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Between the hammer of the markets and the anvil of politics: Mr Kenyatta, in debt distress

Recently released Treasury figures paint a frightening picture: not only is the government broke and struggling with declining revenues, it is now spending the equivalent of 90 percent of the wage bill on interest repayments and in July, failed to remit any monies to the Counties. Interest payments on debt are eating into recurrent expenditure, threatening to grind daily government operations to a halt. The low-down: big projects – including Uhuru Kenyatta’s legacy projects, the ‘Big Four’ Agenda and the Standard Gauge Railway – are off the table. And for Jubilee, the prospect of collapse is very real. By DAVID NDII.  

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Between the hammer of the markets and the anvil of politics: Mr Kenyatta, in debt distress

A few weeks ago the CS Treasury was kind enough to publish and gazette the government’s income and expenditure statement for July, the first month of the current financial year.  They are only a few numbers, but they are quite revealing.

Government Income and Expenditure Statement, July 2018

Government Income and Expenditure Statement, July 2018

The government opened the year with KSh 102.8 billion in the bank. It raised KSh 99 billion from taxes, and borrowed KSh 30 billion locally, that is, total inflows of KSh 129 billion during the month. How was the money spent? Debt took KSh 68 billion, just under 70 percent of the tax raised.  The counties and development budget got no money at all. The Treasury closed the month with KSh 110.7 billion, KSh 8 billion more than the opening balance.  Why did the Treasury hoard money when the counties and development projects were starved of cash? I will come back to that question shortly.

It is tempting to think that this was only the first month of the financial year, and things will look up. Not quite. Treasury puts revenue for the full financial year at KSh 1.34 trillion which translated to a KSh 112 billion monthly average, so the July revenue figure is low but not far off the mark.  The debt service budget for the year is KSh 870 billion, which works out to KSh 72.5 billion per month so the July figure of KSh 68bn is also consistent. The domestic borrowing target for the year in the budget is KSh 270 billion, which works out to KSh 23 billion per month, so the July borrowing of KSh 30 billion is well above target. 

In essence, the July statement is a good snapshot of the state of government finances. Unless revenue increases dramatically, the only way the government will be able to stay afloat is by excessive domestic borrowing.  Borrowing more than it is doing already will put paid to any chances of recovery of credit to the private sector, which stalled three years go.  And one does not have to be an economist or finance expert to appreciate that a person, business or government spending 70 percent of income to service debt is distressed.

How did we get here? Binge borrowing.

KENYA: FOREIGN PUBLIC DEBT AND INTEREST PAYMENTS, FY 2017/18

Kenya Public Debt 2013 - 2018 KShBillion

Kenya Public Debt 2013 - 2018 KShBillion

KENYA: Average Interest Rate on Foreign Public Debt FY2017/18

As at end of June 2018, our total public debt was KSh 5.2 trillion, up from KSh 1.8 trillion five years ago, an increase of KSh 3.3 trillion. Jubilee has borrowed close to double the debt it inherited. The debt has increased more or less equally between domestic and foreign borrowing.  The second is cost of debt.

Unless revenue increases dramatically, the only way the government will be able to stay afloat is by excessive domestic borrowing.  Borrowing more than it is doing already will put paid to any chances of recovery of credit to the private sector, which stalled three years go.  And one does not have to be an economist or finance expert to appreciate that a person, business or government spending 70 percent of income to service debt is distressed.

The stock of debt has increased 187 percent but debt service outlays are up 230 percent, from KSh 264 billion to KSh 870 billion. The standout figure here is foreign interest, which has increased sevenfold from KSh 14 billion to KSh 114 billion. This in turn, is explained by two factors, foreign commercial and China debt.  Five years ago, foreign commercial debt was inconsequential— we owed only one syndicated loan and that was an exception. We were not in the habit of taking on foreign commercial debt. Five years on, commercial debt is the single largest item on foreign debt accounting for 36 percent of it.  We owed China KSh 63 billion accounting for seven percent of foreign debt. Debt to China is now up to KSh 550 billion accounting for close to 30 percent.  Commercial debt and China combined account for 80 percent of the increase in foreign debt.

We, of course, expect commercial debt to be more expensive than the soft loans from bilateral and multilateral development institutions. But Chinese debt is not cheap either.  Last year’s debt service figures show that we owed China 21 percent of foreign debt, but we paid them 32 percent of the interest. Multilateral lenders account for 33 percent of the debt but only 15 percent of the interest payments (See chart). The interest rates implied by these payments, although only a rough approximation, show that China’s debt is the most expensive at 4.8 percent, followed by commercial debt at 3.9 percent, other bilateral lenders at 2.4 percent and multilateral lenders are the cheapest at 1.4 percent. But as I said, these are implied rates, not the actual ones, as they do not reflect the debt movements within the year.

Jubilee has borrowed close to double the debt it inherited. The debt has increased more or less equally between domestic and foreign borrowing. The stock of debt has increased 187 percent but debt service outlays are up 230 percent, from KSh 264 billion to KSh 870 billion. The standout figure here is foreign interest, which has increased seven fold from KSh 14 billion to KSh 114 billion. This in turn, is explained by two factors, foreign commercial and China debt.

