organized that one can be forgiven for thinking that some within the government may have actually anticipated the chaos," said lawyer Karim Anjarwalla in Nairobi.

Kibaki faces early tests of his international standing.

First, he is due at an African Union (AU) summit at the end of January, where it is not clear how fellow heads-of-state will treat him. Uganda, Swaziland, Morocco, Somalia and Egypt are the only African nations to recognize Kibaki so far.

Then there are threats in the air by Western powers to cut direct aid. But as Kenya gets less than five percent of its budget that way, the impact would be largely symbolic.

Some who know Kenya well say that rather than a dramatic transformation in the last three weeks, Kibaki is in fact only showing qualities he has hidden for decades.

As a legislator in every parliament since 1963 independence, Kibaki has exhibited plenty of political guile and strength during a career that includes a decade as vice-president for Moi -- the man with whom he was seen as representing a clean break.

And while he belatedly benefited from the advent of multi-party politics in the 1990s, critics remember his comments in previous years likening those seeking to end one-party rule to daydreamers trying to fell a tree with a razor blade.

Don't Ignore the Violence in Kenya

By WANGARI MAATHAI

It's been nearly two weeks since the Electoral Commission of Kenya declared President Mwai Kibaki the winner in his bid for a second term. The loser in this closely fought and much disputed election is Raila Odinga, the candidate of the Orange Democratic Movement (ODM). The declaration threw Kenya into the current crisis -- street protests, wide-spread civil unrest and the threat of violent crackdowns -- which refuses to end.

The commission may have legitimate reasons for ushering out both the local and international press before making its announcement exclusively on the state-owned Kenya Broadcasting Corporation. There also may be legitimate reasons why the subsequent and much hurried swearing-in ceremony for Mr. Kibaki has already taken place.


But given the messy performance of the electoral commission, many people are wondering whether there was something to hide. Some of its members have admitted to being under tremendous pressure to announce the results even as some found credible reports of irregularities. This has cast doubt over the credibility of the democratic process.

To people conversant with the political games of intrigue and trickery, however, what's happening in Kenya is just another instance of the challenges to real democracy that bedevil this region. In the eyes of some politicians, the misfortune is that the irregularities have come to light. Under "normal circumstances," leaders in Africa don't lose elections they organize.

I have heard it said by some political veterans that if you're not willing to play these games, you have no business being in politics, since you're bound to lose. It is on the altar of this kind of cynicism that values like transparency, honesty and accountability are often sacrificed. Within this worldview, bribing voters, election officials and government officers, as well as theft and manipulation of votes, are considered "political wisdom."

After the very high voter turnout in the Dec. 27 elections among Kenyans rightfully choosing their next government, it's tragic that Kenya -- a country I thought could provide a model of peaceful transfer of power in Africa -- has been plunged into the sort of senseless bloodletting that the outside world all too often associates with my continent. Despite the insistence by some of the protagonists that outside intervention is not required, more public and international pressure is essential if Mr. Kibaki and Mr. Odinga are to seek a lasting solution. Despite the suffering of the Kenyan people, and others in the region that depend on Kenya's functioning infrastructure and economy, moves toward dialogue have been disturbingly slow.

Colonial administrators and the leaders who followed them have used ethnicity as a major strategy to divide their people. In countless conflicts in Africa, the uncompromising positions of such leaders -- refusing to consider mediation or to make any concessions -- have led to unimaginable suffering.

Under this mindset, fellow tribesmen support their respective leaders no matter what -- even when they are the first victims of the leaders' actions, or inaction. Eventually, even these leaders lose control and anarchy takes over, with rival gangs stealing, raping, maiming and punishing civilians.

Mr. Kibaki has now sworn in half of this new government's cabinet, even after being urged not to do so before holding talks with Mr. Odinga on resolving the crisis. Mr. Kibaki's move may lead to another round of ethnically based violence -- which already has taken the lives of hundreds of Kenyans. Both Mr. Kibaki and Mr. Odinga have appealed publicly to those causing the mayhem to stop, but few seem to be heeding the call.

