Should Retrenchees Get Safaricom Shares?

I have had strange thoughts of late. The recent one involves the possibility of allocating Safaricom shares to Telkom rentrenchees. The soon to be privatized telephone monopoly is letting go 11,873 employees of its 18,000 labor force. Unfortunately, most retrenchees are low skilled individuals who might soon dry their Kshs 250,000 retrenchment packages.

Here comes my proposal: Retrenchees should take-up Safaricom shares as part of their retrenchment benefits. They can take 50% cash and 50% shares. That arrangement would introduce them to capital markets, which is a smart way of safeguarding their urgently needed financial safety nets.

But wait a minute! It’s most likely that Telkom retrenchees got their jobs through bribery, nepotism or tribalism. A preferential treatment in Safaricom IPO would be tantamount to rewarding vices that have crippled our nation for decades. However, these people should not be hanged-out to dry, but encouraged to take advantage of the fast maturing NSE.

East African Economic Freedom

Background
The 2007 Index of Economic Freedom is out. The annual publication of The Wall Street Journal and The Heritage Foundation is an indicator of individuals’ freedom to control their economic affairs.

The 2007 report authors refer to economic freedom as the ability of individuals to produce, consume, and distribute goods and services without interference from the state or any other entity. Economic freedom calls on governments to restrain themselves to the provision of entrepreneurial-friendly environments. That includes (1) providing proper legal and law enforcement systems (2) enhancing contract laws and (3) facilitating access to sound money.

How well a government performs the above roles determines a country’s economic freedom, which is measured in percentage points. A country with higher degrees of freedom, say 90%, means that the government is performing its roles efficiently and it rarely interferes with people’s economic endeavors. On the other hand, a country experiencing low degrees of freedom, say 30%, means that the government is spending more time encroaching on individuals’ economic lives other than performing its designated roles. Government interference can happen in 10 indifferent ways.

East Africa
As the above chart shows, Ugandan economy is the most-free in East Africa, a position is has held for thirteen straight years. The Peal of Africa is currently ranked as the fifth most-free economy in Africa and 58^th in the world. Mother Kenya is ranked eighth in Africa and 82^nd in the world, whereas Tanzania is ranked 15^th in Africa and 103 in the world.

Economic freedom is not to be taken lightly; it is directly related to prosperity, thus a better weapon to fight poverty. The report observes that countries experiencing higher degrees of economic freedom were more productive and had better living standards.

That fact holds true for Eastern Africa. Picture this: Uganda, the freest economy in Eastern Africa, has the region’s highest per capita productivity ($1,478), highest life expectancy (48.4 yrs), and the highest education enrollment ratio of 66.1%. Kenya comes second with a per capita productivity of $1,140, life expectancy of 47.5 years, and an education enrollment ratio of 60.1%. Tanzania, which has the region’s lowest economic freedom, lags with a per capita productivity of $674, life expectancy of 45.9 years, and an education enrollment rate of 47.1%. Those three factors (life expectancy, education and productivity) are key components of the United Nation’s quality of life index, popularly referred to as the Human Development Index.

That simple example from Eastern Africa, which is depicted all over the world, should convince our policy makers on the importance of economic freedom in the society. It could be the missing link in the battle against poverty.

Cross Country: Its Kenya Vs. Ethiopia (Part 2)

Kenyanomics promised a post on two of the world’s best women cross country teams, i.e, Kenya and Ethiopia. Their rivalry was founded in 1990, the year that East African ladies stamped their authority in the world of athletics. Ethiopian women have been team champions eight times and seven times for the Kenyans. The 2007 championships provide Kenyans with a chance to equalize. But that will be an uphill task considering that Ethiopians have taken the gold medal home every year since 1999, except for 2001. Go Ladies!!!!

Tomorrow on Kenyanomics: Cross Country Becomes an East African Business.

Cross Country Championships: Its Kenya Vs. Ethiopia

Ethiopian Airlines and Kenya Airways are arch rivals on African Skies, but their rivalry is overshadowed by that of Cross Country athletes. This year the battle for supremacy is being fought in Mombasa. The 35^th IAAF World Cross Country Championships will be the 26^th meet for both teams. Kenyan men have been team champions 19 times and Ethiopians seven times. But let statistics not fool you! The sport is full of surprises. Actually, there are no favorites until the race is over.

The above graph shows how both teams have performed since they first met in 1981. The y-axis shows team points and the x-axis indicates the year of competition. Unlike in other sports, the winning team in cross country is the one with least points. You can therefore see that successive Kenyan teams have performed better than Ethiopians. But tables turned in 2004 when Ethiopians broke Kenyans’ 17-year winning streak. They have been on each other’s neck ever since. Ethiopians are steadily catching up but Kenyans are still holding on. And even if Bekele the Great will not be racing, the world is assured of an electrifying competition. Let the best team win. Or who is your favorite?

