Archive for January 2009

Tempers flare as Ruto, MP face off over maize scam

AGRICULTURE minister William Ruto and Ikolomani MP Dr Bonny Khalwale yesterday faced each other off over the maize scandal as tempers flared freely in the House forcing Speaker Kenneth Marende to intervene. The accusations and counter accusations that degenerated into personal vendetta dragged in the names of MPs Ababu Namwamba and nominated MP Amina Abdalla who personally accused Dr Khalwale of peddling rumours and dragging in names of persons who cannot defend themselves in Parliament.

Trouble started when Khalwale, rose on a point of order to seek the Speaker’s indulgence to defer the conclusion of a ministerial statement he issued last week on grounds that the minister misled the House and the public in order to cover-up the scandal. Ruto told the Speaker that he had furnished the House with all details on the maize scandal and was ready to respond to any clarifications.

Khalwale rose to ask the Speaker to defer the matter since Public Accounts Committee (PAC) had commenced investigations and preliminary report shows that the minister grossly misled Parliament in the list of 3,000 millers he tabled last week and needed more time to contradict this. He particularly ruffled feathers when he gave an example of Wasu Milliers, a company associated with the widow of the late Dr Guracha Galagalo that was allegedly allocated 16,503 bags of maize.

He claimed that a company by the name Mafuta millers was associated with Minister Ruto and that it was allocated 100,000 bags of maize. He went ahead to state that the minister had misled the House that he had no knowledge of maize exports to South Sudan yet the Prime Minister confirmed the same by sacking one of his aides over the scam. He said Ruto lied to the public and the House by claiming that there was only 1.6 million bags of maize at the Strategic Grain Reserve yet the there was 2.6 million bags.

The Ikolomani MP said Ruto denied the existence of authorisation chits to National Cereals and Produce Board when infact he has evidence of such chits. He said the minister denied unprocedural release of maize at NCPB to influential people and companies of political elites citing Wasu and Mafuta millers as examples. When stating that he had evidence of claim he was making Khalwale said Ruto exposed apparent cover up of the scandal by sacking some NCPB board members and retaining others.

He said the minister denied existence of ghost millers in the list he tabled saying maize was released to millers who had no crashing capacity. But he was interrupted severally by Ruto who described Khalwales claims as “very unfortunate” charging that the MP is using the floor of the House to peddle rumours about his connections with any milling company and challenged the legislator to table evidence to that effect. Ruto accused Khalwale demonstrating malice on the matter by naming companies of individuals’ especially the widow of Galagalo who can not defend herself in Parliament. “Khalwale has something up his sleeves.

To make allegations about a Mrs Galgalo, the widow of our former colleague that she is a girlfriend of a certain politician is unacceptable. How will Khalwale feel if one of his many wives is discussed in this House yet she can not defend herself,” Ruto said. Amina Abdalla supported Ruto challenging Khalwale to declare his interest in the Galgalo widow saying that if the late Galgalo had a bone to pick with him he should say for MPs to repay him.

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Wangari Maathai: Kimunya is back as minister, so what is the big deal?

MR AMOS KIMUNYA IS NOT the first minister to be accused of corruption and to retain his post. In fact, until the Narc Government, no minister had ever resigned on being accused of corruption.

When President Kibaki allowed his ministers to step aside, he was hailed as a democrat. There was a sense of pride that ministers could be forced to resign and only return when declared innocent.

If positions have changed, it might be because of the forces of a coalition government, whose two sides are constantly tearing into each other. Were the President to get rid of every minister accused of corruption, there would be few left.

Despite an anti-corruption authority, graft seems to only get worse. It has become a cancer which afflicts many and extends into government and its institutions, the business and private sector, and sadly, even in the religious sector and society in general.

CORRUPTION HAS IMPOVERISHED the country as a few people exploit national resources at the expense of the rest. The majority of Kenyans are victims of corruption, whether they are workers, teachers, health workers, or farmers of coffee, tea, sugarcane or livestock.

But though Kenyans appear to loathe the symptoms of corruption like poverty, slums, hunger, death and a high cost of living, many are beneficiaries of that same corruption, especially if the corrupt are ministers, MPs, or civil servants from their tribe or region.

The corrupt individuals are heroes who deserve support, ululations and dancing parties. Corruption only appears wrong when it is on the other side of the fence.

That makes the work of the Kenya Anti-Corruption Commission difficult: To take the corrupt to court, it may have to start from the very top. Therefore, the authority is in a dilemma: who do they go for without chopping the hand that feeds them?

Our institutions of governance are too weak to take steps that could curb abuse of authority without those who run them jeopardising their jobs or even lives.

The problem is not the President. Rather, it is the institutions of governance that tolerate impunity, lack of transparency and non-accountability. Instead of governing, the political leadership has gradually assumed the role of predator.

That is why a new constitution is necessary. It will create institutions that will give the nation a shared vision and values to ensure better governance, no matter who is in charge. Without it, those replacing the President in 2012 will follow a similar path, their current rhetoric notwithstanding.

As long as institutions allow it, politicians will continue to make decisions to benefit their friends, supporters and ethnic communities.

Therefore, our efforts should focus on the creation of strong institutions that will curb the weaknesses of human nature: greed, selfishness, and insensitivity to the welfare of others.

We need institutions that encourage and reward hard work, integrity and patriotism. Dictators and corrupt leaders take advantage of weaknesses of institutions of governance and the hopelessness of poor citizens.

With proper institutions of governance and citizens willing to stand up for their rights, excesses of leadership can be controlled. Without them, presidents will continue to appoint or retain people implicated in corruption.

Kenyans may argue that the President’s conscience should not have allowed him to re-appoint Mr Kimunya against the vote of no confidence in Parliament and the wishes of Kenyans.

But, the management of our governments seems more dependent on political expediency and survival than on morals and values.

UNTIL A NEW CONSTITUTION DEmands that ministers be appointed for their competence and commitment to the country, and be vetted by a competent authority, presidents will continue to appoint those who can protect them from the never-ending onslaughts and shifting fortunes.

