A Macro Economic Analysis of the Jubilee Cabinet Nominees

A Digital Essay by Onyango Oloo in Nairobi

Uhuru Kenyatta and William Ruto have both been hailed for their cabinet picks, widely lauded for the diversity, professionalism, relative youth and gender mix.

Even the very process of selecting the 18 nominees for the pared down cabinet secretary positions is seen as a clear break from the hoary days of MPs emerging from urinals in Nakuru town to find out over the 1 pm news on the radio that they have been appointed ministers; or the converse case of surprised sugar daddies shriveling in their southerly genital regions, being shocked to the core in post-coital mode, that they can no longer fly that flag.

In what kicked off as a nail biting suspense-packed teaser with a quartet of obscure technocrats being thrust in the national limelight, the announcement of the first Jubilee cabinet has been met across Kenya with what are slightly below the raucous decibels heard at soccer finals-or presidential victory parades.

There is growing grudging admiration with the energetic derring do duo which has a date at Daag Haag over the coming weeks and months.

I have deliberately kept my busy motor mouth zipped and detained my prolific fingers from tapping on the key board of my over worked lap top .

While the Ethnic Arithmeticians have been poring over the last names (and maiden names for the married women in the short short list) and the Back Room Analysts have been burrowing for any connections with this or that political chieftain, this or that retired or even expired top bureaucrat, I have been doing something completely different.

I have been doing a diligent Boolean search.

It has been defined elsewhere as:

A type of search allowing users to combine keywords with operators such as AND, NOT and OR to further produce more relevant results. For example, a Boolean search could be "hotel" AND "New York". This would limit the search results to only those documents containing the two keywords.

This seemingly esoteric, but actually quite mundane digital research methodology consists of simply taking the name of the cabinet nominees one at a time, enveloping their names in quotation marks, opening a second set of inverted commas and encasing the words “world bank” or alternatively, “imf” and feeding that sample to Google or Yahoo, Bing or whichever robot can data mine for me.

The results have been fascinating, if you see the correlation between these Kenyans and the Bretton Woods evil twins.

I invite you to conduct the process yourself and compare your findings with mine.

Of course, there is not always an exact match.

Before I delve further into the connection between the World Bank, the IMF and the new Jubilee administration, I want to take a temporary detour and talk briefly about the so called “Washington Consensus”.

Wait a minute!

I have some juicy gossip to share about 

Henry Rotich, you know the middle ranking Ministry of Finance functionary who has been catapulted to become head honcho of the revamped Treasury portfolio.

According to page 5 of the April 26^th edition of the Standard, Mr. Rotich was the Deputy Director in charge of macro economic policy at the Ministry of Finance since 2006.

That means he was FIVE LEVELS below the minister until just a few days ago. That means he was junior to the permanent secretaries, deputy secretaries, under secretaries and directors that he will now be coordinating and supervising.

Quite a meteoric rise eh?

We all saw the guy sputtering, stuttering, quaking and almost quacking when the President invited him to the State House lectern to say a few words to the wananchi gawking at his image on television screens across Kenya.

Now get this.

All his former bosses are there by dint of the Public Service Commission (the bulk of them at least). The ones who are not going to be relieved of their jobs, retire, or as they say these days, “move on”, will retain their titles and privileges in the Kenyan Mandarinate. It is going to be surreal contemplating the prospect of the relative equivalent of a senior clerk dressing down his former managers- if it comes to that, that is.

But that is NOT what tickled my fancy.

I am made to understand that according to the 50/50 arrangement between TNA and URP, the finance plum job had been RESERVED and GUARANTEED to Deputy President William Ruto.

Those who are assuming that Rotich, because of his Kalenjin surname was Ruto’s pick are in for a rude shock.

Who was Rotich’s Oberhaupt  his Vorgesetzte when Uhuru Kenyatta was still in charge of Finance?

That was a rhetorical question.

Henry Rotich, in turns out, was a TNA pick!

My hard working moles , who must have been furtively eyeballing the  tense vuta-ni-kuvute through the State House key holes,  whispered in my left ear when I was not looking that the REAL POWER behind Uhuru (some well-connected Mt. Kenya Mafia have been cited, including one of the maternal relatives of very senior government officials) simply confronted a rather rattled Uhuru and told him, that despite the Gentleman’s Pact with the other half of the Dynamic Duo, the “House of Mumbi” simply had to keep control of the Treasury for well articulated strategic, ethno-comprador power considerations and interests.

If Uhuru was rattled, then Ruto was keeled over with stupefied astonishment!

It appears that Uhuru was coerced into going along with the assurance that he did not have to propose a Mgikuyu. The simple ploy was to pick an Uhuru loyalist-but from among members of the Kalenjin community. Kenyans would be then hoodwinked into thinking that Henry Rotich was Ruto’s pick. I was told that Ruto had his own nominee. 

That is what I was told.

I was not there obviously, so this could be just one of those nasty Made in Nairobi rumours.

Anywayz, to conclude this little tattle tale.

Ruto was reportedly adamant that the cabinet selection process would be halted there and then.

No move until the Dynamic Duo reverted back to the original pact.

That I am told, is REAL REASON WHY THERE WAS SUCH A LONG DELAY in announcing the cabinet.

There was a tense tussle between TNA and URP over the composition and the balance of the Jubilee government with Ruto’s people crying foul as they struggled to unsheathe the dagger from their ambushed backs.

The drip drip announcement of four names today; twelve names a couple days later; that was basically management by crisis.   

A circular had gone out to the media corps to be on hand for a 4 pm State House announcement and the hawk eyed Fourth Estate were parked in the Presidential lawns by 3 pm. 

What to tell them? 

What to tell the waiting nation?

Announce four names and that was it for the day. Give the media and the country a bone to chew on as heads were scratched, brows furrowed plotting of a Plan B in rolling out the new cabinet.

