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Adding Fuel to Fire: Why Somalia’s Oil Could Prove to Be a Curse

The decision by President Mohamed Abdullahi Farmajo’s government to put Somalia’s oil reserves on the predatory oil and extractive industries’ market argues RASNA WARAH could prove to be a resource curse and a recipe for disaster in a country that has suffered from more than two decades of civil war, fledgling state institutions, absence of checks and balances and which has few or no regulatory frameworks or laws in place to manage its oil in the interest of the Somali state and its people.

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Early this month, dozens of people gathered outside the Claridge’s Hotel in central London to protest against the Federal Government of Somalia (FGS)’s decision to award oil exploration licences to foreign companies later this year. The hotel was the venue for the International Conference on Somalia Oil and Gas that was hosted by Spectrum, a leading seismic data processing company. The conference was aimed at showcasing possible locations in Somalia where crude oil reserves can be exploited.

Last year, the FGS announced a first round of bidding on 206 offshore oil blocks, mainly in southern Somalia. The decision by President Mohamed Abdullahi Farmajo’s government to put Somalia’s oil reserves on the predatory oil and extractive industries’ market is being viewed by many as a recipe for disaster in a country that has suffered from more than two decades of civil war and which has few or no regulatory frameworks or laws in place to manage its oil in the interest of the Somali state and its people.

Jamal Kassim Mursal, who was the permanent secretary in Somalia’s petroleum ministry until last month, when he resigned, told the Voice of America that Somalia was not yet ready for any oil exploration because “nothing has changed – petroleum law is not passed, tax law is not ready, capacity has not changed, institutions have not been built”.

The decision by President Mohamed Abdullahi Farmajo’s government to put Somalia’s oil reserves on the predatory oil and extractive industries’ market is being viewed by many as a recipe for disaster in a country that has suffered from more than two decades of civil war

A study published in 2014 by the Mogadishu-based Heritage Institute of Policy Studies cautioned that it was still too early for Somalia to be venturing into the oil industry because the country faces a host of challenges and obstacles that need to be addressed before any viable oil exploration and production can start. These challenges and obstacles include scant infrastructure for the transport and processing of oil, political volatility, institutional fragility, physical insecurity and ambiguous property rights.

If not handled with caution, warned the report, Somalia’s oil could prove to be a curse. Given the high levels corruption within the Somali government, and in light of the country’s fledgling state institutions, the absence of checks and balances, as well as nascent democratic structures, the hydrocarbon sector’s economic spoils are likely to also ruin politics, said the study’s author Dominik Balthasar. Lack of oversight and transparency could lead to conflict as competing forces seek to control the lucrative, but highly opaque, sector. “The problem arises in light of the fact that Somalia not only needs to counter the standard challenges arising from the resource curse, but must do so in the context of fragility.”

A study published in 2014 by the Mogadishu-based Heritage Institute of Policy Studies cautioned that it was still too early for Somalia to be venturing into the oil industry because the country faces a host of challenges and obstacles that need to be addressed before any viable oil exploration and production can start.

In his book, The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth, Tom Burgis describes how the discovery and exploitation of oil and other resources by foreign companies have left many African countries poorer and more conflict-ridden than they were before. From Nigeria to the Congo and South Sudan, the “resource curse” has left populations embroiled in violent conflicts and/or in debilitating poverty. Resources such as oil also distort economies, breed corruption and foster poor governance. Burgis explains:

“More often than not, some unpleasant things happen in countries where the extractive industries, as the oil and mining businesses are known, dominate the economy. The rest of the economy gets distorted, as dollars pour in to buy resources. The revenue that governments receive from their nations’ resources is unearned: states simply license foreign companies to pump crude or dig up ores. This kind of income is called ‘economic rent’ and does not make for good management. It creates a pot of money at the disposal of those who control the state. At extreme levels the contract between the rulers and the ruled breaks down because the ruling class does not need to tax the people to fund the government – so it has no need for their consent.”

Burgis shows how resource-funded regimes are “hard-wired for corruption” and that an economy based on just one pot of resources leads to “Big Man” dictatorial politics, as has been witnessed in Equatorial Guinea and Cameroon. And whereas before, Africa’s resources were often extracted at gunpoint or through violent colonisation, today “the looting machine has been modernized” through “phalanxes of lawyers representing oil and mineral companies” who “impose miserly terms on African governments and employ tax dodges to bleed profit from destitute nations”.

In his book, The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth, Tom Burgis describes how the discovery and exploitation of oil and other resources by foreign companies have left many African countries poorer and more conflict-ridden than they were before

Dodgy deals

Mursal, the former petroleum permanent secretary, is also against an agreement that gives the first choice for exploration blocks to Soma Oil and Gas, one of the companies that has been embroiled in several controversies with regard to Somalia in the past. The agreement allegedly gives Soma Oil and Gas 12 blocks to conduct oil exploration.

The controversy around Soma Oil began around the tenure of Yussur Abrar, Somalia’s first female Central Bank Governor. Abrar resigned in November 2013 after just seven weeks in the job on the grounds that she was being continuously asked to sanction deals and transactions that violated her responsibilities as governor.

In her resignation letter, Abrar stated that she had “vehemently refused to sanction the contract with the law firm Schulman & Rogers regarding the recovery of the Somali financial institutions’ assets frozen since the fall of Siad Barre’s regime”. She said that the contract did not “serve the interest of the Somali nation” and “put the frozen assets at risk” while opening the door to corruption. She also stated that the Central Bank she had been assigned to manage was in a poor state, with payroll processing being the only semi-functioning unit.