What is important to the President is survival and everybody in Parliament knows that, and indeed, acts accordingly! The only way corruption will be reduced is if the punishment is a deterrent. At the moment, corruption pays handsomely, even if you are caught!

We ought to be ashamed of the reputation we have earned: that Kenyans are for sale to the highest bidder.

Prof Maathai is the 2004 Nobel Peace Prize laureate.

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Macharia Gaitho: Do the Principals have any intention of fighting graft?

I DON’T KNOW WHETHER THIS is a sign of incompetence or worse, but President Kibaki and Prime Minister Raila Odinga willfully passed up the opportunity to demonstrate to Kenyans that they are fully committed to fighting corruption and incompetence in their ranks.

The first Cabinet reshuffle since the establishment of the Grand Coalition monster came at a time when millions of Kenyans are facing starvation from a famine induced by corruption and incompetence in government.

It was also at a time when the Kenya Pipeline Company-Triton oil scandal reached the highest offices. This should have been the time for the government to show that it can no longer be business as usual, and that any leader who gets involved in activities that mar the image of the country or hurts ordinary Kenyans, will be shown the door.

Instead the President and Prime Minister settled for a reshuffle that demonstrates no intention of acting on the pressing problems of the day. It was the equivalent of kicking Kenyans in the teeth with a message that grand theft is now part of government policy and there will be no buckling to pressure from any quarters to get rid of the corrupt and the non-performers.

The retention of Agriculture minister William Ruto and Energy minister Kiraitu Murungi demonstrates there is no intention of dealing with the rot in the two ministries that have been in the news for all the wrong reasons.

If any ministry is enmeshed in greed and corruption and the heads are not held to account, then a precedent has been set and it will only be a matter time before we are hit with a scam of Goldenberg proportions.

President Kibaki and Prime Minister Odinga have demonstrated that corruption and incompetence are tolerated, if not encouraged.

That is the signal for every Cabinet minister, permanent secretary, parastatal head and other nabobs to dip their talons into the public coffers while the going is good, secure in the knowledge that they have been given the green light to loot and plunder at the risk of only a few knowing winks.

Refusal to take action on the two ministries confirms that the era of impunity is back, and we are inexorably sliding back to the kind of activities that marked the Nyayo kleptocracy.

The reshuffle also demonstrated the Kibaki doctrine. Any of his friends and allies entangled in corruption may be asked to temporarily ‘‘step aside’’ when the heat from the public becomes unbearable, but is assured of a comeback once the anger has died.

FORMER FINANCE MINISTER AMOS Kimunya thus came back to the government as minister for Trade, following in the footsteps of Mr Murungi and former minister David Mwiraria, key Kibaki allies and advisors who have at one time, had to lie low amidst corruption allegations, before making comebacks into government.

But somewhere along the way, the Principals forgot that the report of the Commission of Inquiry that investigated Mr Kimunya and the Grand Regency Hotel deal would leak, despite having been ‘‘sat on’’ since it was delivered to the president last year. The man did not come out smelling very clean.

In the next few weeks, as the government holds out the begging bowl before Western potentates in order to feed its people, it will be asked searching questions about the collapse of the war against corruption.

Actually there is nothing like a collapse, because there was never such a war in the first place, only plenty of hot air and an array of smoke and mirrors in the Kenya Anti-Corruption Commission and a multiplicity of other equally hopeless agencies.

Perhaps, as is the preferred fashion of buying time, we will be forced to endure yet another of those expensive but useless commissions of inquiry into the maize and oil scandals.

There may also be some arrests and prosecutions, but targeted at expendable cannon fodder in paper-pushing officers rather than the wheelers and dealers in the heart of government and their business partners who drive corruption.

But, of course, the prosecutions will be handled so incompetently, by design, that prospects of conviction will be less than zero.

One can only despair. Perhaps a trip into places where the pristine mountain air is not yet tainted by the stench coming out of government can do one a world of good. That is where I headed to yesterday.

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Jaindi Kisero: Free the market for maize farmers in Rift Valley

THE MAIZE MARKET HAS totally collapsed. There is not enough maize in the country. Worse, activity by farmers at National Cereals and Produce Board depots in the Rift Valley is at an all-time low.

Compounding the problem is the fact that there is not enough white maize in the international market. Just the other day, the Government invited international commodity traders to put in letters of intent to buy imported maize on its behalf. Just 52 applicants put in bids to bring in white maize while 42 bid to bring in yellow maize.

We were all surprised when the big international commodity traders were left out of the deal. I had expected to see names like Cargill, Glencore, Louis Dreyfuss, and Hollburd coming up with offers to bring in maize. We ended up with names that are not too well-known in the business.

The upshot is that more than a month later, the importers who won the deal for white maize have not done even as much as make a physical booking with the grain handling terminal at Mombasa Port. All indications are that what will arrive soon is yellow maize used as feed.

Those who say that the decision by the government to dismantle import duties on maize will lead to the flooding of the local market with imported maize have totally missed the point. There is not enough white maize anywhere.

When word went round recently in international maize trading circles that a commodity house in the East London region of South Africa had one cargo of white maize in its silos, there was a scramble as never witnessed before.

The Grains Council, the lobby for traders, has predicted that the shortage will worsen towards March and April. What can the Government do? The situation the Government now finds itself in is what economists refer to us the “food policy dilemma”.

As a government, you must ensure that maize farmers have an incentive to keep producing and selling maize. On the other hand, you also have an obligation to ensure the urban population is protected from volatile and consistently high maize-meal prices. You have to strive to strike a balance between these two competing interests all the time.

Urban dwellers command more political influence than farmers. They will threaten the political elite with food riots. Scenes of hordes of the urban poor demonstrating in the streets inflict more damage to the image of the country than farmers demonstrating in some sleepy town in the corner of the Republic.

