Category Archives: kenyamoneyinthepast

CIA Economic Data on Kenya and its President in 1978

Excerpts from a declassified CIA document from August 1978. 

The Economic Intelligence Weekly Review issue, dated 24 August 1978, was published two days after Kenya’s first President Jomo Kenyatta, who had led the country since independence in December 1963, passed away.

The document is meant for US government officials and was done in a format that is useful to them. It has economic indicators, industrial material prices, and contains data from sources like the IMF, and the Economist (their index of 16 food prices). There are also charts on Inflation, unemployment, trade patterns (imports and exports), unemployment rates, interest rates etc. in different countries that are classified by segments such as the Big Seven (US, Japan, West Germany, France, UK, Italy and Canada), other OECD, OPEC (oil-producing nations) and also Communist countries, and other ‘World’ countries.

There are detailed write-ups in the CIA weekly review on:

  • The black market in Cuba: Hustling of consumer goods is vibrant, reflecting shortages of consumer goods. Most consumer goods are rationed except a few luxury items like rum and cigarettes. It also notes that aggregate personal incomes in Cuba are up 38% since 1973 and have reached the rank and file of Cuba, with no evidence of appreciable corruption among top-level officials.
  • The USSR has borrowed more than it needs to build a pipeline. It obtained $2.5 billion, which was $1 billion more than required, from the CEMA International Investment Bank (IIB). Five Eastern European countries helped build it, and in exchange, they will receive gas annually, while sales of natural gas to Western Europe are expected to yield $750 million to $1 billion. The IIB borrow funds in European markets and on-lends them to Eastern European countries at rates better than the countries could obtain on their own. Items paid for with the loan funds included equipment bought from West Germany, Italy and France.
  • Concern about Poland debt payment problems despite a shrinking deficit: For a third year, Poland had to borrow $4 billion and could face a financial crunch or debt rescheduling. Cutbacks of available industrial materials have been severe, affecting production, while debt service payments are now double what they were in 1976 – amounting to 60% of Poland’s exports to the West, compared to 37% in 1976. 
  • The USSR is engaging with Iraq and India.
  • On Kenya, it looked at the transition era and economic stakes of the Kenyatta family, whose inner circle controlled key economic posts and had extensive commercial and agricultural investments, and land tracts around the country. 

The CIA found that the substantial economic investments built over 15 years would deter them from unconstitutionally challenging Acting President Daniel arap Moi, even as they predicted that the Moi-Njonjo group’s (Njonjo was Kenya’s Attorney General and a key ally of Moi in the transition phase) efforts to increase the economic pie could cause disenchantment with the Kenyatta clan.

It was expected that economic pressures would cause the government to push for redistribution of the country’s wealth as it also noted that the family is big in two activities – charcoal and ivory whose exports were banned. At the time, Kenya was considering applying to the IMF for assistance with its balance of payments in the coming years as oil prices had risen, key foreign exchange earners like coffee and tea were slumping, and there was a need to modernize the military while Kenya had also lost its top destination market – Tanzania with the collapse of the East African Community.

It is an astonishing amount of economic data, from fourty years ago – so what does the CIA collect today on different countries and economies?

See also this story from the Standard newspaper. 

Kenya’s Money in the Past: Diplomatic Engagement

This week saw the publication of “Kenya’s 50 years of Diplomatic Engagement, from Kenyatta to Kenyatta,” a book on the history of the diplomatic services and foreign policy in Kenya.

Edited by Dr. Kipyego Cheluget, Kenya’s Assistant Secretary General at COMESA, it is a collection of writings by different authors including foreign ambassadors. It is the result of a nine-year journey that came from an idea that came when he was Director of the Foreign Service Institute – to document the history of the diplomacy in Kenya. And he then set out to travel around the county, interviewing and recording former ambassadors and diplomats such Munyua Waiyaki, Njoroge Mungai and even unofficial ones like politician Mark Too. Some of them have since passed away like Bethuel Kiplagat and Phillip Mwanzia, and whose widows were present at the book launch.

The Chief Guest was Former Vice President, Stephen Kalonzo Musyoka who has also served as a Minister for Foreign Affairs and Minister for Education and he said that to upgrade Kenya’s  diplomatic performance, the country should reward career diplomats and have them, not election losers, as Ambassadors, and legislate a 70:30 ratio of professionals over politicians in such posts, a reverse of the current imbalance. The event had panel talks with former ambassadors on topics like peace-building in Ethiopia, Somalia and the East African region, using sports as a tool of diplomacy, combating apartheid, the lost years of engagement with Russia shaped by the Cold War and how the pioneering diplomats worked through trial and error for decades without an official foreign policy.

