How Jubilee’s Coast strategy has created powerful losers

Last week, Mombasa Governor Ali Hassan Joho was blocked from attending the launch of the Standard Gauge Railway (SGR). News about the episode did not overshadow the launch itself, as it happened when Joho was barred from President Uhuru Kenyatta’s re-launch of the Mtongwe ferry channel in Likoni, Mombasa, earlier this year.

In Kenya, political drama has traditionally commanded large swathes of the public’s attention, and following in this precedent, media coverage has largely focused on the personal duel between Uhuru and Joho – and the associated rise of Joho’s political career within national opposition politics. In my view, these are mere dramatic overtures to something more substantial.

Since at least 2002, when the NARC regime came to power, there has been a newfound zeal by leaders and bureaucrats to extend the power of the central government in areas previously viewed as peripheral to the Kenyan economy, and whose people have been historically marginalised. The strategy has been to extend centralised state power in areas where such power has previously been weak, through a number of mega-infrastructure projects and the associated rise of mining and oil exploration missions.

These projects, such as Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project, the Turkana wind power project, the Lamu coal power plant, and the just concluded SGR, have all been legitimated on a wider narrative of economic development, and the need to move Kenya into middle-income economy status by 2030.

However, state-led development projects such as these will inevitably increase the power of the national administration, and transport it from Nairobi to peripheral regions, especially in Northern Kenya and parts of the Coast region where most of these projects will be implemented. In these regions, displacement of previously established regional-level notables in business and politics will happen.

In this way, since they came to power, Uhuru and William Ruto have attempted, first to cajole county governors, and for those who were not pliable to their demands, ignore or bully them ‘wapende, wasipende,’ as they sought to extend the powers of their administration outside of its Nairobi headquarters.

This should not be surprising. Uhuru’s administration is the first in Kenya that has been made to share some of its powers and responsibilities with new county governments across the country. Viewed in this manner, one will find that there is much in common between Uhuru’s public spats with Joho since January 2016, and that between Uhuru and Turkana Governor Josephat Nanok, in March, and the arrest of Lamu’s Issa Timamy in July 2014. In all three cases, the fate of infrastructure development and oil exploration, and the rearing of the ugly head of historical marginalisation, has provided much of the impetus for the publicised bickering.

Reforms at the Port

Joho, himself a beneficiary of commercial networks in and around the Port of Mombasa, has consistently indicted the Jubilee administration using two arguments: one, that the Jubilee administration has not implemented any new development projects at the Coast, and two, that the Jubilee administration seeks to starve the coast of job and economic opportunities long provided by port operations in Mombasa.

In the latter, Joho has claimed there is a plan by the Jubilee administration to move port operations away from Mombasa and inland in Naivasha. In his recent visit to the coast, Deputy President William Ruto countered Joho’s assertions by claiming that what is being created in Naivasha is an economic zone and not a port. Perhaps, a more nuanced account was offered by Mombasa Senator, Hassan Omar, when he stated that the differences between Joho and Jubilee may lie in differences over business deals at the Port of Mombasa.

Frontal assault

The Port was inaugurated in 1896 when work started on the construction of the old meter gauge line (the Kenya-Uganda railway) and has since provided the bedrock of economic activity on the coast region. But the port has also been underperforming for a while, especially since the 1990s, and port inefficiency has resulted to high freight costs.

In 2011, a port expansion project that cost the government Sh8.5 billion was launched, and by 2013, the port was able to handle Panamax Vessels. A new berth, berth 19, was also constructed, with 15 acres of stacking yard, and has provided additional capacity of 200, 000 TEU.

About the same time that Joho’s family businesses were temporarily closed down in Mombasa, major reshuffles were being conducted at the port (and the regional office of the Kenya Revenue Authority) on allegations of corruption.

As both moves would have served to curtail Joho’s local family business interests and networks, it is more important to consider this as evidence of the link between the implementation of national government development projects and the ‘squeezing’ of local commercial elites where these projects are implemented. And nowhere has this been well-articulated as it has on the coast.

Since President Kenyatta took over power in 2013, there have been a number of mega-infrastructure and mineral exploration projects that have been underway on the coastal region. These include titanium exploration in Kwale, development of a Free Port at the Dongo Kundu area in Mombasa, a new port on Manda Bay and the construction of a coal power plant, both in Lamu, among others. It is important to note that at the same time as these projects were being carried out, the fortunes of a number of coastal-based tycoons have actually dwindled.

Take for example the late Tahir Sheikh Said (TSS). During Moi’s regime, he was KANU branch chairman in Lamu, and his son-in-law, Fahim Yassin Twaha (current Jubilee candidate for Lamu governor) was Lamu West MP between 1997 and 2013.

In 2014, a Wealth in Kenya report listed TSS as one of Kenya’s largest landowners. After the Mpeketoni attacks of June-July 2014, President Kenyatta revoked the title deeds for 500,000 acres of land near the proposed site of the Lamu Port, arguing that these had been irregularly allocated to some 200 companies in 2012. Some of those companies belonged to TSS, who had already used the title deeds as collateral to acquire loans in excess of Sh5 billion from NIC Bank and National Bank.

In 2016, it emerged that TSS had Sh8 billion in total non-performing loans with a number of banks, one of which, KCB, moved to seize some of his properties. TSS died in January 11, 2017, while undergoing treatment in Johannesburg, South Africa, but his experiences provided a smokescreen of what was happening within coastal elite and business circles since Uhuru became president.

In this vein, many other coastal-based tycoons, namely Ali Punjani, Ashok Doshi, Mohammed Sajjad, Mohammed Bawazir and the Akashas, most of whom had cultivated links at various levels of officialdom during the Moi era in the 1990s (and some during the Kibaki era), have all faced almost similar business misfortunes since 2013. Baktash Akasha and his brother Ibrahim Ghulam were even extradited to the US earlier this year on drug-trafficking charges.

A debt-funded vision

Businessmen such as these had bankrolled presidential and parliamentary campaigns in the 1990s, including the 2002, 2007 and 2013 elections. In the early 1990s, when the multilateral donor Paris Club denied Moi substantial amounts in aid money citing the lack of political and economic reforms, some of these businessmen loaned the government money to pay salaries and save collapsing banks in return for lucrative government tenders. Why then, has their importance diminished significantly, and with such speed, under the Jubilee regime?

Since 2002, improved tax collection and economic growth has provided much needed governmental revenue. Prolonged political stability (like the lack of an attempted coup such as the one Moi faced in 1982) has also meant that those in power have had the time to consider long-term goals and not simply worry about regime survival.

There has also been an outpouring of global capital into African economies, especially since the 2008 financial crisis in the US, a flow that has also been boosted by the ‘Africa Rising’ narrative. In this narrative, it is roads, railways, pipelines, fiber-optic cables, dams, irrigation systems, ports and airports that are set to deliver economic and social development.

In addition, stability has meant that the government has had the confidence to seek out loans from the European Union, World Bank, the Chinese government, sovereign bonds, or the African Development Bank to fund its infrastructure projects, such as the standard-gauge railway.

It is clear what risks the standard-gauge railway poses to traditional transport businesses (cross-country buses, and heavy commercial vehicles), most of which have already been elucidated by Joho. In my view, as the SGR comes into full operation, and as other infrastructure projects at the coast continue to be rolled-out, these businessmen will continue to become dispensable in Jubilee’s architecture of governance and power.

- The writer is a PhD candidate at Durham University, United Kingdom.