50 Cent

Michael Mundia Kamau
P.O. Box 58972
00200 City Square Nairobi
Kenya
28th April 2007

                   

The Kenyan media has lately been awash with outrageous
and mythical claims of how the Kenyan Diaspora
annually remits home average sums of 50 billion Kenya
shillings (approximately US $ 714 million), and
without batting an eyelid, the two main Kenyan
dailies, “The Daily Nation” and “The Standard”,
continue to give prominent spreads and editorials to
these nonsensical and baseless assertions.

These claims actually began with the immediate former
Governor of the Central Bank of Kenya, Andrew Mullei,
and may initially have been dismissed as a populist
statement geared at raising the profile of the
Diaspora and/or justifying legislation that could
grant dual citizenship to the fast growing Diaspora.

However, these claims have continued to grow in
profile, to the extent that we now hear of all manner
of delegations going abroad to “woo the Diaspora” to
invest back home. One such trip has just been
concluded by no less than the Kenyan Finance Minister,
Amos Kimunya.

The money and energy being wasted on these worthless
and inexplicable trips, would be extremely laughable,
if they were not extremely serious and tragic. For
instance, the Commissioner-General of the Kenya
Revenue Authority (KRA), has not produced documents
supporting the receipt of these large sums of money
over the years. These would among other things include
annual return forms completed by the individuals
and/or corporations remitting these large sums of
money, and the bank accounts through which these large
sums of money have been wired.

In public interest, the Commissioner-General of KRA is
also duty bound to report whether the 50 billion Kenya
shillings (approximately US $ 714 million), which has
lately been flowing back from the Diaspora on an
annual basis, is net of taxation or whether it has
been exempted from tax. If the amounts of 50 billion
Kenya shillings (approximately US $ 714 million), have
all along been tax exempt, then the
Commissioner-General of KRA has to produce all
published legal notices in all the respective editions
of the Kenya Gazette (signed by the Minister of
Finance), and citing the provisions under which the
Finance Minister has continually chosen to grant tax
exemptions to these large sums. In this respect, the
Commissioner-General of KRA would also be duty bound
to produce evidence demonstrating that this matter of
national interest has been brought to the attention of
the Kenya Cabinet and been extensively discussed and
agreed upon, and that the same has also been brought
to the attention of Parliament, and been also
extensively discussed and been also agreed upon by an
Act of Parliament that does not contradict powers of
tax exemption granted to the Minister of Finance and
/or any other statute in law related to this matter.

If on the other hand the 50 billion Kenya shillings
(approximately US $ 714 million), is net of tax, then
the Commissioner-General of KRA has to account for
approximate annual amounts of 21.4 billion Kenya
shillings (approximately US $ 306 million), given the
approximate Kenyan tax rate of 30%.

The Kenya Revenue Authority (KRA), has lately been
making impressive returns on tax revenue collections
on both a quarterly and annual basis. The KRA has been
managing tax collection rates of up to 98% of targeted
figures stipulated by the Finance Minister in his
annual budgets. What is not clear at all, is whether
tax collection rates on a quarterly and annual basis
are inclusive or exclusive of the foregoing figures of
50 billion Kenya shillings (approximately US $ 714
million) or 21.4 billion Kenya shillings
(approximately US $ 306 million).

This country is in a terrible state of disrepair and
it is extremely tragic that we still allow ourselves
to be governed by assertions as nonsensical as the
Diaspora making annual remittances home of 50 billion
Kenya shillings (approximately US $ 714 million). It
does extreme injustice to the large numbers of
individuals in this country who now hold high school
certificates, college diplomas, undergraduate and
postgraduate degrees, and all manner of professional
qualifications and/or proficiencies. It also raises
begging questions on whether we have evolved the
competencies required to run our affairs and the
affairs of this country.

50 billion Kenya shillings (approximately US $ 714
million), is a very large sum of manner by any
measure, and if we cannot appreciate and grasp this,
there is little else we can.

The Kenya Government through the Kenya Cabinet, has
just approved payment of 20 billion Kenya shillings
(approximately US $ 285 million), to the National Bank
of Kenya, being part repayment of long outstanding
government guaranteed loans. The amount is considered
large enough to destabilise the financial and capital
markets, and a committee has therefore been
constituted and given a two month mandate, to oversee
the gradual injection of the 20 billion Kenya
shillings (approximately US $ 285 million), into the
economy. The key strategy in the matter, is the
issuance of a long term non-redeemable government bond
with a maturity of 20 years, for the near absolute
amount of the 20 billion Kenya shillings
(approximately US $ 285 million), clearly
demonstrating the limited extent to which our young,
growing and fragile economy, can effectively absorb an
immediate unregulated injection of 20 billion Kenya
shillings (approximately US $ 285 million), let alone
50 billion Kenya shillings (approximately US $ 714
million).

It brings memories of the 1992 general election, and
the accusations then made against the ruling party,
the Kenya African National Union (KANU), of money they
“printed”, to fund their high profile campaign of
1992, that included the high profile and now defunct
Youth for KANU ’92 (YK ’92), which seemed to have
endless financial resources.

