Is Washington finally losing patience with governance by UhuRuto? If so, what is seen as “the way forward”?

I touched a few bases while briefly in Washington recently. I was left with the impression of general “benign neglect” on Kenya, which would be expected given the overwhelming number of more immediate crisis situations around East Africa, such as the South Sudan “civil war/state failure” situation, escalating tensions between the Kagame and Museveni regimes, the uncontained Ebola crisis, etc. And always the war in Somalia.

Nonetheless, there are those who work or engage with Kenya more specifically on a less seasonal basis who will unavoidably have noticed how badly the Government of Kenya has been underperforming just as a factual matter regardless of the diplomatic angles of the day.

All this is to lay the groundwork for my great interest in a couple of news items today:

1). First was the report that Ambassador McCarter had said in Kisimu that the U.S. was putting on hold financing for the Bechtel Mombasa-Nairobi expressway due to concerns about corruption risk and debt levels escalating costs such that the intended value to the Kenyan people was not delivered. Here is the version from “Kenyans.co.ke” which has been running a bunch of pieces bringing up events from political inflection points from years past with no specific explanation of the timing, such as the piece I posted about last week taken off from my June 2017 piece in The Elephant on “The Debacle of 2007: How Kenyan Politics was Frozen and a Election Stolen with U.S. Connivance“.

As a private American “friend of Kenya” and taxpayer I am quite gratified by this willingness to change policy to address current “facts on the ground” and to actually “walk the talk” on “anti-corruption” even if it involves possibly giving up a big subsidized project for a very big well-connected private business owned by a group of Americans.

I have been concerned about this project for the reasons identified by the Ambassador but have not wanted to say much without being close enough to have details and not wanting to be seen as an inveterate naysayer or unduly skeptical about things where I am not that well informed.

Maybe Ambassador McCarter can end up being a “breath of fresh air” and is actually serious in his talk of zero tolerance for corruption in a way that would be different from the ordinary diplomacy where we run hot-and-cold at best. If no one explained to him as a political appointee from outside Washington that “zero” among diplomats ends up as shorthand for a wide range of dollar values in varying circumstances explained in the addendums and codicils, as opposed to just “zero” as it might mean to a businessman in downstate Illinois, then maybe Kenyan cartel leaders need to be worried a bit after all?

And if people in Washington have their hands full or are not focused on the immediate situation in Kenya, and with what we read about how national security policy management is working in Washington these days, it may well be that McCarter has that much greater practical latitude “on the ground”? Likewise, usually an Ambassador in Kenya will have the potential distraction of career considerations not dissimilar to people working in the government in Washington; this would not seem to be a challenge for McCarter. (And maybe he isn’t looking to be a lobbyist for a neighboring warlord in a black hat, and an oil and gas consultant and an investor-broker in USAID-funded health business, for instance.)

There are obvious sociocultural and political barriers to how McCarter will be perceived in Washington and among Americans who typically engage with foreign policy on Kenya or are “Kenyanists” or “Africanists” with focus on Kenya, but open minds are warranted. And maybe that works both directions.

Part of what is so striking here is how much Uhuru Kenyatta has in the past seemed to be arguably “Donald Trump’s signature African leader”–not so much that they are seen to really know each other or have some personal rapport, but rather that in the face of general lack of signs of personal interest in Africa from Trump we still have Uhuru at least included in meetings and doing photo ops with Trump in Europe, Canada and Washington, if not yet Mar-a-Lago, during the first two years of the Administration. Even though he was such a favorite of some in the Bush-Obama years.

So surely putting the Bechtel deal on hold suggests that there is finally heightened willingness to openly acknowledge that governance is simply not now what it was cracked up to be from our previous public diplomacy in recent years.

2) Next is Macharia Gaitho in the Daily Nation publishing today’s column: “Either rebels in Jubilee ranks join opposition, or Uhuru steps down” calling out Jubilee’s divide:

The politicians who contrive to insert his name [Deputy President Ruto’s] into every issue do the DP no favours at all. It does not help his image or his 2022 presidential election prospects when his name is used to fly cover for disreputable leaders caught on the wrong side of the law.

. . . .

As an elected member in his own right, a Majority Leader [Sen. Kipchumba Murkomen] does owe a duty to his constituents. Where conflicted, however, he could consult internally within the government and party organs.If his concerns are not adequately addressed, then the honourable thing would be to relinquish the Majority Leader role so that he can, in good conscience, speak out for his people both inside and outside Parliament.

As it is, what we are seeing from Mr Murkomen’s now frequent outbursts are the hallmark of rebellion. This is rebellion not from one disaffected individual, but a powerful Ruto faction in Jubilee that is unhappy with the path pursued by President Kenyatta.