Different components of debt affect the budget differently. Interest comes out of the recurrent budget, and in effect from revenue. Working with a realistic figure of KSh 1.4 trillion revenue, the interest burden this year takes 29 percent of revenue up from 14 percent five years ago. In fact, interest cost is now equivalent to 90 percent of the wage bill as compared to 40 percent five years ago.  Interest on debt is crowding out the Operations and Maintenance (O&M) budget. O&M is what makes government work. It is the money that enables the police to move around, and health facilities to treat patients, government laboratories to test food and drugs and so on.

On this trajectory, it will not take long for the recurrent budget to consist of only salaries and interest

The foreign debt consists of market debt (the Eurobonds), syndicated loans and term loans.

Eurobonds and syndicated loans are similar. The key difference is that syndicated loans are short-term notes, typically sold in two-year cycles, which banks typically hold to maturity. Amortization of bonds and syndicated loans (i.e. repayment of principal) is financed by new market debt, and is known as re-financing. The principal on bank debt has to be repaid. The key concern with market debt is the refinancing risk. The government has to be able to sell new bonds as old ones mature.  The market conditions can change, or the investors risk-perceptions can change to the extent that the government is unable to sell enough bonds in which case it defaults. Alternately, it may have to offer such high returns that sooner or later, it cannot afford the interest, which amounts to the same thing— default.

Which brings me to the  KSh102 billion shilling cash hoard— the money that government had but did not spend in July. This is half the money that the government raised in the second Eurobond six months ago. It was not spent because it was raised to refinance the maturing debt, KSh 250 billion this year.  The balance has to be raised. 

The key concern with market debt is the refinancing risk. The government has to be able to sell new bonds as old ones mature.  The market conditions can change, or the investors risk-perceptions can change to the extent that the government is unable to sell enough bonds in which case it defaults. Alternately, it may have to offer such high returns that sooner or later, it cannot afford the interest, which amounts to the same thing— default.

The preferred option is to float another Eurobond, preferably a long dated one that does not come up for refinancing soon. The alternative is more syndicated loans which will cost more and come up for refinancing in two years. The market environment that they will be doing this is not favourable.  When we raised the first Eurobond in 2014, the market was awash with “Quantitative Easing” (QE) money the US Federal Reserve and European Central Bank were “printing” in order to shore up their banking systems following the 2007 financial crisis, as well as “petrodollars” accumulated by oil exporters—recall that oil was selling at over $100 a barrel). The returns on financial assets in advanced markets were close to zero or negative.

Money managers were looking for higher returns wherever they could find them. Emerging markets were growing fast, and news out of Africa was dominated by the “Africa Rising” story.

Zambia was one of the first countries to jump onto the Eurobond bandwagon.  Zambia floated a debut bond, looking to borrow US$500 million. It was heavily oversubscribed, attracting offers in excess of US$ 12 billion. Zambia accepted $750 million.  Kenya’s stated objective was to issue a US$500 million “benchmarking” bond and use the proceeds to offset a syndicated loan that was due. How this turned to a US$ 2.8 billion is a story for another day— where it went is already the stuff of legend.

Our political class seems not to have understood the paradigm shift that becoming a sovereign borrower in international markets entails. Going to the market is analogous to a business going public. When a company is private, its affairs are dealt with behind closed doors. The only way unhappy investors can express their views is with their voices, or voting out directors during the annual general meetings, and this is usually quite difficult as typically, the insiders usually have more shares than outsiders. When a company gets listed on the stock exchange, investors don’t have to wait for AGMs. They communicate with the company every day by either buying or dumping the stock. Facebook’s share price fell 11 percent (US$134 billion) in the wake of the Cambridge Analytica scandal—and that’s all the shareholders needed to say.   

Prior to “listing” in the international sovereign bond market, our financial affairs were discussed behind closed doors between the government and its external financiers led by the IMF, and enforced through “conditionalities.” Sanctions for non-performance were flexible and negotiable, and influenced by political considerations. We call this programme discipline.  After “listing”, the bond yields work the same way as share price, punishing or rewarding the country for good or bad economic management as the case maybe. We call this market discipline. The IMF continues to have a role, but a different one— providing a form of credit enhancement to the markets.

Our political class seems not to have understood the paradigm shift that becoming a sovereign borrower in international markets entails. Going to the market is analogous to a business going public. When a company is private, its affairs are dealt with behind closed doors…When a company gets listed on the stock exchange, investors don’t have to wait for AGMs. They communicate with the company every day by either buying or dumping the stock.

But Zambia’s government does not seem to have gotten that memo. Sometime ago it organized national prayers for the Kwacha, hardly a confidence building measure.  A quarrelsome negotiation with the IMF broke down in February. Last week, the government kicked the IMF out of the country for “spreading negative talk”.  The markets responded accordingly. Zambia’s bonds are trading at a bigger discount than Mozambique which has already defaulted.

