2011/12 Kenyan Budget: The Road Map to Neo Colonialism Feudalism/Serfdom/Debt Peonage

By Mwarang'ethe

There are two ways of conquering a nation. One by the sword. The other is by debt.
After some useless spectacle over the mode of presentation of the 2011/12 budget, Uhuru Kenyatta managed to deliver the same on 8th June, 2011. As expected, those who call themselves experts in taxation and economics gave their verdicts as they have done since 1963. By and large, according to these experts, Uhuru did a commendable job. For this communicated nonsense, see this: here and here and here. Please, note very carefully their emphasis on so called 2030 Vision.

However, with due respect, these so called experts are deceiving Kenyans because, they focus on the content, or, the data, but, ignore the context. In other words, just like the rest of Kenyans, they have totally missed the big picture. And, the big picture is this, the 2011/12 budget, is a road map to Neo Colonial Feudal Economic Order or Serfdom, or debt peonage. To appreciate the big picture, one must first understand the real objective of Vision 2030. On, March 21st, 2010, we summarised the mission of Vision 2030 in two lines as this: “Like Bastiat, we feel we have a moral duty to warn Kenyans of the greatest robbery which is a foot in the name of the so called Vision 2030.” We beseech thee to read the entire article before you proceed to read further. You will find that article here. The real title of that article should have been “2030 Vision Infrastructure and Great Robbery of Wanjiku.”

Hoping that, you have read the above piece, let us now hop to London to begin weaving the 21st Century feudal economy. On 7th February, 2011, the Guardian reported this: “To us, it's an obscure shift of tax law. To the City, it's the heist of the century.” Among other stuff, we are reading this:

At the moment tax law ensures that companies based here, with branches in other countries, don't get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches. The exemption applies solely to "large and medium companies": it is not available for smaller firms. The government says it expects "large financial services companies to make the greatest use of the exemption regime". The main beneficiaries, in other words, will be the banks. But that's not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this.

Please read the entire story here. If you have time, to read the primary source, see in particular, page 87 of the 100 pages document here. Let us now return to Kenya. So as to mesmerize Kenyans, Kenyatta allocated sh2.9 billion to modernize railway services in Nairobi and its environs. To ensure the plebs are informed of these wonderful developments, the DN told us that: “It’s full steam ahead for city commuter train” here. Among other stuff, we are told that, “Mr Kenyatta said it would cost Sh25 to travel from Embakasi to town and Sh35 from Ruiru to the city, down from Sh70 and Sh100, respectively, charged by PSVs.” It may be true that the fares may go down, but, we are not sure. However, even if fares will go down, will these savings translate into more money into the pockets of those who are funding the project? The answer is no. As soon as, or, even now that, this project has been announced, land rents in the affected areas will start to go higher. In others words, the few who own land will be the beneficiary of this project and not the masses who must fund it. The beauty is that, as we shall show later, these landlords are now corporate and income tax exempt.

However, there is something even more sinister for we are told that:

“A rail operator is expected to manage the proposed commuter service. Procurement of the operator is going on through an international tender advertised by the Kenya Railway Corporation and InfraCo Ltd (InfraCo Africa), a donor-funded privately managed infrastructure development company. The project will also involve the construction of about seven kilometres of a new track to Jomo Kenyatta International Airport’s Unit 3, and the rehabilitation or construction of stations and other facilities along the network. The multi-phased project, whose cost is estimated to hit Sh24 billion once completed, is expected to link the city centre with outlying areas like Thika, Limuru and Athi River/Lukenya. ... the project began in April 2009, when the corporation signed a joint development agreement with InfraCo. InfraCo shoulders much of the upfront costs and risks of early stage development, reducing the entry costs of private sector infrastructure developers.”

In other words, the so called donors have formed a company to invest in the Kenyan railway system. Three questions are in order. Firstly, since all the bankrupt “donors” have divested from their own railways, why the hell are they investing in third world railways? And, if natural monopolies can be privately managed, why then, did we sell out rightly monopolies like Safaricom and KPLC? And, what is this animal called Private Finance Initiative (PFI) under which the InfraCo. is being brought in? Well, in the UK, these PFI vehicles are being used to divert millions of pounds from the NHS into offshore tax havens. Please read this by the BBC: “Portsmouth hospital NHS cash 'destined for tax haven”. In simple words, it is a scam of a century.

Also, in the DN, in an article entitled: “Experts fault some tax proposals as vague and open to abuse,” we find the tax leader of Deloitte East Africa, a Mr Nikhil Hira telling us that:

“But the firm welcomed the introduction of the Real Estate Investments Trusts (Reits) to boost investments in the property market. Part of the proposals pegged on the Reits are that those registered with KRA will be exempt from corporate tax, as well as incomes earned by investors in this vehicle being exempt from tax.”