This phenomenon explains why the government is not too keen to increase producer prices. It is not politically correct at this point in time to do so. The circumstances have left Agriculture minister William Ruto walking a tight-rope.

WHILE THE REST OF THE COUNTRY wants cheap maize-meal, farmers in Rift Valley, Mr Ruto’s power-base, want higher producer prices. If he does not employ dexterity in his footwork, the minister may find his political fortunes slipping.

What the economists within government should do is design a better formula for implementing subsidies. Subsidies that create parallel markets and that are applied in the context of an oligopolistic milling industry are a recipe for disaster. You end up opening up opportunities for millers to engage in rent-seeking behaviour.

The Government should allow Rift Valley farmers to sell their maize to whomever they choose on a willing-buyer willing-seller basis — at the best prices they can get.

Let the National Cereals and Produce Board compete with middlemen for maize. Rift Valley farmers must be allowed to take maximum advantage of the current maize scarcity.

If you insist on buying from the farmer at NCPB prices, which are set and decreed by bureaucrats in Kilimo House, you will end up creating artificial shortages.

Do we really want to do so when white maize is in short supply in the whole region? The situation in Rift Valley is ripe for a robust underground maize-buying at prices which reflect the prevailing scarcity.

If the government is worried about food riots, let it design better methods of delivering subsidies and safety nets for the urban poor. It is grossly unfair to force one segment of society to subsidise the consumption habits of the majority.

In any event, a policy that favours consumers at the expense of producers is not in the country’s interests in the long run. Policy-makers should focus on how to deliver incentives to maize farmers so that we can achieve the production levels we used to in the 1980s.

There was a time in those years when we used to produce 1.8 million bags of maize annually. Production has stagnated ever since. We must go back to focusing on how to make agriculture a worthwhile economic activity.

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Central Bank of Kenya: Mobile Phone Financial Services in Kenya

1. It has become necessary for the Central Bank of Kenya to issue a statement on mobile phone financial services in view of the continued media and public attention this issue is drawing. At the onset, the Central Bank welcomes innovation that has been introduced in Kenya's financial sector through the use of mobile telephony.

Whereas this interest in mobile phone financial services is welcome, the Central Bank considers it necessary to shed more light on assertions being made in the media on its' role in licensing mobile phone financial services products.

2. At the very outset, it is important to note that the Central Bank of Kenya currently has regulatory oversight over banks, non-bank financial institutions, mortgage finance institutions licensed under the Banking Act and Foreign Exchange Bureaus licensed under the Central Bank of Kenya Act. The Bank also since May 2008 has had regulatory oversight over Deposit Taking Microfinance Institutions.

The Central Bank therefore has no regulatory oversight role over mobile service providers, licensed by the Communications Commission of Kenya (CCK). The Central Bank's point of interaction with mobile phone providers is through its' licensee commercial banks who offer a platform for mobile phone financial services.

3. It is also important at this juncture to trace the genesis of mobile phone banking in Kenya. In 2005, a development agency requested for proposals from interested parties on cost effective ways of deepening Kenya's financial sector through enhanced access to financial services and products. Safaricom, a mobile service provider in collaboration with Vodafone U.K., one regulated commercial bank and two microfinance institutions submitted a proposal based on the use of mobile phones to transfer money.

4. The development agency found the proposal to be successful and a pilot of the mobile money transfer system was conducted in 2005/6. Before the pilot run, the regulated commercial bank requested the Central Bank for a go-ahead. The Central 'Bank agreed to the pilot run after discussions with the concerned commercial bank and a review of the proposed product. The pilot run was successful and the Central Bank was then approached in August 2006 with a proposal for a commercial launch of the product, "M-Pesa".

5. The product was subjected to a thorough due diligence from August 2006 to March 2007 when it was launched. The due diligence focused on the requisite legal and regulatory framework, product feasibility, customer identification procedures and product/customer/Agent security. However the principal concern of CBK related to the need for an enabling legal and regulatory framework for mobile banking to protect the interests of consumers and ensure sustainability of the product. An enabling regulatory framework for mobile banking should also incorporate a legal framework for oversight of payment systems,, electronic contracting, money laundering, consumer protection and Information and Communication Technology (ICT).

6. It is however noteworthy that regulation generally lags behind innovation and a pragmatic approach was adopted with regard to the review of M-Pesa. The Central Bank, therefore, required that safeguards be put in place to address money laundering, consumer protection, product and agent security concerns before the product was launched.

7. Coming to the present, there have been reports in the media linked to the proposed launch of a mobile banking solution by Zain in partnership with regulated commercial banks. The Central Bank has noted the unfortunate media reports implying that it is denying or delaying the issuance of a license to Zain. We once again underscore that CBK has no direct relationship whatsoever with Zain or licensing the services it wishes to launch.

8. The application under consideration by the Central Bank is from a commercial bank that proposes to partner with Zain in providing a mobile banking and payment solution. The application has already been reviewed in accordance with statutory and prudential requirements governing licensed banks. A similar due diligence process as was applied with M-Pesa has also been undertaken. Matters requiring to be addressed have already been brought to the attention of the applicant bank. The Central Bank has a cardinal duty to ensure that products introduced by banks are safe, efficient and that the public interest is protected.

9. It is therefore very unfortunate that issues that are purely of a regulatory nature are being distorted and used to smear the credibility of the Central Bank or to create a marketing platform via sympathy. The Bank will not waver in safeguarding the public interest by ensuring the stability, safety, efficiency and reliability of the banking sector.

10. The Central Bank will also continue working with relevant players in the ongoing development of a comprehensive legal framework covering oversight of payment systems, electronic contracting, money laundering, consumer protection and Information and Communication Technology (ICT). This framework will further bolster the development of payment systems that leverage on technology to enhance access of Kenyans to financial services. The Central Bank, therefore, welcomes the introduction of such products in the Kenyan market and will ensure that the necessary safeguards to protect the interests of Kenyans are put in place before they are launched.