As of last week, Zambia’s bonds were trading at a yield of 15 percent.  An increase in the yield corresponds to a decline in value of a bond, and vice versa. Zambia’s debut Eurobond carries a coupon of 5.375%, and was issued at a yield at 5.625%, meaning that investors paid $93.50 for $100 of face value.  A yield of 15 percent means that the bond is now trading at $36, a 60 percent fall in value.  As summed up by an investor in Zambian Eurobonds: “It’s not a place that investors would rush into even if emerging markets become popular again. People will be cautious about Zambia until it produces better numbers or gets an IMF deal.”

Why our Treasury mandarins have been bending over backwards for a deal with the IMF is now readily apparent.  IMF deal or no-deal, the government will have to produce better numbers. Healthy foreign exchange reserves are good, but reserves don’t service debt; revenues do. The markets want to see fiscal consolidation. The markets do not send missions. They dump your bonds. 

The low-down: Mega projects are off the table, as is the “Big Four.”  The SGR is not going past Naivasha anytime soon. The only order of business is crisis management – that is, if the government survives. Looking around, the odds are not good.  The Greek crisis consumed five governments. Argentina went through five presidents in two weeks following imposition of the “corralito” (small enclosure) austerity measures in December 2001. The EPRDF autocracy in Ethiopia, erstwhile poster child of Africa’s new breed of authoritarian developmental regimes, did not run out of bullets or prisons. It ran out of money, and unravelled. Sri Lanka, Pakistan and Malaysia have ejected the mega-project mega-corruption governments that corralled them into China’s debt trap. Earlier this week Sudan’s President Omar al Bashir dissolved his government and appointed a new prime minister tasked to form a leaner government “as part of austerity measures to tackle economic difficulties.”

Mega projects are off the table, as is the “Big Four.”  The SGR is not going past Naivasha anytime soon. The only order of business is crisis management – that is, if the government survives. Looking around, the odds are not good.  The Greek crisis consumed five governments. Argentina went through five presidents in two weeks following the imposition of austerity measures in December 2001. The EPRDF autocracy in Ethiopia, erstwhile poster child of Africa’s new breed of authoritarian developmental regimes, did not run out of bullets or prisons. It ran out of money, and unravelled…It is fair to say that Mr. Kenyatta is now caught between the hammer of the markets, and the anvil of politics.

It is fair to say that Mr. Kenyatta is now caught between the hammer of the markets, and the anvil of politics. That comes with the territory.

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David Ndii

David Ndii is one of Kenya's leading economists and public intellectuals.

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‘You Should Have Died At Birth, Oh Dirty Delinquent Dictator’: A Poet’s Rage Against Museveni in the Bobi Wine Age

A controversial scholar attacks Museveni with her incendiary pen. She is accused of bad manners. But is she more badly behaved than a regime that peels away the skin of its people? By MARY SERUMAGA.

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‘You Should Have Died At Birth, Oh Dirty Delinquent Dictator’: A Poet’s Rage Against Museveni in the Bobi Wine Age

One of President Museveni’s biggest mistakes was to nominate a day as his official birthday and presumably also an age, his actual particulars being unknown even to him. The day, September 15th in 2018 became the occasion for his nemesis, Dr Stella Nyanzi to dedicate a poem to him.

The long piece of six stanzas is a sustained torrent of invective that encompasses not only the head of state but also his unfortunate mother Esteri Kokundeka who she calls by name, an affront in itself. “Omwana omubi avumisa nnyina” – a bad offspring causes his mother to be abused, the Baganda say.

Nyanzi submits her work with an invitation to Museveni to arrest and beat her, complete with directions to her house. If it was thought that Stella Nyanzi had reached her vituperative peak when in 2017 she likened the President to a part of the human anatomy (a matter for which she has spent a month on remand and is now on trial), this poem surpasses anything she has done in the past in her war of attrition with Yoweri Museveni.

The long piece of six stanzas is a sustained torrent of invective that encompasses not only the head of state but also his unfortunate mother Esteri Kokundeka who she calls by name, an affront in itself.

The crimes for which Museveni is indicted in the poem centre around poor governance; the ‘seeds of corruption sown and watered’ by the National Resistance Movement (NRM)’s 32 year occupation of the country – issues most Ugandans are discussing with increasing openness and which have radicalized a generation of activists prepared to protest despite the repression that Dr Nyanzi mentions in the first stanza.

She speaks of the corrosive effect the regime has had on the morality and professionalism of public institutions. It will be remembered that only one out of five Constitutional Court judges (presidential appointments) ruled that the invasion of Parliament by the USA–funded Special Forces Command (SFC) during the debate to remove presidential age limits rendered the Age Limit Act (2018) null and void. The rest refused to condemn the beating of MPs. This was followed a month later by the abduction and torture of five MPs by the SFC. One, Francis Zaake, is fighting for his life.

Nyanzi laments the aspirations of millions, drowned in a sea of unemployment and lastly the abortion of democracy. None of those issues is being mentioned for the first time. What is new, is the manner of delivery; the verse and the insults.

At the first stanza, one might think Stella is simply being undisciplined, that there are ways to communicate without being rude. There are. As the poem progresses the persistence of the verbal assault on both Yoweri Museveni amplified by involving his mother and the obvious effort that went in to making each stanza unashamedly more repulsive than the last cause one to contemplate on what could possibly enrage a doctoral fellow, a mother and intellectual to the point of triggering such a public attack on the head of state.