Abrar’s woes also had something to do with the fact that the then President Hassan Sheikh Mohamud was at the time making secretive deals with foreign oil companies. Barely a year after President Mohamud took office, stories began to emerge that the FGS had entered into a deal with Soma Oil. Apparently the Somali government had also held talks with Shell, Exxon, Mobil Corp and BP to revive pre-1991 oil contracts that were put on hold when the civil war broke out and when the government of Siad Barre collapsed. Observers were surprised that President Mohamud in the first year of his term agreed to an oil exploration deal after having earlier expressed fears that the country was too fragile to risk further conflict. Many observers warned that these oil deals would ignite further divisions and civil strife in oil-producing regions of the country, especially in the absence of legislative and regulatory provisions.

There were also concerns that oil deals would pave the way for more corruption in a country that has already gained the reputation of being amongst the most corrupt countries in the world.   These concerns were so widespread that in July 2015 the UK’s Serious Fraud Office opened an investigation on Soma Oil’s dealings with the Somali government. Soma Oil, which was chaired by the former Conservative Party leader Michael Howard, dismissed the investigation, claiming that the British company’s conduct with the Somali government was “completely lawful and ethical”. Through its PR agency FTI Consulting, Soma Oil insisted that “broad terms” of the deal had been made public. (Interestingly, FTI Consulting is the same firm that was given a contract to “unfreeze” Somali assets abroad, the very contract that led to the resignation of Abrar.)

UN monitors reported that the deal would give Soma Oil the right to apply for up to 12 oil licences, covering a maximum of 60,000 square kilometres. In May 2015, Bloomberg Business revealed a draft production-sharing agreement between Soma Oil & Gas and the Somali government that indicated that Somalia could end up paying up to 90 per cent of its oil revenue to the British company, thereby conferring unusually high benefits to the latter.   Barnaby Pace, a campaigner with the watchdog Global Witness, described the agreement as a “terrible deal for the Somali people”. In a private conversation with yours truly, a Somali MP asked, “How can you sign a deal with a patient who is in ICU? Does an ICU patient have the capacity to sign anything?”

Although there has been more funding in the recent years, from the World Bank and the European Union to introduce public finance reforms and to provide budget support to the FGS, these efforts have not yet borne fruit. The FGS still has little authority over large chunks of Somalia where clan-based fiefdoms and Al Shabaab rule with impunity and even collect “taxes” from the local population.

In May 2015, Bloomberg Business revealed a draft production-sharing agreement between Soma Oil & Gas and the Somali government that indicated that Somalia could end up paying up to 90 per cent of its oil revenue to the British company, thereby conferring unusually high benefits to the latter.   Barnaby Pace, a campaigner with the watchdog Global Witness, described the agreement as a “terrible deal for the Somali people”

And despite attempts by Kenyan columnists like Peter Kagwanja to depict Somalia as “the poster child of an ‘Africa rising from the ashes of civil war’”, most analysts would agree that the FGS is ill-equipped to govern and that most state institutions in the country are not only severely degraded, but in many cases are completely absent. The idea of a Somalia being run from the capital Mogadishu is a myth that only comforts the international community that created the FGS. The FGS simply does not have the capacity to manage the entire country or to enforce its will and laws on the various clan-based federal states and the majority of the Somali people.

The auctioning off of Somalia’s oil could also lead to feuds with neighbouring countries like Kenya, which has a dispute with Somalia over a maritime boundary along its border – a triangular chunk of sea in the Indian Ocean of about 100,000 square kilometres

It is estimated that there could be as many as 110 billion barrels of oil and gas reserves in Somalia – equal to Kuwait’s reserves and nearly half of those of Saudi Arabia. It is no wonder that Britain, along with Norway, Australia, Qatar and Turkey, among other countries, have been eyeing Somalia’s oil and gas reserves for some time.

However, exploiting natural resources in an environment of fragility and near-anarchy can spell doom for a country that barely has functioning ministries and other public institutions and which does not have the regulatory frameworks that could protect the country from local and foreign predatory forces. In addition, the looting spree precipitated by oil could lead to further in-fighting between factions and clan-based rivalries and competition could be further aggravated in regions where oil reserves are found. Al Shabaab could also find another reason to rally its troops against the FGS in regions it controls.

The auctioning off of Somalia’s oil could also lead to feuds with neighbouring countries like Kenya, which has a dispute with Somalia over a maritime boundary along its border – a triangular chunk of sea in the Indian Ocean of about 100,000 square kilometres. Kenya has already recalled its ambassador to Somalia because since the dispute remains unsettled at the International Court of Justice, Somalia has no right to auction off the territory, which is believed to have vast amounts of oil and gas reserves.

The heavy presence of oil exploration teams and infrastructure in the Indian Ocean could also lead to more piracy, especially if coastal communities feel disenfranchised and left out of the deal. This could reverse all the gains made by the international community in stopping piracy along Somalia’s coastline, which at 3,300 kilometres, is the longest in Africa.

The heavy presence of oil exploration teams and infrastructure in the Indian Ocean could also lead to more piracy, especially if coastal communities feel disenfranchised and left out of the deal.

Somalia is simply not ready to enter into any oil agreements with foreign companies; the costs are simply too great and any economic benefits derived will most likely accrue to individual politicians and businesspeople rather than to the majority of the Somali people who have suffered from poverty, underdevelopment, lack of basic services and poor governance for nearly thirty years.

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Rasna Warah

Ms Warah, the author of War Crimes, a sweeping indictment of foreign meddling in Somalia, and A Triple Heritage, among several other books, is also a freelance journalist based in Malindi, Kenya.

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An Injustice in Kenya’s History: The TJRC Report Six Years On

Six years later, writes GABRIELLE LYNCH, little progress has been made on Kenya’s Truth Justice and Reconciliation Commission (TJRC) despite on the gross injustices and abuses that the report outlines.