Unfortunately, much of the advice Mr. Kibaki is getting from ministers, and Mr. Odinga from advisers, seems to urge that each maintain his hard-line position. Many of these advisers and ministers are thinking ahead to the privileged positions that they assume they will receive with their candidate in power. This is making it very difficult for men and women of goodwill in Kenya to broker a lasting peace.

For the sake of the people of Kenya, the East African region and indeed Africa in general, I appeal to the international community, including the African Union, the Commonwealth, the European Commission, the United Nations and other friends of Kenya like the United States and Japan, to put strong pressure on Messrs. Kibaki and Odinga -- before this crisis escalates into an even greater tragedy.

The leaders must put the welfare of Kenyans before their own ambitions, and enter immediately into a serious and sustained dialogue for a political and legal settlement.

Ms. Maathai, the 2004 Nobel Peace Laureate, was a member of Kenya's Parliament from 2002 to 2007.

Zimbabweans Contemplate Kenya's ODM Model

By Rejoice Ngwenya

The nightmarish quagmire of Kenya's deadly electoral circus has filtered shock waves of potential civic uprising to Zimbabwe, a country facing its own elections this March, having known no real ballot peace since 2000. We Africans tend to pick political bad habits from neigbhours because as it is, Zimbabweans are contemplating using the 'Odinga Model' to reverse Robert Mugabe's inevitable electoral fraud.

The Kikuyu, like our Shona in Zimbabwe, have always wanted to forever dominate national polity. In the first election in 1980, they hogged the ballot box, and Mugabe, like Kenyatta, has exploited this dominance in subsequent contests. Kikuyu, like Shona, are the majority who never want to share real power with ethnic minorities. Thus, the coalition that propelled Kibaki to stardom five years ago was a marriage of convenience in which, like Zimbabwe's Joshua Nkomo, Odinga was deceived. To say Daniel arap Moi defied the odds and elevated Kalenjins would be a denial that he was as much a compromise surrogate of Jomo Kenyatta as Joshua Nkomo's so called vice presidency that never gave the Ndebele tribe a bite of Zimbabwe's political cake. For Mugabe now, the chickens are about to come home to roost because typical African politics is that when the tribal war has been won, ethnicity takes centre-stage.

Robert Mugabe's ZANUpf party presents an illusion of a formidable solid political machinery, yet the ageing dictator has always used a combination of intimidation, mutual distrust and blackmail to smother potential intra-party competition between Zezurus, Karangas and Manyikas - the ethnic groupings that largely constitute ZANUpf's Shona tribe. Zimbabwe's commerce, industry, quasi-government and academic sector follows these distinct ethnic patterns that reflect the country's balance of political power. Since Mugabe himself is Zezuru, it is 'natural' that most blue chip companies are managed and owned, like Kenya's Kikuyu, by Zezurus affiliated to ZANUpf's political centre. This is necessary because Mugabe needs to finance his empire with money he can trust.

The cronies have become so dependent that they, since 1980, have done everything to sustain his ambitions in exchange for lucrative government tenders. During the last Extra Ordinary Congress in December 2007, these 'crony corporates' fell over each other to finance expensive advertisements to support Mugabe's unprecedented seventh term presidential bid. The crony corporates have accumulated so many favours that if any of them so much as tries to express an opposing political opinion, Mugabe pulls the life support plug.

Mutumwa Mawere and James Makamba, early beneficiaries of Mugabe's benevolence, got excited about diverse political opinion and the retribution was instant. Mawere lost the war and is now operating his African Resources Limited from Sandton City in Johannesburg while James Makamba, a business associate of current vice president Joyce Mujuru escaped imprisonment by a hair's breadth, and subsequently lost his controlling shares in Tele Cel after fleeing to London.