Is Onyango Oloo telling the truth or just mongering some wild, baseless fabrications?

Let me say this.

Way back in 1975, when I was a  teenager in lower secondary at a missionary run high school  down at the Kenyan Coast, I started life as a writer composing adolescent wannabe short stories for my English Language class assignments.

Who knows?

Maybe the few paragraphs above comprise a  crude work of fiction, the product of a feverish, possibly even diseased, fertile imagination.

But again, I could be leaking an inkling of the truth.

Like my hero Fidel Castro at his famous 1953 trial let me shrug my broad shoulders as I mutter, Historia Me Absolveria, history will absolve me.

And by the way, a former academic colleague of  

Fred Okengo Matiangi intimates that the Information, Communications and Technology would be cabinet secretary and supposed Simeon Nyachae crony, may face a storm (quite possibly in a Kenya Chai kikombe) over allegations that he was relieved of his University of Nairobi teaching job for being absent without official leave as well as questions over the probity swirling around how some State University of New York (SUNY)  funds may or may not have been diverted into some unrelated mansion construction project in the leafy Karen suburb. Apparently forensic financial sleuths from a certain northern European embassy did a thorough audit of SUNY’s books, and discovered a great deal of creative accounting, and conflicts of interests including hiring friends as key resource persons and  tapping relatives for all related procurements. The gist of these allegations is that  there were of family entanglements which were not very kosher/halaal .

But hey, I am not part of the 28 person parliamentary vetting committee so Mr. Matiangi and his detractors will cross that bridge when they come to it.

In any case the foregoing  was strictly in passing.

Let me come back to the centre piece of this particular digital essay:

Customizing the Washington Consensus in Kenya as part of long term efforts to buttress the historical neo-colonial and imperialist appendages to the capitals of capital because of the interconnected ideological, commercial and geopolitical agendas.

Even though we are already in the middle of this essay, let us begin, as it were at the beginning.

When we talk of the Washington Consensus, what are we referring to?

Again, Wikipedia’s summaries come in very handy:

The term Washington Consensus was coined in 1989 by the economist John Williamson to describe a set of ten relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis-wracked developing countries by Washington, D.C.-based institutions such as the International Monetary Fund (IMF), World Bank, and the US Treasury Department. The prescriptions encompassed policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.

Subsequently to Williamson's minting of the phrase, and despite his emphatic opposition, the term Washington Consensus has come to be used fairly widely in a second, broader sense, to refer to a more general orientation towards a strongly market-based approach (sometimes described, typically pejoratively, as market fundamentalism or neoliberalism). In emphasizing the magnitude of the difference between the two alternative definitions, Williamson himself has argued (below) that his ten original, narrowly-defined prescriptions have largely acquired the status of "motherhood and apple pie" (i.e., are broadly taken for granted), whereas the subsequent broader definition, representing a form of neoliberal manifesto, "never enjoyed a consensus [in Washington] or anywhere much else" and can by now reasonably be said to be dead.

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C.[2] Williamson used the term to summarize commonly shared themes among policy advice by Washington-based institutions at the time, such as the International Monetary Fund, World Bank, and U.S. Treasury Department, which were believed to be necessary for the recovery of countries in Latin America from the economic and financial crises of the 1980s.

The consensus as originally stated by Williamson included ten broad sets of relatively specific policy recommendations:

•  Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;

•  Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;

•     Tax reform, broadening the tax base and adopting moderate marginal tax rates;

•     Interest rates that are market determined and positive (but moderate) in real terms;

•     Competitive exchange rates;

•     Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;

•     Liberalization of inward foreign direct investment;

•     Privatization of state enterprises;

•     Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;

•     Legal security for property rights.

 There has been a lot of  critiques of the Washington Consensus in Africa. The well known anti-globalization academic and political activist Patrick Bond who is the Director of the Durban based Civil Society Institute wrote way back in 2001 in relation to Thabo Mbeki's pet project NEPAD:

Thabo Mbeki is seen as Africa's most legitimate, self-confident and fundamentally pro-Western leader. If anyone can shake down the World Bank in Washington for debt cancellation, or the WTO in Geneva for trade concessions, it's the primary architect of the miracle transition in recently-liberated South Africa.

Africa needs enormous concessions, thanks to what Mbeki has termed "global apartheid" and what Washington/Geneva technocrats prefer to laud as the "Washington Consensus"--or just "globalisation." Africa generates nearly 30% more exports today than in 1980, yet their value has crashed by more than 40% because of falling terms of trade.

Likewise, Sub-Saharan Africa's foreign debt rose from US$60 billion to US$206 bn over the same period notwithstanding 1980s-90s debt repayments of US$229 bn, thanks to the tyranny of compound interest rates and the near- universal failure of intervening structural adjustment programmes. Over the past three years alone, debt repayment by Sub-Saharan African countries was US$16 billion greater than incoming new loans.

Can Africa's leaders finally, vigorously campaign against such extreme uneven world capitalist development? Should we draw hope from a "New Partnership for Africa's Development" ("Nepad"), launched in Abuja, Nigeria by several African heads of state on October 23? And first of all, what background should we have about the Nepad process?

From the late 1990s, Mbeki embarked upon an "African Renaissance" branding exercise with poignant poetics. The contentless form was somewhat remedied in the secretive Millennial Africa Recovery Programme (with the acronym "Map"), whose powerpoint skeleton was unveiled to select elites in 2000, during Mbeki's meetings with Bill Clinton in May, the Okinawa G-8 in July, the UN Millennium Summit in September, and a subsequent European Union gathering in Portugal.

The skeleton was fleshed out in November 2000 with the assistance of several economists. It was immediately endorsed during a special South African visit by World Bank president James Wolfensohn "at an undisclosed location," due presumably to fears of the disruptive civil-society protests which had soured a Johannesburg trip by new IMF czar Horst Koehler a few months earlier.