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An Injustice in Kenya’s History: The TJRC Report Six Years On
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On 21 May 2013, Kenya’s Truth Justice and Reconciliation Commission (TJRC) handed over a four-volume report to President Uhuru Kenyatta. The report outlines a range of injustices and abuses that occurred in the country between December 1963 and the end of the post-election violence in 2008, and provides a range of recommendations and a clear implementation plan. Six years later, little progress has been made on its dissemination or the implementation of its recommendations.

The TJRC Commission collected over 40,000 statements – the largest number of any truth commission to date – and 1,000 memoranda. The Commission also held public and women’s hearings in 35 locations across the country, as well as a series of adversely mentioned person (AMP) and thematic hearings

This is unsurprising given the fate of previous commissions of inquiry, the credibility crisis that surrounded the TJRC’s chairman, and the limited media coverage that the Commission’s work enjoyed. Nevertheless, I find this depressing.

The reason is that, while many paid the TJRC little attention, a significant number of Kenyans opted to relay their stories, pain and fears. This is evident from the numbers; the Commission collected over 40,000 statements – the largest number of any truth commission to date – and 1,000 memoranda. The Commission also held public and women’s hearings in 35 locations across the country, as well as a series of adversely mentioned person (AMP) and thematic hearings.

To be fair, the TJRC’s founders were aware of the inadequacies of speaking, which is why they included “justice” in the title and gave the Commission powers to recommend further investigations, prosecutions, lustration (or a ban from holding public office), reparations, institutional and constitutional reforms, and a limited amnesty.

It is also evident from my own observations; in 2011 and 2012 I spent months following the TJRC around the country attending hearings, speaking to victims, alleged perpetrators and interested parties. From these interactions it was clear that, while many who came before the Commission welcomed the chance to speak, the majority submitted statements or memoranda or provided testimony in the hope that they would be heard and that some action would be taken. As one woman explained to me after a women’s hearing in Nakuru, she was glad that she had spoken as now the Commission would “come in and help”.

To be fair, the TJRC’s founders were aware of the inadequacies of speaking, which is why they included “justice” in the title and gave the Commission powers to recommend further investigations, prosecutions, lustration (or a ban from holding public office), reparations, institutional and constitutional reforms, and a limited amnesty. However, on the question of whether recommendations would be implemented, the Commission rather naively relied on the TJRC Act (2008), which stipulated “recommendations shall be implemented”. However, such legal provisions proved insufficient; in December 2013, parliament amended the Act to ensure that the report would first be considered by the National Assembly, something that is yet to happen.

But how did the TJRC come about and what was its mandate?

The Commission was informed by the belief that, while the post-election violence of 2007/8 was triggered by a disputed election, it was fuelled by more deep-rooted problems.

The establishment of a TJRC was first considered in 2002 at a moment of great optimism and hope after Mwai Kibaki and the National Rainbow Coalition (NARC) ousted President Moi and Kanu from power. However, a task force recommendation that a TJRC be established was ignored by the Kibaki government. The idea was later revived following the post-election violence of 2007/8 and the formation of a coalition government.

The TJRC was established by an Act of Parliament in 2008, began its work in 2009 and submitted a final report in 2013. The Commission was informed by the belief that, while the post-election violence of 2007/8 was triggered by a disputed election, it was fuelled by more deep-rooted problems. It was thus mandated to investigate a wide range of injustices – from perceptions of economic marginalisation and periods of ethnic clashes to state repression and torture – from Kenya’s independence in December 1963 to the end of the post-election violence in February 2008. As a result, while some insights into colonial rule were provided as context for post-colonial realities, the report is silent on Kibaki’s second term in office and Uhuru Kenyatta’s presidency.

In addition to documenting the past, the Commission was able to offer various recommendations including further investigations and prosecutions, reparations, institutional reform and amnesty for non-gross human rights violations. The aim was to contribute to truth, justice, reconciliation, and sustainable peace.

The Commission’s task was thus impossibly large and it also faced additional challenges including a credibility crisis around the Commission’s Chairman and limited media coverage. It was also upstaged by parallel proceedings at the International Criminal Court and was working in a context in which there had been no real transition.

Given these challenges, the report is actually pretty impressive.

Critically, it does not pretend to be exhaustive and recognises how – over four years and in a single report – it could not provide a “definitive history of the broad range of violations committed and suffered” over the course of 45 years (TJRC vol. 1 2013: v).

Given this impossibility, I am keenly aware of how my attempt to summarise a report that runs to over two thousand pages involves further simplification and omission – for which I apologise. Despite this, I think it is worth marking the six-year anniversary of the report’s submission – and recognising all those who engaged with the process – by saying something about the Commission’s findings.

First, it was clear that each regime – from the colonial period through the Kenyatta, Moi and Kibaki eras – had overseen widespread abuses through acts of commission and omission and that Kenyans had suffered (and many continue to suffer) as a consequence.

The establishment of a TJRC was first considered in 2002 at a moment of great optimism and hope after Mwai Kibaki and the National Rainbow Coalition (NARC) ousted President Moi and Kanu from power. However, a task force recommendation that a TJRC be established was ignored by the Kibaki government.

The commission found that all three post-colonial regimes had been responsible for gross human rights violations and concluded that state security forces had been “the main perpetrators of bodily integrity violations of human rights in Kenya including massacres, enforced disappearances, torture and ill-treatment, and sexual violence” with northern Kenya standing at the “epicenter of gross violations of human rights by state security agencies” (TJRC vol. 1 2013: vii).

