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Fight against corruption masks the real issues

By Leonard Khafafa | Published Wed, August 22nd 2018 at 00:00, Updated August 21st 2018 at 21:20 GMT +3

The bulldozer christened 'Sany The Terminator' that is used to demolish illegally erected buildings in Nairobi. [Elvis Ogina.Standard]

It took years of savings, investment and sheer hard work to turn Nairobi’s Kileleshwa Shell Petrol Station into the “go to” place for refueling. Yet it took a few strikes of a bulldozer’s hammer to reduce it to rubble.

The roaring engines of the green demolition machines have become the soundtrack of Kenya’s latest attempt at fighting corruption. Kenya is firmly in the grip of graft and President Uhuru Kenyatta has conceded to popular desire to eradicate this vice. However, the rationale and legality of the process for determining which establishments are earmarked for destruction is notoriously opaque.

According to Transparency International’s index of corruption, Kenya ranks 143 in a list of 180, the last of which has the most untrustworthy and badly functioning public institutions like the police, Judiciary and economic administration. The country’s economy loses Sh650 billion annually to graft, which effectively keeps the engine of the economy from firing on all cylinders, contributing to the erosion of sovereignty.

The first example of this effect has to do with the East African Community’s (EAC) ban on importing used clothing from the United States by 2019. The ban is part of the EAC Vision 2050 seeking to encourage growth in the local manufacturing sector, from the current 8.7 per cent to a more robust 25 per cent by 2032.

US demands

America has opposed this ban, threatening to suspend Kenya from the African Growth and Opportunity Act (AGOA) which allows Sub-Saharan African countries to export to the US without tariffs. Rwanda has refused to accede to US demands and has since been suspended from AGOA. Uganda too is not budging. But Kenya has acquiesced. Corruption having killed its domestic markets, Kenya cannot afford to antagonise the US for whose markets the bulk of our exports are intended.

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The second example of the deleterious effects of corruption on Kenya’s economy and sovereignty is the intended 16 per cent Value Added Tax (VAT) on petroleum products. This levy on fuel is one of the conditions set by the International Monetary Fund (IMF) for the Kenya Treasury to qualify for a Sh150 billion standby loan. The levy would increase the cost of a litre of petrol from the current Sh113 to Sh130. Ordinarily, any minute changes in pump prices have instant financial ramifications across households. An increase to Sh130 would be too much.

These circumstances engender widespread skeptical speculation that the Government’s initiative to demolish buildings supposedly erected on illegally acquired lands is not really a fight against corruption but rather an attempt to obfuscate the real problem in Kenya. According to these skeptics, the economy is tanking.

Trust deficit

The new fuel levy which comes into effect in September will only serve to make tough times even worse. Because of fears that the populace may become restive, the demolitions are intended to reassure Kenyans of the government’s noble aspirations. They are intended to compensate for the current trust deficit that the leadership suffers; a subliminal message that says, “hey, times may be hard, but the Government is doing something about corruption.”

Judging from the reactions of many Kenyans, the campaign to paint the Government in a favourable light has been largely successful. President Kenyatta’s recent address to some members of the clergy was greeted with rapturous acclamation. His was the unctuous delivery of a practiced used-car salesman, extolling all the virtues of his goods, but forgetting to mention their shortcomings.

He did not mention the hard earned, painstakingly cultivated investments like the Kileleshwa Shell Petrol Station, that have been reduced to rubble by the bulldozers, nor the thousands that their destruction add to the numbers of the unemployed. He did not mention that because due process may have been circumvented, aggrieved investors may file lawsuits and that the courts may award them billions of shillings in recompense, possibly at the tax-payer’s expense. Finally, he did not mention that the demolitions appeared to spare the properties of persons within the new-found “handshake” amity while selecting those who appeared to go against the “Building Bridges Initiative” comity.

There is need to ensure that new buildings are erected according to existing codes on legally acquired land. However, it is only right that those that are alleged to have infringed on the country’s legal processes be subjected to the rule of law. Demolishing investments without clearly enumerated selection criteria and due process sends a dangerous message to investors: that Kenya is governed by lawless caprice and its economy is running on empty!

Mr Khafafa is Vice Chairman, Kenya-Turkey Business Council


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