Thanks to work by a co-author of South Africa's own disastrous 1996 homegrown structural adjustment programme (Stephen Gelb), the content of the 60-page working document was becoming clearer: more privatisation, especially of infrastructure (no matter its profound failure as a strategy, especially in South Africa); more multi-party elections (typically, though, between variants of neoliberal parties, as in the US) as a veil for the lack of thorough-going participatory democracy; grand visions of a developmental kickstart via ICT (hopelessly unrealistic considering the lack of simple reliable electricity across the continent); more trade with the North; and a self-mandate for peace-keeping (which South Africa has subsequently taken for its soldiers stationed in the Democratic Republic of the Congo and Burundi).

In short, Mbeki dreamed of more globalisation, not less.

By this stage, he had managed to sign on as partners two additional rulers from the crucial West and North regions of the continent: Abdelaziz Bouteflika and Olusegun Obasanjo from Nigeria. Unfortunately, both continued to face mass popular protests and widespread civil/military/religious bloodshed at home, diminishing their utility as model African leaders.

Later, to his credit, Obasanjo led a surprise revolt against Mbeki's capitulation to Northern pressure at the World Conference Against Racism in September 2001, when he helped generate a split between EU and African countries over reparations due the continent for slavery and colonialism. Tellingly, even loose talk of such reparations cannot be found in the Mbeki's document, and the South African host delegation was furious at Obasanjo's outburst because it nearly scuppered a final conference resolution.

But that incident aside, 2001 has been a successful year for selling Nepad. Another pro-Western ruler, Tanzania's Benjamin Mkapa, joined the New Africa leadership group in January 2001. Mkapa's government suffers a dreadful recent human rights record, but he and Mbeki gave the world's leading capitalists and state elites a briefing in Davos, Switzerland, which was very poorly-attended. A few days later, an effort was made in Mali to sell West Africans to the plan, with on-the-spot cheerleading by Wolfensohn and Koehler.

Then, the July 2001 inaugural meeting of the African Union in Lusaka provided the opportunity for a continent-wide leadership endorsement, once Mbeki's plan was merged with the "Omega Plan"--offered by the neoliberal Senegalese president, Abdoulaye Wade--to become the New African Initiative. For a few months until late October, observers termed Mbeki's initiative "the Nai."

The Genoa G-8 summit offered soothing encouragement. With 300,000 protesters outside the conference accusing the world's main political leaders of running a destructive, elitist club, Mbeki was a useful adornment. Likewise, Mbeki's October visits to Japan and Brussels confirmed his elite popularity, perhaps because there was no apparent demand for formal monetary commitments at this stage.

A recent surge of enthusiasm from Johannesburg corporations, Washington multilateral banks, and European capitals deserves much more consideration than I have space for here, particularly given the geopolitical give-and- take associated with George W. Bush's "anti-terror" coalition-building. But to sum up the ideological partnership that Mbeki proposes, consider the way that the 1980s-90s recolonisation of African economic policy is explained on the website version of Nepad:

    "The structural adjustment programmes provided only a partial solution. They promoted reforms that tended to remove serious price distortions, but gave inadequate attention to the provision of social services. As a consequence, only a few countries managed to achieve sustainable higher growth under these programmes."

Slippery, this line of analysis, and worth unpacking briefly, to conclude, for one test of robust analysis is to pose the opposite premise, and to see whether the subsequent hypotheses are worth exploring:

- --What if structural adjustment represented not "a partial solution" but instead, reflecting local and global power shifts, a profound defeat for genuine African nationalists, workers, peasants, women, children, manufacturing industry and the environment?

- --What if "promoting reforms" really amounted to the IMF and World Bank imposing their cookie-cutter neoliberal policies on desperately disempowered African societies, without any reference to democratic processes, resistance or diverse local conditions?

- --What if the removal of "serious price distortions" really meant the repeal of exchange controls (hence allowing massive capital flight), subsidy cuts (hence pushing masses of people below the poverty line), and lowered import tariffs (hence causing widespread deindustrialisation)?

- --What if "inadequate attention to the provision of social services" in reality meant the opposite: excessive attention to applying neoliberalism not just to the macroeconomy, but also to health, education, water and other crucial state services?

- --And what if the form of IMF/Bank attention included insistence upon greater cost recovery, higher user-fees, lower budgetary allocations, privatisation, and even the disconnection of supplies to those too poor to afford them, hence leading to the unnecessary deaths of millions of people? If these hypotheses are reasonable, and if the logical implication is to proceed no further with structural adjustment, then a central task of Nepad must be to slip around such arguments without reference to their relevance. By doing so, Nepad fits right into the globalisers' modified neoliberal project, which now insists even more incongruously that economic integration solves poverty.

Apparently, the notion that South Africa might "naai"--translated from Afrikaans as "totally screw over"--the rest of Africa through Mbeki's New, Almost-African Initiative led those gathered at Abuja to revise the name. Still, cheeky commentators are already observing that if porounced "kneepad," the document signifies its merits as the cushion African leaders will need, as they stoop and grovel for more handouts.

But that would be unfair, for Nepad is worth reading even if merely as an ambitious attempt to bring a spirit of "engagement" by at least three African leaders to a world economy which is still totally screwing over Africa. True, like all top-down policy formulations, Nepad reeks of technicism--a scent which could dissipate partially if exposed to the fires of popular debate, protest and participation. But that would risk the transformation of Nepad into a partnership with Africans themselves. And Mbeki's AIDS interventions provide enough evidence of his intentions to keep millions of Africans alive, much less in partnership.

The alternative to Nepad begins with African activists building up networks within and between diverse social movements, visionary trade unions, Jubilee chapters, women's organisations, environmental groups and the progressive intelligentsia. These are already taking seed across the continent via anti-neoliberal protests and longer-term strategic work (e.g., in this subregion, the Southern African Peoples Solidarity Network, at http://aidc.org.za, and across the continent flowing from the Dakar 2000 process to promote an African People's Consensus instead of a Map/Nai/Nepad).

