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Historical injustices taught us how to defeat the rule of law

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By LUIS FRANCESCHI
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We like the rule of law in abstract but we hate and despise its application in our daily lives and relationships. We preach the rule of law from top to bottom, in schools, in conferences, in churches, in corporate and everyday politics. Yet, we easily and happily disobey laws from bottom up.

Take a quick look at Nairobi, one of the best originally planned cities in Africa. Just think for a moment of any matatu terminus around rich or poor Nairobi. The place may be tarmacked or potholed, with or without signage, with or without policemen… It could be Westlands, Lavington, Juja Road, River Road, Nairobi West, Kitisuru, Donholm or Buru Buru in any of their phases.

Think also of road signs, forests, road reserves, quite a few buildings, particularly the so-called Kikuyu-Gothic architecture prevalent on Thika Road, Zimmerman, Wangige, Gachie… Picture the times you, yourself, have broken any law because there was no camera or no policeman on sight.

We dislike the law, but love our customs

It is evident. We have a social disdain for the rule of law…but not for any rule of law. Think too for a moment of other laws; those customs revered so sacredly by different communities across Africa. In-laws in Western Kenya would never dare to spend a night in the house of their father in law. Think also of any man from central Kenya who may dare to go on without circumcision…he risks facing the knife in the middle of the street, and it has happened to more than one in Karatina.

We scorn some laws but we respect others. We revere our traditional laws, even if nobody is looking at us. Instead, we easily mock police instructions, ministry directives, acts of parliament…anything unless a gun is pointed at us. Why?

Prof Patricia Kameri-Mbote, my teacher and mentor, answered this question at Taifa Hall, during the presentation of her higher doctorate (LL.D.) She was referring to wildlife and forests when she gave us the key of our legal drama. She said, “The militarisation of wildlife areas and forests happens when we have more people wanting to break the law than those protecting it. This is a result of our colonial days when breaking laws was a matter of survival for Africans.”

The colonial laws were there to favour the white master

I found this statement to be deep, true and sad. The legal system handed down by the colonial masters was a tool of oppression; it was the excuse to keep Africans down to increase social advantage, pleasure and bigger profits for the coloniser.

This is how Africans were arrested and fined if they uprooted tea or coffee trees, if they sat on the whites-only section of a bus, if they walked at night in white neighbourhoods. Life and education were segregated; freedom of movement was restricted and freedom of association was carefully monitored.

Mercy Muendo published a fantastic piece some years ago in The Conversation. She argues that some of these laws can be “traced back to legal ordinances that were passed by the colonial government between 1923 and 1934.”

Was I born a vagrant, vagabond, barbarian, savage or Asian?

For example, the “1925 Vagrancy Ordinance restricted movement of Africans after 6pm, especially if they did not have a registered address.” These laws differentiated white settlers from “other created categories of persons known as ‘vagrants’, ‘vagabonds’, ‘barbarians’, ‘savages’ and ‘Asians’.”

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Mercy also mentions the “Witchcraft Ordinance of 1925 (which later became the Witchcraft Act) outlawed any practices that were deemed uncivilised by colonial standards. The provisions of the Act are ambiguous and a clear definition of witchcraft is not given. This has made it easy for authorities to prosecute a wide range of cultural practices under the banner of witchcraft.”

Owaahh, in one of his fascinating posts on the seven most interesting but obscure Kenyan laws, also quotes the Asian Officers’ Family Pensions Act (and Asian Widows’ and Orphans’ Pensions), which expressly excluded Asian employees from the lucrative European Pensions laws (of course, Africans were not entitled to any pension whatsoever.)

Prof Makau Mutua also argues in his article “Africa and the Rule of Law” that the Western concept of the rule of law cannot be simply transplanted to Africa for it would lack legitimacy and fail to achieve social transformation.

The colonial idea was to divide and rule, to separate the races and create “safe heavens” for the invading powerful minorities. The law turned every white person in a potential law enforcing agent. Although not all whites liked and supported this status.

This is the legal system we inherited at independence. It was organised, clean and neat, but designed to segregate. It is interesting to know that many of the ordinances in force in the colonies were never law in England. That would have been unacceptable for the common English farmer, yet in Africa they were enforced and people went to prison for violating them.

In post-independence Kenya, we missed the historical moment to address such injustices. It was not a matter of revenge, or ransacking the many benefits modernity had brought to the land. It was rather a matter of redoing the social tapestry; of rebuilding the legal fabric by airing the compost of unfair laws and regulations passed by a racist and repressive system.

