Social Watch Report 2009

More documents

Recommendations

Info

kenya 100 100 52 Neo-liberal orthodoxy and the ostrich game 60 100 25 0 0 0 Neo-liberal capitalism has lost its 28 reason to exist. It is a structural crisis of liberal democracy, but in 98 51 93 54 62 100 100 Kenya the 100 Government 100 is in denial, playing the game 100 of the ostrich, 100 burying its head in the 100 sand. 99 The governing elite argues that the crisis is circumstancial and that the national economy is sheltered enough by its weak ties with international capital. Kenyan civil society keeps warning that, contrary to ,1 IEG of El Salvador = 67,5 BCI of Eritrea = 60,2 IEG of Eritrea = 47,1 the Government’s predictions, the country is about to sink in the turbulent waters of neo-liberalism. 100 100 Social Development Network Prof. Edward Oyugi Philip Thigo 100 SEATINI KENYA IEG of = 47,3 Oduor Ongwen Kenya Debt Relief Network Wahu Kaara BEACON Rebecca Tanui Daraja-Civic Initiatives Forum 0 Don Bonyo Futa Magendo Chapters NO VA Ayoma Matunga Mazira Foundation Eddy Orinda Haki Elimu Opiata Odindo Kenya Land Alliance Odenda Lumumba Migori Clan William Janak KETAM James Kamau Kenya-Cuba Friendship Association 100 Basic Capabilities Index (BCI) 100 BCI = 71 GEI = 59 83 Children reaching 5th grade 100 100 100 100 100 Births attended by skilled health personnel Survival up to 5 0 BCI of Kenya = 71 Kenya is more than familiar with stock promotions, Ponzi schemes, structured asset destruction through inflation that has had a lot to do with asset-stripping through fraudulent privatization, debt peonage, corporate conmanship and blatant dispossession of assets, 100 as the case of rampant raiding of the National Social 83Security Fund (NSSF) Gender Equity Index (GEI) Economic activity Empowerment 42 88 98 100 81 100 100 85 100 0 Education Mwandawiro Mganga It was reported that the NSSF rejected an offer of Bunge la Mwananchi demonstrates. This eventually led to parastatal collapses and decimation of stock through credit and accepted that of KES 1.3 billion (USD 17.53 million) KES 1.4 billion (USD 18.88 million) for the plot and George Nyongesa ChildFund Africa Region Andiwo Obondoh share manipulation by unscrupulous capital market after the lower bidder offered a kickback to trustees Undugu Society of Kenya 23 insiders, like Suntra Investments, Nyaga Brokers to the tune of KES 650 million (USD 8.77 million). 9 Alloys Opiyo 0 0 0 Ltd, Francis Thuo Ltd and others. The Fund’s management denied this but in July 2008 The NSSF was established in 1966 as a mandatory provident fund for employees in Kenya. Although the Managing Trustee 47 to pave way for investigations 100 the Minister for Labour dissolved the Board and fired 35 94 Thirty years of unfettered, 57 free-market capitalism, 100 100 74 100 100 81 100 100 77 100 100 based on the neo-liberal model, can no longer obscure both employees and employers each contribute only into this and other scandals. In September 2008 it the systemic faultlines of a system whose time KES 400 (USD 5.4) monthly, the Fund has, by dint of was disclosed that NSSF was at risk of losing KES has run out. its sheer size, chalked up a cumulative portfolio of 1 billion (USD 13.49 million) in Discount Security IEG of Nepal = 51,2 Commoditization and privatization of public more than KES 80 ICB billion de Nigeria (USD 1.08 = 66,3 IEG of Niger = 44,4 billion) or about – a stock brokerage firm that collapsed and was associated assets hitherto considered essential to prosperity has led to the transfer of assets from the public and popular realms to the private and class-privileged domains. The resultant predatory and speculative 8.2% of the country’s GDP. It continues to be used by the Government as a gravy train for its close associates, forgetting that it is a contractual savings and investment support scheme for supporting old-age with a former Managing Trustee of NSSF. The lie that the neo-liberal state must, as a matter of strategic efficacy, give the market a wide berth has been laid bare by the fact that instead of maximizing financialisation of trade transactions has led to the retirement. Originally a department in the Ministry its effectiveness away from the market, it has been 100 100 100 steep rise in the daily turnover of financial transactions of Labour, the NSSF was elevated to a stand-alone assigned the role of a prime agent of redistributive in international markets, which rose from USD 2.3 billion in 1983 to USD 130 billion in 2001. No 43 wonder, the accompanying deregulation allowed financial systems to assume centre stage in redistributive parastatal in 1987. Since then the pensioners have known nothing but melancholy. In the run up to the first multiparty elections in 25 1991-92, the NSSF was used as the main source of policies, reversing the flow of 74resources from upper to lower classes that can only be associated with the era of embedded liberalism; effectively subsidizing the rich in society through confiscatory deflation activity through speculation, 0 predation, out- slush funds for oiling the 0 campaign machinery for practices. 