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China’s role in Africa elicits debate

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By AGGREY MUTAMBO
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The dust on the Focus on China-Africa Co-operation (Focac) Summit held in Beijing earlier this month may have died down.

But the impact of decisions made there have elicited a rigorous debate on China’s role on the continent.

Gathered at a hall in Nairobi last week, experts in international trade, development policy and foreign aid and relations pored over the debate on whether financial aid from Beijing is trapping Africa or providing the much-needed keys out of the jails of poverty.

At the Focac Summit, Chinese President Xi Jinping told his African colleagues that his country would be pumping another Sh6 trillion into the continent.

It was in addition to a similar amount announced at a previous summit in 2015, doubling Beijing’s financial commitment to Sh12 trillion in just 36 months.

This amount is twice what Japan, through a similar programme called the Tokyo International Conference on African Development (Ticad), has sent to Africa since 2012.

The money from China would have “no political strings attached”, Xi said, and that there will be no interference in African countries’ internal affairs; no imposition “of our will on African countries” and “no seeking of selfish political gains” in investment and financing cooperation with Africa.

But that pledge created both support and criticism.

Supporters view the pledge as China’s continued move to fill a vacuum – supporting the continent where Western development partners were either reducing or tightening conditions for help.

Opponents on the other hand saw this as a bid to tie down the continent into massive debt, trapping its inhabitants to be slaves for Beijing.

For example, the US National Defence Strategy for 2018 accuses Beijing of “predatory economic practices” targeting neighbours and other vulnerable countries.

Critics in Kenya amplified their view after it emerged that Nairobi had not yet secured financing to build the standard gauge railway to Kisumu and that the Chinese were now assessing actual feasibility first before committing their money.

It also came amid stringent tax proposals like the VAT on petroleum products, tax on airtime and mobile money transfers as well as cutting down on spending.

So what is the true picture?

Africa is the biggest recipient of China’s foreign aid, taking nearly 52 percent of it between 2000 and 2012, according to the China-Africa Research Initiative. It would have loaned Africa Sh12 trillion by 2021, according to FOCAC.

At Sh534 billion, Beijing is one of the major creditors to Kenya but not the biggest.

Yet in Nairobi, the discussants at the forum organised by the Africa Policy Institute (Api) debated whether China should be blamed for loaning Kenya or Africa.

Development economist Anzetse Were told the audience that Africa’s debt debate should first relook at governance issues.

“China is already playing its role (in providing financial aid); it is time for African governments to seize their decision-making power,” argued the Business Daily columnist who charged that as long as ordinary folks in Africa are kept in the dark about the nature of financing deals their leaders enter into, it is Africa to blame, not China, when debt mounts.

In an earlier paper published by the South African Institute of International Affairs, Ms Were had argued that implying China plies clueless African governments with debt fails to acknowledge that African nations are aware of these debt obligations.

“Indeed, arguing that China is manipulating African governments into debt confers a childlike innocence on African governments,” she said.

Chinese officials say their foreign aid to Africa has seen the construction of 6,200km of railroad and 5,000km of highways.

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Between 2000 and 2017, a study by the Africa Policy Institute found China extended $136 billion (Sh13.6 trillion) to African governments and their enterprises in the form of official development aid, export credit, suppliers’ credit and commercial credit. The China Africa Research Initiative shows these loans were non-concessional.

API CEO, Prof Peter Kagwanja, who moderated the forum, argued that Africa should see Chinese loans as some form of Marshall Plan, and use it in a way similar to the US post-World War II financial assistance to Europe, to ensure infrastructure it builds is supported by policies to break trade barriers and ensure it borrows as much technology as possible from China.

Yet that mounting debt has caused problems in Africa.

Angola, DRC, Ethiopia, Kenya and Sudan account for over half of Chinese lending in Africa with Angola and Congo-Brazzaville having reviewed their debt plans with China after it became difficult to repay routinely.

Zambia and Ethiopia are in discussions for the same but China is taking over Zambia’s power utility firm, Zesco, after Lusaka defaulted on $8.7billion (Sh870 billion) worth of Chinese loans.

Djibouti is facing similar predicament.

But Chinese Charge de Affairs Li Xuhang argued Africa to see a “bigger picture”, not just in terms of debt.

“The debt itself is not guilty. What matters is whether the debt is used for the country’s building, or for corruption or abused,” he argued.

“Second, the debt burden of African countries is not the fault of China. The debts of Kenyan and other African countries were accumulated into a big burden for historic and complicated reasons,” he added.

Africa’s economy used to rely on the West, he said.

The loans from Europe, he argued, are seldom used in infrastructure but for short-term programmes like health or education or governance.

Beijing, is therefore plugging a hole by providing “first bucket of gold” in the beginning.

“Some countries seized their “gold” by wars or colonisation in the past. China and African countries are all victims of colonisation, and we will never follow their ways of collecting money,” he said

According to latest figures from the Treasury, the World Bank is now the biggest creditor to Kenya at Sh581 billion and other countries like France, Japan, Belgium, UK, Netherlands, Finland and German all have fractions of bilateral debt with Kenya.

Mr David Owiro, a trade policy consultant in the Ministry of Trade, argued that the source of debt should be the least of worries, it should be how policies are developed to use the money.

“Regional policies need to be coherent so we can translate it into an African agenda. China is coming to Africa more a complimentary than the traditional support so we need to develop a path to sustainability.”

But China’s critics cite the low trade volumes for Africans as a contributor to the situation of indebtedness. For example, Kenya imported Sh390 billion worth of goods, mainly machinery and material for construction, and sold only Sh10 billion to Beijing in 2017.

The Chinese official responded that the situation is affected by the global market fluctuations which have increased the cost of financing Africa and the fact that Africa exports mainly raw materials whose international prices never change or are mostly controlled by middlemen.

“China’s financing to Kenya and Africa is not a trap. African countries including Kenya, now in a period of rising development, are making efforts to realise industrialisation, economic diversification and modernisation.”

“At the request of Africa, China and Africa have agreed to identify cooperation projects to help Africa overcome development bottlenecks,” the Chinese charge de affairs said.

But China, he added, will conduct thorough feasibility studies for selection of projects, and take into full consideration the supporting development of the projects after their completion.



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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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Monitor water pumps remotely via your phone

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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