Jubilee cannot govern effectively when it has such a powerful opposition within; hence the rudderless, dysfunctional government seemingly sabotaging its own efforts.

This is not a healthy situation. Maybe, it would be best for Mr Ruto and his cohorts to resign and go officially into opposition or for President Kenyatta to throw up his hands in surrender and leave the burden of leadership to those more able.

Now I don’t know and haven’t asked, but there have been recent times when Gaitho has seemed to be carrying a message, such as the time when he explained that Raila’s fellowship at Yale was intended to be a perk to ease into a honorable retirement, not a springboard to run yet again in 2017. Different Kenyan columnists are in this role at different times it has seemed over the years. See “Six years an Ambassador: Godec’s Kenya valedictory with Macharia Gaitho”.

This background made me figuratively “perk up my ears” when I read the Gaitho blast after the news on the Bechtel expressway deal.

As a practical matter, there are certain ironies any time it is suggested that “regular order” of some type is suddenly warranted in Kenyan politics. Uhuru Kenyatta himself as KANU leader and Leader of the Opposition in 2007, crossed the aisle to support “Kibaki Tena” without resigning, when party godfather, retired President Moi who picked Uhuru from relative obscurity to nominate as his successor in 2002, realigned his fortunes, so to speak, to be with Kibaki while being appointed as Kibaki’s diplomatic representative for Southern Sudan. So I think Ruto might scoff at Gaithos’s advice now, and I doubt Uhuru’s mother would be good with him resigning at this point with all the family has going on at stake. Too much water under the bridge for too many years to expect anyone “in government” to go formally into “opposition” voluntarily–reform can happen but not nearly so easily or cheaply.

A necessary and complimentary read is the latest from Rasna Warah in the East African Review with what needed to be said on the most egregious act of contempt toward what we used to call “the reform agenda”: “In whose interest? Reflecting on the High Court judgment against John Githongo?”

Kenya 2007 election Kibaki Tena Kazi iendelee re-election

Investing in Southern Africa–MCC Webchat

Register for a webchat about Millennium Challenge Corporation programs, AGOA and investment opportunities in Southern Africa.

Event is Thursday, April 21, 11:30am Washington/EDT; 1530 GMT.

New Developments on Iran’s Geopolitical Efforts in Africa–another challenge for democracy?

This Bloomberg/Business Week article, “Iran Arms Shipment May Deal Setback to Expansion of Africa Ties” , is worth a read.

Feb. 2 (Bloomberg) — A political wrangle over an Iranian arms shipment seized in Nigeria has set back the Persian Gulf nation’s efforts to cultivate links in Africa as it seeks to forestall diplomatic isolation over its nuclear program.

A United Nations team arrived in Nigeria Jan. 16 to probe the consignment of rockets, grenades and mortar shells that may have been destined for Gambia or Senegal in West Africa. Gambia cut ties with Iran in November and ordered its diplomats out of the country over the shipment. A month later, Senegal recalled its ambassador, citing “grave concern” about the weapons.

.  .  .  .

Zimbabwe, Uganda

Iranian President Mahmoud Ahmadinejad traveled to Africa at least three times last year. In April, he visited Zimbabwe to attend a trade fair, and then Uganda, where Iran is building a tractor-assembly plant and may invest in a proposed $2 billion oil refinery, according to Uganda’s Foreign Ministry. Three months later, he traveled to Nigeria, where Saipa, Iran’s second-biggest car manufacturer, signed an accord in November to jointly produce and market budget vehicles in Africa’s most- populous nation.

The commercial diplomacy has some parallel in Iran’s expanding trade and investment in Latin America, where Ahmadinejad has found ideological partners in Venezuela, Bolivia, Ecuador and Brazil. Saipa and Iran Khodro, the country’s largest automaker, aim to quadruple production at a joint-venture car plant in Venezuela.

Economic Clout

In Africa, “their goal is to win votes in the UN and to increase the number of countries that support them there, to win economic points, to increase Iran’s economic clout in the region and in the world,” Meir Javedanfar, an Iranian-born Middle East analyst at Meepas, said in an interview on Nov. 11. “The Iranian leadership sees Iran as a superpower, and superpowers build alliances.” Meepas is a risk-analysis group based in Tel Aviv.

.  .  .  .

Iran is still a modest player in Africa compared with Turkey, which sold $10.2 billion worth of goods in the continent in 2009, according to the State Statistics Agency in Ankara. Brazil shipped $9.26 billion last year, 6.1 percent higher than in 2009, according to Brazilian Trade Ministry figures.

U.S. Interests

Even so, Iran’s efforts on the continent are a “big test” of U.S. influence, said Alex Vines, Africa analyst at Chatham House, the London-based research group.