A recent precedent for rejection and reformulation was the World Bank's Global Development Gateway, which was repelled in March by creative Southern African civil society groups, and which instead initiated the Africa Pulse information community. That kind of African partnership, based on a human-rights culture, a decommodification strategy and durable cross- border alliances, is far superior to Pretoria's new gambit.

Indeed, Nepad belongs with many of South Africa's other regional economic strategies: deindustrialising neighbours because of relectance to give the same duty-free preferences to SADC imports that even the apartheid regime had offered; imposing EU and US free-trade regimes on unwilling neighbours; demanding debt repayments from impoverished Mozambique for loans that resettled dissident rightwing Afrikaner farmers and that rebuilt electricity lines which were destroyed by apartheid destabilisation; kicking out 15,000 Zimbabwean farmworkers with no compensation; or treating informal economic migrants like meat for dogs (not merely in extremist SA Police Service training exercises but on a day-to-day basis at the Department of Home Affairs).

To expand this sort of subimperialist project via a warmed-over Washington Consensus, Nepad, means that Mbeki is content merely polishing, not abolishing, global apartheid.

And the late Nigerian Pan Africanist visionary, Dr. Tajudeen Abdul Raheem, who used to be based right here in Nairobi made this observation in a piece for the Pambazuka online newsletter:

 The Cold War also took its toll on our intellectuals and politicians who became cold warriors for the east or the west. By the late 1970s and throughout the 80s, Africa had become prostate and formed an experimental ground for all kinds of half-baked ideas of development from outside, principally through the hegemony of the IMF /World Bank and their dubious Washington Consensus.

The IMF and World Bank did not want thinkers who would challenge their dubious assumptions and arrogance. The military or one party dictator did not want any criticism of their misrule. Between both of these, our once promising and flourishing intellectual centres became deserts and development thinking and planning became externalized.

Interestingly, there has even emerged in recent years, something known as the Beijing Consensus. But I do not have time to be side tracked by that so you can find out on your own by reading this document by  John Ramos..

Not surprisingly, scholar focusing on China came out with a swift rebuttal of the concept.

To bring matters closer to Kenya  and more relevant to our contemporary national realities, let us examine how the World Bank for instance, has reacted to the 2010 Constitution and in particular that section which deals with Devolution.

In November 2012, the World Bank with financial support from the Australian Government,  published a  268 page document entitled, DEVOLUTION WITHOUT DISRUPTION:Pathways to a Successful New Kenya which, in my opinion, is a MUST reading for anyone who is interested in the future of our country.

Here is a link to PDF version.

Let me quote extensively from the Executive Summary:

Kenya’s new Constitution marks a critical juncture in the nation’s history. It is widely perceived by Kenyans from all walks of life as a new beginning. Indeed, many feel that post-Independence Kenya has been characterized by centralization of political and economic power in the hands of a few, resulting in a spatially uneven and unfair distribution of resources and corresponding inequities in access to social services: the opposite of an inclusive state. Born of the political opportunity created by the 2008 post-election violence, the Constitution that was finally adopted after almost a decade of unsuccessful reform attempts presages far-reaching changes. Its vision encompasses a dramatic transformation of the Kenyan state through new accountable and transparent institutions, inclusive approaches to government, and a firm focus on equitable service delivery for all Kenyans through the newly established county governments.

2. Devolution is at the heart of the new Constitution and a key vehicle for addressing spatial inequities. A more decentralized government makes eminent sense given Kenya’s diversity and past experience with political use of central power. Decentralization has been increasingly seen and adopted worldwide as a guarantee against discretionary use of power by central elites, as well as a way to enhance the efficiency of social service provision, by allowing for a closer match between public policies and the desires and needs of local constituencies. Kenya’s Constitution entrenches devolved government by guaranteeing a minimum unconditional transfer to counties under the new dispensation.

3. Devolved government presents an opportunity to address the diversity of local needs, choices and constraints in Kenya. This is a very diverse country with ten major and more than thirty minor ethnic groups. Needs are very different between the arid and semi-arid North, the highlands, the rural Northern Rift, the urban centers of Mombasa, Nairobi, and Kisumu, the coast, and Western Kenya. Counties will be better placed than the national government to deliver social services, because they have specific challenges and the local knowledge to address them. For instance, in the case of health, lagging counties still need to catch-up in providing basic health services, while the leading urban counties will be faced with new types of diseases (mostly non-communicable such as diabetes and cancer). With these stark differences it makes little sense to provide the same mix of services across the country. And even if there are no dramatic improvements in service delivery, people prefer to make decisions themselves rather than following directions imposed by a central government. With a constitutional guarantee of unconditional transfers from the center, Kenya’s counties will have the means and the autonomy to begin to address local needs, and their citizens will be more able to hold them accountable for their performance.

4. But Kenya’s devolution is very ambitious, and therefore commensurately risky. It is a massive undertaking from a logistical point of view. The day after the next general election, Kenya’s system of government and public administration will be profoundly remodeled. It is inevitable that teething problems will be encountered during the transition. There are diverging views on how far and how fast the transition should be implemented. Since Independence, Kenya’s leaders have held diverging views about devolution. From one perspective, it offers the potential to redress perceived ethnic and political bias by giving local communities far greater control over resources and decisions about service delivery. However, from another perspective, devolution could potentially undermine national unity, by encouraging fragmentation of the state along partisan lines or by ‘decentralizing corruption’, leaving citizens worse off if local elites are able to capture resources to the detriment of the majority, or if newly established counties fail to put in place the systems needed for effective and transparent service delivery.