This, you can read here: What this means is that, real estate companies will now organise themselves as stock companies in the form of Real Estate Investment Trusts (REITS). So many things are now going to happen to mention them in a short article. Suffice to say that, we have created a perfect mechanism for real estate bubble, i.e. like that of Ireland, Latvia, Spain, UK and America, just to give a few examples. Yes, on the surface, we will appear to be doing well. However, when that bubble will burst, we will go the Latvian, Greek and Ireland way.
There are many issues we can raise about this vital question. However, for today, we wish to bring out two things. First, having exempted the land barons who are the richest men in Kenya from both corporate and income tax, we ask, who then, is going to pay the taxes for running the bloated bureaucracy we have created in the name of a new constitution? We answer that, CAPITAL and LABOUR.

In other words, should you as a capitalist wish to start a factory to create WEALTH, while creating the jobs we desperately need, you and the labor you employ will be highly taxed. When you combine high taxation and the increased land rent which will be occasioned by the land speculation, our production cost will soar. This will be the last nail on our beleaguered manufacturing sector about which we reading that, “Manufacturers map exit routes as Kenya attractiveness wanes.” This, you can read here. This is coming as the battery manufacturer Eveready East Africa is planning to close its factory in Nakuru, “because the cost of manufacturing in Kenya is high, driven by high labour and energy costs.” This you can read here. The question is, since our manufacturing base will be decimated by this policy, where shall you and your kids find work? Well, if your dream is to work in the so called Kazi Kwa Vijana projects, it is fine.

Now, the expectation of humanity was that, with industrial revolution, we should move to industrial wealth as opposed to landed wealth. However, with these policies, it is a signal that, the industrial dream and its promise is being buried. In other words, we are cycling backwards to feudal economic order. Do not worry; they have baptized this feudalism as the post industrial economy.

Now, we come to the second and most troubling issue. By real estate, we mean business entities like railways, roads, ports, and dams etc which dominate the Vision 2030. If you analyze Vision 2030, you now begin to see where the so called donor led infrastructure company fits in all this. If this is the case, does it follow that, someone in the UK, USA, Japan can now get let us say, £ 5 billion for free (0.5% interest rate in 2011), come to Kenya, buy almost all of our land, infrastructure, mineral wealth, and then, go back to London and smoke cigars as he waits for his corporate and income tax free income from the African slaves? We are saddened to say, yes, this is the future. If you want know the origins of these REITS, read the history of the first one, which was appropriately called, Foreign and Colonial Investment Trust, founded in 1868, here . If you recall the ongoing UK corporate tax reforms, the donor infrastructure company and the real estate investment trusts we are introducing, you can start to see the great game of re-introducing feudalism is afoot.

In other words, did we bitterly fight for our land, to have the same given back to the colonialists by the son of Jomo, son of Odinga and Kibaki and thereby, make us and our children the drawers of water and hewers of wood in perpetuity in our own land? If not so, how shall we recover these lands in the future? Shall we be recolonized through debt? Shall we be recolonized by our own ballot? You may be animated by the ongoing spectacle about the Chief Justice and such, but, we ask, will not it be the job of that Chief Justice to enforce these feudal laws? And, once you have taken the 2012 OPIUM, shall it not be the work of whoever you will elect to enforce these feudal laws which exempt the barons from taxation while grinding the poor?

It seems Kenyans have forgotten what Machiavelli taught us. He taught us that, a Prince conquering a republic has three options:

1. Utterly destroy it. For such an example, see Iraq or the ancient Carthage.
2. Conquer and live there. For that, recall colonialism.
3. Set up a puppet government. See the new constitution. As they say, The King is Dead. Long Live the King.
   

Remember this, know the truth, and it shall set thee free. To the extent we are not free, then, we do not possess the truth. This being the case, then, it follows that, what they teach us is not the truth. They do not teach us the truth because, such truth would threaten those who wish to imprison us and keep us dominated. As such, the imperialists profit by the lies they tell us, the false perception and the false consciousness they creates in us.

Why Is Kenya So Suddenly Broke?

Economics is a terribly boring and yet it is terribly important.

Especially at a time like this in Kenya. For all intents and purposes this should be a pure economics post. But don’t worry I will not bore you today with macro-economic policy blah blah and stuff like that. Rather I will tell you some nice stories that will help you understand the mechanics of what is happening.
Why should you care about what is happening? Because whether you like it or not you are going to get hit in a very major way by what is unfolding currently. When the exchange rate to a dollar hits the three digit figure of Kshs 100 EVERYTING YOU HAVE TO PAY FOR will increase dramatically in price. Because EVEN if it is manufactured locally there is some imported content in it. Even agricultural produce is transported from the farm using petroleum products which are imported. Let us not even discuss oil prices in this post because if we do you will probably just lie down and wait to die quickly.

