How Much Corruption Can Kenya Withstand?
I was having a discussion sometime back with someone and he said to me that between now (2009) and (2012), the only thing that’s going to be happening withing the government will be massive, massive theft. Nobody knows who’ll be in charge of the country after Kibaki leaves and if you are in, this is your last shot to get rich. Also, if you have any political aspirations post-2012, you’ll also need money in case there is an election.
So, I’ve been thinking about this issue of corruption and wondering how much corruption a country can withstand before it just collapses economically. My thoughts on this issue were raised from two instances. The first was watching a couple of news clips where 10 billion shillings has been reported stolen from the National Water Conservation Offices (see clip here: Does Whodini live in Kenya?). Then there was a second clip where money set aside for the IDP’s has also gone missing (see clip here: No Kibaki, no peace, no food, no home, no nothing).
The second incident that got me thinking about this issue came about from comments I’ve been seeing on Twitter where Kenyans will post various “tweets” about business happenings and at some point I began to wonder whether these people were living in reality. I’ve said on many occassions that reading Kenyan business blog is a difficult ordeal for me and that’s mainly because there is no story line or analysis that accompanies what many of these blogs write. Usually, what’s written down goes something like this:
Kengen’s bond is oversubscribed by 300%, yipee!
Safaricom has posted it’s prospectus, check it out!
The AGM meeting was fruitful, wo-wee! we even got a basket of chicken & a banana! Hee-haw!
I predict East African Cables share price will raise by 23.79% because their …fu.fu.funny-mentals are strrrrong
and blah, blah, blah…..
There is zero analysis of the political situation or of general economics or of anything else and I think in a third world country, you simply cannot talk about business and economics without looking at the political environment that exists within that country. You want to know why? because shit could explode overnight and the whole thing could erupt.
When you are looking at a country where ten or (possibly fifteen million) people are facing serious hunger issues, you simply cannot ignore this reality because it’s going to come back and bite you in the ass.
However, the more serious issue here is how long the country can sustain itself with a growing population and with these extremely high levels of corruption. At some point, something has to give.
I’m thinking of Indonesia as I write this post. They were very high levels of corruption in Indonesia under Suharto, but guess what? Suharto was able to keep a lid on it for a while because Indonesia was a high producing country. They made stuff, which they exported to the west and used the money from their exports to build roads, schools, factories, etc, etc….And the people were not starving! and yet, they too eventually got tired of Suharto and his corruption.
Now, I look at Kenya and I say to myself, how? Something is not adding up here. They are stealing and they are not putting the money back into productive enterprises. This is not Indonesia. The money is being extracted out and this is going to lead to disaster.
This is why I can’t read Kenyan business blogs anymore. Telling me that Kengen’s bond was oversubscribed because Eddy Njoroge said it was and because he also said 15 billion was raised…doesn’t tell me anything about anything. Where is this 15 billion (if it exists) going to end up? Who is keeping track of it? They say they are going to invest the money into building more power plants. How do you know that? And who is going to make sure it happens?
With a corrupt judiciary and a non-functioning coalition government, who the heck knows where all this money is going to end up? I mean, how do you know? Seriously? Tell me….
NB:
I’ve been getting additional information on Equity bank and East African Cables and it ain’t pretty.
Ke,
How much corruption can Kenya withstand ?
-Enough to create the most unequal society in the world.
-Enough to create permanent hatred between tribes because of being jealous of other tribes wealth.
-Enough to make the country so insecure such that even driving a simple car can make you a potential victim of car jacking by young men who have no hope of getting employment.
- Enough to make sure that their own tribesmen have the president seat… Even if it means rigging the election and tearing the country apart.
- Enough to make the country so insecure that even answering a simple phone call on the streets of Nairobi has become a question of a matter of life and death or a matter of having your hand cut off.
- Enough to make the country’s inflation rise because of government printing money to fund more social entitlements.
- Enough to lock out young talented Kenyans from World competitions and tournaments e.g soccer etc among other sports which are run by greedy people handpicked by the government ministers.
- Enough to ensure that NO positive goals are achieved by the government nor the Wanjiku.
- Enough to keep the grain board and other agricultural boards in wallowing in disillusionment for lack of ideas. Hurting the farmers.
- Enough to keep Nairobi in a state of disorganization, No postal codes, No zip codes, No trust in any institution, No trust in anyone.
- Enough to keep innocent Kenyans to get ripped off by dumped goods from China and other Kenyan countries.
- Enough to keep the Wanjiku getting ripped off by Stock broker who promise them heaven when selling them “hot air” and i mean that by every sense of that word.
-Enough to keep the Wanjiku disillusioned and in state of detachment with their day to day struggles so that they could exploit them more..
Need I say more…. Wake me up when this nightmare is over !!
KE,
Maybe the thieves in power have a slim reprieve coming soon. Have you read what Kiraitu’s been saying about the “good news” Kenyans should be expecting soon?
How will the discovery of commercially extractable oil, with all the associated, ahem, profit taking, impact Kenya? Instead of plundering small change like the Kenya Pipe Line, Water projects, etc, prospects of major looting loom large.
Oh yes, Christmas must be coming soon. Imagine being the president under those circumstances.
On a side note, please do let us know more on Equity. I’m curious.
I think K.E you are very wrong at so many levels.
Firstly Politics and Business synergy is not limited to Developing world(3rd world is a deamening term).
If you will have notices China rapid development is guided by the Communist Party directly and indirectly.
Free market thinking led to the Bankers taking over in America which led to the recession.
Obama through his Goldman Sach’s cronies had to find a way to fund the economy by taking hundreds of billions from the American Tax payer. The same bankers have awarded themselves the highest bonuses in Wall streets history right after the worst period in its History.
Believe me i went to the pubs in Canary Wharf in London over the weekend and there was some serious partying going on there. Even the receptionists got at least $300,000 Bonus.
Back to Kenya obviously there is some effect of politics in the Kenyan Economy especially when politicians create an atmosphere of instability.
Companies like Equity and Kengen have to engage the political class so as to persuade them not to cause havok. That is why you see the Equity C.E.O working alot with Raila.
Please provide evidence when you criticize these companies otherwise you are doing a great disservice to the shareholders of these companies who include ordinary wananchi like myself.
John:
Well, I was opposed to Obama’s bailouts and I think what Goldman is doing, which is basically taking free money from the taxpayers and then using it in their proprietary trading divisions to make enormouse profits is criminal & many good economic blogs are talking about the financial disaster that this is going to create.
Anyway, I’m not doing a disservice to anyone or any shareholder. I doubt they even read this blog, but I am going to do a post on what I’m hearing about Equity, East African Cables & Kengen (again).
I regularly check out your blog, and recently read D. Orlov;s ‘Re-inventing collapse’ after you mentioned it in your post on semi-criminal economies. Can I suggest you take a look at Paul Collier’s ‘The Bottom Billion’? Found it quite illuminating.
Kui:
Could you give me a synopsis on what “The Bottom Billion” book is about?
A couple of traps the ‘bottom billion’ of the population is trapped in, most of them in Africa. Traps include, conflict situations, landlocked countries with limited capacity for exports hence growth, the ‘natural resource’ trap aka Dutch disease where countries rich in resources but with poor governance end up strangling all other exports and don’t grow as the money from their natural resource is used corruptly and there’s no other export base. A look at the two sides of the coin on ‘Aid”.
Written by respected economist with peer-reviewed papers. Ends with a couple of suggestions on improving the situation. I think there’s a summary on wikipedia. I’m sure I don’t need to suggest google/amazon it but I’ll say it just in case