5. In the short run, managing the transition to the new system and people’s expectations will be critical. From a political viewpoint, the devolution process has generated tremendous hope in the population, and sometimes unrealistic expectations of how quickly things can and will change in the ordinary lives of Kenyans. From a logistical viewpoint, this is a highly complex undertaking, which Kenya has embarked upon in a context of political division. The challenge will therefore be to manage expectations of how much and how quickly devolution can deliver, and to make sure that the transition to devolved government causes as little disruption (and litigation) as possible to the delivery of services that are essential for the welfare of the people of Kenya, as well as for the health of its growing economy. Equal distribution of wealth across Kenya may be desirable politically, but it is impossible economically. With a few exceptions, counties will be too small to generate the economies of scale which companies require in order to be successful. Firms will only come to Kenya and expand if they can operate in the whole country and beyond. Moreover, no matter what remote counties do to attract them, most will chose to locate their operations in Kenya’s big cities to benefit from the markets around them.

6. The next two years will be critical because the foundations of the devolution architecture will be impossible to alter the foundations, at least not without knocking it down and starting again. Kenyans sense that a momentous restructuring of their country is underway. There are high expectations and much anxiety. Kenya’s devolution is not only a critical milestone in this country’s history; it is also remarkable in global terms. Many countries.both rich and poor.have transferred power and resources to lower levels of government. Few have done so to entirely new subnational units which they have had to establish from scratch. Kenya will undergo a dual transition: a transfer of power and resources from the center to the subnational level and a simultaneous reorganization of local government, with the consolidation of existing local structures into forty-seven newly-created county governments.

7. The devolution train has already left the station: the challenge is to make sure it arrives at the right destination, safely and on time. The politics of devolution explain the high intensity of hopes and expectations that have been pinned to it. It also means that there are high risks if expectations are not met. There are great opportunities and enormous challenges waiting for Kenya, in a critical election year, which will determine the fate of the country, politically and economically, for years to come. This report takes a look at the critical issues facing Kenya’s policy-makers today. It does not argue for or against devolution (a decision that belongs solely to Kenyans), but presents suggestions and recommendations on how best to navigate the tough choices ahead. It’s main focus is to help Kenya to manage a delicate transition. Financing county needs: transferring the right amount with an appropriate mix of instruments.

8. Decentralizing power requires transferring resources from the center to the local level: but there is no single answer to the question of how much, how fast and in what form. Unlike in many other decentralized countries, Kenya’s counties will not have substantial sources of own revenues. Consequently, they will depend on the national government for transfers. Deciding the amount of each county’s transfers involves a two-step process to ‘fairly’ divide national resources. First, resources must be divided “vertically” between the national and county governments, in such a way that each is adequately resourced to carry out its mandated functions. The vertical division must also take account of historical under-privileging of service delivery. Second, the county share must be split across the forty-seven counties in a way that recognizes their different inherited needs and also addresses historical inequalities between them. This will be particularly difficult in an overall context of fiscal stress, with limited scope to increase overall public funding. Third, national government needs to determine where it is appropriate to provide conditional grants from its own resources.

9. A golden rule of decentralization is “funding follows function”, which is why the function assignment process is so important. While Kenya’s Constitution provides high-level guidance on the respective responsibilities of the national and the county governments, much more granular work is needed in order to provide a basis for sharing resources. The Transition Authority (TA) has been set up with the mandate to carry out a detailed assignment of functions, but the legislated process for function assignment is cumbersome. It is envisaged that each county will apply to the TA for each function to be devolved to it on an ad hoc basis. This approach is likely to be overly complex to manage, and may also lack transparency (because of the resulting complexity), potentially undermining accountability at the local level. In this report, an optional framework is proposed for organizing a phased ‘bulk’ transfer of functions to counties, in a way that minimizes ad hoc arrangements and maximizes efficiency and transparency .

10. By prescribing a minimum transfer to counties, Kenya’s Constitution has not pre-empted the usefulness of an aggregate costing of county needs. This is essentially for two reasons: first, the overall cost of functions to be devolved is likely to be significantly more than the constitutionally guaranteed share of 15 percent of audited national revenue, and; second, functions will be phased out over time during the transition period, and as a result counties may not initially receive the full amount guaranteed to them. Working out a ‘fair split’ of available resources in a context of limited fiscal space, as well as the most appropriate mix of grant instruments (i.e. between the equitable share and conditional grants) will require detailed evidence of how much counties will need, for what and by when.

That was quite a chunk.

And those were merely the FIRST TEN POINTS of the Executive Summary. There are 74 in total!

But you get the drift dear reader- especially you take the trouble like I did, to read the entire 268 page document broken down into four parts over 16 chapters.

In concluding the authors say:

MAIN CONCLUSION AND RECOMMENDATIONS 

In coming years, Kenya will experience a massive and complex transformation, administratively as well as politically. Devolution, enshrined in the Constitution, represents an extraordinary opportunity for Kenyans to hold their leaders to account at every level of Government, and to take an active part in the policy decision making process. This report has focused on ways of making the new system work for Kenya and on ensuring that the transition to devolved government can proceed smoothly in the critical early years of implementation. 

This concluding section summarizes key insights and recommendations from the report. The hope is that they will add to the existing menu of policy options that Kenyan citizens and decision makers will be able to draw upon when confronting the tough choices ahead. 

PART I: 

Seeing the future from the perspective of the past 

Implementing devolution, following the broad canvas provided by the Constitution, will be a tall order because of: (i) the radical scale of the proposed transformation, unique by international standards; (ii) the very short time frame for design and implementation; and, (iii) the fundamental heterogeneity, in starting points and in needs, of Kenya’s future counties. 

Kenya’s devolution is dramatic because it involves transferring substantial powers and resources to entirely new units of government, and it implies major changes to political and administrative institutions at the same time. Kenya’s public sector has been highly centralized for several decades, and devolution will imply both a major reorganization and a ‘culture change’. The new counties will need to set up institutions from scratch, while taking over functions, staff and revenue raising powers from existing institutions. 

