SECTIONS

Why the leadership risks losing control over political destiny

It was raining heavily that morning and would throughout the day. In the company of a colleague, I had arrived in Mombasa from Nairobi to participate in the “Black Monday” protest, a weekly march by small-scale traders and civic groups, against a government directive decreeing a monopoly to the Standard Gauge Railway (SGR) of the transportation of cargo, which has had a devastating effect on business in the coastal city.

Because of the heavy downpour that morning, I thought that the organisers would call off that day’s protest, the 9th since the weekly demonstrations began. However, my call to Haki Africa Executive Director, Hussein Khalid, established that the protest was still on. The protesters already braved the torrents and were out in the streets. Plodding through the sludge that the deluge had gathered at the bottom of lakes that had formed on under-construction roads, I soon joined the protesters, moved by their evident determination to be on the streets despite the difficult conditions. In competition with the driving rain which had combined with the protest to bring all movement to a halt, we listened to lamentations about the ruinous effects the SGR directive has had on the coastal business community. We were told about the negative effects on virtually all small-scale traders: spare parts dealers, clearing and forwarding companies, eateries, bars and lodgings, landlords, car washers, guards. The directive had affected big businesses too, including well-established trucking companies now driven out of business and left in debt from bank loans they cannot pay. We were told that in one case, the bank was not interested in repossessing trucks purchased with its loans because there were no buyers.

Two cities

The SGR-driven crunch is not confined to Mombasa: towns along the way to Nairobi have also been hit, as the number of trucks going up and down the road has declined. Many of these towns were sustained by the robust road transport business between the two cities, now disrupted by the government directive.

The Jubilee government conceived the SGR as a silver bullet that would ease haulage and human transport from Mombasa to the hinterland. So far, however, the story is a lot more complicated than that. As economist David Ndii had predicated and has repeatedly demonstrated, SGR was never competitive and the forcible diversion of cargo onto its tracks is evidence that this method of carriage is not viable. It now seems that for SGR to thrive, something else must perish. In this case, it is the road trucking from Mombasa and the livelihoods of small-scale businesses whose owners defied the rain that morning to sustain their weekly streets protests.

Besides atrocious weather, these traders have had to confront their many limitations as private people. Before the SGR imbroglio, many of these people were just ordinary citizens minding their business and staying far away from confrontation with the authorities. Now, unable now to feed their families, the traders have been forced out onto the streets where they are learning to lead, to build solidarity, to stand up to the police, to address crowds and to engage the few public officials that have not shunned them. Nothing in their lives prepared them for this new role.

All this is happening as the country braces itself for the repayment of mounting SGR-induced foreign debt. My remarks to the crowd that morning were about the Mississippi Bubble, the historical event that contributed to the collapse of the French overseas empire.

When Louis XIV died in 1715, France was bankrupt with royal debts of three billion livres, an annual income 145 million and expenditure 142 million livres, leaving only three million livres for the repayment of a 220 million interest on the debt. In those circumstances, the royal court accepted help from John Law, a Scottish financial wizard, whose activities led to the establishment of the Company of the West, a corporation that came to hold a business monopoly over French colonies in North America and the West Indies.

Manipulating its royal ties, the company would go on to engage in hubristic business which, although unconnected with any economic activities, led to an exponential rise in the value of its shares. Rather than let the shares fall, as they eventually had to, the central bank bought shares to cushion the fall, trapping the financial system in the unfolding bubble. When, in 1789, Louis XVI, convened the Estates General to address mounting debt, this gave way to the French Revolution.

As the French example shows, economic stress diminishes the ability to control political events. As Kenya descends into economic hardship, the leadership is preoccupied with plotting how to outdo one another in the next elections. The news is that, because of economic factors, Kenya is at a point where the leadership risks losing control over the country’s political destiny.

- The writer is the executive director at KHRC. [email protected]