NDII: How business rivalry between US and China is undermining our Constitution, democracy and sustainable development - Daily Nation

How business rivalry between US and China is undermining our Constitution, democracy and sustainable development

Saturday September 23 2017

A tunnel being built on the Nairobi-Naivasha leg of the Standard Gauge Railway (SGR). The US has joined China in the rush for major infrastructure projects in Kenya and Africa. PHOTO | FRANCIS NDERITU | NATION MEDIA GROUP

A tunnel being built on the Nairobi-Naivasha leg of the Standard Gauge Railway (SGR). The US has joined China in the rush for major infrastructure projects in Kenya and Africa. PHOTO | FRANCIS NDERITU | NATION MEDIA GROUP 

By DAVID NDII
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A couple of years ago, a former United States envoy sought me out. He was back in the country on a mission (he had since retired and was then, still is, a professor and consultant).

He was refreshingly forthright on what his mission was — China.   He wanted to know why China was penetrating Africa, how the penetration was perceived by the people, and what the US could do to stem the tide. 

Shortly after the parley, Hillary Clinton then Obama’s Foreign Secretary made her infamous comments in Dakar, Senegal, her first stop on her maiden Africa tour where she characterized US as committed to “a model of sustainable partnership that adds value, rather than extracts it” and further that “America will stand up for democracy and universal human rights even when it might be easier to look the other way and keep the resources flowing.” 

The comments left no doubt that she was talking about China. A few days later in Zambia, she was explicit: “We are, however, concerned that China’s foreign assistance and investment practices in Africa have not always been consistent with generally accepted international norms of transparency and good governance, and that it has not always utilized the talents of the African people in pursuing its business interests.”

SH300 BILLION CONTRACT

It has recently come to light that a large US construction company signed a Sh300 billion contract to build a new Mombasa Nairobi highway. 

The contract, signed three days before election is a carbon copy of the Standard Gauge railway deal—a single sourced, turnkey project to be financed by US Government-backed commercial loans. Can’t beat them, join them.

When he took office, Obama’s flagship aid programme was a food security initiative dubbed Feed the Future. This, and his predecessor’s healthcare initiative President’s Emergency Plan for Aids Relief -PEPFAR, and the historical focus on democracy and governance made for a progressive agenda.  But times were changing.  China and terrorism were taking the centre stage.

Following Hillary Clinton’s foray, the Obama administration entered the infrastructure fray with Power Africa, a public-private electrification initiative whose “partners” are the who is who of US big business.  Darkness has been elevated to be Africa’s most serious deprivation.

ELECTRICITY

The front page of the programme website pronounces that “two out of three people in Sub-Sahara Africa lack access to electricity (though they manage to charge their now ubiquitous mobile phones).   As someone who grew up without electricity, this is the kind of situation that invokes that Gikuyu saying úrimú no ta  úthungú   (foolishness is like whiteness), which loosely translates to ignorance is bliss.

As luck would have it, I had the occasion to register my views with the current US envoy, at a lunch tête-à-tête over salmon when he brought up Power Africa as evidence of benign US aid to change the subject from the agenda of the meeting namely, the military aircraft deal that had failed John Githongo’s “smell test.“

He was rather piqued with my immediate retort that it was nothing more than a vendor-driven commercial initiative. It struck me then, on reflection, that it could not be a coincidence that rural electrification is one of Jubilee administration’s flagship infrastructure programmes.

When Bechtel Corporation the company in the highway deal first appeared on these shores, it was in connection with the LAPSSET project. 

STANDARD GAUGE RAIL PROJECT

Readers of this column may recall that one of the grounds on which I opposed the Mombasa-Nairobi standard gauge rail project right from the outset was that LAPSSET was the better project. In fact, my preferred routing was from Lamu to Thika via Kitui and onwards to Nanyuki along the existing derelict railway line, which I called “LAPSSET lite.” The logic is straightforward.

It would have given us two integrated regional transport corridors instead of one, faster and at a cost considerably lower than the proposed LAPPSET route.  It would now be possible to consign cargo destined to Nairobi or Kampala to either Mombasa or Lamu, and similarly, cargo destined for South Sudan or Ethiopia to either of the two ports.

The case for the Mombasa-Nairobi routing of the new railway was predicated on decongesting  the highway by shifting all the cargo back onto the railway.  This calls into question why the Jubilee administration is investing a colossal amount of borrowed money, almost the same as the railway, on the same corridor when LAPSSET remains unfunded.  It is highly unlikely that explanations will be forthcoming.