Moreover, Kenya’s future counties are at dramatically different points (and possibly potential) in terms of overall development, economic infrastructure and access to social services. The challenge will be to make the framework of devolved government (and associated intergovernmental finances) accommodate such diversity. For instance, there are clear challenges for function assignment, fiscal equalization and, capacity building. 

Recommendations

• Public expectations should be carefully managed as to how much and how fast devolution can deliver to avoid disappointment and overloading of weak counties.

• Devolution provides a unique opportunity to rationalize the service delivery framework, by making counties the hub for organizing services at the local level. But this will require strategies to blend institutional frameworks of co-existing public administrations, clarify their roles and responsibilities, and transition staff currently employed in local authorities and districts.

• Specific capacity building programs are needed for ‘lagging’ counties.

• Equalization policies should be focused first and foremost on equalizing opportunities to access basic

social services. 

PART II: Equity between levels of government 

One of main challenges facing policy-makers will be to devise a “fair split” of national resources between the future counties and the national government. This will imply resourcing counties to adequately perform their functions, and to continue to deliver on the essential services devolved to them. But it will also involve finding the fiscal space required to deliver on the promise of equalization across Kenya’s counties. 

This can be done in part by reallocating resources from historically privileged to formerly neglected counties, and it will also call for tough trade-offs at the national level. At the same time, expectations need to be managed on how fast equalization can be achieved in a context of overall fiscal stress. 

A first step, in order to make this sharing process as transparent and fair as possible, is to clearly establish (and eventually cost) what functions counties will be expected to perform, in terms of both existing services to be devolved and new functions they will be required to perform. Failure to do this could result in blurred accountability, and possibly costly mismatches between funding allocations and spending obligations. This is a key mandate of the newly established Transition Authority (TA) which has a central role to play. 

A second step will be to design the intergovernmental financing framework in support of devolution. By collectively guaranteeing counties a minimum transfer of 15 percent of national revenue, the Constitution has not preempted the need for further definition of the intergovernmental transfer architecture, for two essential reasons. First, all available evidence suggests that aggregate county needs will be well in excess of 15 percent, calling for additional transfers to counties. Second, the equitable share transfer is only one of several instruments for financing counties. Others include: own source revenues, transfers under the Equalization Fund, and any other transfers that the national government could decide to extend out of ‘its’ share (whether conditional and formula driven or not). The intergovernmental transfer architecture should be designed as a system, with aggregate financing matched to aggregate needs. 

Recommendations 

• The TA should accelerate the process of clarifying function assignments, and create a framework of assignment to guide this process involving line ministries and central government, from the start. 

• A roadmap is needed to streamline and simplify the initial asymmetric transfer of functions, possibly by opting for “phased transfers” based upon clearly defined readiness criteria. 

• Comprehensive function assignment and costing are prerequisites for working out the vertical, aggregate division of revenues across levels of government. 

• Decisions regarding resourcing of counties should consider all possible sources of revenue available to them. 

• The tradeoff between unconditional and conditional funding deserves particular attention, as the scope for one will constrain the use of the other. 

• As a matter of urgency, the GoK should decide the fate of existing earmarked programs (CDF, LATF, RMLF), which if maintained, would constitute conditional grants to be resourced above and beyond the equitable share.

PART III: Equity across Kenya’s diverse counties 

Making sure that counties, collectively, are adequately funded is crucial from a macro and fiscal point of view. It is equally important that each county receives what it needs, as funds are further split across the forty-seven new units. Counties will be able to collect own revenues, but with rare exceptions these will be modest. In the short term, it will be key that the constitutional base for county tax collection is converted into legal instruments that enable counties to collect revenues from day one after the elections. Beyond this, it will be important to broaden the array of tax instruments that counties can use. 

Counties will initially be highly transfer dependent and much of their future resources will come from the county equitable share. Because of its constitutionally mandated floor, the equitable share is likely to be the single largest transfer. The CRA has recommended a formula for allocating the equitable share across Kenya’s forty-seven counties. The proposed formula is highly re-distributive, in line with the Constitutional emphasis on equalization, and this may create a fiscal challenge going forward. Because the formula is so redistributive, historically privileged counties (with relatively large inherited service delivery obligations) could be facing a significant financial shortfall, unless the total transfers to counties are expanded well beyond what is currently being spent on devolved functions. In turn, doing this would require fiscal space being created out of the national budget, which may be difficult to achieve immediately without compromising other essential services. 

It is also critical that the intergovernmental transfer system be designed in light of explicit choices regarding conditional funding because of: (i) Kenya’s tight fiscal environment; (ii) the constitutional guarantee that the equitable share will be purely unconditional; and, (iii) specific merits of conditional funding. The need for conditional transfers, if only to extend currently earmarked programs such as RMLF, CDF and LATF, will determine the fiscal space left available for the equitable share (above 15 percent). An expansion of the county equitable share above that minimum would proportionately reduce the scope for conditional funding (a key ingredient of devolution worldwide). 

Finally, the Equalization Fund, given its small size, will be insufficient to address the vast needs of Kenya’s marginalized communities. Moreover, the impact could be nil, or even negative, if it crowds out existing programs whose fate under the new dispensation is still unclear. 

Recommendations

• A new interim national law governing county own revenues could provide an opportunity to revise and update existing taxes, particularly property rates (to apply to both land and improvements, and to ensure that public land generates adequate fiscal revenue) and the Single Business Permit. 

• Additional local revenues should be sought among a range of possible options, including surcharges on personal income tax, taxes on the use of motor vehicles and payroll taxes. 

• Particular consideration should be given to the sharing of taxation related to natural resources as their potential may increase vastly in years to come, and this issue often constitutes a source of conflict both between levels of Government, and with local communities. 

• Given the experimental nature of CRA’s formula, and lack of a clear estimate of actual county needs and capacity, it may make sense to limit the equitable share transfer, at or close to 15 percent, during a transitional period. Unmet needs at county level could be filled using other unconditional or conditional instruments.