More specifically, the report outlined how the Kenyatta regime (1963–1978) was responsible for the largest number of political assassinations, and how the repression of dissent reached its apex under the one-party rule of Daniel arap Moi (1978–2002). In turn, while the commission recognised the reforms initiated by the first Kibaki regime (2002–2007), it also drew attention to ongoing corruption, ethnic favouritism and inter-communal violence, and to the collapse of the NARC coalition and the increase in extra-judicial killings, problems which, in its opinion, prepared “fertile ground (…) for the eruption of violence” in 2007–8 (TJRC vol. 2A 2013: 28–29).

The TJRC also highlighted the socio-economic effects of gross human rights violations. These included, for example, the challenges faced by former political detainees in finishing their education, securing employment and caring for their children. At the same time, the report sketches out some of the ways in which socio-economic factors impacted upon bodily integrity rights at a more general level through, for example, the relative vulnerability of marginalised people during conflict.

In terms of inter-communal conflict, the commission blamed the emergence of “negative ethnicity” on colonial rule and Britain’s adoption of a divide and rule strategy and alienation of large tracts of land, with historical grievances over land cited as the “single most important driver of conflicts and ethnic tension” (TJRC vol. 1 2013: vii).

However, all the post-colonial regimes were blamed for the perpetuation of such politics as, rather than provide redress, successive administrations “alienated more land from already affected communities for the benefit of politically privileged ethnic communities and the political elite” (TJRC vol. 1 2013: xiv) and favoured members of their own ethnic groups in employment and appointment processes (TJRC vol. 1 2013: x). According to the commission, a sense of ethnic competition was then exacerbated by multi-party politics, as “ethnicity became an even more potent tool for political [organisation] and access to state resources” (TJRC vol. 1 2013: ix–x). This combination of factors then led to “a volatile environment in which violence had been normalised and ethnic relations had become poisoned” (TJRC vol. 2A 2013: 29).

The commission also emphasised the “pervasiveness of socio-economic violations” across the country (TJRC vol. 1 2013: xv). More specifically, it found that – in addition to the socio-economic impacts of gross human rights violations – the “government’s exclusionary economic policies and practices in the distribution of public jobs and services inflicted suffering on huge sections of society at different historical moments” (TJRC vol. 1 2013: xv), with corruption in turn linked to everything from violent state security forces to poor health and education services.

In terms of spatial inequalities, the commission found that northern Kenya – taken to consist of former North Eastern, Upper Eastern and North Rift Valley provinces – together with former Coast, Nyanza and Western provinces suffered particularly harsh economic marginalisation as a result of biased or indifferent state policies. However, the commission also recognised how even residents of regions that were not identified as economically marginalised – namely, former Central, Nairobi, South Rift Valley, and Lower Eastern provinces – considered “themselves marginalised at one time or another” (TJRC vol. 1 2013: xv). The implication was that no single province had escaped economic marginalisation, with hardships often passed on to subsequent generations through a cycle of limited education and employment opportunities.

Women, minority groups and indigenous people were also found to have suffered state-sanctioned discrimination. In summary, minority and indigenous peoples were found to “have suffered gross violations of human rights on account of their membership in these communities” (TJRC vol. 2C 2013: 281). Women were found to have “suffered unspeakable and terrible atrocities … in the majority of cases … for no other reason than that they are of the female gender” (TJRC vol. 2C 2013: 151) and children were found to have been “subjected to untold and unspeakable atrocities” (TJRC vol. 4 2013: vii).

However, while the Commission suggested that most (if not all) Kenyans are victims of some injustice, it did not suggest that all Kenyans suffered, or continue to suffer, equally. On the contrary, some individuals were deemed to have suffered more severe harm or multiple injustices, while some groups were presented as having suffered more than others. For example, a minority were found to have suffered direct bodily integrity violations at the hands of state operatives, while, overall, women were said to have suffered more than men, and some regions or ethnic groups to have suffered more than others.

The Commission was “not just interested in what happened…. [but] in why things happened the way they did, what was their impact and who was responsible” (TJRC vol. 1 2013: 43). Regarding the why and the impact, the report is of mixed quality, but it is in establishing the who that the TJRC had the least success. Instead, the report details how the Commission met a wall of silence, denial and justifications. At the same time, the Commission found that the state had historically “covered-up or downplayed violations committed against its own citizens, especially those committed by state security agencies” and had “demonstrated no genuine commitment to investigate and punish atrocities and violations committed by its agents against innocent citizens” (TJRC vol. 4 2013: 10).

The commission concluded that the underlying causes of violations and contributing factors were complex and included centralised power, a culture of impunity, inter-ethnic competition, uneven development, under-employment and patriarchy.

These findings informed wide-ranging recommendations that included further investigations, lustration and prosecution of those allegedly involved in assassinations, massacres, land grabs and so forth. It also included specific apologies by the head of state for various atrocities suffered – from the torture and unlawful detention of political dissidents to acts of sexual violence committed by state security agencies during operations and periods of violence, and the state’s sanction of discrimination against women.

The report also called for the implementation of recommendations from previous commissions of inquiry, the fast-tracking of ongoing reforms of state institutions, such as the security services and judiciary, and the enactment of key pieces of legislation.

It also set out extensive guidelines for individual, collective and symbolic reparations. These included a framework for individual compensation, development policies to address the historic marginalisation of certain regions, and the establishment of public memorials to commemorate particular places, events and people.

Finally, the commission recognised how the recommendations of earlier truth commissions and commissions of inquiry had largely been ignored, stressed the mandatory nature of the commission’s recommendations, and set out a clear timeline for their implementation together with detailed guidelines for an implementation and monitoring mechanism.

The report and recommendations are thus wide-ranging, and their dissemination and implementation was always going to be a problem. However, the collective decision of members of parliament to change the Act in 2013 and their failure to discuss the report to date is – at least to me – a further injustice that marks Kenya’s history.