There was this man who had very high costs. He made them higher himself by taking a second wife. Each wife had children in school and so you can imagine what kind of costs we are talking about here. At first it was not a problem because he was dealing in drugs. But one terrible day the police moved in and shut down his cartel. He was lucky not to end up in prison. He had taken the right precautions and there was no evidence to link him to the vice. But he often wondered whether it may have been a better thing to end up in prison where he did not have to worry about how to put food on the table for his enormous family.

That man is Kenya with the big fat grand colallition government. It is now clear that drug money has been playing a much more major role in propping up the Kenyan economy than anybody will dare admit. Even the unprecedented political crisis of January 2008 did not put a dent on the shilling but the naming of drug king pins by President Obama has had a devastating effect on the Kenyan economy. Actually it has among other scary things put the Kenya shilling on a free fall where most analysts believe that we shall see a Kshs 100 US dollar by the end of this month or soon after.

What has happened at the treasury is that all of a sudden foreign currency has become very important and there are those analysts and experts who are suspecting that the government has accordingly changed it’s policy from that of keeping a strong shilling to one of attracting as much forex as possible at all costs. So in effect the government has decided not to fight the war they know they will lose anyway of trying to prop up the shilling. For those who have never understood; how is the shilling propped up? Imagine a situation where there is a scarcity of sukuma wiki (Kales) at the nearest fresh vegetable market to where you live. What will happen? Prices will shoot up dramatically. However they will come down very suddenly if a lorry or two suddenly arrives at the market loaded with sukuma wiki. Prices will fall like a stone back to normal or even below normal. That is exactly what the government does as part of it’s fiscal policy when forex gets scarce due to various factors, it brings “lorry loads of foreign exchange” to the marketplace which has the effect of keeping the shilling strong. Clearly the situation now is that somebody has realized that even if they bring 10 lorries of sukuma wiki to the market the prices will not go down because the demand for the vegetables from the hungry vilagers is much higher than 20 lorries. let alone 10 lorries. So in this case people will buy the lorry loads of sukuma wiki at high prices and some will not get any ad rpices will continue to climb. This is the situation the fiscal planners of Kenyan economy suddenly find themselves in.

In one sentence the word on the economics streets of Nairobi is that old man Kenya is completely flat broke and very desperate. What do you do when you are broke? You borrow. But what if you snubbed the people you usually borrow from over the last few years? Kibakinomics has involved snubbing old friends like Britain and United States for new kids on the bloc like Libya, China and the Arab world. Now Gadaffi of Libya is pretty much gone, the Arab world has their own very serious political problems just now mainly caused by Facebook that need plenty of cash to keep under control. China is busy and excited doing deals in the western world and has in recent times dramatically reduced engagement in Africa which is not a priority at the moment. Kenya’s old friends may be willing to help but they are waiting with their long list of demands before they can do anything. And besides Mwai Kibaki’s pride will not allow him to grovel at the feet of anybody and beg while asking to be forgiven for straying.

So where does that leave us?

You don’t want to know...

Because everything is pointing towards unprecedented economic crisis. A depression of the magnitude that has never before been witnessed in these shores. Prepare for scenes from the Great depression in America being played out on Nairobi streets. In the days of the great depression New York city was filled with very smartly dressed men in designer suits who were hungry because they suddenly couldn’t afford a meal. Many others (also in their smart suits) were jumping off high buildings to their death below. Our old friend Mwarangethe was right after all only that even he downplayed the catastrophe that is about to unfold.

What should you do?
Rush to your bank now and open a Euros or US dollar account and if you receive money from anywhere in the world in these currencies keep it there. Even if it means borrowing Kenya shillings to keep things going.

If you have never been interested in farming in your life you had better start getting very interested pronto. At least grow your own food if you feel that it is below you to grow and sell farm produce (a business that is guaranteed to be extremely profitable in the months to come).

But even if money is the least of your worries, don’t think this thing won’t touch you. Just think about it. All those guys who were relying on the drug trade to put food on the table, what will they do now? What about all those folks who are losing their good jobs everyday as the economic crunch continues to bite? Even if just 10% of them go into violent crime we all have too many reasons to be very very worried.

Will the last person leaving the crumbling house please remember to switch off the lights.


Moinomics, Biwottnomics and what Goldenberg really did to you explained in simple standard two English

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