Nyanzi laments the aspirations of millions, drowned in a sea of unemployment and lastly the abortion of democracy. None of those issues is being mentioned for the first time. What is new, is the manner of delivery; the verse and the insults.

One possibility is Arua which came fresh on the heels of the Women’s March against unsolved serial killings and mutilation of women and #ThisTaxMustGo campaigns, both of which Dr Nyanzi took part in. After the Arua attack on August 13 2018, Dr Nyanzi organized a walk to Makindye Barracks on 18 August while Bobi was held there. It was foiled by the police. She travelled to Arua a town 353 kilometres away. Going via Bugiri, a constituency in which Asuman Basalirwa won with R. Kyagulanyi (Bobi Wine)’s support she organized a demonstration against the continued incarceration of people arrested following the Arua by–election.

There were also deaths that began with Yasin Kawuma and continued to take in S. Ssekiyizivu and one Jingo, travellers to a football match in Mityana shot by jittery soldiers; a new Kyambogo graduate was hit by what the government has called a ‘stray bullet.’ Others were shot and killed on the streets of Kampala.

Many were beaten mercilessly, struggling to free themselves when encircled by cane-wielding uniformed officers and being recaptured and pushed back into the blows by plainclothes security operatives.

In Arua, Dr Nyanzi visited Night Asara, the Woman Councillor for Arua Hill and other women brutally kicked repeatedly in the abdomen to the point that they are unable to walk independently weeks later. Saudha Madada who was sitting behind the late Kawuma when he was shot was still periodically vomiting blood. Whether Atiku Shaban will be able to walk again remains to be seen. Their only crime was being supporters and employees (Kawuma and Atiku) of MP K. Wadri who went on to win the by-election, and for whom Bobi Wine campaigned, along with three other young MPs.

The persistence of the physical onslaught on the MPs and their supporters reveals much about Museveni, his NRM and his praetorian guard, the SFC and those donors who continue to enable him. Francis Zaake had the skin and flesh of his hands and ears peeled away in what must have been hours of torture. A fellow arrestee gave a graphic account of the beating Zaake sustained in the back of a van, before, fearing he was about to die, security operatives off–loaded him at the entrance to Lubaga Hospital and abandoned him there. There is photographic evidence of uniformed officers using pliers on other arrestees piled in the back of police pick–up trucks. They are not pliers one could ordinarily buy in town.

Bobi Wine too had an injured ear that needed stitching and, from the time he was grabbed, wrapped in a blanket and thrown into a vehicle, the SFC applied pressure to his testicles using a device he was unable to see. His entire body was beaten to the extent that the government could not present him in court until the swellings and wounds had begun to heal. The public can only imagine (or perhaps they cannot) the other features of the attack that Bobi Wine describes as ‘unspeakable things’.

The persistence of the physical onslaught on the MPs and their supporters reveals much about Museveni, his NRM and his praetorian guard, the SFC, and those donors who continue to enable him. Francis Zaake had the skin and flesh of his hands and ears peeled away in what must have been hours of torture.

To add insult to injury, all of the above were denied. The President denied the criminality of beating members of the public saying it was justified by their resisting arrest. He was supported by the court jesters employed to humour the supreme ruler. Like Feste the jester in Shakespeare’s Twelfth Night, Uganda’s Ambassador to the United States, political appointee Mull S. Katende was “wise enough to play the fool” when he said in a debate with Bobi Wine on VOA’s Straight Talk on 15th September that he saw no evidence of torture and seemed to question Bobi Wine’s use of crutches.

It is unfortunate that although the British High Commission and EU Commission, professional election observers, visited Bobi Wine on 22 September in Makindye Barracks, they did not make their findings public. This omission allowed the government of Uganda to develop a narrative denying the victims were tortured. Yet their lawyers and colleagues were reduced to tears by their condition.

Museveni went on to complain as did so many NRM supporters and bots, that the People Power movement aims to tarnish the good image of Uganda abroad. Ugandans are being asked to believe People Power supporters are being funded by foreign governments to be violent and disruptive and that the victims were malingering. The American embassy has responded by tweeting bulletins about the amounts of money in grants that they have given the NRM, even as they are accused of undermining it.

Unfortunately but predictably, there are those who draw a moral equivalence between the military attack on the people and Constitution of Uganda and the retaliatory attack on President Museveni rendered more poignant by referencing his mother; between a physical assault and a verbal retaliation.

It is expected that even though Ugandans have had their skin and flesh peeled away with pliers, the response to the government’s impunity should be one of politesse, not rage and certainly not bad language. Not all those expressing shock at Stella’s poem have protested routine state brutality. For them verbal assaults ‘cross the line’ but state brutality does not.

Like court jesters, the bots came out in force on social media to mock the afflicted. The President’s Principal Private Secretary Molly Komukama posted a two–year old photo of a smiling Bobi Wine and his wife on board a plane as ‘evidence’ that his departure from Entebbe airport in a wheelchair was playacting. Another old photo followed of the MP walking in Times Square.

