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By Gitahi Ngunyi

The genius in the budget for the financial year 2020/2021 was not how treasury kept the tradition for capitalist planning by prioritising the profiteering and monopoly capital but how the budget statement presented to parliament and the public through live broadcast was coached to sound progressive.

The most conspicuous elements of the budget are the allocations made by the treasury for the rescue of big businesses from the ravages of the Corona Virus pandemic. Flower farmers were allocated Sh1.5 billion as a COVID 19 recovery package while tourism has been allocated Sh3.billion for “renovation and recovery.”

Let us look at the flower farms bailout critically. The flower farms in Kenya are owned by multinationals such as Unilever, Finlays, and connected political families such as the Kenyattas, the Mois, the Kuleis, and the Biwotts. In other words, the bailout package for the flower farms is aimed at benefiting the business interests of the capitalist class that continues to have overbearing weight on the working class in Kenya.

It is important to remember that the big flower farmers were very quick to fire workers, who are among the poorest paid in Kenya, when international flights were grounded globally. Compared to the handful of wealthy flower farmers, the workers in the floriculture industry are estimated to be slightly over 100,000. Most of these workers are currently jobless and, in some cases, homeless (for those who live outside the flower farms and could not afford to continue paying rent) and with no safety net package. The biggest proportion of workers in the industry are women.

A structure similar to the floriculture industry is replicated in the tourism industry. The tourism sector is largely owned by multinationals (Intercontinental hotels, Hilton, Radisson Blu, Kempinski, Fairmont, Sheraton) and the powerful political families such as the Kenyattas (Heritage). All these hotels predictably dismissed their workers on the first signs of COVID 19 economic stress.

Conservative estimates put the number of workers in the hospitality (hotels and restaurants) at 2.2 million.  In line with the capitalist tradition, while Treasury was quick to allocate the “renovation and restructuring” package to the hotel industry owners, it conveniently forgot to allocate anything to provide the hotel workers with a safety net to help them cope with their new status as unemployed workers.

Treasury appears to have spent sleepless nights charting new ways to elevate and expand the interest of both local and international capitalists. For example, Treasury has given conservancies a thumbs up with an allocation of Sh2 billion. Most conservancies are established by rich foreigners who use the cover of conservation not only to extract and expatriate money to foreign countries but also to steal land from pastoralist communities in Kenya.

Through the finance bill 2020, Treasury is seeking to open the road for the capitalists to use workers' savings for their speculative adventures. One of the proposals that may have escaped the notice of trade unions is the revision of pension funds regulations to allow pension managers to invest 10 percent of the funds in private equity and venture capital.

To understand the full import of this proposed revision, one has to look at the structure of the pension industry in Kenya. The pension industry in Kenya has assets valued at Sh1.1 trillion according to the pension industry performance report of 2018. Out of this, only assets valued Sh221 billion are held by the National Social Security Fund (NSSF). The rest of the assets (Sh990 billion) are held and managed by private fund managers who include asset management firms established by both local and multinational insurance groups, banks, investment banks, and stock brokerages.

These fund managers will now be allowed to invest over Sh116 billion of the workers' savings into the riskiest businesses locally and internationally. Private Equity, in short PE, and Venture Capital is generally speculative business activities that combine lending and purchase of shares to get a return from promising businesses over a defined period usually between five to 10 years.

Organisations or individuals who put their funds in PE or Venture Capital Funds are not guaranteed that they will not lose their money although the PE Firm owners guarantee that they will conduct due diligence before investing in a company. Losses are very common in the Private Equity activity and happen to firms with the biggest names in the industry. Usually, the biggest PE firms are operated by capitalists with very heavy connections in governments. That is the case for Carlyle Group for example which is a firm set up by former US Government Officials. The range of businesses that PE firms invest includes ordinary and simple operations businesses such as Chemists and shops to complex businesses such as manufacture and trade in military equipment and services.

It is in this sophisticated and risky environment run by powerful and sometimes untouchable forces that Treasury now wants Sh116 billion worth of Kenyan workers' savings to be invested for non-guaranteed high returns.