1 0 right fraud and thievery. Stimulus plans may be technical steps in the right direction, particularly if they party. Pensioners’ money was funneled 86out of the Velvet glove treatment for criminals the then ruling Kenya African National Union (KANU) 100 33 58 99 100 100 71 have the virtues of working bottom-up rather 82 100 100 100 100 100 100 than Fund in order to fund dubious real estate deals that Nowhere is this more starkly demonstrated than in 98 top-down through the inert banking system. Essentially, created instant billionaires among youngsters then the public fraud that was the Initial Public Offer (IPO) however, they remain technical fixes designed known as “Youth for KANU ’92”. It continued to be a IEG of Slovenia = 65,1 BCI of Somalia = 47,8 IEG of Spain = 76,9 to pump up demand and get consumers shopping cash cow for the politically connected and got to the 1 See: Wade, R. Governing the Market: Economic Theory again instead of empowering them to question the headlines only 10 years later, when in a pre-election and the Role of Government in East Asian Industrialization. much-touted efficiency of neo-liberal capitalism. deal in 2002 it lost KES 256 million (USD 3.45 mil- Princeton: Princeton University Press, 1992. IEG of Kenya = 59 lion) through a Euro Bank scam to finance the presidential campaign. In a new election the NSSF, true to character, regained its notorious profile. A commercial plot adjacent to the equally scandal-ridden Laico (formerly Grand) Regency Hotel 100 was sold to a lower bidder. 11 National reports 108 Social Watch 100 100 100
of Safaricom shares. Despite voices of dissent coming from the civil society watchdogs as well as the Orange Democratic Movement (ODM) – the principal coalition partner in the Kibaki administration – the Kenyan Government decided to offload 25% of its shares in Safaricom, a mobile telephony company, to raise the badly needed KES 50 billion (USD 674 million) to bridge its budget deficit. Two concerns arise. First, how could a faceless and foreign company known as Mobitelea came to own 10% and then 5% of a public company in Kenya and, even more perplexing, how could it be that this foreign company never paid a single cent to have shares in Safaricom? Second, when the Government offered to offload 25% of its shares in Safaricom, the public was made to believe that these shares would make ordinary Kenyans own the company. However, when Safaricom was finally on sale, they had no first right of refusal. They had to compete with the rest of East Africans while a whopping 35% of the government’s 25% shares on offer had been reserved for some faceless foreign investors. It is believed that these investors are local oligarchs with substantial interest in offshore companies. As if that was not enough swindle, the IPO (the first offering to the public of the company’s shares on the stock market) was grossly oversubscribed. In the end, Safaricom’s stock brokers had to refund a whopping KES 236 billion (USD 3,183 million) of which KES 119 billion (USD 1.6 billion) was due to local people. Now close to one year down the line, a majority of the applicants (a staggering majority of them being ordinary people who got bank loans) are yet to receive their refunds, while Safaricom shares fell by more than 50% in the week of 9 March 2009. In the recent past, the Nairobi Stock Exchange (NSE) has witnessed a surge of rogue stock brokers. In less than two years, four of such firms have had to fold up following fraudulent activities and outright theft of clients’ investment funds. The first to come to light was Francis Thuo Stock Brokers who were suspended from the NSE in 2007. It should be noted that the owner, Francis Thuo, was a longserving chairman of the NSE. At the time Francis Thuo brokers were suspended, several complaints were raised about another firm – Nyaga Stock Brokers – to the Capital Markets Authority (CMA), the regulatory body. But nothing was done. Finally, the local press in March 2008 published that Nyaga’s operating capital was not only negative but also the firm had been using gains made from illegally trading in clients’ shares to prop up its operating capital; the NSE feigned surprise and quickly moved to create a KES 100 million (USD 1.4 million) bailout package to cushion the affected clients. The matter was then swept under the carpet. Nobody at Nyaga or Francis Thuo has to date faced any criminal charges. In quick succession, Discount Securities and Suntra Investments have followed suit. The velvet glove treatment accorded these criminal firms not only attests to the nature of the rampancy of malpractices in the NSE but, more importantly, to abuse of the touted free and efficient market. A section of civil society has consistently demanded that a market dealing in public funds of this magnitude needs a strong, efficient and independent regulator. The CMA does not qualify: it is obsessed with maintaining status quo, leaving rogue brokers to rule the roost with their perpetual power plays and manipulations. In the last 20 years, no less than 20 private commercial banks have gone under with depositors’ fortunes – mainly those of pensioners and informal sector savers – estimated at KES 70 billion (USD 944 million). Among the private banks and financial institutions that collapsed with depositors’ funds are Rural Urban Finance Company, Jimba Credit Finance (owned by the Nairobi Stock Exchange, Jimna Mbaru), Trade Bank, Trust Bank, Continental Bank (owned by close associates of President Kibaki) and Euro Bank. In Kenya, these perpetrators continue to be appointed to high public office. On 16 December 2008 – amid a growing global financial crisis – the Cabinet agreed to privatize more financial institutions, including the National Bank of Kenya and Consolidated Bank. The ostrich game As widespread doubt about the immutable efficiency of market forces grows in the leading capitalist economies, their client economies in the South are still in denial, sustained by naïve faith in the cyclic nature of capitalist crises. As the economic principles informing free-market economies began to crumble, the Kenyan political elite, like the legendary desert ostrich, buried its head in the sand; hoping that the crisis would pass. Against this silence, civil society organizations warn that Kenya’s economic boat is leaking and rescue measures are urgent. Opportunities for mobilizing dissent are growing, and these must be taken lest the country experience a neo-conservative resurgence. In the meantime it is important to reject the illusion that Southern economies will be shielded from the meltdown, owing to not being fully integrated into the global capitalist economy and may even benefit through the escalation of domestic demand. They confuse a cyclical (if severe) downturn in the historical fortunes of capitalism with its fundamental crisis. The Kenyan ruling elite remains oblivious to the looming disaster: massive food insecurity, impending environmental disaster (in the Mau Forest, in Mount Kenya, in Lake Victoria, etc.), unemployment/underemployment, spiraling crime and disparity between the wealthy and the poor, declining tourist arrivals and volume of remittances from overseas. Instead of taking heed, the recent National conference on “The Kenya We Want”, like the current policy instrument for turning Kenya into a middle income economy by 2030 (“Vision 2030”), continue to adhere to the thoroughly discredited Washington Consensus. Even as Western economies inject massive new bailout funds into their financial institutions, and in some cases re-nationalize their banks, the Kenyan Parliament is legislating the privatization of the few remaining strategic public assets in order to provide a one-time government revenue injection. 