Fortunately, the victims remain resolute and have not lost their capacity to resist. Night Asara and Jane Abola, two of the female Arua 33 able to speak, gave confident and articulate interviews at the end of August. After his release on bail, Kyagulanyi has commanded a media blitz such as Uganda has never known. All major international channels, Al Jazeera, BBC and CNN, have featured Bobi Wine. He has honed his media skills and addressed the Diaspora at town halls and other gatherings.

Like court jesters, the bots came out in force on social media to mock the afflicted. The Presidents Principal Private Secretary Molly Komukama posted a two–year old photo of a smiling Bobi Wine and his wife on board a plane as ‘evidence’ that his departure from Entebbe airport in a wheelchair was playacting.

In response to Ambassador Katende’s callous and insulting denial of his ordeal, (despite observing at a distance of one metre his broken nose and other injuries), Bobi Wine quoted Norbert Mao, Democratic Party president: “If you are paid to be a fool, your intelligence ceases to matter.”

Then Dr Nyanzi wrote her Ode ending with the line, “You should have died at birth, you dirty delinquent dictator.” The poem’s chief purpose seems to be to communicate rage. The question is is it a justifiable rage?

In response to Ambassador Katende’s callous and insulting denial of his ordeal…Bobi Wine quoted Norbert Mao, Democratic Party president: “If you are paid to be a fool, your intelligence ceases to matter.

If as a citizen of Uganda I must live with murder, torture, sexual assault and arbitrary detention by the armed forces; if I am required to accept land–grabbing and looting by senior public officials, asset stripping of public property, loss of sovereignty to the IMF and other lenders, I can live with Stella’s rejection of refinement.

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INDIA UNDER MODI: Gucci Capitalism Embraces Hindu Nationalism

Four years since Narendra Modi’s Hindu supremacist BJP took power, dismantling the old Congress Party elitist stranglehold on power, RASNA WARAH returns to New Delhi for the first time in 30 years, to discover, among the chattering reasporan tech and financial privileged classes, a world of globalised sophistication peppered with rightwing prejudice. 

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INDIA UNDER MODI: Gucci Capitalism and the Embrace of Hindu Nationalism

I am in a fashionable neighbourhood in South Delhi with a group of 40-somethings who could be described as the New India, the aspirational India, the India of the dot-com generation – English-speaking, affluent, tech-savvy, well-travelled. During before-dinner drinks that include the finest imported wines and whiskies, the conversation inevitably turns to the Indian stock market – what shares are most profitable, when to invest and how much, and how to reap the greatest profits.

Not too long ago, this same group might have been looking to leave India for greener pastures in places like America or Australia. Today, they and their age-mates couldn’t imagine living anywhere else. One of them has just given up a job in Dubai to return to his home in New Delhi. “Life is so much better here – we are spoilt, by servants, cooks and the lifestyle. Who would want to give all this up?” he commented as we debated whether to sample the spicy Chinese dumplings or the cheese and crackers that the dinner party host had on display.

New Delhi thirty years ago, when I last visited the city, was a different place. It was more akin to V.S. Naipaul’s India where those who had the means or the opportunity to do so couldn’t wait to leave, “to shake India off, shake off what they see as the retarded native element in dhotis and caste-marks, temple-goers…bad at English” than to Indian author Siddhartha Deb’s more recent description of the subcontinent, where people are “devoted to efficiency, given to the making of money and the enjoyment of consumer goods while retaining a touch of traditional spice, which meant that they did things like use the Internet to arrange marriages along caste and class lines”.

Shopping malls were an alien concept then and Louis Vuitton, BMW, Gucci and other luxury brands had not yet entered the Indian market. Pre-1991, then Finance Minister, who would become Prime Minister over a decade later, Manmohan Singh had not yet liberalised the economy. India produced everything from matchsticks to refrigerators for domestic consumption. In 1977, even Coca-Cola withdrew from the Indian market and an Indian company filled the gap by producing Thums Up, a local version of the soft drink. (Coca-Cola re-entered the Indian market in 1993.) The mantra of self-reliance, or Swadesh, popularised by Mahatma Gandhi, extended even to motorcars – the Indian-made Ambassador, a slow, bulky vehicle, was the main mode of transport of ministers and senior government officials. It was rare to see a Mercedes Benz or a Toyota on the roads.

New Delhi thirty years ago, when I last visited…was a different place…more akin to V.S. Naipaul’s India where those who had the means or the opportunity …couldn’t wait to leave, “to shake India off, shake off what they see as the retarded native element in dhotis and caste-marks, temple-goers…bad at English” than to Indian author Siddhartha Deb’s more recent description of the subcontinent, where people are “devoted to efficiency, given to the making of money and the enjoyment of consumer goods while retaining a touch of traditional spice, which meant that they did things like use the Internet to arrange marriages along caste and class lines”.

This protectionist (some might call it nationalist) “Made in India” policy lost favour in the early 1990s with the opening up of the economy. With liberalisation came an aspirational generation that could dream the American Dream that Indian IT engineers in places like Silicon Valley were already experiencing. Thanks to a government policy initiated shortly after independence to promote and subsidise higher education in science and technology, India’s top state-run engineering institutes churned out graduates that could find a job anywhere in the world. Many of these engineers eventually returned home to establish software companies like Infosys in IT hubs like Bangalore, so much so that by 2006, the software industry in India was worth $25 billion and employed over a million people. The success of India’s IT sector and the outsourcing of services like call centres to Indian hubs by companies in the US and Europe spawned a generation of young Indians who had money to spend on luxury goods.