Almost no veracity of these claims of excess liquidity
is required, given the events of the following years,
beginning with 1993. Interest rates and inflation
soared to troubling highs last experienced in Kenya
during the oil embargo of the 1970s instituted by the
Organisation of Petroleum Exporting Countries (OPEC).
Government Treasury Bill rates on which banks peg the
interest they charge on loans, soared to rates as high
as 70%. Prices of basic commodities such as maize meal
and bread doubled, trebled and even quadrupled, yet
inflation rates came nowhere close to what is
currently being experienced in Zimbabwe (inflation
rates of over 2,000%), or what was experienced in
Mobutu Sese Seko’s Zaire.

The exchange rate of hard currencies to the Kenya
shilling hit unprecedented highs, with one US dollar
exchanging for 83 Kenya shillings, at one stage, 100
Kenya shillings on the black market. Even condoms,
then fast rising on the list of necessities, were not
spared. The “Rough Rider” brand of condoms for
instance, overnight rose from about 25 US cents per
pack, to US $ 1 per pack, causing mass hasty retreats
to “Sultan”, then the free standard condom issue given
by the Ministry of Health.

Several individuals have never recovered from the
inflationary trends of the 1990s, and several
individuals have indeed lost assets by way of public
auction, because of the high interest rates and
defaults in loan repayments linked to those times. A
big portion of the bitterness against the past KANU
regime is associated with those times.

It took the Central Bank of Kenya (CBK), over ten
years to mop up the excess liquidity associated with
the general election of 1992, and bring interest rates
to the current low levels which the present regime
seems determined to maintain. It took over ten years
to mop up excess liquidity whose exact figure is yet
to be known and which legend puts at between 2 billion
Kenya shillings (approximately US $ 28 million) and 10
billion Kenya shillings (approximately US $ 142
million), yet there are continued high profile claims
that the Kenyan Diaspora remits 50 billion Kenya
shillings (approximately US $ 714 million) on an
annual basis. How irresponsible and reckless.

The Minster of Finance has just gotten Parliamentary
approval to draw 28 billion Kenya shillings
(approximately US $ 400 million), from the
Consolidated Fund, to cater for expanded recurrent
expenditure not catered for in the 2006/2007 budget.
One could easily reprimand the Finance Ministry for
this, because the Diaspora should by now have sent the
quarterly remittance of 12.5 billion Kenya shillings
(approximately US $ 179 million), for the year 2007,
meaning that the Finance Ministry would only have
needed Parliamentary approval to draw 15.5 billion
Kenya shillings (approximately US $ 221 million), from
the Consolidated Fund.

In a most embarrassing, humiliating and peculiar yet
little noted incident also, auctioneers on 10th April
2007 moved in and attached movable assets of 11
branches of Standard Chartered Bank Kenya Limited,
over a 15 year old civil suit involving a relatively
small amount of 420 million Kenya shillings
(approximately US $ 6 million), which Standard
Chartered Bank Kenya Limited, the Kenyan operation of
global blue chip Standard Chartered Bank PLC, failed
to pay to the plaintiff in the time stipulated by a
Court of Appeal Ruling (page 20 of “The Standard” of
12th April 2007). Just how well is our economy
doing……..? This incident didn’t even affect the share
price of Standard Chartered Bank Kenya Limited on the
Nairobi Stock Exchange (NSE), raising further
questions about the parameters we use to measure
economic performance in this country. Standard
Chartered Bank Kenya Limited has been declaring annual
profits in the billions of Kenya shillings for several
years now, yet on 10th April 2007 the reputation of
the entire organisation, both here and globally, was
put into serious question, because of their inability
to effectively deal with and handle a 15 year dispute
involving a small sum of 420 million Kenya shillings
(approximately US $ 6 million). Public attention is
drawn to the very, very disappointing fact of Standard
Chartered Bank Kenya Limited’s inability to deal with
issues revolving around small sums of 420 million
Kenya shillings (approximately US $ 6 million),
despite their long standing and reputation, in the
midst of which we continue being fed with garbage that
the much less prolific, much less experienced and much
less skilled Kenyan Diaspora, remits home 50 billion
Kenya shillings (approximately US $ 714 million), on
an annual basis.

50 billion Kenya shillings (approximately US $ 714
million) per annum is power and substance, power and
substance to justify the granting of recognition and
privileges to the Diaspora, such as dual citizenship,
tax concessions/holidays, nominated Members of
Parliament specifically addressing the needs and
interests of the Diaspora, a Ministry specifically
catering for the needs and interests of the Diaspora,
roving ambassadors specifically catering for the needs
and interests of the Diaspora, and most certainly, the
immediate establishment of apparatus that will ensure
the Diaspora votes in all elections and/or
referendums. Ironically though, the annual cost of
Kenyans studying abroad, about 14 billion Kenya
shillings per year (approximately US $ 200 million per
year), is amongst the highest in the world. We are
certainly help build outside economies, at the expense
of our own.

The Diaspora and it’s supporters back home here in
Kenya, are hardly able to justify it’s continued
existence, embarking instead on expanded meaningless,
inexplicable, ridiculous and peculiar campaigns of
self-glorification. What this is intended to
accomplish, remains to be seen.


Michael Mundia Kamau