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Laws Can't Guarantee Property
Rights
The East African (Nairobi)
25 February 2008
Martin Kimani
Nairobi
The recent post-election violence was aimed as much at individuals
as at their properties.
From farmhouse torchings, to the looting of shops and the illegal
occupation of houses in Nairobi, private property as a fundamental
right is under assault. The destruction has been as much about
economic resentment as it has been about disputed election results.
Politics and property are inseparable in Kenya. Business owners
and managers need to absorb this as a strategic risk and move
beyond traditional corporate philanthropy to a way of doing
business that
strengthens popular, and local, support for their property rights.
The right to private property is a cornerstone of the economic and
political system that Kenya has pursued since independence.
Whatever its demerits, no major political party has offered a
comprehensive alternative, so it is fair to assume that there is a
national consensus on it being the vehicle that will carry our
economic hopes. Unfortunately, the inability of the courts and law
enforcement agencies to protect the thousands of destroyed farms
and businesses proves the fragility of the private property regime.
The unmistakable message of the post-December 27 period is that
bad ballots spark underlying ethnic resentments which in turn lead
to title deeds being violently rendered meaningless.
At this rate, it will be difficult for ethnic minorities in any
part of the country to do business among a resentful local
majority.
Democracy rather than being a panacea will instead become the
means by which resentful majorities wreak their anger at
minorities that they perceive to be succeeding at their expense.
There are questions that need hard asking by the business
community in the coming months and years.
How will private property be upheld in a country where the state,
its presumed protector, is not perceived as an honest broker?
To what extent can legitimate business, for its own sake, distance
itself from the merchants of government favour who give it a bad
name? How will managers and owners calculate the risk of their
holdings being immolated in the name of political and ethnic
justice into their business models?
How will they be able to protect their claims against the
animosity of the communities in which they do business?
If there is a powerful emerging trend in the world, it is
ethnically-identifiable minorities possessing or at least
appearing to possess a lion's share of a country's free market
economy contending with a resentful majority empowered by
electoral democracy.
At least that is the view of Amy Chua whose World on Fire: How
Exporting Free Market Democracy Breeds Ethnic Hatred and Global
Instability bears bleak testament to the many countries in Asia,
Latin America and Africa whose politics are easily driven by the
intense resentment of wealth that is concentrated in the hands of
a few. Like so much else in Kenya, the identification of ethnic
minorities with economic and political dominance has its roots in
the colonial period.
European settlers were awarded large land grants on the basis of
their ethnicity. Their properties enjoyed the protection of the
law written by the very authority that had forcibly seized
indigenous land in the first place.
The Lord Delamere types of the twentieth century were the first to
suck on the tit of the Kenyan state.
Since then political influence - perhaps more than entrepreneurial
effort - has been the wide road to financial success.
Kwame Nkrumah's adage, "Seek ye first the political kingdom and
all else shall be added unto you?" has underwritten many a Kenyan
leader's pig-at-the-trough mentality.
But they were not always so cynical and greedy. While fighting for
independence, leaders such as Jomo Kenyatta - echoing Nkrumah -
believed that occupying the political heights was a necessary
precondition to winning other forms of independence.
The state by widespread reasoning throughout Africa and much of
the non-Western world was going to be the vehicle that levelled
the field in favour of the formerly colonised.
The Kenyan economy through government fiat would no longer be
dominated by colonial interests; Africans, too, would now get the
largest piece of the pie.
The optimism of this view failed to take into account that the
state they inherited was built to serve the few at the expense of
the many. Kenya failed to make fundamental reforms in the
structure of the state with the result that official corruption
set in soon after independence.
The 40-plus years of Goldenberg-like schemes have led to the
entrepreneurial success of the many being tragically equated with
the corruption of the few.
The linking of the election results with the property of "outsider"
ethnic groups indicates that many Kenyans believe that the capture
of the state by their representatives will lead to economic favour
or even an arbitrary redistribution of wealth.
It does not matter that the Kibaki government facilitated a
stronger
economy and delivered on targets that its predecessor had barely
approached.
It matters more that many Kenyans thought the president was
governing from a narrow church of supporters drawn according to
ethnicity.
The opposition smelt an opportunity, which is why it continually
argued in thinly-veiled language that a vote for it was a vote
against Kibaki and the prosperous minority he supposedly
represents.
In their turn, the Mount Kenya peoples, whether poor or wealthy
recipients of state largesse, regarded the president as the
defender of their group interests. A political defeat for either
seemed to promise
economic defeat as well.
The result has been the tarnishing of private property rights to
the detriment of the strong economy needed to deliver a prosperous
future for the country. Private enterprise for many years to come
will be
guided not only by the competitive risks inherent in every market,
but also by a complex weighing of whether its property claims can
survive political storms in particular locations.
A Kikuyu businesswoman will hesitate to invest in Eldoret as much
as her Luo counterpart will think twice before opening shop in
Kiambu.
The intensity of the post-election violence is also a warning that
demagogues will regularly arise to whip up popular fury at
prosperous ethnic minorities in return for votes.
The helplessness of the courts and the security organs to enforce
property claims will force businesses to be timid in expanding
naturally. Innovative insurers may be realising that the potential
market for political risk insurance has probably grown a
hundredfold in the past six weeks and will remain deep for many
years.
But it will not be sufficient to address the kind of widespread
violence witnessed in the past six weeks.
It will be up to the business community to apply pressure on
government to decouple political power from unfair economic
privilege. Helping win the fight against corruption will be a way
of ensuring business continuity and success.
Businesses will also have to substantially invest in gaining the
favour of their customers and neighbours such that their property
rights rest as much on local goodwill as on legal but
difficult-to-enforce rights.
This calls for a fundamental rewriting of corporate citizenship
beyond narrow philanthropic efforts largely drawn from the
corporate social responsibility movement in the West.
In Kenya, and perhaps elsewhere on the continent, companies will
need to fashion innovative strategies in hiring, procurement and
training that support the popular perception of them as fair
actors within the communities in which they do business.
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