The Karangas who generally hail from the south-eastern part of Zimbabwe have always been the intellectual entity of not only Zimbabwe as a whole, but also ZANUpf as a party. The late political icon Edison Zvobgo was the brains behind ZANUpf's legal affairs, having not only participated in crafting the Lancaster House Agreement of 1979, but was also credited with altering Zimbabwe's constitution in 1990 to give Mugabe executive presidential powers that transformed him into an infamous dictator. Many positions of academic excellence in universities, colleges and state institutions have been parcelled to Karangas by Mugabe as a token of appreciation for Edison Zvobgo' s life-long support of dictatorship. The Karanga entity equally dominated the national army for decades, a chain reaction that started with Josiah Magama Tongogara who ran ZANUpf's liberation military command in Mozambique but died in a mysterious 'road accident' a few hours before Zimbabwe's independence. Political analysts have long advanced the theory of appeasement - that it was necessary for Mugabe to keep the Karangas busy in the army so as to divert their interest from 'real' politics.

Herbert Chitepo, Mugabe and ZANU's first barrister and party co-founder, was a Manyika, the group that hails from Zimbabwe's eastern province. His ascendancy was cut short in the mid-seventies in [another] mysterious car bomb in Zambia. Since then, Mugabe has kept the Manyika very close to the political centre, with perennial praise-singer Didymus Mutasa floating in between undefined cabinet positions, and credited with Zimbabwe's violent land reform program. In appreciation of both Chitepo and Mutasa' s allegiance, president Robert Mugabe strengthened the influence of Manyika in the banking sector, while so-called presidential hopeful Simba Makoni was given a position as the first Secretary General of Southern African Development Community in the 1980's.

Now, the political dynamics have changed. In March 2008, Robert Mugabe faces an ethnic rebellion in his ZANUpf. The Karanga, led by Emmerson Mnangagwa who was implicated not only in the 1980s Matebeleland genocide, but also blood diamond scams in Democratic Republic of Congo, have been conspiring with the late Joshua Nkomo's young brother, John, in a strong alliance to neutralise Mugabe. The notorious secret service sensed signals of this alliance largely by tracking Professor Jonathan Moyo's loud recitals in the last election, and inevitably, Mugabe rattled a few skeletons in Mnangagwa cabinet. The current vice president, Joyce Mujuru, is leading another Zezuru faction that is desperate to check Mugabe's seventh term bid and headlines in recent independent press stories align this faction with Simba Makoni' s Manyika ethnic grouping.

Dr Simba Makoni has been flouted as a more credible presidential candidate because he is not contaminated with ZANUpf's violent history, and there have been allegations that opposition MDC factions of Morgan Tsvangirayi and Arthur Mutambara consider him a good compromise. If all these reports are accurate, ethnic tribal politics are just the gunpowder that Zimbabweans, like Kenyans, require for resistance, but not necessarily in the scale of Kenya's barbaric sectarian violence.

Are elections in Africa really necessary or a waste of time?

by ALPHAYO OTIENO

ELECTIONS, IF MERELY FOR their own sake, are a waste of time in Africa, and nowhere else has this been demonstrated more than in Kenya.
The recent polls have been roundly condemned by election-monitoring bodies. Observers from the European Union said that the whole process was “not credible” and the report they issued on the exercise was the most damning it had ever issued anywhere in the world.
As Kenyans and the international community grapple with the crisis, the question they should now be asking themselves with some urgency is: “What now?”

The elections represented a big step backwards in the Government’s ostensible efforts to match economic reforms with democratic openness and respect for basic rights.
Kenya’s Western partners should not be idle bystanders. Instead they should be willing to condition non-humanitarian aid and security co-operation on clear evidence of reform, including the impartial investigation and prosecution of politicians suspected of subsidising recent election and post-election violence, and committed serious electoral malpractices.

From the polls, we now know that democracy is not a panacea. Some elements of the deficit of democracy should have been put to the test long ago.

Democracy is just a governing system. It might be one of the best, but it does not automatically solve all problems. In fact it probably does the opposite; most major problems must be solved before democracy can work.

From the polls, we have learnt that there is yet to be fair, free and transparent elections in Africa; it is just a waste of money and other resources.