27th JANUARY 2009

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Ministry of Finance Audit Findings on M-Pesa Money Transfer Services

1. Since its inception in 2007, M-Pesa has rapidly developed to become one of the most dynamic innovations for delivery of financial services using modern Information and Communications Technology (ICT). This innovation makes Kenya a world leader in the use of mobile phones to transfer money.

To appreciate its rapid growth in popularity, it is important to note that the number of registered Kenyan using the M-Pesa service regularly has grown rapidly to reach close to 5 million persons last year.

2. However, the adoption and growth of M-Pesa services has not only continued to draw public attention but has also generated a lot of debate as to the safety and reliability of these kinds of payments and transfer systems and what the government is doing about it. Among the questions in the minds of many Kenyans are: How does the M-Pesa money transfer service really operate and is it safe and reliable? Does M-Pesa compete with commercial banks? Should it be regulated?

3. It is for this reason that it has become necessary for the Treasury to provide an audit of the M-Pesa system in order to clear any doubts in the minds of the public regarding its safety and reliability, and provide information about its effectiveness as well as the soundness of the operating platform for M-Pesa and other similar services wishing to enter the market.

4. The purpose of this note is to therefore, provide insights as to how this innovative money transfer service has developed, how it has enabled the transfer of funds to the unbanked and how the Central Bank of Kenya (CBK) continues to oversee its operations in order to ensure their safety and efficiency.

5. M-Pesa is an electronic money transfer product that enables users to store value on their mobile phone or mobile account in the form of electronic currency that can be used for multiple purposes including transfers to other users and conversion to and from cash. One clear advantage of M-Pesa is that it offers the prospect of providing money transfer services to people who are not in a position to open a bank account. Moreover, these services can be offered in any part of the country where there is mobile phone service. In this way, the M-Pesa service has been able to reach the unbanked Kenyans including those in the marginalized areas where formal banking services are non existent.

6. Today, many Kenyans are using the M-Pesa service to conveniently transfer money safely, efficiently and effectively. They use it for paying field staff their allowances and expenses so that they do not need to travel to the Head Offices for payment, sending a long haul truck driver money for spare parts, sending money to family members for consumer purchases, school fees payment, sending pocket money to students in schools, and sending emergency medical payments among other purposes. A taxi driver wishing to be offered prepaid services due to security reasons could request for payment via M-Pesa service. In many instances today, Kenyans traveling up-country deposit cash before the start of the journey to pick it up upon arrival to their destination thus avoiding the risk of loss through theft or robbery that has increased in Kenyan highways today.

7. Prior to the launch of M-Pesa services in Kenya, Safaricom sought authorization from the Central Bank of Kenya (CBK) to undertake the money transfer service. In evaluating the proposal, the CBK considered the request on the basis of safety, reliability and efficiency of the service. In addition, precautionary measures were put in place to ensure that the services did not infringe upon the banking services regulatory framework as provided for under section 2(1) of the Banking Act. The M-Pesa service therefore does not:
  • Accept from members of the public money or deposits that are repayable on demand or at the expiry of a fixed period or after notice;
  • Accept from members of the public money for current account purposes that is used for payment and acceptance of cheques; and
  • Employ money held or any part of the money for purposes of lending and investment or in any other manner for the account and at the risk of the person so employing the money.
8. In M-Pesa, money collected by agents is deposited in a trust account in one of the leading commercial banks in Kenya. This trust account provides the legal protection for the beneficiaries. The money in this trust account is not under the control of Safaricom and cannot be employed for purposes such as lending, investing or in any other manner for the account and at the risk of Safaricom as per Section 2(1) of the Banking Act. Legal protection of the money in the trust account is provided for in the trustee deed. Various legal instruments pertaining to this service, including the trustee deed have been presented to the Central Bank and reviewed accordingly. Further to this, funds in the trust account deposited in the designated commercial bank are regulated by the Central Bank of Kenya under the Banking Act.

9. The Trustee holds funds on behalf of all M-Pesa System participants under a Declaration of Trust (the Trust Deed). Highlights of the Trust Deed are:
  • The Trustee holds all amounts which constitute the Trust Fund on trust for the System Participants.
  • The beneficial entitlement of each System Participant to the Trust Fund at any time shall be to such amount of the Trust Fund in conventional money as is equal to the amount of e-Money in the M-Pesa Account of such System Participant at such time.
  • Safaricom is entitled to levy certain charges on System Participants for the operation of the service. Where it does so, the M-Pesa Account of the relevant System Participant will be debited by the amount in e-Money of the relevant charge and a M-Pesa Account of Safaricom shall be credited with the relevant amount.
  • The amounts constituting the Trust Fund shall be held by the Trustee in a reputable commercial bank.
  • Safaricom undertakes to the Trustee and to the System Participants that it will not issue any new e-Money other than in return for an equal amount in conventional money being paid to and received by the Trustee.
  • Safaricom shall also not effect any transfer of any e-Money from any M-Pesa Account of an amount which exceeds the credit balance of e-Money in the relevant M-Pesa account.
10. A number of critical issues and risks that have been reviewed include: liquidity management, settlement risks, the reliability of the system, the registration of users, system audit trail, anti-money laundering measures and consumer protection issues that could compromise the safety, efficiency, integrity and effectiveness of the M-Pesa system. These risks have been mitigated through a number of measures which the Central Bank and the Communications Commission of Kenya (CCK) monitors regularly.

11. For example, there is no credit risk because M-Pesa agents prepay before offering services customers. Also, CBK has placed a maximum limit of KShs 50,000 per M-Pesa account per day and a transaction limit of KShs 35,000 per day in order to mitigate against settlement risk. Moreover, Safaricom, is part of the Vodafone group, an international and reputable multinational in the provision of mobile phone services. The M-Pesa product benefits from the research and development of Vodafone and as such, the operational risks are minimal if not non existent.

