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An ‘invisible hand’ is steering integration

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By CHARLES ONYANGO-OBBO
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The 20th Ordinary Summit of the East African Community Heads of State on February 1, 2019, in Arusha, the Tanzania city where the organisation is headquartered, was billed in several media commentaries in the weeks prior as likely to be its funeral.

Another summit on November 30, 2018 flopped, with Burundi boycotting it and President Pierre Nkurunziza accusing Rwanda of being behind efforts to destabilise his country.

He also accused then-EAC chairman, Uganda’s President Yoweri Museveni, of doing little to attend to Bujumbura’s many grievances.
Museveni eventually responded. In a leaked letter dripping with condescension, Museveni mildly ribbed Nkurunziza over his displeasure at the EAC’s interference in Burundi’s business, reminding him that Burundi didn’t mind the interference when the region brokered the peace that eventually brought him to power in 2005.

One of the unsaid things there being that, unlike Museveni or Rwanda’s Paul Kagame, who won power decisively in the battlefield at the head of victorious guerrilla armies, Nkurunziza got his in an air-conditioned conference room.
Tanzania, on the other hand, has been hitting Kenya over the head repeatedly with trade barriers.

Kenya, for its part, has been stewing over the failure of the majority of the EAC members to finalise the economic partnership agreement (EPA) with the European Union, so that, especially its flowers, the crown jewel of its economy, can continue enjoying duty-free, quota-free access to the EU market.

Convoluted dispute
But the most worrisome development is, many fear, the likelihood of a war between Uganda and Rwanda, which would probably doom the EAC.

On September 3, 2018, Ugandan editor and publisher Andrew Mwenda, who had deep access to both the Rwanda and Uganda state houses at that point, published an unsettling lengthy report in his The Independent, detailing the convoluted dispute between the two, and how “in May [2018], the two nations amassed troops near the border ready to battle.”
Once bosom allies, Uganda and Rwanda have had a turbulent love-hate relationship since they fought in two short but bitter clashes in Kisangani, eastern DR Congo, in August 1999 and May 2000, where they were backing rival local rebel armies.

On both occasions, the Rwandans bloodied Uganda’s nose, and Museveni and his lieutenants, accustomed to military triumphs, swore to one day avenge their defeat.
It marked a dramatic souring of a compact that had been important in the Rwanda Patriotic Front/Army’s eventual victory in 1994 that ended the genocide.

It also saw the two sides, together with Angola, Zimbabwe, and even Ethiopia, rally to oust DRC’s corrupt long-time dictator Mobutu Sese Seko in 1997, and the installation of Laurent Kabila as president in Kinshasa.
It all unravelled spectacularly in 1998, when Kabila turned with a fury on his Rwandan and Ugandan patrons.

The patrons all converged in mineral-rich eastern DRC, with Rwanda and Uganda on one side, facing off with Kabila, Angola, and Zimbabwe on the other. Stories of plunder and pillage were plentiful.

The conflict in eastern DRC that this so-called African World War in turn sparked — and has never ceased — is estimated to have killed over 4.4 million since, and displaced millions more.

Nearly 20 years later, the ghosts of Kisangani refuse to rest. And the plot has thickened. Against this backdrop, “collapse”, “tension”, “woes”, “peril” have been the most common words in headlines about EAC affairs.
Reading the online publications that reflect Uganda and Rwanda’s extreme and unvarnished views on their disputes, and sundry posts by social media flamethrowers, these headlines seem justified.

However, that would be to miss the new realities on the ground, and the many forces, several of them on the margins, that are nevertheless shaping the EAC today, and function as the glue that holds it together.
For one, the Arusha summit itself was significant in that it started the march toward the 20th anniversary of the EAC, the Treaty re-establishing it having been signed on November 30, 1999, coming fully into force on July 7, 2000.

The current EAC can rightly brag it has lasted twice as long as EAC I, which collapsed in 1977 after 10 years in existence.
It is fair to say, though, that the Community had its roots farther back in the Customs Union between Kenya and Uganda in 1917, which Tanganyika joined in 1927. Several iterations resulted, after the independence of Tanzania, Uganda and Kenya, culminating in EAC I.
That this second official East African marriage has lasted twice as the long as the first one is not a fluke.

The expansion of the EAC to include Rwanda and Burundi, and then South Sudan, was not universally welcome, with critics saying it was ill-judged, as the new members were “not ready.”
It’s also true that it has led to a two-tier EAC, with Kenya, Uganda, Tanzania and Rwanda up in a Premier League, and Burundi and South Sudan, wracked by conflict at the bottom, languishing as basket cases in a Second Division.
However, the expansion partly solved the vexed issue of who gained most from the EAC, the predominant view in the past being that Kenya got the most, having already robbed its partners at the collapse of 1977, when it hung on to its most precious assets, especially the airline, housing and telecommunications.
Extending the outer edges of the EAC into Central Africa and northwards, rewarded countries like Uganda, the only landlocked member of the initial EAC, with new market room.
Thus, by the time South Sudan erupted into war again in December 2013, Ugandan exports to the country were worth nearly $330 million, with one of the biggest export items being mobile phones — which Uganda doesn’t make.
Even in its ramshackle post-war state, South Sudan also drove a boom in northern Uganda, which was recovering from a 20-year-old rebellion, and a new corridor of opportunity opened up with the import and export corridor from Tororo at the Kenya-Uganda border along a series of towns to Nimule in South Sudan, as reconstruction picked up after the 2005 peace agreement ending its long war against Khartoum.

Business
In the year 2000, Ugandan exports to Rwanda were worth $9 million. By the 2017/2018 financial year, this figure had shot up to $197 million, against imports of $20 million, giving it a surplus of $177 million, despite the icy relations currently prevailing.
In the same period, in a reversal of fortune, Uganda for the first time registered a $122 million trade surplus with Kenya, with exports worth $628 million and imports worth $505 million.