The MC for the event at Taifa Hall of the University of Nairobi, Nancy Abisai said the only good books is a finished book, and Kenya’s Cabinet Secretary for Education Dr. Amina Mohamed, added that, following a challenge by President Kenyatta, her Ministry was in the process of setting up a unit for the publication of Kenyan memoirs and which would be operational by January 2019. Former Vice President Moody Awori, who at 91 is still an active Chairman of Moran, the publishers of the book, said they were looking for more scripts to turn our more such books.

Excerpts from early sections of the book and launch

  • It has never been right to say that Kenya’s foreign policy is a “wait and see” one. Diplomats were able to negotiate to host a combined World Bank/IMF meeting in 1973 and for UNEP to have its headquarters in a newly independent African country – Ambassador Francis. Muthaura.
  • Njoroge Mungai initiated steps for President (Mzee) Kenyatta to be nominated for the Nobel Peace Prize in 1972 and Singh Bhoi drafted the dossier.
  • Dennis Afande opened the Kenya Embassy in Jeddah, Saudi Arabia in February 1977. He was the only employee there for four months and the only signatory to the Embassy bank account for the period.
  • When Paul Kurgat went to apply for his scholarship visa at the Nairobi Russian embassy, in 1984. he was arrested and questioned about links to Oginga Odinga. He was later to return to Russia as Kenya’s Ambassador in 2010.

The book is available in local bookshops, such as the University of Nairobi one, at a cost of Kshs 1,395 (1,200 + VAT) and a digital version is also available on Amazon for $8 (~Kshs 800).

Kenya’s Money in the Past: TJRC

From reading the introduction to a new book (available on Amazon) by Ronald C. Slye,  a Commissioner with the defunct Kenya Truth, Justice, and Reconciliation Commission, he narrates how the Commission evolved and troubles it encountered as it sought to carry out  investigations, through to completing its report and handing it over to Kenya’s President. These included accusations again their Commission Chairman and delays to the release of their report so it did not clash with the 2012-13 Kenya electioneering period as well as demands that some clauses be deleted from the final report.

The foreword of the book written by Reverend Desmond Tutu is also available and he gives some more background to the Commission and Slye’s writing. Tutu writes that the Kenya Government did not support the report, and printed as few of them as possible and Parliament has not debated the TJRC report.

In a chapter, available online, Slye explains how he came to join the Commission and some to the things he went through. He thanks his university, the Seattle University School of Law,  for making the complete TJRC report, in sectors and versions, available online on its website as well as also hosting supporting documents that he researched as the basis for his book.

In terms of finance and budgets, there were allegations against that the commission was a waster of public funds and Slye has dedicated a separate page called “Financial Scandals” that contains documents and correspondence on the financial affairs of the Commission. .. includes the letters written by the Commission to the relevant Parliamentary Committee’s requesting an investigation into the handling of the Commission’s finances by the Ministry of Justice. It also includes the only document the Commission received from the Ministry of Justice in response to our inquiry concerning how our monies were being spent.

Excerpts from the documents;

  • The Commission, while independent, never really had control of its monies which was stipulated in the TJRC act; that was done by the (Justice) Ministry. The Ministry also communicated that the Commission would have no control of funds until much later.
  • Some trips Commissioners made e.g to hear facts at the Kenya Coast were paid for out of their pockets but were never reimbursed. Nor did they get reimbursed for some medical expenses, some local travel which were done out-of-pocket, as well as for moving expenses of foreign Commissioners.
  • Money was spent on their behalf for activities which the Commissioners were not aware of e.g. Kshs 16 million to host a “council of elders.”