Tomorrow on Kenyanomics: Kenyan Vs. Ethiopian Women (Long Course)

Check Out Kenya Imagine

Kenya Imagine is a new online interactive newspaper. It allows registered users to post articles and commentaries. Users with blogs are allowed to double post, i.e, the same article can appear on Kenya Imagine and on author’s blog as well. Less than a year since its founding, the site has, in one user’s words, “become the go-to place for intelligent Kenyan debate and analysis.” Check them out!!----- http://kenyaimagine.com/

Bloggers Beware

Nark-Kenya propaganda machine is up and running. Kenyan blogs have fallen victims of Dr. Mutua’s move to counter government criticism. I happened to criticize Kibaki’s dictatorial appointment of nine new ECK commissioners. As a result, Kenyanomics’ commentary section was bombarded with fourteen 50-paged “Statements from the Minister of Planning and Development.” Now that was crazy. I’ll be spending a fare share of this weekend deleting that nonsense. Check it out: http://kenyanomics.blogspot.com/2007/01/badly-timed-post.html

A Badly Timed Post

Kibaki’s dictatorial appointment of nine new electoral officials made my post on ECK totally useless. The sequence of my post and news reports is just disappointing:

• 09:21 (-5:00GMT)—Kenyanomics posts “A Tale of Kenya’s 21 Electoral Commissioners.” I intended to explain how political appointments have continuously caused chaos at the Commission.
• 16:00 (-5:00GMT) – The Nation and EA Standard report that Kibaki has appointed nine new commissioners.

A Tale of Kenya’s 21 Electoral Commissioners

Did you know that Kenya has the world’s largest number of Electoral Commissioners? Well, no country comes close. Not even our immediate neighbors, Uganda and Tanzania, which have seven commissioners each. Nigeria, which boasts Africa’s largest number of registered voters (58 million), has 12 commissioners. South African commission has six officials, whereas major western democracies like the United States and Britain have six officials each. The most shameful comparison comes with India, whose 670 million votes (60 times more than Kenya) are administered by four officials. So why does it take a multitude of commissioners to oversee electoral transparency in Kenya’s 12 million votes? Political patronage is the answer.

Our electoral commissioners have been political appointees ever since the country’s electoral law was legislated in 1963. The reintroduction of multi party politics in 1992 did not help. In fact, things got worse as political parties jostled for representation in the commission. Gradual increase of political interests has catapulted the number of commissioners from nine in 1991 to the current 21, including the Chairman and his deputy.

Most Kenyans would agree that their bloated electoral body has been a source of unnecessary political confrontations, which can be eliminated by reducing the number of commissioners. A smaller number, say five, would mean fewer positions for political parties to fight about. This would also foster scrutiny of candidates in parliament. Finally, only candidates who are well qualified and untainted by party politics would become electoral commissioners. And that could be the genesis of electoral transparency in the Kenya.

However, reducing the number of officials is by itself a political battle. But how else could we reform the commission? Chairman Kivuitu has suggested that we remold ECK’s composition to reflect the current political climate. Unfortunately, such proposals have been implemented three times before, but without much success. In fact, appointing commissioners to reflect the existing political climate is the main cause of ECK problems.

Consider that in 1992, membership was remolded to portray commitment to multiparty politics. In 1997, membership was altered through the IPPG to fit political demands of the day. The membership structure was also altered in 2003 to include members of the short-lived Rainbow Coalition. And for the fourth time in the fourth multi party elections, Kenyans want to repeat the same mistake knowing very well that it does not work. That must not happen. We Kenyans must not let political winds dictate structures of our civil institutions.

Ignorance Vs. Kenyan Athletes

Ignorance can be very expensive. It proved so to Mushir Salem Jawher, a Kenyan-born athlete who got stripped of his Bahrain nationality. Reason: he raced in Israel, which is not recognized by his Islamic home country. The shell-shocked athlete protested his innocence by stating that he was “never told it was illegal (for a Bahraini) to enter Israel.” But who was supposed to enlighten him (and other athletes) of global politics. Is it Sports Minister Maina Kamanda, Athletics Kenya, 8-4-4 or athletes themselves? Commonsense says it is the latter. Kenyan athletes should do more research before jumping ship, lest they get themselves into stateless situations or with curtailed liberties.

Aids: A South African “Powder Keg”

The year-ender edition of the Wall Street Journal carried an interview with Rev. Desmond Tutu, a South African cleric who recently reminded his fellow countrymen that Mbeki’s policies on poverty, Aids and Zimbabwe resembled a “powder keg” waiting to explode. Those comments were not received well by President Mbeki, who referred to Rev. Tutu’s remarks as "empty rhetoric".

AIDS Tale

Current administration’s dealings with AIDS leaves nothing to be desired: senior government officials, including the President, have been on the wrong side of AIDS war. Most notable case is that of former Deputy President Jacob Zuma, who recently claimed that bathing after sexual intercourse “lessens the chances of contracting AIDS virus.” It is absurd that the comment was made by a former head of SANAC (South Africa National Aids Council).

Health Minister Manto Tshabalala-Msimang questions the success of antiretroviral drugs, which is why she supports the use of dietary supplements (including garlic and beetroot).

The president has consistently refused to acknowledge that HIV causes AIDS. He had to be overruled by his own cabinet for a statement that “HIV causes AIDS” to be included in the country' AIDS policy. Worse still, Mbeki’s administration had to be taken to court for public treatment programs to begin.

One can only hope that South African leaders will change their attitude before the “Powder Keg” explodes.