12. The Central Bank of Kenya has continued to oversee the service in line with its Oversight Policy Framework document on payment systems in Kenya which is available at the Bank's website, For instance, whereas the system transacted about kshs. 17 billion in August 2008, the net deposit/residual value per customer (i.e. deposit less withdrawals) was kshs. 203 thus demonstrating that M-Pesa has not been regarded as an alternative bank account with sums of money staying in the system.

13. To further provide a sound legal basis for payment systems in Kenya, the CBK and the Treasury have been refining several legal and regulatory measures aimed at promoting safety, efficiency and effectiveness of payment systems in Kenya. One such effort is the review of the Central Bank Act in the year 2003 to include section 4A1 (D) that mandates the CBK to promote such policies as to best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement systems. Currently, the Bank has proposed and formulated the enactment of the National Payment System Bill that will strengthen the above mandate by inter alia expressly providing for the oversight of all Payment systems including money transfer services. This Bill will soon be tabled in Parliament for enactment into Law.

14. It is also noteworthy that the recently enacted Kenya Communications (Amendment) Act 2008 expanded the functions of the CCK in relation to electronic transactions and provides legal recognition of electronic transactions. The Act not only legalizes electronic transactions but it also enables the CBK and CCK to work together and support this system including other such products that may come in future to the market.

15. With respect to competition with the commercial banks, there is no evidence to support such an allegation. In any case, there is nothing wrong with competition as long as it underpinned by a level playing field.

According to a study funded by the Department for International Development (DFID) of the UK, while 55 percent of adult Kenyans have access to a mobile phone, only 19 percent are banked. There is therefore a huge market that has access to mobile phones but not financial services and M-Pesa is helping to fill this gap. It is also laudable to note that some commercial banks and other service providers are now partnering with M-PESA with a view to complementing each other and leveraging on the M-PESA outreach.

16. This audit by the Central Bank on M-Pesa system provides comfort to the Treasury and I would like to assure Kenyans that this innovative idea of money transfer through the mobile telephones is safe and reliable. I wish therefore, to reiterate that the Treasury and the Central Bank of Kenya are committed to promoting safe and efficient innovations that enhance access to financial services thereby addressing the challenge of financial exclusion occasioned by infrastructural constraints to formal banking services. At the same time, the Treasury and the Central Bank will continue to oversee its safety and reliability as the innovations in the system and outreach progresses.

Joseph Kinyua
Permanent Secretary Treasury.
January 24, 2009

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Johnson Kimanzi: Change is yet to come

As I walk and talk to the regular folk everywhere, one thing that is clear is that majority of we Kenyans are very UNHAPPY. Among the things I hear ; ‘I am unhappy because my neighbor wants me to view him as my friend even after the damage he caused to my property after the announcement of the disputed 2007 elections’, ‘I am unhappy because my neighbor is dying of hunger while billions and billions of taxpayers money is disappearing into the pockets of a small clique of people who call themselves “leaders” just to camouflage their greed for power and money’, ‘I am unhappy because my maize or wheat harvest cannot be sold at a break-even price despite of the labor and the money I spent to ensure that the harvest is of the best quality’, ‘I am unhappy because despite being a teacher for 15 years, I still can’t afford to pay my child’s university tuition fees instead I have to remain in debt for the rest of my life to ensure that my children get the best in life’, ‘the price of maize meal is so high this year , to avoid overstretching our monthly budget, my children are getting a smaller portion of ugali compared to last year’.

These are just a few among many problems that we face. But I believe there’s light at the end of the tunnel because the end of last year and the beginning of this year, something extraordinary happened. We Kenyans put aside our differences in race, gender, social status, tribe, religious, beliefs, political affiliation and age to come together to celebrate the nomination, victory and inauguration of Barrack Obama as the 44th President of the United States of America. For those of us who are optimists, this restored the hope that positive change will come, if not in our generation but in the next one. This restored hope that Kenya being a nation of diversity, can come together for a common cause.

The desire to unite coupled with other common values and goals that hold the citizens of this country together should be the platform of achieving the change we want. The hard work and the desire to prosper should be harnessed to create the energy to counter attack the negativity created in the society by those who use our differences to create divisions among us. Everywhere I go the dreams and aspirations of every Kenyan are same. Everyone unanimously agrees that they want price of basic needs to be affordable, leaders to fulfill the promises they pledge before getting into public office, devolution of power from the Central Government, corruption in central and local governments to end, Members of parliament to be more accountable in the way they spend CDF e.t.c. All we Kenyans want is a government that represents the face of the people and not the faces of the few who hold positions of power.

I don’t want to sound pessimistic or to go out of line with the above desires, but I want to stress unless WE change ourselves, we will not live to see a better Kenya. We need to change our attitudes in the way we approach politics and politicians; we need to change the traits we look into an individual before casting our vote for him or her, we need to stop looking at every member of parliament/government officer with skepticism and give the benefit of doubt to those in power that have good and genuine values and motives, we need to stop approaching our problems with bitterness, anger, blame-games and other negative emotions. Instead we should look at the positive lessons that are learnt from the mistakes of the ones before us, we should learn to appreciate that our nation is a multicultural centre and there’s so much to learn from your neighbor even though you don’t share same background, religious beliefs, language or hometown. We need to replace the fear and divisions created by a few and replace it with it the love, strength and courage that we share with millions of others.

We should stop blaming the government for everything that is not right in our nation. We should stop expecting the government to solve every problem that we encounter in our lives. We should stop blaming our politicians for the poor leadership they portray because we had a part to play in that since we are the ones who elected them. Unless you and I work on changing ourselves, CHANGE IS YET TO COME

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As Famine Looms, Kenyan Politicians are Behind the Maize Scandal

Big names in maize scam

Ababu Namwamba (MP Budalangi) – 15,000 bags – Sh36 million
David Koros (Ex-MP Eldoret East) – 8,000 bags – Sh 18 million
Joshua Kuttuny (MP Cherangany) – 5,000 bags – Sh 11.5 million
Caroli Omondi (PM chief of staff) – 3,000 bags – Sh 6.9 million

In what reminds one of the infamous coffee racket of the 1970s when unscrupulous brokers and politicians minted money from smuggling coffee to Uganda through Chepkube market, politicians are today making a kill as they ship tonneloads of the much-needed maize out of the country even as millions stare at certain starvation for lack of commodity that is the staple stuff of Kenya.