 

A full copy of the TJRC report as well as transcripts of many of the hearings can be found online courtesy of Prof. Ron Slye – one of the TJRC commissioners. Parts of this article draw directly from Gabrielle Lynch’s book, Performances of Injustice: The politics of truth, justice and reconciliation in Kenya (Cambridge University Press, 2018). Gabrielle is a Professor of Comparative Politics at the University of Warwick in the UK.

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Memo to Political Busybodies: There Is No Value Addition in Processing Coffee. It Is a Cockroach Idea

As long as cartels and cockroach ideas rule the roost, coffee farmers will continue to vote with their feet. Because farmers owe themselves an income, be it from bananas or avocados, it does not matter.

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Memo to Political Busybodies: There Is No Value Addition in Processing Coffee. It Is a Cockroach Idea
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Paul Krugman, 2008 economics Nobel Laureate and prolific New York Times columnist narrates how as a young man he went to work for Government and an old hand, presumably a senior government economist, explained to him that their job was mostly about fighting bad ideas. The bad ideas, the old hand went on to explain, are like cockroaches, “No matter how many times you flushed them down the toilet, they keep coming back.”

The idea of value addition is closely related to the concept of agricultural value chains. But many people who talk very forcefully about value addition do not actually understand what a value chain is.

One such cockroach idea is that we are losing money by selling our coffee raw, and we could add a whole lot of value by processing it domestically. I first wrote an Op-Ed on this idea fifteen years ago, I read sometime back that a venturesome cooperative in either Nyeri or Kirinyaga had set up a coffee processing operation but couldn’t sell the product. Someone forgot to tell them that it is at the business end – market entry, product launch marketing, distribution and all that – that the rubber hits the road. Still, hope springs eternal. I have learned that Moses Kuria, the mouthy MP for Gatundu South, has drafted a bill intended to make domestic processing of coffee mandatory.

A supply chain analysis starts with the procurement of raw materials and ends with the delivery of the product to the shelf where the final consumer picks it. A value chain starts at the other end – with the value proposition to the customer – and traces how and where that value is created along the chain all the way back to the raw material

The idea of value addition is closely related to the concept of agricultural value chains. But many people who talk very forcefully about value addition do not actually understand what a value chain is. If they did, they would not be so cocky. More often than not, they are talking about a supply chain. A value chain captures the production-to-market linkages that generate value for the customer. A supply chain captures the processes that transform raw materials or commodities into products.

A supply chain analysis starts with the procurement of raw materials and ends with the delivery of the product to the shelf where the final consumer picks it from. A value chain starts at the other end – with the value proposition to the customer – and traces how and where that value is created along the chain all the way back to the raw material. Value proposition means the characteristics that a consumer likes or prefers about a particular product that makes them choose that product, and even pay a premium over similar or competing products. The value proposition can be price, taste, appearance, durability, convenience, image, or all of these attributes and more.

Consider sneakers. A supply chain view of sneakers will seek to understand the sourcing of raw materials that go into manufacturing sneakers, the logistics of getting these materials to the sweatshops in Asia and elsewhere, volumes, sizes, styles and colours, production cycles, inventory, distribution channels and such like. A value chain analysis will start with why customers are willing to pay three or four times more for their Air Jordans than for generic products or cheaper brands, and work through the chain to see how and where the value is created.

The most expensive coffee in the world is an Indonesian coffee called Kopi Luwak, also known as Cat Poop Coffee. Kopi is coffee, Luwak is the local name for the Asian civet cat. Kopi Luwak is retrieved from the poop of the civets, which eat the cherry but do not digest the beans. A cup of this coffee will set you back anything from $35 to $100 (Sh3,500 to Sh10,000) and $200 to $1,200 (Sh20,000 to Sh120,000) per kilo of beans, about 20 times the price of other premium coffees. If exactly the same coffee bean was processed by human beings as opposed to being pooped by a civet, it would not fetch more than $40 a kilo. In effect, at least 80 per cent of the value of Kopi Luwak is generated by civets.

The Espresso & Coffee Guide lists its top ten coffees of 2019 – in no particular order – as Tanzania Peaberry, Hawaii Kona, Nicaraguan coffee, Sumatra Mandheling, Sulawesi Toraja, Mocha Java, Ethiopian Harrar, Ethiopian Yirgacheffe, Guatemalan Antigua and Kenya AA. Jamaica Blue Mountain gets an honorable mention and Kopi Luwak a dishonorable one. Most other coffee reviews have more or less the same list. The reason that Jamaica Blue Mountain does not make the list is because it is expensive, costing according to the website, double the price of Kona and four times the price of Kenya AA. But the review does acknowledge that Jamaica Blue Mountain is consistently rated as the best coffee in the world. Kopi Luwak gets a thumbs down for the ridiculous price, lack of traceability (i.e. authenticity certification) and animal cruelty reputation issues.

Why is Jamaica Blue Mountain so much more expensive than other comparable coffees? The simple answer is, it’s a matter of taste. Like wine grapes, different climates and soils produce different coffee flavours. Jamaica Blue Mountain is distinctly mellow, East African coffees are more intense, and Asian ones are more spicy but, in the end, the brand premium reflects Jamaica’s success in positioning and marketing its national brand

Homegrounds.co – a coffee e-commerce website whose top ten coffees also overlap with those on the Espresso & Coffee Guide – has Jamaica Blue Mountain as the most expensive, with several offerings retailing at between $50 and $100 a pound (Sh11,000 – Sh22,000 a kilo) and a Central American Geisha from Costa Rica and Panama in the same range at $70 a pound (Sh15,400 a kilo). All the rest, are priced between $18 and $24 (Sh4,000 and Sh5,300) a kilo. Kenya AA is priced at US$20 a pound (Sh4,400 a kilo)

Why is Jamaica Blue Mountain so much more expensive than other comparable coffees? The simple answer is, it’s a matter of taste. Like wine grapes, different climates and soils produce different coffee flavours. Jamaica Blue Mountain is distinctly mellow, East African coffees are more intense, and Asian ones are more spicy but, in the end, the brand premium reflects Jamaica’s success in positioning and marketing its national brand.