Meanwhile, India’s hospitals and medical facilities polished up their image and improved the quality of specialised health services, giving birth to what is now known as the “medical tourism” industry in the country. “India Shining”, the mantra of the 1990s and early 2000s, seemed to be bearing fruit. India’s GDP today stands at $2.6 trillion, making India the sixth largest economy in the world. (Only the US, China, Japan, Germany and the UK have larger economies.) With an annual economic growth rate of roughly 8 per cent, it is likely that India will soon make it to the top five economies.

Thanks to a government policy initiated shortly after independence to promote and subsidise higher education in science and technology, India’s top state-run engineering institutes churned out graduates that could find a job anywhere in the world…By 2006, the software industry in India was worth $25 billion and employed over a million people. The success of India’s IT sector and the outsourcing of services like call centres to Indian hubs by companies in the US and Europe spawned a generation of young Indians who had money to spend on luxury goods.

But is India really shining and have these achievements come at a price? Unlike China’s economic reforms in the late 1970s and early 80s, which managed to lift half a billion people out of poverty within one generation, and which saw this communist country evolve from a command economy to “market socialism with Chinese characteristics”, economic reforms in India have not had a significant impact on poverty levels. More than 260 million people – or about one-fifth of the population – are still classified as extremely poor, though there is a noticeable growth in the middle classes, whose numbers vary from between 300 million to 600 million, depending on who is doing the counting.

Rural India remains steeped in tradition and ignorance; caste still determines destiny. While the IT and retail sectors have grown, the agricultural sector is facing a crisis, with an increasing number of farmers committing suicide due to their inability to service loans taken to pay for higher-yield seeds marketed by multinational companies. This agrarian suicide crisis, which began in the 1990s, has left many wondering whether liberalisation has had a negative impact on the country’s agricultural sector.

But something fundamental has also shifted in India. Two things have happened in the last decade that have both affirmed and negated India’s assertions about being among the world’s fastest growing economies and most tolerant democracies. The first is the rise of the Bharatiya Janata Party (BJP) and its leader Narendra Modi who dismantled the old elitist structures that characterised Indian politics. The second is the growth in the popularity of a type of Hinduism that has given birth to new hierarchies and divisions based on religion.

While the IT and retail sectors have grown, the agricultural sector is facing a crisis, with an increasing number of farmers committing suicide due to their inability to service loans taken to pay for higher-yield seeds marketed by multinational companies.

Modi, who boasts of once being a chaiwallah, or tea seller, has injected a kind of egalitarianism in Indian politics. He has toppled the elitism that characterised the Indian Congress Party (India’s Grand Old Party). Although the Congress Party prides itself in representing the poor and minorities, under Indira Gandhi and her successors, it developed an elitist culture and sense of entitlement. As Ramesh Thakur commented in an op-ed piece in the Times of India, “Inevitably this [Congress Party culture] morphed into the VIP culture that Indians by and large detest with a depth of contempt, anger and resentment” – a situation that Modi fully exploited.

Modi, who is not averse to getting his hands dirty and leading by example, including taking a broom and cleaning the streets of the capital city, does not display conspicuous consumption or ostentatiousness. And unlike most of his predecessors, he did not attend elite English-medium schools and did not go abroad for higher education. His ascent to power had little to do with family connections or patronage networks, but more to do with his charisma and populist rhetoric. His stand against corruption is viewed by many as a refreshing attempt to tackle a vice that has plagued India for decades. He claims to be committed to eliminating the rot that had festered under Congress Party leadership, which allowed India’s ruling elite to capture power, wealth and privilege while allowing the majority of the country’s population to wallow in poverty and illiteracy.

But Modi’s brand of politics is also deeply flawed – and has proved to be divisive. The BJP’s “Hindutva” philosophy, which embraces militant Hinduism and imagines a “pure” India comprised only of Hindus, has led to increasing religious intolerance. Muslims, Christians and lower-caste Hindus have increasingly come under attack by Hindu mobs. While the Indian Prime Minister promised a more egalitarian and inclusive India, where an office clerk can aspire to become an office manager, he also created a more exclusive India, where minorities, Muslims in particular, have no place. Attacks against Muslims have been on the rise in India since he took office in 2014; Hindu vigilante groups, emboldened by a leader who believes that India belongs to just one religious group, have been targeting Muslims and other religious minorities. Some states in India have even banned the eating of beef. The Indian writer Arundhati Roy recently quipped, “it’s safer to be a cow than a woman or Muslim in India”.

Modi…does not display conspicuous consumption or ostentatiousness…[H]e did not attend elite English-medium schools and did not go abroad for higher education. His ascent to power had little to do with family connections or patronage networks… His stand against corruption is viewed by many as a refreshing attempt to tackle a vice that has plagued India for decades. But Modi’s brand of politics is also deeply flawed…[and] has led to increasing religious intolerance…[The] Prime Minister [has] also created a more exclusive India, where minorities, Muslims in particular, have no place.