Believe it or not, Budalangi MP Ababu Namwamba, one of the brains behind the still-born Grand Opposition Bill currently gathering dust in parliament is the biggest beneficiaries of maize irregularly allocated to individuals by the National Cereals and Produce Board from the National Strategic Reserve.

Investigations reveal that in a scheme to build political allies in various regions across the country, Agriculture Minister, William Ruto, capitalised on the maize crisis to reward friends by issuing instructions for them to be given allotment letters in what is being, termed in business circles the "maize wind fall".

Apart from Namwamba who was allocated a cool 15,000 bags from NCPB that is said to have fetched him a cool Sh36 million after selling to a miller through a broker, others who have benefited from the deal is Cherangany MP Joshua Kuttuny and former Eldoret East MP David Koross.

Koross is said to have pitched tent at Nakuru NCPB depot where he has been able to broker and sell his slot to millers based in the town. Some. of the millers claim to be able to mill tonnes of maize to help curb the crisis when in true sense they are unable to mill a few tens of kilogrammes per hour.

Koross who was defeated by Prof. Margaret Kamar on the Eldoret East Parliamentary seat is a close ally of Ruto.

Sources well versed with goings-on at NCPB where Prof. Misoi is the Managing Director reveal that Koross was allocated 8,000 bags and pocketed a cool Shl8 million in the deal.

Koros was last week seen shopping for a Range Rover Sports car at a motor sales yard at Yaya Centre.

Ruto is said not to get on well with Prof. Kamar, who was quoted in the media last week complaining that the government was importing maize at a higher price while offering farmers lower prices.

On his part, the Cherengany MP Kuttuny, was allocated 5,000 bags that saw him pocket Sh 11.5 million. He has bought a 20-acre plot at Kaplamoi in Trans Nzoia using part of the money.

Word has it, the Agriculture Minister used the maize allocation to consolidate his political power in ODM and nationally. The maize was allocated at the height of the clamour for official opposition that was seen to be fighting Raila and Ruto who was not in good terms with Raila then reportedly wanted to financially empower the Ababu and Kuttuny for the power war ahead.

The Kenya Anti-Corruption Commission is said to be investigating the NCPB scandal that has seen crooked men pose as millers. A source at NCPB also revealed, Caroli Omondi the chief of staff in Prime Minister Raila Odinga office was also a beneficiary. He was allocated 3,000 bags that saw him laugh all the way to the bank with Sh6.9 million.

A company associated with Raila's son, Fidel Castro, and the PM's business associate Mike Njeru trading under the banner Alpha Logistics was also allocated.

Former MPs who are said to have pushed to be allocated include Maoka Maore, Joseph Kimkung, but we could not establish if they benefited.

Businessman-cum-politician Jackson Kibor was allocated 2,000 bags.

It is also emerging, Agriculture PS also pushed for a number of those surrounding President Kibaki to get allotment notable one being KenGen Managing Director Eddy Njoroge.

Sources told us, aware of the goldmine that maize business is, those close to Kibaki pushed the President to name one of their own on the Cereals board to push for their interests.

Kibaki named Jimnah Mbaru, the retired Nairobi Stock Exchange boss as the chairman of the board. Surprisingly, Kibaki is said to have neither consulted his Prime Minister nor Agriculture Minister before naming Mbaru Board chairman.

It is imperative to note this was done moments before he launched a Sh32 billion international appeal for food aid, with observers suggesting that the placement of Mbaru in anticipation is strategic to have control over the possible windfall that should be channeled through the NCPB.
By late last week, State House was pushing to have the purchase of cereals and handling of NCPB moved from the Agriculture Ministry to the Office of the President Special programmes Ministry.

It is estimated that 100,000 bags of maize has in the last few months gotten in the hands of brief case dealers part of which has found its way to Southern Sudan where the prices are three to four times higher than in Kenya.

Millers investigated by KACC by last week are Beada Millers, Temusi Millers, Valley Posh Mill in Nakuru and Uchumi Grain Millers. The maize importation saga intensified with parliamentary committee oh Agriculture accusing Raila and Ruto of engaging in dubious dealings in the importation of cereals.

Led by Kaloleni MP Kambu Kazungu, the MPs called for the president to appoint an independent body to oversee the importation of maize. The committee alleged that millions of maize bags imported by the government have disappeared in unclear circumstances.

Weekly Citizen has information that 100,000 bags have been reported unaccounted for. As the revelations emerge of the maize scam, last week saw accusations traded over the role of the Prime Minister in the cancellation of an advertisement placed for a second grain handling facility.

While addressing the media, the MP for Kangundo Johnstone Muthama drew the wrath of ODM stalwarts when he linked the maize shortage to the monopoly of the Grain Bulk Handlers Limited. As if to justify the maize scandal, those from ODM who spoke in defense of the PM and GBHL linked Muthama to the now tired Goldenberg scandal. Weekly Citizen was the first to authoritatively and exclusively report on the relationship between the PM and GBHL.

GBHL has been in a protracted fight with the Kenya Ports Authority over the KPA's move to snatch its monopoly for grain handling at the port of Mombasa.

On a trip of Mombasa by Raila mid last year in which he paid a visit to GBHL offices at Shimazi, Raila moved around the town in the GBHL chairman, Mohamed H. Jaffer's Mercedes Benz KAU 065B - a car that according to our investigation which has its roots in the United Kingdom, where it is reported as stolen. Worse still, the PM's flag was moved from Raila's official vehicle and fixed onto the controversial private car.

Astonishingly, according to the registrar of vehicles records the number plate the Mercedes bore are supposed to be for a Tuk.