What these price differentials are not about is processing. There is no amount of domestic processing of Kenyan coffee that can increase its value from $20 to $50 a pound. Beans and ground coffee generally cost the same. A decent kitchen grinder costs Sh3,000 at the supermarket, cheap ones half that. Moreover, roasting brings shelf life issues into play; raw beans will last well over a year, although they begin deteriorating after six months. Once roasted, coffee is best consumed within 24 hours. Once ground, it loses its freshness within half an hour. Discerning coffee drinkers don’t want stale coffee, and will pay more for coffee roasted as they wait, or for green beans for that delectable treat of serving your dinner guests fresh coffee, roasted right before their eyes. It is of course possible to preserve some freshness by vacuum packing, but supermarket coffee buyers are price not value customers. The import of Moses Kuria’s “value addition” bill is to lock Kenyan coffee out of the value market.

We are then left with the question that, if Kenyan coffee can fetch well over Sh4,000 a kilo, how much of that is the farmer getting? The February 2019 market report from the Nairobi auction – the most recent on the Nairobi Coffee Exchange website – gives prices of $70 and $320 for the low “T” grade and the top grade AA, respectively, and an average of $220 per 50 kg bag. These prices translate respectively to $1.40 (Sh. 140), $6.40 (Sh640) and $4.40 (Sh440) per kilo of clean coffee, meaning that the farmer is getting no more than 10 per cent of the shelf price. It is of course the case that not all Kenyan coffee ends up in the premium market; some ends up in supermarket roast and ground blends – but that does not mean that it is of less value.

I cannot emphasise enough that there is no value addition to speak of that happens between the Kenyan AA bought at the auction at Sh640 a kilo and the Sh4,400 shelf price in the destination market. But even locally, the retail price is on average three times the auction price, The coffee trade has all manner of commercial and technical explanations, but it is hard to see them as anything but self-serving seeing as it is the trade itself that appropriates the premium. The simple answer is: middlemen – a powerful ruthless global cartel politely known as “the trade” (“the craft” would be more apt).

Let’s start with the national brand Kenya AA. You will have noticed that most coffees are named for their geographical origin. Jamaica Blue Mountain is grown on the Blue Mountains range that dominates the Jamaican landscape. Ethiopia has two coffees in our top ten list, Yirgacheffe and Harrar and Indonesia has three: Sumatra, Sulawesi and Java.

But the crux of the problem is the fact that the law denies farmers control over their product. Converting coffee cherries (the ripe fruit that farmers pick) to coffee beans that you can roast at home is a simple process that can be done on the farm manually, even on a small scale.

So, why Kenya AA and not Mt. Kenya Peaberry or Aberdare Ruiru 11? AA refers to bean size, known as screen size. AA are the largest beans.The next size is AB, which in the February market report averaged $4.40 (Sh450) a kilo. In effect, coffee from the same bush can end up having a 30 per cent price difference on account of a one millimeter difference in the size of the bean. The reason for sorting out coffee beans by screen size is roast evenness, that is, to ensure that when beans are roasted, some are not undercooked and others overcooked. Once roasted, the AA beans and the AB beans sold at a discount can be re-mixed, packaged and sold as Kenya AA. These are the “trade secrets.”

But the crux of the problem is the fact that the law denies farmers control over their product. Converting coffee cherries (the ripe fruit that farmers pick) to coffee beans that you can roast at home is a simple process that can be done on the farm manually, even on a small scale. Yet farmers are compelled by law to sell their coffee through the auction, or to appoint members of the trade as marketing agents. Cooperative members lose control of their coffee as soon as they deliver the cherry to their local pulping factory, while those with their own pulping plants lose control after milling (milling entails removing the beans from the husk, and is not very different from hulling maize).

The $100-a-pound Jamaica Blue Mountain offerings come with names like Wallenford, Clifton Mount Estate and such like. These are coffee growers, and such coffees are known as single origin coffees. This is how value is added to coffee – by market segmentation, and positioning single origin brands in different niche markets. Jamaica produces only 8,000 tonnes, and sells 80-90 per cent of it to Japan. Kopi Luwak production is between 500 and 1,000 tonnes a year. The more distinct the coffee and more niche the market, the higher value. The difference between the price of green and roasted beans of a certified single origin Blue Mountain coffee is immaterial.

Fifteen years ago, my colleague Githuku Mwangi, myself and the late Julius Mimano (the man at the helm of Kenya Railways when trains ran on time) who was then chairperson of the Kenya Coffee Growers Association – and coffee farmer par excellence – developed a plan to give control of coffee to the farmers so as to enable them to sell single origin coffees. We did all the homework, including mapping all the growing regions, developing a brand book, and securing the support of the Specialty Coffee Association to implement the specialty coffee certification system. We got many stakeholders behind the initiative but the trade cartel wore us down. A decade and a half later, so called coffee reforms are still going round in circles.

These reforms would have enabled the coffees from the different growing regions to distinguish themselves and find the consumers who have the taste and are willing to pay good money for their coffee. Mt. Kenya coffee might make a name for itself in California, Kisii Highlands coffee in Sweden or somewhere else. If the farmers were to get 70 per cent of the consumer price, the additional cost and risk of roasting, packing and marketing would not be worth taking. On the other hand, as long as the middlemen are in control, processing coffee locally makes no difference for the farmer. Whatever benefits might accrue will still end up with the middleman.