ECONOMIC LOGIC

Besides this purely economic logic, the other equally compelling case for LAPSSET is  promoting equitable development. This happens to be constitutional imperative, as spelled out in Article 201 of the Constitution to wit “the public finance system shall promote an equitable society (Article 201(b) and “expenditure shall promote the equitable development of the country, including by making special provisions for marginalized groups and areas” (201(b)(iii)). 

In constitutional parlance, these provisions are known as directive principles of public policy. The primary mechanism for pursuing this particular principles is devolution, and specifically the revenue sharing system that it prescribes (In the interest of disclosure, this author worked on this chapter of the Constitution).

It is a matter of public record that the Jubilee administration leadership opposes devolution and many other fundamental principles of the 2010 Constitution.

Uhuru Kenyatta is on record blaming the Constitution for his administration’s underwhelming performance. William Ruto was leader of the NO campaign. Both Uhuru and Ruto have in recent days bragged that they have sufficient strength in Parliament to change the Constitution.

FOREIGN DEBT

Between the Mombasa- Nairobi SGR and this new highway, we are talking over US$ 6b, a third of the total foreign debt, and close to 40 per cent inclusive of the SGR extension to Naivasha.  

Since, in the revenue sharing system I have referred to, servicing debt takes precedence over county allocation, this uncontrolled borrowing negates the constitutional imperative.  Let me illustrate. 

Suppose in Year Zero of devolution we start with Sh1,000 sharable revenue. The sharing rule is set at 70:30 for national and county governments respectively.  In the course of the year, the national government borrows Sh500 at a 10 per cent interest. The national government now has Sh1,200 to spend, which changes the resource allocation from 70:30 to 80:20.

The following year, the revenue to be shared will be less Sh50 annual interest on the debt. If the revenue remains Sh1,000, the sharable revenue will fall to 950, and the county share from Sh300 to Sh285.  If this goes on for five years, the counties revenue share will be squeezed down to Sh225. 

Secondly, the concentration of investment in the favoured regions reinforces the development disparities that the constitution has set out to cure.  The motives that are driving the national government to concentrate infrastructure on the Northern Corridor at the expense of LAPSSET are not difficult to discern.

INVESTMENTS

The national government is captive to the owners of capital both local and international, and this is where their investments are. It has emerged that Jubilee administration’s goal was to capture the four metropolitan counties Nairobi, Kiambu, Kajiado and Machakos, create a metropolitan authority controlled by the national government to which the county governments would cede power, leaving the governors as figureheads.

Desperate scheme

Not too long ago, we were treated to one of Uhuru Kenyatta’s frequent tantrums while campaigning in Turkana as he was taken to task for frustrating an oil revenue sharing legislation.  The monster oil bonanza anticipated three years ago was a key driver of the Jubilee administration’s borrowing binge.

As the prospects of the windfall faded, how to repay the monies borrowed and squandered in anticipation has become a headache. It is this headache that prompted the desperate scheme to transport some oil by road all the way to Mombasa that now appears to have come a cropper as well. 

Remarkably, the cost of the proposed crude pipeline from Turkana to Lamu given as US$3b, is of the same order of magnitude as the new highway.  So even after all the hubris about going it alone after losing the Uganda pipeline, and the “early oil” charade,  it now turns out that the oil pipeline is not a priority.  What might the logic be?

POLITICAL SYSTEM

Sociologists call this political system the centre-periphery model of capitalist accumulation. In centre-periphery capitalism, the periphery is only seen through the lens of extraction of natural resources or exploitation of cheap labour. As long as Turkana, and the whole of the arid north generally had neither (pastoralists are notoriously difficult to exploit), they were left pretty much to their own devices. 

Effective extraction requires authoritarian political control. The logic should now be readily apparent. The 2010 Constitution has given too much power to the periphery.  The investment must be put on hold until this constitutional order is dismantled, and effective political control re-established. 

What we are seeing in effect is convergence of the international and domestic centre-periphery logic. In the face of the counter-terrorism imperative and the Chinese commercial onslaught,  constitutionalism and democracy in the periphery have become inconvenient. 

But this is not new.  It harks back to the Cold War era puppet regimes of Mobutu, Moi and others.  Plus ça change, plus c’est la même chose (The more things change, the more they stay the same).

Simply put, we are on our own.

 David Ndii, an economist, is currently serving on the Nasa technical and advisory committee. He leads the NASA policy team. [email protected] @DavidNdii