On his motorcade various cars that were lined up belonged to suspected tax evaders. A Lexus KAZ 858M which was given to Raila by Jaffer as a present is also on the Interpol list of stollen cars.

On the tour Raila was hosted by Jaffer for dinner. At the Kingly dinner, Raila was accompanied by ministers James Orengo and Fred Gumo.

The two cars according to our investigations were stolen from the UK and both are registered as Tuk Tuks in Kenya.

All Jaffer's nine luxurious cars, according to our investigation, bear number plates 065, while another Raila's ally in the region Mohamed Zubedi - owner of the region's famed Nawal Centre bear number 900.

And Mohammed Ali Rashid Sajjad who was ODM provincial campaign coordinator has cars whose number plates start with 786.

Most of the cars in Raila's motorcade during his visit according to documents in our possession are on the list of Interpol as some are stolen from either Dubai or UK.

The three businessmen, who had lost ground after Kanu was bundled out of office in 2002, have become powerful overnight after Raila was appointed the prime minister.

To demonstrate how powerful Sajjad has become since Raila was named prime minister, last year he ferried over 100 Asians into the country without documents and when the aliens were arrested he called for help from Agriculture minister William Ruto.

And now keen observers are questioning the reason why the premier could hold a secret meeting with a private developer - (GBHL)- in the absence of Coast MPs and KPA managers at the firm's factory for close to five hours.

Our investigations have it that Raila has an interest in Grain Bulk Handlers where he has already acquired a stake through his region point man one John Mwai.

The prime minister's men have inherited habits of former president Daniel arap Moi where the former head of state allies used to hide behind the shadow of powerful individuals in acquiring stakes in various firms.

John Mwai alias Raila as fondly referred to by those who know him is a director at Grain Bulk Handlers. However he is representing the prime minister's family interests.

The same man is also a director at an Italian-owned hotel, Hi Covo Restaurant where he also represents Raila.

As if that is not enough Mwai who is also known as Andiwo is a director at the famous Wild Waters Sports where he is also said to be safeguarding Raila's interests.

Andiwo who is reported to have been once a waiter at Casablanca Restaurant in his early days in the region, is also a director at African Safari Club.

All eyes are now focused on the owner of Casablanca Restaurant who is also well-known entertainment personality in Mombasa, whom leaders from the region are accusing of being Mwai's mentor.

Back to Raila's deal in the region, after he finished his five-hour meeting at Grain Bulk he rushed to the port issuing threats in a move which was perceived as intimidating the KPA managers before he pushed for Grain Bulk's interests at the port.

GBHL operations date back to 1976 when a company called Jaffer and Jaffer applied for lease on plot no. R/23 section 1, Kilindi High level Mombasa from East Africa Harbour Corporation (EAHC).

On 19th July 1976 vide ref.E/SHZ/L9POA EAHC responded to Jaffer and Jaffer lease application giving the company a lease. Jaffer and Jaffer then schemed and on 28th October 1976 vide ref.J.8, M/S the company requested EAHC to extend the lease period of the plot to 99 years a request they were granted but the period scaled down to 33 years.

However, after EAHC dissolved, and KPA was chartered by the act of parliament, Jaffer and Jaffer applied Wayleave from KPA to establish a grain handling terminal.

After several processes, the grain handling was in 1995 renamed Grain Bulk Handlers - the firm stands on a KPA plot.

The long and short of GBHL story is that Jaffer would later manoeuvre to get a monopoly of handling the grain at the port of Mombasa for eight years.

It is after the hue and cry by other investors that the government last year saw it fit to end the GBHL monopoly and open a window for competition as a way of increasing efficiency in that business segment.

However Jaffer has never said die in his fight to get the monopoly and that is where he lured Raila to his armpit as a partner.

GBHL monopoly was ensured by KPA managing director Brown Ondego who later moved to GBHL as an MD after his contract expired at KPA.

Ondego who is an ODM sympathizer is at present the executive chairman at the troubled Rift Valley Railways (RVR). With a second or third grain bulk handler, the price of maize would come down as the cost of packaging grains to sacks that GBHL now sets so high would be exposed to competition and he would have to bring it down to attract clients which would at the end show on shelves.

A grain bulk handler moves grains from ships through suction in pipes to its tanks which is then packaged to sacks for transportation. It is by all means and purposes a packaging factory. All types of grains to Mombasa port are packaged into sacks by GBHL. Only sugar and fertilizer comes to the port in sacks.

(Source: Weekly Citizen)

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Kenyan Youth May Lament Forever, But They Remain Own Enemy

The victory of the USA elect president, Barrack Obama, an American with Kenyan roots, was celebrated across all continents of this world. And indeed it is assumed to have inspired the greatest hope of our time across the generational divide. Here in Kenya, the youth celebrated that victory with renewed energy and optimism. But as the dust settle, the Kenyan youth has to realize that right in the heart of this nation, there is an Obama who only need our united support; that right here in this country change is possible if only we would vote with our future in mind, that right here in this great nation, we can command the politics of the day, if only we would discover the power that lies within our numbers and strength.

The youth, both white and black in America and especially the first time voters created, supported and elected Barrack Obama. They departed from and defied the norms of race and prejudice to put in place a generational change they felt good for them. If this is not a lesson enough, in this country where everybody remembers, worships and memorizes the tribal belonging, and mistakes it to be a synonym to democracy, then change is far a way from sight.
The bulk of this country’s population is the youth accounting for about 68.7 percent; unfortunately this demographic strength is not reflected in the political leadership and representation. 

Look at the national top leadership of some key national and union like sectors like Central Organization of Trade Union (COTU), The Kenya National Union of Teachers (KNUT), Kenya Football Federation (KFF), and Athletics Kenya (AK) among others; they are all headed by the old adults while the greatest stakeholders in these sectors are young people. This should be reason enough to make the youth change tact, prioritize the change agenda and draw a road map that will grant us a chance to lead this nation. Otherwise we will continue to be powerless, beggars and foreigners in our own land.