It should not be lost to the readers that PE and Venture Capital are deemed as effective tools for the implementation of neoliberal policies. Because they invest over a defined period, the PE and Venture Capital employ aggressive tactics in companies where they invest to get the highest returns over the shortest period possible. Such tactics include retrenchment of workers, conversion of employment terms from permanent and pensionable to short contract terms, low wages for lower cadre workers, and payment of poor prices to suppliers.

Still in the Finance Act, Treasury has revised provisions on revenue collection to allow private sector players who participate in the public-private partnership (PPP) ventures to collect road tolls from the public. In his budget statement, Treasury CS explained that this was a logical step given that the government had fully embraced PPP. He mentioned that there are transport, energy, health, housing, and manufacturing projects worth Sh200 billion under PPP pipeline.

What the CS did not say is the private firms that will undertake the PPP projects will only undertake the implementation of the projects with loans guaranteed by the same government. He did not also mention that the private firms that will undertake the project will be largely foreign and loans will come from home countries of the companies involved. In short, CS failed to mention that the entire PPP project is largely beneficial to monopoly capital and will be to the disadvantage of the Kenyan workers and peasants who provide the biggest contribution to the tax basket.

One confounding aspect of the budget is the increased role that Treasury has given to monopoly capital. Take the case of Kenya Mortgage Refinancing Corporation for example. The firm’s role is to reduce the interest rates for mortgages to “affordable levels” for households with incomes less than Sh150,000 per month. In this year’s budget, the government has allocated the firm Sh2 billion. At the same time, the CS says the government has mobilized another Sh35 billion from “development partners.”

The plan for the firm looks all noble and decent until the firm is unbundled from a non-capitalist lens. From the outset, it must be stated that the company is a product of the lobbying by Kenyan banks where the Kenyattas have a huge interest. The firm is owned by the banks and Saccos.

However, the operations of the Corporation are largely dependent on Sh25 billion loan from the World Bank which will be wired in the course of the financial period. There is also Sh10 billion loan from African Development Bank which is expected to be wired during the financial year.

The most curious aspect of the Corporation development is that International Financial Corporation (IFC), the World Bank private-sector lending arm will be handed shareholding in the corporation.

In other words, the Kenyan housing and mortgage market is just about to be handed to the World Bank. The full import of the huge influence of World Bank funding to the firm is two-fold. First, all current homes on a mortgage will be transferred to the corporation which is equivalent to handing over the properties of Kenyans to a corporation that will be largely owned by the World Bank. Secondly, workers who acquire homes through mortgages envisaged in the affordable homes programme will be directly indebted to the World Bank.

In the meantime, it should be remembered there has been a coordinated plot by the World Bank and Kenya government officials to lock out workers from controlling the housing market through pension funds. Traditionally, NSSF has been a big player in developing working-class homes. But corruption and government interference in the fund has meant that the fund cannot plan and see through its socially transforming programmes.

Having looked at how the bulk of the budget and the financial bill 2020 entrenches the interests of both local and international capital at the expense of the workers and peasants, I will now focus on Treasury’s poor attempt to fuse in progressive tone in the budget.

From the theme to the meat of the statement presented on the floor of parliament on July 1, 2020, by Cabinet Secretary for Treasury Ambassador Ukur Yattani, the budget statement is a clear case of bite and blow.

The theme “Stimulating the Economy to Safeguard Livelihoods, Jobs, Businesses and Industrial Recovery,” had all the sounding of progressiveness with words carefully selected to fit in the lingua used in social justice and human rights-based approach to development. Buzz words such as safeguarding livelihoods gives the impression of a government plan modelled around the needs of the people whose livelihoods have been severely threatened. Of course there is no doubt that Kenyans livelihoods have been put on the edge since the emergence of the novel coronavirus.

To give the words real meaning, the statement outlined some measures that the government has factored in the financial year plan. The measures include an economic stimulus package that will see the government pushing funds to the economy. Included in the package is an allocation of Sh2 billion for additional classrooms in secondary schools, Sh1.9 billion to purchase school desks from local artisans, Sh2.1 to recruit 10,000 intern teachers and Sh700 million to recruit ICT interns for digital learning in public schools.