“For the U.S., other emerging powers in Africa wouldn’t be such a concern, but Iran is kind of hard-wired to give American diplomats concerns,” he said. “That makes Iran different from a Turkey or even China.”

Expanding ties with Iran may cost African nations some of the $6.7 billion in annual aid the continent receives from the U.S. The Republican-led Congress plans to reassess all foreign development aid in the coming year, said Ed Royce, the ranking Republican for the Congressional subcommittee on nuclear proliferation.

“African governments forging close relationships with Iran are not the types of governments we want to do business with,” Royce said in an e-mailed response to questions on Nov. 24.

With the Uganda elections upcoming, Museveni will presumably do his best to play this to maximum advantage.  He attracted high level U.S. courting for his sanctions vote back in May as I discussed here at the time, along with the unsuccessful appeal to open up his Electoral Commission. See also, Uganda, Iran and the Security-Democracy Trade Space?

Yes, U.S. policy should consistently prioritize democracy, and the State Department’s diplomats should carry that priority forward.  But realistically diplomats will always have a full card, and frankly the norms of diplomacy are pre-democratic if not outright anti-democratic, as reflected in the degree to which the basic records of our policy are self-classified by the diplomats.  This is why U.S. democracy support or promotion as a development effort needs to be primarily centered elsewhere.

World Bank–current circumstance “calls for a new approach–Africa as an investment proposition . . .”

Apparently the World Bank has noticed the same shifting environment that private investors and the rest of us have and has released a draft of a revised Africa stategy this week at least in part to help position itself “in front of the parade”. Claire Provost has a good discussion at the Guardian‘s Poverty Matters blog: “What role does the World Bank have in Africa’s future?”

Record inflows to “Frontier Africa Funds” reflect continuing “mainstreaming” of global investment in Africa

Reuters reported record inflows of $660M into African regional equity funds in the past 12 months, with positive inflows in 51 of the 52 weeks based on a report from EPRF Global in Washington. Not large numbers on a global scale, but definite confirmation of the arrival of Africa into the mainstream of emerging markets equity investment.

Certainly this number is much smaller than aggregate aid flows of various types, but it also represents only public equity funds and does not capture the scope of overall international investment, particularly private equity. How this fits in to the overall development picture is a worthy subject of study. It surely creates opportunities for growth and reflects some underlying optimism in future governance and stability at least in some major markets.

One question of course is competition among developed countries for deals in a growing African market. Here is a fascinating story from Uganda’s “Independent” entitled “German, US, UK envoys fight over EC [Electoral Commission] tender”.

Roubini asks: “Africa the Next BRIC?”

More on Africa as the latest hot investment trend, amid growing concern about continued economic slowing in the U.S. and elsewhere in the developed world:

In a new proprietary paper, Roubini Global Economics notes the growing interest in Africa as a global investment destination, as well as a location for organic business start-up: "Low cost labor, a fast growing population and an abundance of natural resources are among the benefits of investing on the continent. According to analysts, the return on investment is the highest in the developing world."

The Aid Bubble has burst–the West wants profits in Africa (a follow up)

To pick up on an earlier theme about the shift in "climate" for Western involvement in Africa, it is clear that there is a huge upswing in Western investor interest. I’ve been collecting some of the interesting stories and anecdotes and will share as time permits. Bloomberg is providing lots of coverage out of Nairobi now, and the Wall Street Journal has an Africa page that is well worthwhile. Clearly Western investors are playing "catch up" to the Chinese in some markets, but there remains a difference in the nature of Western private investment and Chinese operations. Likewise the Libyans, the Gulf States and and Iranians have moved more quickly than Western funds, but have some different objectives and approaches. See Nick Wadhams blog for some interesting observations on Chinese projects.

Newsweek has the other side of the coin in a new feature by Joshua Kurlantzick on "The Death of Generosity". This is the background for my thought that I should go so far as to label the Bono era as a "bubble". A lot of "promises" that will not be met and IOUs that will not be paid, in part because the rich nations are finding themselves less rich than they thought they were, in part because a certain amount of it was a political fad fueled by the finance/housing bubble and the political winds have changed. Some of it is an appropriate sobriety about what actually works and make sense.

One big obstacle to aid is the politics of spending money on other nations’ problems. President Bush enjoyed a Nixon-goes-to-China credibility with conservatives, who tend to be more skeptical of foreign aid. But Obama’s low popularity among conservative voters makes it nearly impossible for him to sell an aid program to them. Reaching out in this way might feed into American stereotypes that Republicans are tougher on national security while Democrats prefer soft power.