The shifting of masters without looking into matters

We simply shifted masters. We replaced the oppressing white colonial master by a local ruler, and kept on enforcing the same oppressive laws. It was no longer racial discrimination but inter-African, ethnic and financial. African against African…the have against the have-nots.

The task ahead is huge, humongous. It cannot wait. Africa will not survive another century under the current legal system. The time to innovate, redraft, rethink is long overdue.

We have developed the habit of breaking the law. In our day-to-day affairs, only militarisation can keep “law and order”. This is risky and expensive. It is unsustainable. We want to have the parks of Copenhagen, Singapore’s clean streets, Switzerland’s organised public transport system…this is simply impossible without a culture that is premised on the rule of law.

When the masses do not understand the purpose and benefits of such laws, a neat urban culture can only be created by force, by pressure, and as soon as the pressure is released, we go back to our daily pandemonium…to business as usual.

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KIBUUKA: Developing tax planning policies and strategies for the new year

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PAUL KIBUUKA

By PAUL KIBUUKA
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Tax, previously relegated to the background as simply another cost of doing business, is high on the agenda of CEOs and boards of multinational enterprises (MNEs)—and small and medium enterprises (SMEs) in global trade and international business.

Paradoxically, at a time when countries in East Africa are using tax and investment incentives to attract foreign direct investments and to stay competitive with other regions offering similar incentives, the veritable magnitude of changes in tax policies and laws made in recent years necessitates that directors and senior executives of MNEs—and the preponderance of SMEs—give due consideration to tax issues.

Currently, beyond maximising shareholder value, there is growing concern about the handling of negative publicity, enduring heightened pressure from nonprofit advocacy groups to take less aggressive tax positions, and getting to grips with the impact of tax on business decisions. At the same time, community expectations of private sector companies in East Africa to pay their “fair share of taxes” are increasing.

Against this backdrop, companies need to deliberately devise appropriate tax planning strategies and to actively engage senior executives, the board, and the finance and tax executives.

A factor further complicating the intrinsically technical field of tax is the fast pace of changing policies and laws as the region’s tax authorities cope with the upshot of rapid technological innovations, global interconnectedness, disruptive business models, and the new era of talent mobility. Moreover, contemporary tax policies and laws are built on centuries-old principles and goals.

From these observations, we can appreciate the significant scale of the changes and their possible lasting consequences on business, trade and investment activities.

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But what is giving impetus to the rapidly changing tax environment in East African countries? The Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD) aims to combat tax avoidance by MNEs. It is one of the key drivers of change in tax policies and laws and has resulted in unparalleled changes around East Africa.

For example, Kenya recently signed the MLI Convention, an outcome of the OECD/G20 BEPS project, to implement BEPS-related measures into 14 of its existing tax treaties, and to prevent the use of these treaties for tax avoidance. Tanzania also replaced its previous transfer pricing regulations issued in 2014 with the new Tax Administration Regulations, 2018, which are largely consistent with the OECD transfer pricing guidelines.

Other key drivers of change in tax policies and laws are digital technologies that are creating new challenges for authorities, and the perceived aggressive planning arrangements by MNEs.

The OECD is trying to find global consensus among more than 130 countries on the allocation of taxing rights in the digital economy by June 2020. As the OECD continues its efforts, reaching an international agreement to tackle the global issue of taxing the digital economy is crucial. But that is no mean feat.

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Some countries in East Africa have already explored expanding their taxing jurisdiction with regard to the digital economy. In 2018, Kenya unveiled a provision requiring non-resident tech companies to pay taxes on domestic income accrued from a digital platform. More countries contemplate doing so, which may lead to double taxation.

Yet despite these approaches to expanding the tax bases, governments in the region are endeavouring to entice investments and generate jobs by providing investors with generous fiscal and investment incentives.

Uganda offers 100 per cent allowance for, inter alia, mineral exploration expenditure in the year of expense: Kenya offers an investment deduction of 150 per cent for eligible investments exceeding Ksh200 million ($2 million), and Rwanda offers a preferential corporate income tax (CIT) rate of zero per cent for international companies with their regional offices in the country.

Ethiopia offers Customs duty exemptions of up to 100 per cent on imports of capital goods for qualifying investments, and Tanzania offers a reduced CIT rate from 30 per cent to 20 per cent for new manufacturers of pharmaceutical or leather products who have a performance agreement with the government.

Changes in tax policies and laws provide senior executives and the board the opportunity to engage actively with respect to tax policy development, by sharing practical insights and perspectives on the impact that the changes can have on a company, an industry, or a sector.

Policy makers typically seek views from senior executives and the board through chambers of commerce, private sector associations, and policy think-tanks. Effective interactions, consultations and exchanges between the business community and tax policy makers can as well assist to determine whether a particular tax policy and legislative initiative will achieve its objectives.