Then there is also the allocation of Sh500 million for the purchase of hospital beds from local artisans, Sh25 million to purchase walk-through sanitisers (never mind that the ministry of health has warned against the use of the walk-through sanitisers) and Sh1.2 billion to recruit 5,000 health workers for one year. For small businesses, Treasury has allocated Sh3 billion for a national credit guarantee scheme to facilitate collateral-free loans. Further, Sh5 billion was allocated to rehabilitate damaged rural roads and footbridges and Sh10 billion for “Kazi Mtaani” aimed at creating short term jobs for 200,000 unemployed urban youths.  The stimulus package is valued at Sh20 billion.

All these allocations sound good until they are given deeper scrutiny. The first fact that emerges on these measures to “safeguard livelihoods” is their temporal nature. 90 percent of the projects envisaged in the stimulus package are short term ranging from 3 months to 12 months and have no sustainability mechanisms. Intern teachers and the health workers to be recruited in the package will only work for just 12 months while the artisans will benefit from the one-off purchase of their products.

But the most outstanding fact is the planned wastage in the package. Waste of financial resources and waste of worker's time. A clear example of the planned wastage in the package is the Kazi Mtaani project. According to the planners of the project, the unemployed youths will be used to unblock sewage systems, clear grass in urban centres and to remove garbage from urban markets. These tasks are ordinarily undertaken by the county government authorities in the case of Nairobi, Mombasa, Nakuru, and other centres. These urban counties spend billions of shillings every year to do these tasks and have permanent and pensionable employees who are dedicated to the accomplishment of these tasks.  

Then there is the aspect of human wastage. While the youths to be employed in the project will rake some income from the project, the earning will only be for a short term of three months. After three months, the youths will fall back to unemployment. Worst of all is that they will neither get to use/horn the skills that they already have, nor will they gain any meaningful skills that could help them get into self-employment or otherwise.

The only reason that can be fathomed as an explanation to the duplication of function by the national government is the need to create an avenue for pilfering national resources. Similar projects in the past have ended up leaving the youth without the promised wages, while senior administration officials steal the rest of the money (hence the popular phrase, kazi kwa vijana, pesa kwa wazee).

It is crucial to note that the stimulus package will largely be funded through international debt, mainly sourced from the World Bank.

This means that in the next five years, the country will largely be privatised and the fate of the workers and peasants' livelihoods will be at the hands of billionaires supported by the World Bank. If this is not reversed, the hope for the economic democracy envisioned in the constitution (2010) will dim and then disappear. Already, workers in education and healthcare who were placed under the mercy of private school and hospital owners through liberalisation of the economy are suffering from low wages and regular retrenchments; their livelihoods have been placed under the capitalist cycles of boom and bust. Enter COVID 19 and they have nowhere to run to.

The future that the Kenya government bureaucrats are steering Kenya into, under the tutorship of the World Bank and IMF, is very bleak for the workers and peasants. However, the dangers of the future that we are being shepherded into is not visible to the majority of the Kenyan workers and peasants because the Kenyan billionaire owned press does everything possible to paint rosy pictures of privatisation while glossing over the pain caused on workers and peasants.

The work is cut out for cadres of the Communist Party of Kenya, Trade Unions, Farmers Cooperatives, progressive forces in the civil society, and progressive religious formations. For cadres of the Communist Party, the biggest responsibility is to expose the neoliberal traps in the government plans and their dangers to the workers and the peasants. This should be done using credible Marxist analysis of statistics against plans by the government. Sharing this publication with the trade unions, cooperatives and progressive forces in the civil society will be an important duty of the cadres as they strive to meet their obligation of educating the masses.

Secondly, the cadres will have to mobilise the masses to take advantage of the few progressive aspects of the budget to improve the welfare of the people in the short term. But more importantly, the cadres should use all available means to organise and mobilise the masses to oppose the neoliberal aspects of the budget.


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