Interestingly, the BJP’s brand of Hinduism has found a willing following among India’s so-called aspirational classes, who like to see themselves as modern and cosmopolitan. In his book The Beautiful and the Damned: Life in the New India, the writer Siddhartha Deb says that Modi’s brand of Hinduism received a new life in the liberalised 1990s “when the Indian elites simultaneously embraced free-market economics and a hardened Hindu chauvinism”.

Deb says that the Gita, Hinduism’s religious text, was adopted by these Hindu revivalists/fundamentalists because in it they discovered “an old, civilisational argument for maintaining the contemporary hierarchies of caste, wealth and power…they read an endorsement of a militant, aggressive Hinduism that did not shirk from violence, especially against minorities and the poor”. In other words, while the economic pie has grown larger in India, the biggest slices are still being eaten by Hindu elites, who now find justification in religious texts for excluding and discriminating against those who have traditionally been marginalised.

Modi’s right-wing government is also silencing the dissenting voices of left-leaning writers like Arundhati Roy. Roy’s radical views have also not endeared her to the aspirational classes, such as the group I met at the South Delhi dinner gathering, who consider her to be an “unpatriotic” rabble-rouser intent on spoiling India’s reputation.

[D]issenting voices left-leaning writers like Arundhati Roy are also being silenced…Roy’s radical views have also not endeared her to the aspirational classes…who consider her to be an “unpatriotic” rabble-rouser intent on spoiling India’s reputation. Recently five human rights activists were also arrested and accused by the government of being members of India’s Communist Party…Under Narendra Modi, India may be rising, but it is certainly not going in a direction that promises a more tolerant and diverse society.

Recently five human rights activists were also arrested and accused by the government of being members of India’s Communist Party. Among them were lawyers and a professor. India has not witnessed such intolerance since Indira Gandhi declared a State of Emergency in India in the late 1970s.

Under Narendra Modi, India may be rising, but it is certainly not going in a direction that promises a more tolerant and diverse society.

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TRANSITIONAL JUSTICE: Impunity, Project Kenya and Burying the TJRC Report

More than five years after it was handed over to President Uhuru Kenyatta, the Truth, Justice and Reconciliation Commission’s final report remains buried in the engineered politics of silence and prevarication – mostly to protect key political figures who were listed as Adversely Mentioned Persons. In its absence, however, the Jubilee government’s attempts to build bridges and engineer a cohesive nation will remain a mirage. By GABRIELLE LYNCH

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WHEN KILLERS BECOME VICTIMS: Impunity, Project Kenya and Burying the TJRC Report

On 21 May 2013, Kenya’s Truth, Justice and Reconciliation Commission (TJRC) handed over a final report to President Uhuru Kenyatta. According to the TJRC Act of 2008, the Commission’s report – or summaries of it – were to be widely disseminated. The report was also to be tabled in parliament within twenty-one days with implementation to start within six months. All recommendations were to be implemented with the Minister of Justice tasked with giving reasons for any instances “where the implementation of any recommendation has not been complied with”.

Five and half years later, few know the details of the Commission’s findings or recommendations. Neither the report nor summaries have been widely disseminated. The report is no longer available through a government website and can instead only be accessed through a University of Seattle site – where one of the former TJRC commissioners, Ron Slye, is a law professor.

The report has neither been discussed in parliament nor its recommendations implemented. Instead, the only substantial discussion that the country’s MPs have deemed to hold was back in December 2013 when they took advantage of the Act’s reference to the Minister of Justice (an office which, with the 2010 constitution, no longer exists) to amend the TJRC Act. However, MPs opted to not only replace all references in the TJRC Act to the Minister of Justice with the Attorney General, but also removed the requirement that implementation commence within six months and added a clause that required the TJRC report to be considered by the National Assembly.

Five and half years later, few know the details of the Commission’s findings or recommendations. Neither the report nor summaries have been widely disseminated. The report is no longer available through a government website and can instead only be accessed through a University of Seattle site – where one of the former TJRC commissioners, Ron Slye, is a law professor.

This record of non-implementation is hardly surprising. Kenya has a long history of commissions of inquiry that have looked into everything from “ethnic clashes” to irregular land allocations and grand corruption scandals to devil worship. However, all share one common theme: the reports are generally only read by academics and activists and their recommendations have been ignored by successive governments.

The fate of the TJRC report is rendered even less surprising when one considers the credibility crisis that surrounded the chairman, the late Bethuel Kiplagat; the limited coverage given to its public hearings by the country’s media; and controversy that surrounded the report’s submission. The latter due to a dissenting opinion issued by the TJRC’s three international commissioners who claimed that the Office of the President had pressurised the Commission to delete sections of the land chapter, which had adversely mentioned President Uhuru Kenyatta’s father and Kenya’s first president, Jomo Kenyatta.

That the TJRC’s report would gather dust in a government archive was thus perhaps predictable, but does it matter? Is it ok to forget the report and its recommendations? Is it perhaps even a good thing to forget and “move on” in the interests of peace and unity?