African leaders hate to be called “former head of state”, and once they taste power, they think the country belongs to them. Then arrogance, disdain and authoritarianism take their course as the means to hanging on to power.

But what is the root cause of the problem? Prof Donald Kagan in Pericles of Athens and The Birth of Democracy, says that a successful democracy is based on more than elections.

He maintains that an examination of the few successful democracies in history suggests that they need to meet three conditions if they are to flourish.

The first is to have a good set of institutions.

The second is to have a body of citizens who possess a good understanding of the principles of democracy, and who have developed a character consistent with the democratic way of life.

The third is to have a high quality of leadership, at least in critical moments. Until the above has been fulfilled, the struggle for democracy will continue.

TWENTIETH CENTURY HISTORY IS littered with the remains of elections that brought forth neither democracy nor the rule of law.

The entire Soviet empire was enamoured of show elections in which every citizen was given the privilege of voting for the winner — and only the winner.

Fascist and corporatist regimes would routinely invoke the plebiscite to crown the claimed rule of the people, a tool used by Hitler to consolidate power in the 1930s.

Post-colonial regimes in countries such as the Central African Republic, or more recently, Zimbabwe, would hold elections only to see the victors proclaim themselves rulers for life.

Before any election is held, there must be ground rules that determine what elections are for, and formal institutional structures that will be filled by the elections.

But what justifies those rules? The answer can only be given retrospectively, based on the success of the democratic experiment itself.

All democracies enter this world with this so-called democratic deficit — a system preordained by no particular democratic process.

British philosopher John Stuart Mill may have had a case like Kenya in mind when he wrote that political liberalism was impossible in a country with ethnic or national divisions.

He wrote: “Among a people without fellow-feeling, especially if they read and speak different languages, the united public opinion, necessary to the working of representative government, cannot exist.”

Over the past years, the need to secure democratic order in countries fractured by racial, ethnic or religious cleavages like Kenya has robbed us of the easy assumption that democracy can take hold in raven societies.

Democracy, then, is ultimately not about the ability to elect rulers; it is about the ability to send them packing. The political tragedy of post-colonial Africa is not the absence of elections; it is the inability to vote rulers out of office.

Whether an election is a harbinger of democracy is best addressed in hindsight once the security of the minorities is assessed and once the first elected rulers face retrospective accountability before the electorate.

Is the Kenyan Finance Minister in the middle of a Dirty Economic Game????

The Kenyan finance minister is showing great signs of underhand economic mischief specifically because of an impending major IPO (Initial Public Offer) of Safaricom, a mobile phone service. Apparently, he is so determined to get into the books of history as the man who pulled off a deal worth over 34 Billion Kenya Shillings. With the country's elections just weeks away you may be forgiven for assuming that this is just a ploy to get money to fund the elections given that the incumbent is faring not so well in recent opinion polls that put him at 37% against his major challenger who gannered 53%. May be best way would be for the government to wait until after the elections before proceeding with the IPO. Forcing such issues at a time like this when the country is preparing for elections is taking Africa back to the old days when leaders did not respect the rule of law. They ruled with impunity stashing billions of taxpayers money in foreign accounts without regard of the people they lead. Mr Minister do not shame your country by playing dirty tricks with investments you hold in trust for the people. Kenya has shown great growth in the past 5 years so let it not be in vain.

Below is an article carried in The Business Daily voicing the same concern.

"The controversy surrounding the pending and much awaited Safaricom initial public offering goes to show the immediate need of the government to get out of private business. Although the government legally owns Safaricom, through Telkom Kenya, and has the right to sell the shares to the public, one must wonder about the timing.

On the one hand, the government argues that it needs the Sh34billion generated through the sale of the IPO to finance government initiatives, while on the other hand the Opposition, specifically ODM, fears that the government wants to use the proceeds to fund its political campaign.