What’s more, Americans are not in a generous mood. In a poll released last December by the Pew research organization, nearly half the Americans surveyed said that the U.S. should “mind its own business” in the world. This figure was the highest level of support for isolationism in decades. And it is not just the U.S.; polls show that this isolationism is matched in many wealthy nations in Europe and Asia, including Japan, long one of the biggest donor nations.

It is not surprising that nations such as Italy, one of the weakest industrialized economies, have slashed their aid budgets by more than 30 percent, while France has not met promised commitments, and the Obama administration has presided over reductions in the budget of the Millennium Challenge Corporation from $3 billion requested for 2008 to $1.4 billion this year.

Recipient nations have not exactly helped themselves. In the early 2000s many developing countries eagerly pledged to improve governance in order to make aid more effective. In 2001 African nations agreed to a New Partnership for Africa’s Development, a continentwide compact to improve governance, promote equitable development, fight graft, and fulfill other aims favored by both Western donors and civil-society activists in most developing nations. In 2006 wealthy Sudanese communications entrepreneur Mo Ibrahim established a $5 million prize for the African leader who best focused on development, governance, and education. Yet the performance of these aid-recipient nations often has been woefully poor, a failure that only further alienates donors. Kenya, for one, vowed in 2002 to implement a tougher reform program, appointing prominent graft fighter John Githongo as anti-corruption czar. Within two years, Githongo had been forced out of real power, and he soon fled the country, his investigations having failed to change Kenya’s climate of corruption. Githongo has since returned to Kenya to launch a grassroots advocacy group, but little has changed, though there is some hope that the new Constitution, passed in Kenya this month, might curb some of the worst abuses. Still, Kenyan M.P.s recently voted themselves another salary increase, and now earn roughly $170,000 per year, nearly the same as members of the U.S. House of Representatives, though the average nominal annual income in Kenya is only about $900, compared with roughly $46,000 in the United States.

In rich nations, the growing demand for instant political gratification also undermines the long-term commitment to aid programs. For instance, India, fueled partly by foreign assistance, launched the agricultural-modernization program that would come to be known as the green revolution in the early 1960s, but most of the results were not seen until the 1970s and even later. After the devastating Haiti earthquake last January, governments and private citizens around the world rushed to contribute to the reconstruction effort, often pledging money through new tools such as mobile phones. But as the Haitian government, weak in the best of times, struggled to rebuild and resettle the homeless, many donors grew frustrated. Though it has been only seven months since the quake, only $506 million of the $5.3 billion pledged to the country has been disbursed. “Donors typically set unrealistic time frames for reconstruction, and the level of infrastructural and political damage inflicted in Haiti suggests that they must think in terms of years, if not decades,” notes a report by Oxfam Great Britain on the Haitian disaster.

This will present yet another challenge to Western diplomats and further tension between other diplomatic objectives and democracy support. One of the many hats worn by our Ambassadors, and the Ambassadors of the other nations comprising "the diplomatic community" in places like Rwanda, Uganda and Kenya, is the promotion of the interests of investors from "home". Thus, one more area in which Western diplomats will be seeking cooperation from people like Kagame and Museveni, and Kibaki, while also asking them to behave better on political rights and civil liberties.

Africa: From “Cool” Aid to “Hot” Investment? (Updated)

I will have more to say on this soon, but let me introduce an idea I am thinking through. I have the sense that there is a real shift in momentum on interest in Africa from the subject of aid to a possible place to make profit.

One factor has been the “global financial crisis”, from the initial “meltdowns” and “bailouts” to the current focus on public debt levels in the West. The moment for pledges of large future aid increases seems to have passed–“pledges” were made during times that felt flush, but mostly not delivered on even then. Greater scrutiny of the downsides of aid as reflected in critiques such as Dead Aid followed. Now the rich countries feel much less rich, and much less sure of themselves anyway.

At the same time, investors (partly thanks to the bailouts of the financial system) still have lots of cash and conventional opportunities in developed markets look that much less appealing. Interest rates are very low and gold is already at record levels. Africa may be in the process of going from being seen as the outlier that needs massive aid as a laggard in development to the outlier that represents the last great frontier of globalization with growth potential that isn’t available elsewhere.

Africa has been in many respects a “playground” for corrupt Western politicians and schemers. The month before its now-famous report leading to a change of command for U.S. forces in Afghanistan, Rolling Stone had a fascinating piece on a massive land deal between an investor group and a militia figure in Southern Sudan featuring stereotypical behavior of the worst sort all around.
Nonetheless, it would seem that there is a growing level of interest in more transparent and straightforward investment activity of the sort that could have the potential to contribute to sustainable growth in a number of African countries.

Here is the link to a recent report from the McKinsey Global Institute on Africa’s “Emerging Lions”.