The above developments give rise to, or increase, tax and tax-related risks, which recurrently occur and can have a significant impact on a firm’s bottom line.

Consequently, senior executives and the board need to evaluate these risks, despite the fact that tax is not the only issue to be considered in business decisions regarding technology, business and talent models, new market entry and outsourcing relationships.

Outside tax expertise can be extremely valuable, especially considering that tax is a dynamic and fast-paced technical field.

Bearing in mind the effects that tax planning strategies, government tax policies and tax legislation can have on a company, active engagement—not just involvement—by the board of directors in routinely deliberating about tax policy and legislative developments in 2020 and beyond is merited.

Paul Kibuuka, a tax and corporate lawyer and tax policy analyst, is the CEO of Isidora & Company and the executive director of the Taxation and Development Research Bureau. E-mail: [email protected]

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Action security plan to make country safe

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EDITORIAL

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Insecurity remains a major threat to the country’s stability.

A series of terrorist attacks in the past few weeks illustrates our vulnerability and, consequently, the imperative to step up security and assure safety for all.

And other forms of insecurity obtain, including shootings, thefts, muggings and break-ins. Kenya’s borders are porous while too many guns are in the wrong hands.

High levels of unemployment and hard economic conditions, among others, have combined to create a pool of dangerous gangs.

This provides the background on which Interior Cabinet Secretary Fred Matiang’i issued a 10-point agenda to deal with insecurity and other threats.

Significantly, Dr Matiang’i issued the plan in Mombasa, a region that has witnessed repeated cases of terrorist attacks and violence by local organised criminal gangs.

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In the directives, the government undertakes to intensify surveillance to pre-empt terror attacks and other forms of raids.

But this is not a novelty. As argued here before, constant checks and stakeouts are the surest tactics to avert violence.

But surveillance presupposes that the government provides adequate resources – personnel, equipment and cash – to support such operations.

Often, however, the security teams are handicapped by scarce resources, rendering them unable to carry out spot checks and respond quickly and competently to incursions.

Worse, police lack modern technology and equipment to deal with new forms of crime, including cybercrime. Matters are compounded by the fact the police are not well trained to deal with such threats.

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Referring specifically to the war on terror, the government makes an undertaking to not only deal with the perpetrators but also their accomplices, especially those who harbour the gangs and finance or otherwise support their heinous activities.

And this is where the provincial administration has to take charge; identify and flush out suspected gangsters and their collaborators.

And officials have to coordinate activities such as registration of persons, issuance of birth certificates and national identity cards because, away from the inherent corrupt deals, those provide avenues through which foreigners and criminals acquire vital documents to mask their identity as they plan criminal activities.

Another directive was on gun licensing, which is suspended until July to enable the government mop up all illegal firearms.

This directive came into effect last year and, although some progress was made, many firearms are still in the hands of criminals. A crackdown on illegal possession of firearms is crucial.

Sound as the directives may be, however, the challenge is execution. The onus is on Dr Matiang’i, the security agencies and provincial administration to shift from pronouncements to action.

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Fix estate access roads, too

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EDITORIAL

By EDITORIAL
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The past four days have seen what started as a small protest over the appalling condition of roads in Nairobi’s eastern outskirts turn ugly.

One person has been confirmed killed in running battles between local residents and the police. The conflict has also left a trail of destruction in its wake.

What the residents of Kasarani are complaining about is not peculiar to their neighbourhood.

Paying a heavy price are commuters, who now have to trek several kilometres to catch matatus from other places as the local operators insist that the Kasarani-Mwiki road must be fixed before they resume operations.

The matatu owners are investors who pay taxes like the rest and deserve services and amenities. The badly damaged roads mean that their incomes are spent on vehicle repairs.

It is encouraging, therefore, that following Nairobi Senator Johnson Sakaja’s intervention, the repair of this key road began yesterday.

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He had to convene a meeting of representatives of the Kenya Urban Roads Authority, matatu saccos and the city county roads department.

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The State has released Sh300 million for the works.

It is a shame that the people must resort to such desperate actions to get the authorities to do their bit.

Only the other day, President Uhuru Kenyatta reiterated his commitment to creating an enabling environment for small-scale enterprises to thrive.

This is important in the overall government efforts to fight poverty and create jobs through the small-scale businesses, including public transport sub-sector saccos and individual investors.

While the government has done a commendable job in building major roads, including beautiful bypasses in all the major towns, access roads in the residential areas have been badly neglected. These roads should be fixed as well.

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