How on earth did USAID in Kenya end up helping to finance Michuki’s imperial Windsor Golf Hotel and Country Club? (revised)

(The end of this post has been revised to reflect skepticism about an allegation by Kenya’s Minister of Natural Resources in 1998 that land for Windsor was irregularly allocated to Michuki from Karura Forest based on the geographic separation between Windsor and the Forest.  Not a central issue, but I want to be as fair as possible.)

This very interesting piece of diplomatic and development history is noted in a recent oral history interview by a former USAID official, Kiertisak Toh, which I have introduced and excerpted below. I have not found reference in the Kenyan or U.S. media to the USAID role in this high profile development started in 1988.

For John Michuki, the Kenyan baron of the Windsor Golf Hotel and Country Club and Kibaki’s Interior Minister during my time in Kenya, please see my post on the occasion of his passing in 2012: “The Michuki Rule, and personal memories: Independence Day, snakes and freedom” and “Don’t forget about the Standard raid“. See “Trust and Accountability: Africa Center for Strategic Studies scholar discusses steps to a peaceful election” with thoughts about his impact on the post election violence. More expansively, for a politico/business biography with an eye to multiplicity of controversies over the years, see “Who is John ‘Kimeedero’ Michuki?” at The Kenya-Stockholm Blog. “Death of an old guardsman” from The Economist:

But as the country’s internal security minister, his hands were covered in blood. He was implicated in mass extrajudicial killings in 2007, in which hundreds of young Kenyan men were shot in the back of the head or bludgeoned to death for their alleged involvement in the Mungiki organised crime gang. And in 2006 Mr Michuki made a fool of himself by bringing to Kenya a pair of Armenian gangsters to shut down newspapers and television critical of the government. Since then, the country’s media have operated more or less freely.

To many Mr Michuki was a bridge to an older Africa. The space between tribal traditions and the palatial Windsor Golf Club, which Mr Michuki built at the north end of Nairobi, can be measured in his life span. He was born in 1932 into a large polygamous Kikuyu family. Orphaned as a child, Mr Michuki left his rural home for Nairobi. He found work in a uniform shop sewing on buttons before battling his way through primary and secondary school. He was loyal to the crown in its bloody hammering of the Mau Mau insurgency. Choosing the British over his countrymen set him at odds with the founding myth of Kenya, but Mr Michuki was too intelligent and “no nonsense” to let it hinder his career. He won a scholarship to Oxford, and became a district commissioner. He was put in charge of newly independent Kenya’s treasury. He ran the Kenya Commercial Bank and got involved in politics. Like the then attorney-general, Charles Njonjo, Mr Michuki had an Anglophile sense of things “being done properly.”

To Mr Michuku, that meant keeping his buttons polished and being on time, but it did not mean transparency. He was part of the cabal of Kikuyu and Meru politicians, intelligence officers and businessmen who ran a state within a state and turned a blind eye to dodgy land and business dealings. President Mwai Kibaki yesterday called Mr Michuki a “true family friend and a dependable ally.” The shame was that his acuity and vigour were not more often put at the service of the common man. . . .

The Windsor Golf Hotel and Country Club is explicitly neocolonial. No one’s heart is going to bleed for the British Royal Family over the cultural appropriation but as an American taxpayer, I feel a bit wretched on learning my “assistance dollars” were used directly instead of just indirectly to subsidize Kenya’s oligarchs in this way. (Disclosure: I have been a member of a private golf club myself, years ago, although I gave it up when I had children. But I am also aware of a variety of laws and regulations in the United States designed to keep governmental development and tax subsidies away from underwriting golf courses, even those that are far less exclusively targeted to the rich than Michuki’s Windsor.) [And, yes, I understand we are spending millions on President Trump’s golf resorts, and I object to that accordingly; that is straightforward self-dealing by our chief executive himself, rather than a misallocation of meagre development resources from poor to rich.]

I highly recommend reading the full Toh oral history interview for anyone interested in understanding the course of relations between Kenya and the United States from the mid-1980s through 2005, as well as one insider’s perspective on the tension between democratization and economic development assistance goals (Toh is an economist by background and initially worked in that capacity for USAID before rising into administration):

The Association for Diplomatic Studies and Training Foreign Affairs Oral History Project Foreign Assistance Series KIERTISAK TOH Interviewed by: Carol Peasley Initial interview date: February 9, 2018 Copyright 2018 ADST (funded by USAID Cooperative Agreement).