• Given the radical and experimental nature of Kenya’s devolution it may make sense to maximize the scope for conditional funding (and minimize that of unconditional resourcing) if only to ensure that essential programs will remain funded but also to foster inter-county competition around performance and promote a system of performance monitoring at the local level. 

PART IV:Translating the vision, with a smooth transition

Implementing the new devolved system of government during the transition will be a massive undertaking.

Below are just a few of the more pressing challenges ahead. 

A new system of intergovernmental coordination will be needed. The Constitution limits the National Government’s power in relation to county governments, but many service delivery functions will be effectively shared between levels of Government. Effective coordination will involve cultural change at national level, and capacity building at county level. A substantive framework is provided for in the devolution laws, but still needs to be operationalized. Getting intergovernmental bodies working effectively with forty-seven county members will be particularly challenging. 

A new legal framework for PFM has been adopted, but there are many remaining gaps to fill. Budgeting for transition will be particularly challenging because counties will only have very limited time to prepare budgets for 2013/14, and because they will take on their assigned functions gradually, following an asymmetric transfer process. Under the new dispensation, the national legislature will have vastly increased power in the budget process. This could potentially derail the budget process at national and county levels if mechanisms are not put in place to manage the politics of legislative budgeting. At the county level, the budget process will have to be built up from scratch as there is currently only limited experience and capacity at the local level, especially within districts. This will require central coordination and significant capacity building. 

Increased accountability of government is at the heart of the Constitution, but decentralization is not a silver bullet to make it happen. At the local level, weaknesses include limited capacity, poor information systems, weak checks and balances, and often poorly organized civil society. Setting up a system of social accountability implies greater fiscal transparency, effective citizen participation, and accountability mechanisms. 

There is great uncertainty surrounding the fate of cities under the new dispensation and Kenya may be adopting a unique approach by re-centralizing municipal services to county level. Kenya’s cities will no longer have an elected leadership, and only a handful will have a corporate body to manage them. All of the revenues currently enjoyed by Local Authorities will become county own revenues and urban service resourcing will be at the discretion of mostly rural counties. Specific arrangements will be needed to ensure that large cities are appropriately governed and it will also be crucial that urban functions are appropriately resourced. Leaving urban services and governance unattended would be dangerous as urban areas worldwide are the main engines of growth in a country. As counties come into existence, forty-seven new separate public services will be created. Kenya’s new counties will have considerable autonomy, including over public service management. The CGA provides part of the legal framework for management of county public servants, but it leaves many gaps and it is not obvious which national agency is responsible to fill them. 

There are important choices to be made about how far national standards should apply, and how much should be left to county governments. Too much flexibility in counties’ ability to make their own public service arrangements would create risks of: (i) elite capture; (ii) uncontrolled personnel spending; and, (iii) widening capacity gaps across counties. Moreover, the secondment approach chosen by Kenya’s policy-makers could create significant fiscal risks, and an uncontrolled expansion of the civil service wage bill at the national level. It is inevitable that implementing such sweeping change across so many fronts in a short time-frame will be challenging. The overriding aim should be to minimize disruption to service delivery. Kenya has put in place an independent TA, but there is much work to be done. The TA will need to gain the trust and cooperation of line ministries, since it is their staff, functions and funding that will be devolved. Resolving uncertainty about the future of public servants in districts and local authorities is crucial. An immediate task after the election will be to integrate former local authorities and new county governments, and some legal loopholes remain to be closed to minimize confusion and complication. Counties will need funding from day one, but are unlikely to have the systems in place to do this on their own. A transitional approach to financing counties remains to be developed, and will have a critical impact on how smoothly transition can be managed. 

Recommendations 

• Despite the many competing priorities, it is important to focus on getting intergovernmental coordination bodies functioning early on. 

• One priority is to get sector bodies working on issues of function assignment, service delivery standards, and performance monitoring. 

• Another priority is to focus on intergovernmental relationships at the county level, particularly by resolving the role of provincial and district administration staff, and designing the new arrangements for the remaining national staff at county level. 

• During the transition period, the budget could include county votes showing total county allocations, even if a portion remains executed by the National Government, on behalf of counties. 

• To mitigate the risk of executive-legislative gridlock during the budget process, a two-step budget process could be introduced with parliamentary votes at each stage, to generate consensus around the fiscal framework. 

• Building county PFM systems from scratch will require central support to capacity building, monitoring of county progress against clear benchmarks and standardized guidelines and templates developed nationally (for example to help counties develop an integrated planning and budget process). 

• Public financial information (including results) should be made public in a way that allows citizens to assess the efficiency and effectiveness of national and county spending. 

• Citizens should be actively involved in planning and budgeting at local level and equipped with the tools to make significant contributions. 

• More urban centers should have corporate bodies to manage them. This could be achieved either by lowering the threshold for ‘municipality’ status, or by amending the powers and functions of towns under the current law. 

• Functions of city and municipal boards should be clarified as well as the formal process for counties to delegate additional functions to them. 

• A national policy on county public services should be developed. At the very least, the framework of regulation should provide uniform procedures and a comprehensive regulatory framework to apply until the counties pass their own laws. 

• National regulation of some aspects of county public service management is needed, in order to maximize career progression opportunities and encourage public service mobility. 

• The National Government should support the establishment of county Public Service Boards to ensure that they are fully independent and competent, and a regulation under the County Governments Act should set out the process and criteria for appointing Board members. 

• As a matter of urgency, the fate of Local Authorities’ employees should be clarified through a law to deal with transition issues involved in abolishing Local Authorities. 

• The TA will need to be empowered financially and statutorily to lead the transition process with clear authority over other organs of government. 

• The TA has started to develop an overarching strategy for implementing devolution, but what is also needed are uniform and authoritative guidelines for line ministries to follow when preparing their implementation plans. 