TJRC financial report from the Justice Ministry

  • In October 2009,  the Ministry sent three different sets of papers to JTRC purporting to give a breakdown of usage of their funds and Slye writes that it included bulk payment for Ministry of Justice retreats and bulk payments for unidentified casual workers when the Commission had just a CEO and two consultants
  • In December 2009, the TJRC submitted a two-year budget request for Kshs 2.06 billion. It also submitted a supplementary request for Kshs 631 million. When no answer was received, it wrote, in January 2010, requesting for a lower amount Kshs 480 million. In March 2010, the Ministry wrote that, of this request, they had been allocated Kshs 30 million in the budget for the rest of the fiscal year. The Commissioners soldiered on and decided to pursue alternative means of funding.
  • The page also contains a press release the Commissioner put out that stated:  “The TJRC would like to emphasise the need for financial independence and to restate that at no time has the TJRC had control over any finances. The Ministry, which has seconded one of its finance officers to the Commission, controls all and every aspect of our budget.”

In July 2011 the Commission was accused of corruption through media reports. Slye writes that internal investigations concluded there was no foundation. In their first year (2009-10), their budget was controlled by the Ministry and they had no control of finances till their second financial year. They lacked financial independence, they had to seek Ministry approval of all activities (delayed processes), and had no authority to approve /disapprove expenditure incurred by the Ministry on behalf of TJRC with no knowledge the ministry expenditure beforehand and they were not given a true account of expenditure in the first year. 

During their second year (2010-11), they ran low on funds and had to seek advances from the Treasury for 44 million and 80 million from the Ministry of Justice. They requested supplementary funding which never came which allowed hearing in Mount Elgon, Upper Eastern and North Eastern. Eventually, 650 million of the 1.2 billion was released. There were recurrent delays, payments came in tranches, they had to seek loans, and were only able to visit two provinces and hold public hearings.

Office of the Auditor General (OAG): 

Meanwhile, the Office of the Auditor General of Kenya mentions the TJRC in some reports:

  • In the report for 2010/2011, reference was made to the Commission’s failure to deduct Pay As You Earn (PAYE) from the salaries of 304 statement takers totalling Kshs.13,077,033. A review of the position during the year under review revealed that no attempt was made to recover the amount.
  • The statement of financial position of the Truth, Justice and Reconciliation Commission (TJRC) lacked opening balances. Further, the statement of management responsibilities was not signed by the officials as required. The whole financial statements were not dated and the necessary supporting documents and schedules including cash books and government ledgers, were not provided for audit review.
  • Although notes to the financial statements were provided, they were poorly numbered and arranged such that it was not easy to follow the financial statements. The financial statements also lacked numbered pages and headings.
  • In the circumstance, the accuracy and completeness of the financial statements could not be ascertained.
  • With regard to truth, justice and reconciliation activities, the Ministry reported to the OAG that it had facilitated the enactment of the Truth, Justice and Reconciliation Act, 2008 and the appointment of the TJRC Commissioners. 

Kenya’s Money in the Past: Bethwell Ogot Footprints on the Sands of Time

My Footprints on the Sands of Time is an autobiography by Professor Bethwell Ogot (wikipedia),  an eminent academic scholar. It is a tale of a young man overcoming incredible hardships, and going through early schooling at Maseno, and later through winning scholarships and prizes, on to excelling at Makerere, St. Andrews (Scotland) and teaching with Carey Francis at Alliance High School. It also touches on his work and roles in the establishment of the University of Nairobi, and Maseno University, and at his travels to present papers and speak at prestigious conferences and other institutions across the world.

Ogot narrates tales on growing up in Luo culture, seeing emerging economic changes e.g. he took a honeymoon trip to Uganda in 1959 traveling on first class from Kisumu to Kampala via Nakuru, a twenty-seven-hour train journey. Later, when his father died on August 30, 1978, this was the day before Kenya’s first president Mzee Jomo Kenyatta was to be buried, and it was a period when the sole broadcaster – the Voice of Kenya refused to publish any other death announcements, newspapers would not publish any other obituaries as a sign of respect to Kenyatta, and coffin-makers were not willing to make any other coffins.

He was close to former schoolmates, who were now in government and its leaders. Ogot was waiting to meet Tom Mboya for lunch at the New Stanley Hotel when Mboya was shot (his death was not unexpected to his friends), and Ogot had an encounter with Mboya’s killer who was fleeing the scene.  He writes of his work to establish and get government and financial support for the Ramogi Institute of Advanced Technology – RIAT and a delicate dance with community leaders including Oginga Odinga who was firmly out of government.