Toh’s positions in Kenya:

USAID/Kenya – Program Economist 1986-1989

USAID/Washington – Program Economist, Africa Bureau/East Africa 1991-1992

USAID/Kenya – Mission Director 2001-2005

. . . .

Q: Well, why don’t you talk- So, this was- you’re in Kenya in 1986 to 1989, so at that point was it a pretty good size program in Kenya, was it one of our premiere programs?

TOH: Yes, it was a high profile and one of the largest programs in Africa with big ESF [Economic Support Funds] money and CIP, Commodity Import Program. We were in the Cold War era. Kenya was considered our geopolitical and strategic partner in the region.

Q: Oh, there was a Commodity Input Program there. Oh, I didn’t realize that.

TOH: And a large- I guess we tried to make the CIP as part of the private sector development program. Kenya at the time had foreign exchange controls which were a barrier to private business to import.

Q: Ah. So, it was a large ESF program. Was that because the U.S. military was using the Port of Mombasa?

TOH: I think so. Q: Yes, okay, so there was a military link to that. So, a large ESF and that was mostly Commodity Import Program?

TOH: Yes, mostly tied to Commodity Import Program. The foreign exchange part of the CIP program provided the balance-of-payments support and the counterpart local currency served as budget support mostly tied to USAID project.

Q: Private sector development. Was the- would imports tied to any sector or anything or were they just broad- do you recall?

TOH: It was broad until 1989 when we turned part (or most, not sure) of the ESF into targeted support for fertilizer imports.

Q: Well, the importers would have been providing the local currency, right? They would have been buying the- in essence buying the dollars?

TOH: In general, we provided the dollars to the Central Bank. The idea was for the government to make it easier for importers to get import licenses and through Central Bank the foreign exchange to pay for imports. The private sector bought the foreign exchange with the local currency, Kenyan shillings, which was deposited in the special accounts at the Central Bank. The local currency legally belonged to the government. But we agreed to program these funds jointly. A big portion of the local currency went to support USAID projects and other private sector development activities..

Q: Right, okay. So, it really was to liberalize then the whole foreign exchange regime?

TOH: Right.

Q: With the local currency used for private enterprise development, did some of that go into credit programs to the banks, or do you recall? Or some of it budget support to ministries. How would it have been used, do you recall?

TOH: Part of these shillings might have been used to support microenterprise credit and loans to businesses. I remember one of the loans went to an influential Kenyan government official to help finance the Windsor Golf Club. When I went back to Kenya the third time (2001) we tried to clean up the outstanding default loan. I am not sure whether we were able to recover the loan. Our private sector development program, except for the microcredit and the CIP programs, was not well targeted. We kind of followed the “thousand points of light” approach.

Q: Women-owned micro-enterprises, because Kenya had one of the big success stories of microenterprise for women, right? KREP?

TOH: Right, yes. We had a project, I think, that helped KREP, Kenya Rural Enterprise Project. And I still have an account with KREP.

. . . .

Fundamentally, diplomacy and development, though can be complementary, are inherently different in their missions, targets, how success is measured. Diplomacy is about maintaining favorable economic and political relationships abroad; it tends to be short-term orientated and transactional. The mission of development is about saving lives and support for long-term equitable growth and poverty reduction; it tends to be concerned with long-term transformative and sustainable changes. The targets for diplomacy are political leaders and citizens where geostrategic and foreign policy interests are most significant. The targets for development are populations where potential impact on poverty, human suffering, and human development is greatest. The success of diplomacy is measured by the strength of the relationship with the U.S. and support for U.S. political priorities. The success of development is measured by the progress in terms of saving lives, reducing poverty, and enhancing equitable, broad-based economic growth.

There are a lot of interesting items to follow up on here: 1) has the Windsor loan balance been collected or not?; 2) why was this project selected and approved, how much money was involved, etc.? 3) in 1998 Minster of Natural Resources claimed in Parliament that Michuki’s Windsor Golf Hotel and the Belgian Embassy had been irregularly allocated land from Karura Forest, but the Windsor club is not adjacent to the Forest so the allegation does not seem to make sense in that way, but it would be interesting to understand the acquisition of the land. [Note: I have revised this to express skepticism about Lotado’s allegation based on the geography as raised by readers.]

Ken

Took leave from corporate career as American lawyer to “assist” democracy in East Africa. After stolen '07 election in Kenya and violent aftermath I have tried to bring out truth of events for those who care in hope we can learn and do better.

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