• The TA should appoint teams in each county, to help establish basic systems in a sequence, prioritizing the first decisions County Governments will have to make.

So, will Kenyans see devolution implemented as per the provisions in the 2010 Constitution?

Well, in my opinion, NOT if the World Bank and the IMF has anything to do with running the Treasury!

Ploughing through that humungous World Bank document, it becomes even more abundantly clear WHY it HAD to be HENRY ROTICH selected to head Treasury because believe it or not, that World Bank document is going to be the corner stone of Jubilee’s economic policies, not the Harmonized Jubilee Manifesto.

For the same, I hope it now makes sense WHY a BANKER is the one who is going be in charge of HEALTH and WHY ANOTHER BANKER,  

Ms. Anne Waiguru is touted to be in charge of Devolution and Economic Policy. She has just left her job as Director of IFMIS and Head of Governance at the Ministry of Finance to join  the Jubilee Cabinet.

It is important that Kenyans should not be bamboozled and dazzled by the array of post graduate stellar qualifications and be led astray as to the REAL ideological motives for hand picking particular individuals to head specific dockets in the Uhuru/Ruto 2013 cabinet.

I have just done a sample analysis of some of the cabinet  anointments, sorry, appointments.

But if I can speculate a bit further.

The new minister for Defence,  

Ms. Raychelle Omamo,  is a very competent  lawyer, distinguished diplomat and a  dynamic, fiercely independent woman WITHOUT any ties to the Kenyan security/intelligence complex. Why was she chosen? Precisely because she is a lawyer and a woman without ties to the military. That way, the real boys can remain in charge while having Ms. Omamo as  convenient window dressing. But on a minor note I am also that she is SOCIAL friends with the new President and they have been known to share drinks and smokes (quite a variety of those) with the funky head of state.

The other thing which brings a section of the Jubilee cabinet together is class and social connections.

Uhuru Kenyatta, Judi Wakhungu and Raychelle Omamo to name just a trio,  know each other because of their shared upper middle class upbringing in the leafy neighbourhoods of Nairobi. They went to schools like St. Mary's and Loreto. In fact Foot  Print Press recently celebrated the elevation of Prof. Wakhungu and Ambassador Omamo to the pinnacles of Jubilee power as you can see from this  Facebook page.

Pertinent to what we have been discussing in this essay, consider the following excerpt:

Confessions of an Economic Hit Man is a book written by John Perkins and published in 2004. It provides Perkins' account of his career with consulting firm Chas. T. Main in Boston. Before employment with the firm, he interviewed for a job with the National Security Agency (NSA). Perkins claims that this interview effectively constituted an independent screening which led to his subsequent hiring by Einar Greve, a member of the firm (and alleged NSA liaison) to become a self-described "economic hit man".

According to Perkins, he began writing Confessions of an Economic Hit Man in the 1980s, but "threats or bribes always convinced [him] to stop."

According to his book, Perkins' function was to convince the political and financial leadership of underdeveloped countries to accept enormous development loans from institutions like the World Bank and USAID. Saddled with debts they could not hope to pay, those countries were forced to acquiesce to political pressure from the United States on a variety of issues. Perkins argues in his book that developing nations were effectively neutralized politically, had their wealth gaps driven wider and economies crippled in the long run. In this capacity Perkins recounts his meetings with some prominent individuals, including Graham Greene and Omar Torrijos. 

Perkins describes the role of an EHM as follows:

"Economic hit men (EHMs) are highly-paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign "aid" organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization."

The epilogue to the 2006 edition provides a rebuttal to the current move by the G8 nations to forgive Third World debt. Perkins charges that the proposed conditions for this debt forgiveness require countries to privatise their health, education, electric, water and other public services. Those countries would also have to discontinue subsidies and trade restrictions that support local business, but accept the continued subsidization of certain G8 businesses by the US and other G8 countries, and the erection of trade barriers on imports that threaten G8 industries.

In the book, Perkins repeatedly denies the existence of a "conspiracy." Instead, Perkins carefully discusses the role of corporatocracy.as he stated in this November 4, 2004 interview:

"I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation’s largest and least understood spy organization; but ultimately I worked for private corporations. The first real economic hit man was back in the early 1950s, Kermit Roosevelt, Jr., the grandson of Teddy, who overthrew the government of Iran, a democratically elected government, Mossadegh’s government who was Time‘s magazine person of the year; and he was so successful at doing this without any bloodshed—well, there was a little bloodshed, but no military intervention, just spending millions of dollars and replaced Mossadegh with the Shah of Iran. At that point, we understood that this idea of economic hit man was an extremely good one. We didn’t have to worry about the threat of war with Russia when we did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He was a government employee. Had he been caught, we would have been in a lot of trouble. It would have been very embarrassing. So, at that point, the decision was made to use organizations like the C.I.A. and the N.S.A. to recruit potential economic hit men like me and then send us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government."

You can access a PDF copy of the book by going here.

Here is what John Mbaria wrote in an op ed piece published in the Daily Nation of Monday, February 25, 2013:

As Kenyans enter into a national dialogue on whether we can do without the West should Uhuru Kenyatta win the presidency, everyone ought to read a book that reveals how the West, the Bretton Woods institutions and giant multinationals take everyone for a ride so that they can rake in billions of dollars generated in the developing world.

It is a book you can never find in Kenya. But the shocking, best-selling gem ought to be read by everyone, particularly those who have been harping loudest on the great mercies of donors.

The moment you are through the Confessions of an Economic Hit Man by John Perkins, you will look at the “donor world’ through a different prism.

For Perkins tells a convincing story of his own inner struggles as he graduated from a willing servant of big capital to a crusading advocate for the rights of oppressed people in developing countries.

I could, of course, say much, much more…

Onyango Oloo

Nairobi, Kenya

Saturday, April 27, 2013

7:58 am, East African Time