I believe that the TJRC report should be discussed. This is a belief drawn from close research of the Commission’s work, which – together with an analysis of the International Criminal Court’s intervention – provides the focus for a new book on Performances of Injustice: The Politics of Truth, Justice and Reconciliation in Kenya.

While many Kenyans were sceptical of the TJRC from the outset, many others opted to engage with the process. In fact, the Commission collected more statements than any other truth commission to date – over 40,000 in total – alongside 1,500 memoranda. It also held public, women’s and closed-door hearings in 35 locations around the country, adversely mentioned person (AMP) hearings in Nairobi and in western Kenya, and a series of thematic hearings.

Moreover, while many who spoke before the Commission valued the opportunity to speak and be heard, most engaged in the hope that further action would be taken. As one woman explained after a women’s hearing in Nakuru, she was glad that she had spoken as now the Commission would “come in and help”. This call for help and for justice was repeated everywhere that the Commission travelled as victims called for truth and acknowledgement, but also for reparations and prosecutions.

The Commission collected more statements than any other Truth Commission to date – over 40,000 in total – alongside 1,500 memoranda. It also held public, women’s and closed-door hearings in 35 locations around the country, adversely mentioned person-hearings in Nairobi and in western Kenya, and a series of thematic hearings.

Those who gave testimony spoke of the past, but also of how the past continues to impact upon the present and likely futures. As victims of state torture recalled, for example, how they lost their jobs and were unable to send their children to good schools; while those displaced during election-related violence spoke of the loss of breadwinners and livelihoods and of the daily challenges of trying to feed, house, and educate their families. The past clearly also lived on in victims’ testimonies through fears of repetition and, for far too many, the ongoing injustice of a lack of redress, the ongoing nature of many issues discussed, and new injustices suffered.

Given this reality, to ignore the engagement and pleas of so many would be a further injustice to those who participated. It is also to ignore the reasons why a TJRC was established in the first place, namely, to address a history of past injustice, improve state-society and inter-ethnic relations, and guard against future violence.

This links to another reason why it is important to return to the Commission’s report and to its recommendations and findings: namely, to try and counter Kenya’s embedded culture of impunity.

This was certainly one of the TJRC’s aims. However, if the Commission’s findings and recommendations are neglected then the process will actually have served to advance, rather than counter, a culture of impunity.

This reality was evident during my attendance at the TJRC’s Adversely Mentioned Persons hearings when I heard little that was new; I heard not a single admission of personal responsibility or guilt. Instead, testimonies were characterised by five discursive strands of responsibility denied: denial through a transfer of responsibility, denial through a questioning of sources, denial through amnesia, denial through a reinterpretation of events and an assertion of victimhood, and denial that events constituted a wrongdoing.

However, while AMPs denied responsibility, none denied that injustices had occurred. As a result, while the hearings provided little clarity on how and why a series of reported events may have occurred, they did recognise past injustice. In this way, they provided a public enactment of impunity: Kenya’s history was replete with injustice, but AMPs were unwilling to shoulder any responsibility for it.

During my attendance at the TJRC’s Adversely Mentioned Persons hearings…I heard little that was new; I heard not a single admission of personal responsibility or guilt. Instead, testimonies were characterised by…denial…

These realities are connected to the substance of the final report, which offers a wide range of recommendations. These include a list of individuals who should be further investigated, prosecuted, or face lustration (or a ban on holding public office); recommendations on institutional and constitutional reforms; and a detailed reparations framework. However, while these recommendations take up much of Volume 4, the bulk of the over 2,000-page report focuses on a thematic discussion of Kenya’s past. Admittedly, this account is of varied quality, but it still provides an important overview of Kenya’s history that is worth discussing and engaging with. In turn, the TJRC’s recommendations should – as required by the initial Act – either be implemented or clear reasons be given for any areas of non-implementation.

To say that we should return to the TJRC is thus not to suggest that the process or report are perfect. Far from it. The idea of holding hearings in public was largely lost for a variety of reasons: limited media and public engagement; the Commission suffered from an ongoing controversy around the chairman; the report is largely silent on key injustices, such as extra-judicial killings; the chapters vary massively in their quality; and the recommendations made, even if fully implemented, will not achieve the Commission’s lofty goals of truth, justice and reconciliation. Goals that require an ongoing political struggle, and substantive socio-economic and political change, which a body like the Truth Commission can recommend, and sometimes contribute to, but should never be expected to achieve.

To say that we should return to the TJRC is thus not to suggest that the process or report are perfect. Far from it. The idea of holding hearings in public was largely lost for a variety of reasons…the report is largely silent on key injustices, such as extra-judicial killings…even if fully implemented, [the Report] will not achieve the Commission’s lofty goals of truth, justice and reconciliation. Goals that require an ongoing political struggle, and substantive socio-economic and political change…

Yet, this reality of truth, justice and reconciliation as an ongoing struggle does not take away from the further injustice that results from ignoring the Commission’s report. This includes the failure to really listen to those who spoke; to ensure that the impunity performed is undermined by action; to learn about, and acknowledge, Kenya’s troubled past; and the need to discuss and implement the report’s recommendations.

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