At the peak in the late 80s Kenya produced 130,000 tonnes of coffee. By 2003 when we got involved, production was down to 50,000 tonnes. With our reforms, we estimated we could get it back up to 80,000 in three years, and to 150,000 in a decade, averaging $10 a kilo, which at $1.5 billion in export earnings (Sh150 billion) would have catapulted coffee back to the country’s top foreign exchange earner. We are now down to 40,000 tonnes, earning about 15 per cent of that (Ksh. 23 billion last year).

As long as cartels and cockroach ideas rule the roost, coffee farmers will continue to vote with their feet. Because farmers owe themselves an income, be it from bananas or avocados, it does not matter. They do not owe trade cartels or the Government coffee.

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Cloak-And-Dagger Intrigues: An Insider’s Account of Why the TJRC Report Was Delayed

In his book, The Kenyan TJRC: An Outsider’s View from the Inside, Prof. Ronald C. Slye reveals the intrigues that intensified near the date of the TJRC report release in May 2013 and how various top State House mandarins sought to influence the contents of the report.

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Cloak-And-Dagger Intrigues: An Insider’s Account of Why the TJRC Report Was Delayed
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Sometime in June 2012, I got a call from the Kenyan Truth, Justice and Reconciliation Commission (TJRC) asking if I would be willing to edit the commission’s report, which the caller said was around 1,000 pages long and needed to be edited within a tight deadline of ten days. I told the caller that an important report of that size and significance would require a minimum of one month to edit, if not two months, and that it was impossible for me to edit it in under two weeks. (For those who may not know, editing is not simply a matter of correcting spelling and grammar; it often involves consultation with the author(s) to ensure logic and consistency, and in some cases, to verify facts.) I did not think I could do a professional editing job in such a short period, so I declined the offer.

A few days later, I happened to be in Mombasa when two members of the TJRC’s staff approached me and pleaded with me to take on the editing assignment. I told them that I would, but only on the condition that another editor work with me on the report. They agreed and so I was quickly booked into the Serena Hotel in Mombasa where the TJRC team was temporarily based to put the final touches to the commission’s report.

Upon arrival at the hotel, I was immediately struck by how youthful the TJRC staff were. The majority were born and raised during the Daniel arap Moi era, and I remember wondering if they had the experience and knowledge to understand the extent of the horrors of the injustices and human rights violations that had occurred in Kenya during both Jomo Kenyatta’s and Moi’s regimes.

But what became obvious to me within the first days of my arrival was the cloak-and-dagger atmosphere of the commission. It was clear that many of the commissioners who were staying at the Serena were not comfortable in each other’s presence, and while there was a shared camaraderie between the staff of the commission, there was an air of suspicion about who could or could not be trusted. For example, I was told that every document that I would edit would be password-protected and that I should not leave my computer without logging out as even the waiters and the cleaners in the hotel could not be trusted.

At first I thought that the tense atmosphere was the result of the controversy surrounding the chair of the TJRC, Ambassador Bethuel Kiplagat, who refused to resign despite questions being raised about whether he could be an impartial chairman given that he had been a witness to some of the human rights violations committed during the Moi regime, in which he had held important positions in various capacities. His failure to withdraw from the commission had even led one of the commissioners, Betty Murungi, to resign.

Prof. Slye’s book shows that the request for an extension was not so much due to the staff needing more time to finish the report, but because the political establishment did not want the findings of the report to influence the outcome of the March 2013 presidential elections

However, having read Prof. Ronald C. Slye’s book, The Kenyan TJRC: An Outsider’s View from the Inside, it is now clear to me that something much more sinister was afoot. I had entered the commission at precisely the time when a plot was being hatched to not release the report in 2012, as per the TJRC’s mandate, but the following year – after the 2013 elections to be precise. Indeed, during my stay at the Serena, I was told that what I and my co-editor were editing may not be the final report after all, as the commission would be asking for an extension to complete it. At the time, I thought that asking for a delay in the release of the report was probably a good idea; while many sections of the report were well written, some chapters clearly needed more work, and probably needed to be redrafted.

Prof. Slye’s book shows that the request for an extension was not so much due to the staff needing more time to finish the report, but because the political establishment did not want the findings of the report to influence the outcome of the March 2013 presidential elections. Given the nature of the TJRC report – which sought to gather evidence and make public all the human rights violations and historical injustices committed by Kenya’s ruling elite since independence – it was understandable that many prominent people would not be happy with its contents, and would prefer that the report not be made public. For instance, Uhuru Kenyatta, whose father has been associated with various land-related injustices, would not want such a report to influence his chances of becoming president in 2013, particularly and especially because he was at that time also indicted by the International Criminal Court (ICC) for crimes against humanity committed after the disputed 2007 election.

However, that commissioners appointed to the TJRC (all of whom have impeccable professional credentials) would succumb to political pressure and agree to delete some sections of the report that adversely mentioned the Kenyatta family is something that I did not expect. Slye – a professor of law at Seattle University and one of three foreign commissioners at the TJRC – shows in his book that by the time the commission was finalising its report, several commissioners had already been compromised or had been coerced into taking political sides, and that by the time the report was released in May 2013, chances of the report’s recommendations being implemented were virtually nil. In addition, some of the commissioners were actively colluding with the new government of Uhuru Kenyatta to delay the release of the report.

Prof. Slye says that when he asked some of the other commissioners why they had asked for such a long extension, even though the report was nearly complete by mid-2012, he was told that it was not the commissioners who wanted an extension, but the government of Mwai Kibaki, presumably so that the report would not be released before the 2013 election (which suggests that Kibaki and his cronies did not want the report’s contents to influence that election). Slye believed that this would be counterproductive because “if our report had been released in a timely manner before the [presidential] debates, it would have provided an opportunity for the voices of the thousands of Kenyans we had heard throughout the country to be included in this important national discussion”. In other words, if Kenyans had had a chance to debate and discuss the contents of the report prior to the 2013 election, they might not have been so eager to support an Uhuru presidency.