2 The stimulus and bailout packages preferred by Western governments are unlikely to make a significant difference beyond harmonizing government and business responses to the crisis. As stop-gap measures, such packages can only delay the inevitable. Without democratizing the ownership of the means of production and strengthening internal mechanisms of the domestic economy, Klaus Schwab’s global redesign initiave, launched in Davos in February 2009, will do little to resolve the crisis. In the face of such a situation, even the trade agreements currently under discussion, such as the Economic Partnership Agreements (EPAs) must be re-negotiated. Often, an epic moment in the history of a social praxis is catalyzed by catastrophes like the one we are experiencing, particularly those that permit fundamental changes in attitudes and social behaviour. The signs of capitalism’s distress have been showing for a long time, but in gradual installments. Now they are obvious. The global capitalist system no longer merits any retrofitting. It calls for a reconstruction by new actors favoured by history. This is the crisis of liberal democracy, which has failed to deliver economic justice and equity. n 2 Organizations set for privatization: Kenya Electricity Generation Company (KENGEN); Kenya Pipeline Company; Chemelil Sugar Company; Sony Sugar Company; Nzoia Sugar Company; Miwani Sugar Company; Muhoroni Sugar Company; Kenya Tourism Development Authority and some hotels; National Bank of Kenya; Consolidated Bank; Development Bank of Kenya; Kenya Wine Agencies Ltd; East African Portland Cement Company; Kenya Meat Commission; New Kenya Cooperative Creameries; Kenya Ports Authority by way of a container terminal at Eldoret and outsourcing of stevedoring services and development of new berths. Social Watch 109 Kenya
Page 1 and 2:
NATIONAL REPORTS
Page 3 and 4:
CHART 1. 160 140 120 100 80 60 40 2
Page 5 and 6:
allowances, along with incentives f
Page 7 and 8:
is viewed as a departure from the s
Page 9 and 10: Climate change Bangladesh tops the
Page 11 and 12: on “Recent evolution and the outl
Page 13 and 14: are finding it impossible to meet t
Page 15 and 16: poverty actually increased, from 36
Page 17 and 18: More surprising, perhaps, is the ti
Page 19 and 20: first two months of 2009 were 27% l
Page 21 and 22: local economy. 9 Similarly, the SPD
Page 23 and 24: medical care to poor families, but
Page 25 and 26: The employment insurance programme
Page 27 and 28: Analysing poverty The current analy
Page 29 and 30: To the reduction reflected in the w
Page 31 and 32: According to Dr. Luis Paulino Varga
Page 33 and 34: public benefits. They have limited
Page 35 and 36: institutionalized discrimination an
Page 37 and 38: dismissed 150 in January. 3 The ban
Page 39 and 40: period was 19.5%. The minimum month
Page 41 and 42: The numerous abhorrent violations o
Page 43 and 44: If France is to make good on its co
Page 45 and 46: to 0.35% of gross national income (
Page 47 and 48: uncertain; so far there is no clear
Page 49 and 50: either by means of “legal procedu
Page 51 and 52: shot up 30%, affecting the poorer s
Page 53 and 54: that any cuts could cause hardship
Page 55 and 56: Interventions to check the downturn
Page 57 and 58: ace”. Such a contradiction compro
Page 59: EUR 22 billion in Great Britain). S
Page 63 and 64: national economy from its effects.
Page 65 and 66: goals of the package are to protect
Page 67 and 68: and needs to place the loss-making
Page 69 and 70: made worse by the crisis: (1) food
Page 71 and 72: However, the Association for Partic
Page 73 and 74: water and to mobility. Moreover, ne
Page 75 and 76: per year, only a third or a quarter
Page 77 and 78: will come and how long they will la
Page 79 and 80: of the family, and the main weight
Page 81 and 82: the Lagos Business School Academic
Page 83 and 84: have access to these alternative me
Page 85 and 86: Government response to the crisis F
Page 87 and 88: Protecting decent jobs The Governme
Page 89 and 90: Government help in dealing with the
Page 91 and 92: of the economy is very negative, an
Page 93 and 94: CHART 1. GDP growth and unemploymen
Page 95 and 96: working in Spain, mainly in the har
Page 97 and 98: • • CFA 10 billion (USD 22 mill
Page 99 and 100: proval of these loans to prevent co
Page 101 and 102: Populism and nationalist politics s
Page 103 and 104: dent that all these measures have a
Page 105 and 106: villages are being abandoned as adv
Page 107 and 108: previous years, and the EU has issu
Page 109 and 110: low in relation to those produced b
Page 111 and 112:
and the rising competition, as many
Page 113 and 114:
secondary education has improved si
Page 115 and 116:
WANTED: The right to food security
Page 117 and 118:
A comprehensive and systematic food
Page 119 and 120:
mulation, poor farmers currently fa
Page 121 and 122:
1985. Reducing tariffs between 5% a
Page 123:
The FNDP claims that Zambia is like
show all

Social Watch Report 2009

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?