This explains why certain ODM officials have taken legal action to prevent the IPO from seeing the light of day under the Kibaki government. History has proven that government is an inept and inefficient entrepreneur. It is better for private forces, driven purely by profit motivation, to undertake economic enterprises. Based on this point, it makes sense for the government to privatise Safaricom. But as we all know, Kenya is a country marked by shady deals, malfeasance, and gross government corruption, thus, the public must question the government’s eagerness to privatise as soon as possible.

We must question why Finance minister Amos Kimunya does not want the biggest IPO deal to be subjected to the Privatization Act passed in 2005. Although the government can easily quote the law and resort to claims of public interest, Kenyans must not be hoodwinked into believing that the deal is without dubious government interest.

Considering that the IPO process is complicated, translucent and not open to public scrutiny, it is possible to manipulate the underwriting process in favour of the government and politicians determined to win the coming election. It is not heretical to wonder why the biggest IPO in Kenyan history coincides with the General Election. I can understand the bragging rights that the current government stands to gain if it succeeds in executing one of the biggest IPOs in Africa. I also appreciate the global significance and the positive economic impact that this IPO will create for Kenya.

However, we are better off waiting until the General Election is over.

More importantly, we must make sure that the IPO is subject to law that informs business practices in the land — in this case the Privatization Act — in order to eliminate unethical scheming that might cast the financial market in bad light. Some at Treasury department contend that if the IPO is not implemented as soon as possible the country risks inflation."

Leaked: Report alleges Kenya's Former President looted billions

Republished from Kenya Imagine
Friday 31st August 2007

Former Kenyan President Daniel Arap Moi declared that he would back incumbent Kenyan President Mwai Kibaki for a second term in the upcoming Kenyan General Elections later in the year. The news of the union of souls has been met with responses coming in at acres of newsprint and millions of gigabytes dedicated to suggesting various motives and calculations that would bring the two erstwhile foes together. It is with interest therefore that we read in today's Guardian of the findings of a leaked report commissioned by the government of Kenya into corruption and the Moi family.

The article published here in today's Guardian under the title The Looting of Kenya - The breathtaking extent of corruption perpetrated by the family of the former Kenyan leader Daniel Arap Moi was exposed last night in a secret report that laid bare a web of shell companies, secret trusts and frontmen that his entourage used to funnel hundreds of millions of pounds into nearly 30 countries including Britain.
The 110-page report by the international risk consultancy Kroll, seen by the Guardian, alleges that relatives and associates of Mr Moi siphoned off more than £1bn of government money. If true, it would put the Mois on a par with Africa's other great kleptocrats, Mobutu Sese Seko of Zaire (now Democratic Republic of Congo) and Nigeria's Sani Abacha.


The assets accumulated included multimillion pound properties in London, New York and South Africa, as well as a 10,000-hectare ranch in Australia and bank accounts containing hundreds of millions of pounds."

It is now clear that the report, submitted to the government in 2004 has been kept under wraps against the spirit of the passionate declarations of 2002.

The Guardian's Nairobi correspondent Xan Rice claims to have seen a leaked copy of this report which makes serious allegations of corruption by relatives and associates of the former president.

According to the article some of the claims made out in the report include:

* More than £1billion pounds was moved out of Kenya

* The former President's sons - Philip and Gideon - are reported to be worth £384m and £550m respectively;

* His associates were said to have acted in collusion with Italian drug barons and been involved in printing counterfeit money;

While it is true that the report which was prepared by Kroll Associates is not a decision of a court, and therefore binding, it is odd that the government, elected on an anti-corruption platform and pledging to make a clean break with the past has not previously published the report. Alfred Mutua, the Government spokesman, in response to the charge, declares that the government found the report incomplete and therefore could not release it to the public.

But now the questions, and there are many. How much did the government pay for this ‘incomplete and inaccurate' report? Are the report and the shadow it casts over the former President the motivation for this week's power pact? Is this the proverbial pound of flesh? Does the burial of the report mean that the sins of the Moi era are dead and buried? Forever?

The report was exposed due to the efforts of Wikileak , a safe haven for whistleblowers and other persons of conscience working to end corruption.