Thus it will be correct to allege and conclude that somehow there is something that is terribly wrong with our youth. In every election year; the Kenyan youth temporarily stop to think about their future and the kind of life they would want out of it. Most young people opt to support the older generation and spend the rest of their life after the election lamenting about the poor performance of the leadership in terms of governance and democracy.

The failure to deliberately plan, strategize and scheme, have cost the youth of this country a great deal. For instance, 2012 is not far from now and the youth have not even thought of coming together, identifying own candidate and starting an early campaign. This is the reason why the likes of Raila and Martha Karua will continue controlling the politics of this nation a little longer.

Initiatives like Jipange Generation is a very good idea towards the right direction by the young people, but we all remember what happened with Vijana Tugutuke, it woke up one day and became Vijana Tugutuke na Kibaki; a true paradox and satire to the aspiration of the young people. Jipange Generation itself became chaotic, violent and degenerated into a looting and mugging spree.

Although all is not lost; the youth has to literary work on their image in order to regain the public confidence. The current parliament has enough number of young people but their performance has been below the expected standards. We have heard little from them except when they speak on behalf and for the benefit of their political parties or party leaders. Some of these legislators were once vibrant and vocal voices in Civil Society movements but once elected, the voices fades off and they get sucked into the system. This impact negatively to the leadership struggles and pursuits of the young people in terms of preceding public image and trust, because we have no show case to present.

Being a youth is not a permanent status, neither is it a qualification to accord anyone a special consideration. The Kenyan youth should therefore stop lamenting and start taking charge of own destiny. No one will hawk power to the youth and those who are waiting to be given or for some miracle vacancy, will wake up to a rude shock when they cross the thresh hold of youth before creating any legacy worth mentioning in the light of the ages to come.

Our attitudes must change; change from the convectional thinking where success among the youth is measured on how best we kill competition, rise to celebrity status, behaving like our oppressors and abscond from our duty to offer quality leadership when it is required most by the citizens of this nation. The youth must read wide, learn the history of this nation, and undertake some project that will be geared to improve the economic, social and political status of this nation.

The youth must unite reform, repackage and re-launch itself, or forever lament as it drips into a web of confusion, mere statistics and weapon of self and generational destruction.

Author; OULU GPO
Born to serve humanity
Dated: 6th January 2009

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This coalition government can only work better under pressure

The greatest historical mistake to happen to this country was the formation of a coalition government. The face value of it may have appeared to have brought some relative calm and normalcy, given that the political violence and situation at that time poised a great threat to the existence of this nation, but on the sad note the coalition government has subsequently brought more damage, confusion and culture of impunity than the good and before.

Without credible Opposition wing in the parliament the government has continued to collude to trample against her own citizens. The standard of living is rising and the government is telling Kenyans that it is a global problem. What they don’t tell us is that ours is locally manufactured.

A cabinet of 42 members, luxury spending and high salaries for the few is denying majority the access to better livelihoods, health and work. Corruption is still thriving and as we loose the grand regency, so do we loose the Kenya Railways and the 13 billion shilling at the Ministry of heath services.

The parliament has failed to enact laws that are just to the people of this nation and since we have no sufficient voice from the parliament to protect the citizen, the people have no otherwise but to defend their own rights. This is the reason why a man had to risk his life on Jamhuri day to pass a message of concern to the President. This is the reason why Raila and Ruto were booed in Kibera and Eastleigh over Unga issue

The signing of National Accord Agreement was the beginning of this culture of impunity from this good for nothing crop of political class. They immediately abandoned the talks at Serena, abandoned the mediator Adeneji in frustration and completely forgot about agenda four; - the agenda that was talking about the youth and unemployment, the lasting solution to violence, the land reform, poverty and inequity, consolidation of national cohesion and transparency, accountability and impunity.

The political class embarked on power sharing wrangles and blatantly displayed this in sharing of ministerial positions and civil servants appointments.

But the most disturbing thing is the way this government has decided to give a blind eye to the wishes, aspirations and desires of the Kenyan people. To begin with, it has totally forgotten to address the fate of the Internally Displaced Persons. The government has done little to ensure that the families in the IDP’s camps are sufficiently resettled. It is a shame that one year down the line; we still have fellow citizens who are refugees in their own land.

So until the IDP’s rise up to some actions that will give the government some headache and sleepless night, then they will have no option but to continue languishing in the camps, because no one in this government seem to remember of their existence.

Further, this government has not presented a clear roadmap for constitutional dispensation. Kenyans desire to have a new constitution but the government to the contrary, has failed to heed to this quest from the Kenyans citizen.

And while Kenyans appreciate the speed upon which the two key commissions, namely; Kriegler and Waki Commission was formed, our hopes are fading over the commitment upon which the government is having in implementing the recommendations and findings of these Commissions. Waki report for instance has been rubbished by some very key and high profile people in this government; a clear expression of the high level of arrogance that this government is willing to lash on her own people.

So Kenyans should not expect the government to operate on business as usual basis. It is the pressure of the citizen that will make it work and perform. The same way Kenyans stood against the high food prices and escalating prices of maize flour and their voice bore fruits, is the same way they should stand up to make the government deliver on her many unfulfilled promises.

The same way the Partnership for Change spearheaded the non-violence campaign 0f 12-12 2008 is the same way Kenyans ought to carry the banner of pursuit of change in their daily lives.
The passing of the Media offensive bill by the parliament and subsequent assenting on the bill by the president Kibaki shows how this government is neither of the people nor for the people.

The Media’s effort through Media Owners Association was ignored in the formulation of this bill. And though the president has asked the minister of information to review the requests made by MOA, it is a late intervention that has after all come through the pressure put upon the government by media, members of public and section of some private entities.

A little and persisted pressure from the people of this country is the only thing that will make this government perform, for it has shown that, that is the only language it understands and that Kenyans have no one to push their agenda except themselves.

Yours faithfully,


P.O Box 4598-00200

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