The government of Jomo Kenyatta’s son, Uhuru, used his powers to cajole, bribe and threaten commissioners and senior staff of the TJRC to have this and other references to his father’s land grabbing removed from the report, including the testimony of Toza

In his book, which was published last year, the law professor reveals the intrigues that intensified near the date of the report’s release in May 2013 and how various top State House mandarins sought to influence the contents of the report, in particular, references to land grabs by Kenya’s first president, Jomo Kenyatta. The Office of the President seemed particularly perturbed by the testimony of a man from Kwale named Toza who claimed that he and his community had lost 250 acres of prime beach land to President Jomo Kenyatta. “The owners of the land were offered the equivalent of US$84 per acre of land, far below the then market value,” writes Slye. “Toza’s father refused the payment and, with other dispossessed residents, unsuccessfully fought to keep the land in the hands of the local community.”

According to Slye, “The government of Jomo Kenyatta’s son, Uhuru, used his powers to cajole, bribe and threaten commissioners and senior staff of the TJRC to have this and other references to his father’s land grabbing removed from the report, including the testimony of Toza.”

Why would Uhuru Kenyatta’s government go to such extraordinary lengths to doctor the report? After all, it is common knowledge that the Kenyatta family became the richest family in the country within just one generation because the patriarch Jomo went on a land-grabbing spree shortly after independence and used his enormous political influence to dispossess people of their land. This narrative is well-documented in various reports, inquiries, books and articles, and as our recent history has shown, has had little impact on the Kenyan electorate, which went on to elect Jomo’s son in the controversial 2013 and 2017 elections, even though the latter was at that time facing charges at the ICC. So why fear the obvious?

Alliance of the Accused

Slye’s book suggests that while the delay in the report’s release probably had to do with the fact that Kibaki did not want the report’s contents to influence the 2013 election, the behind-the-scenes machinations to change the report after Uhuru became president were motivated by a desire to whitewash the new Kenyan presidency. The combined “Alliance of the Accused” between the two ICC indictees, Uhuru Kenyatta and William Ruto, was viewed as “a shift away from accountability and a further entrenchment of impunity in Kenyan politics”. Both Uhuru and Ruto portrayed the election as a “referendum against the ICC”, and so probably did not want the report’s findings and recommendations to influence the ICC’s case against them. (Both cases eventually collapsed due to various reasons.)

This shift in accountability, whereby the electorate voted for candidates not despite the fact that they were indicted by the ICC, but because they were indicted, dramatically changed the political landscape in Kenya. Slye believes that it had a direct effect on the final days of the commission:

“My first indication that something was seriously amiss occurred on May 6 [2013] when I happened to visit our printer’s office to check on the status of the production of the report. When I arrived, I found commissioners [Margaret] Shava and [Ahmed Sheikh] Farah standing over our staff and directing which parts of the report to remove concerning the Kenyatta family. When I asked them under what authority they were changing the content of the report, they replied that we had to remove references to Kenyatta, as the matters were considered sub judice.”

This assertion was clearly false as none of the testimonies referring to Kenyatta were before a Kenyan court. In fact, few, if any, of the over 40,000 statements and testimonies gathered by the TJRC, including from families of the victims of the Wagalla massacre and those who were tortured by the state’s security forces, were cases that were being tried by Kenya’s justice system.

All three of the foreign commissioners – Ronald C. Slye from the USA, Berhanu Dinka (now deceased) from Ethiopia, and Gertrude Chawatama from Zambia – then signed a dissent opinion on the land chapter of the 2,000-plus pages of the final report. Part of the dissent statement reads: “With much regret, and after many tireless days of trying to reach a reasonable compromise, we are obligated by our conscience and the oath we took when we joined this Commission, to dissent completely from the amendments made after 3 May 2013 to this chapter in this Volume devoted to Land – Chapter 2 of this Volume B.”

The TJRC website, which carried the final edition of the report, has since been dismantled. The only available online version of the report, including the dissent and other related documents, can be found on Seattle University’s website.

Neither Prof. Slye nor most of the other seven commissioners were present when Ambassador Kiplagat handed over the report to President Uhuru Kenyatta on 21 May 2013. The ceremony was a hurried, low-key affair, which was surprising given that much time and many resources had gone into the commission and its work.

In March 2015, nearly two years after the TJRC report was published, President Uhuru Kenyatta, in his State of the Nation address, made a public apology to all those who had suffered human rights violations and injustices under previous regimes, and promised to establish a 10-billion-shilling fund for those affected. To date it is not clear if these funds have been disbursed to victims or their families.

Meanwhile, the TJRC website, which carried the final edition of the report, has since been dismantled. The only available online version of the report, including the dissent and other related documents, can be found on Seattle University’s website.

As part of his legacy, Uhuru Kenyatta must claim the TJRC report on behalf of all Kenyans, and ensure that its recommendations are fully implemented.

Which goes to show that this government would prefer to erase the report and its findings not just from Kenyans’ memories, but from the public domain as well. This is unfortunate because it was lack of acknowledgement of the atrocities committed by various regimes that had led to the bloodletting of 2007 and 2008. The recognition that historical injustices needed to be addressed eventually resulted in the establishment of the TJRC. By suppressing the TJRC report, and failing to implement its recommendations, the Uhuru Kenyatta government may be laying the foundations for similar violence in the future.

Wounds may heal, but painful memories and resentments can simmer for generations. As part of his legacy, Uhuru Kenyatta must claim the TJRC report on behalf of all Kenyans, and ensure that its recommendations are fully implemented.

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