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Though Uganda hardly invests any serious money in agriculture, the country is now the EAC’s bread basket.

Kenyan business people travel as far as the remote parts of western Uganda to villages whose names they can’t pronounce, and put a deposit on food crops before they are harvested.

None of this happens as a result of state policy, but rather the invisible hand of integration. The magic happens in that “invisible” East Africa.
Kenya, where economic nationalism is never far below the surface, might have baulked at this trade deficit.

This is particularly so given that it felt hard done by in 2016 when, in a surprise decision, Uganda announced it would route its oil pipeline 1,444km to the Tanzanian port of Tanga, instead of the Kenyan port of Lamu, as it had previously indicated.

Also, when Kenya was building its standard gauge railway, the business case for it had been that it would run through to Uganda, and southward to Rwanda.
Uganda, in what seems to be not just a snubbing of Rwanda, but also stepping harder on Kenya’s toes, decided to extend the SGR toward South Sudan, which Nairobi was eyeing for itself, and dithered forever on linking the Kenya SGR line to Kampala.
While this has been portrayed as being bad for the regional integration project, perhaps in reality it is not. For one, open borders, that have enabled a lot of goods and money to flow, have countered otherwise risky and petty political behaviour by the region’s governments.
Additionally, while amid political tantrums, developments like the one-stop border posts (OSBPs) that are popping up around EAC borders, are tying the member states in deeper bureaucratic linkages with more far-reaching implications than most realise. It is integration by stealth.
Between 1977 and recent years, there has been a shift. Kenya has taken a remarkably pragmatic approach to the EAC, choosing to hold its nose where it might have picked up its ball and walked off in a huff.

This is partly in response to changes in its own economy that have led it to see opportunities beyond trade, as several of its companies – including those owned by Kenyan President Uhuru Kenyatta’s family – evolve into regional multinationals. These will be explored in the third part of the series.
Another outcome of the expansion of the EAC is that it created a policy race that has led to steady progress in integration, even though it is mostly Rwanda and Kenya who are making the running.
In 2010, Rwanda and Kenya agreed to waive work permit fees for each other’s citizens. Shortly thereafter, Rwanda took the plunge and did the same for all East Africans. It opened the floodgates.

With Rwanda breaking left to join the Commonwealth in 2009, adding English as an official language alongside French and Kinyarwanda, Kenyans left in droves to go and teach in its mushrooming international and state schools.
The exodus was so large, an MP sought to move a private member’s motion in parliament to stop it.
In 2013, Kigali went farther, becoming the first EAC country to remove pre-arrival visa requirements for all Africans. It would take four years for Kenya to respond.
One may well ask why the others didn’t join. The reason is that, from a dollars and cents point of view, this relaxation of visa and work permit regimes by the two countries were actually taken in their own national interests as against the wider regional cause, and had a lot to do with their national carriers: RwandAir and Kenya Airways.

However, in turn it meant they were in contention for regional African passenger traffic.

Uganda didn’t have an airline, its various incarnations were all in the graveyard. Air Tanzania was an excuse of a carrier; and Burundi and South Sudan couldn’t spell airline.

In a small country and market; located outside the path of major continental flow; losing money; and kept going largely by strategic imperatives, RwandAir needed something dramatic to unlock more money.

The new visa regime did it, hoovering up a lot of the West African traffic that used to route through Nairobi on Kenya Airways to places like the Middle East and beyond.
Then the 2014-2015 West Africa Ebola epidemic, and bad calls by Kenya Airways, sent KQ into a money-losing tailspin from which it is only beginning to recover. One tool in its box, was the announcement in 2017 that Kenya too was throwing its doors open for all Africans to visit without a prior visa – a critical move, but perhaps several years late.

For Kenya, though, there was an additional factor. After receiving massive support from Africa as Kenyatta, and now Deputy President William Ruto battled their cases, ultimately successfully, against the International Criminal Court (ICC), a pan-African gesture was the only gratitude that would do.
For Kenya Airways and Rwand-Air, their domiciles had to be East African and pan-African if they were to find success. And in that quest, a formidable rival in the wider East Africa, Ethiopian Airlines, was checkmating them.

Would they fight it out, or form a kind of “Three Winged Sisters” alliance?
On the ground, they raced to build new airports or to expand old ones. Ethiopia moved first, with a tweak to Bole.

Kenya struck big with new terminals for Jomo Kenyatta International. Rwanda went outside Kigali, and is building a new airport in Bugesera, projected to be ready, or at least partially, in late 2020 when its holds the Commonwealth Heads of Government Meeting.

And, from left field, everyone was blindsided when the little-known Abiy Ahmed, who has turned out to be the hyper-reformist, was elected prime minister by the ruling Ethiopian People’s Revolutionary Democratic Front in April 2018, following the very unEthiopian and unAfrican resignation of Hailemarian Desalegn. East Africa and the Horn would not be the same again.

The creeping return to peace in South Sudan is in part thanks to the changes in Addis Ababa, and, ironically, the regime crisis that Sudan’s Omar al-Bashir is facing in the North over the last year. There is, in short, a lot in the EAC to play for.

And for Uganda and Rwanda, therefore, an arcane but emotive dispute among leaders, in the end, must look like small fish and chips compared to the cost to their national projects if they walked away from big East Africa.

—Next week, we look at whether Rwanda and Uganda, or Burundi and Rwanda could go to war; how Uganda’s oil pipeline through Tanzania is about everything else but oil…

Charles Onyango-Obbo is publisher of Africapedia.com and explainer Roguechiefs.com. [email protected]

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General

Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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