The book has a wealth of information on corporate governance and management from Ogot’s time at regional bodies, parastatals, international organizations, donor-funded ones, universities that were in slow decline and government. He writes of working in research and publishing, and struggling to document and publish African history. Also of his times at the East African Publishing House that published books on political science, history, geography and a modern African library with much opposition from British Publishers who controlled publishing and later from government officials who set out to shut down independent academic stories. They published Okot p’Bitek’s Song of Lawino that some critics considered a terrible poem ahead of its publication but which went on to be celebrated and sell over 25,000 copies.

There are also stories of navigating the East African Legislative Assembly, travels around East Africa, interacting with leaders and observing actions that were either supporting or undermining the East African Community. Uganda’s President Amin spoke of supporting the community even as he launched Uganda Airlines that he said would only do domestic flights in Uganda. There was also the importation of goods for Zambia through Mombasa that undermined the Dar es Salaam port and the Tazara railway, so Tanzania banned Kenyans trucks with excess tonnage from using their highways, and Kenya retaliated by closing its border with Tanzania. Officials in different countries also tried to keep community assets from leaving their borders, and Kenya grounded planes and withheld fuel of East Africa Airways which owed money to Kenya banks in a move designed to hurt vast Tanzania the most.

The most shocking tales are from his time working at the Museums of Kenya and its spinoff that saw Ogot as the first director of The International Louis Leakey Memorial Institute for African Prehistory – TILLMIAP (see an excerpt). It is a serious indictment of Richard Leakey who regarded TILLMIAP as his personal family fund-raising institution and who, with the support of Charles Njonjo in government and diplomats and donor agencies, warded off transparency and Africanization efforts – and was eventually to hound Ogot out of the institution.

Another tale is of when, as the candidate representing Africa on the executive board of UNESCO, he ran for the Presidency of the General Conference. But what should have been a formality of confirming his position became a long process after a surprise Senegalese candidate emerged to run against him – and France lobbied Francophone countries to only vote for a French-speaking African candidate, rules were changed, documents forged, and additional multiple election steps added before Ogot finally won.

The 500+ page book by Prof. Ogot does not have an index, but it’s worth reading all over again.

Banking History in Colonial Kenya

This morning there was a talk given by Christian Velasco of Warwick University on A Colony of Bankers: New Approaches to Commercial Banking History in Colonial Kenya. He said there have been very few books written about the early banking history of Kenya and East Africa and he had sourced information from the Kenya National Archives in Nairobi, and scattered bank archives in the UK, South Africa, or Australia, but that many records were now lost.

Excerpts 

There were the banks that came before the first World War and a raft of banks that started after the end of the Mau Mau war – and the banks could fall into three categories: Colonial banks (state-supported banks that were the only ones that could handle government accounts, and which disappeared after independence), Imperial banks (less dependent on government business, and who focused more on trade and agriculture) and multinationals (who had most of their business abroad).

The story is of Kenya’s colonial banking era is really about three banks – the National Bank of India (NBI), Standard Bank of South Africa (SBSA) and Barclays. The arrival of Barclays in Kenya changed the banking sector greatly as it sought to end the long relationship that the National Bank of India had with colonial government in Kenya. Also when Barclays arrived, they found that the Standard Bank controlled many of the white accounts, so they set out to include more Africans as customers. Africans had bank accounts from around 1926, and by the 1950’s Barclays had more African accounts than settler accounts. 

Banks were mostly found in urban areas and with the ending of the Mau Mau uprising, there was an expectation that Kenya would remain a British colony for many decades. This resulted in several new banks setting up in Kenya in the 1950’s. Meanwhile, NBI, SBSA, and Barclays all expanded by 100% opening up in new places around the country, even with mobile bank units to attract customers. Despite the arrival of the new banks, the main competition remained between these three established big banks, and in 1954, Barclays sent a memo to the colonial government complaining about the unfair practice of them favouring the NBI who retained a monopoly of new business that dated back 60 years. 

All banks eventually had to break with colonial past and the British empire, and a big loser in the period was SBSA which had concentrated on the white settler population. Kenyan politicians tried to engineer boycotts of businesses related to South Africa due to the Apartheid regime and African customers now shunned it. Officials at the bank wrote to their headquarters about the problem and as a result, the name was changed by dropping “South Africa” from the name, and SBSA became “Standard Bank.”

However Africanization of staff did not start until quote late – Barclays had 1,000 employees, and just 70 were Africans with many more who were Indians. There was a hierarchy in banks of having whites being top managers, middle jobs were done by Indians and Africans, the clerical jobs – and this was because customers did not want to deal with African staff.