FAT and MEAN: The concentration of wealth and the myth of enlarging the pie for a trickle-down effect

Edward Oyugi, J. Ocholla and Mwaura Kaara
Social Development Network (SODNET)

Gross inequalities, arising from and seriously compounding the obscene accumulation and concentration of wealth, have become the defining issue of our time. In some quarters, particularly those inhabited by die-hard market fundamentalists, contrary to the existential threats it invokes, it is believed to be a universal default setting of human society – ordained by Fukuyama-ist end-of-history normalcy, leave alone, finality. As a critical element of the ever- deepening crisis, it is producing a toxic political-economic and ecological situation, the adverse historical implications to which neoliberal political dispositions remain unresponsive, if not utterly oblivious. No wonder it has become the single most important challenge facing humankind, particularly in respect to the accompanying deficit in democratic governance and peaceful coexistence between different sections of societies and even between nations.

In the face of all this, the widening gap between the rich and the poor continues to undermine confidence in the institutions of democratic economic governance and, alongside it, the imperative of social cohesion as a condition for sustainable development. To be sure, it brings into sharp relief the widening rifts within and along the traditional fault lines of social contradictions in society. The attendant conflicting visions of social reality reflect the structures and developmental imbalances that afflict different sections of Kenyan society. Though, of late, the problem of inequality has grudgingly but finally found its way into the status-quo-maintaining agenda for the annual discussions in Davos as a pressing challenge to world peace, it nonetheless, as widely expected, failed to capture the critical imagination of the neoliberal minded crowd that patronizes the gathering in the Swiss Alps. Wrapped in the silken sheets of global financial power and tapping a conservative vein in the neoliberal status quo, Davos could only obscure what should be a critical concern of the human race. The concerns, instead of reflecting the defects in the organization of market societies by harping on the old tunes of: unqualified growth, trickle-down effect, competitiveness, the genius of the market and so on – all replayed on a neoliberal keyboard, should seek to change it.

Enduring exposure to the peripheral effects of global inequality and the ideological operations of the policy options preferred by the ruling elites has disposed Kenyan society to a wide range of systemic and structural forms of inequity for close to a century. This has rendered the society a victim of the systemic and structural forms of social exclusion through a highly skewed distribution of wealth; leading to high concentration of the means of production, methods of appropriation of the accrued benefits and modes of consumption of the same. Given the depth of deprivation in many parts of the country, growth alone will not be enough to ease the growing inequalities that threaten to reverse the meagre gains so far made in democratizing society. With one of the highest gini coefficient measures in the world (4.5), the barriers that constrain poor peoples’ access to enabling conditions for social development (water, good health, education and sovereign engagement with the  market) remain unchallenged: tribalism, corruption based on rampant rent-seeking behavior of well-connected state bureaucratic functionaries and unholy collusion with development partners who, instead of promoting equitable development, tend towards concentrating aid targets to politically rewarding projects in respect to interest of their local satrapies. They build roads, provide water, health and educational facilities where their local comprador and tribal interests lie and, in return expect local policy compliance with their extractive interests. The historical specificity of Kenya’s portrait of social exclusion and the sad story of its acute manifestation can be diagnosed under the following dimensions:

  • It is sub-national in scope and expression -  involving and confined but not limited to the voiceless sections of society and distance to the market;
  • It is structural in character - arising from and a direct function of the capitalist logic of unequal development and antagonistic social differentiation;
  •  It is political in character - reflecting the balance of power relations and running along ethnic, sub-ethnic, racial and elite contests for hegemony;
  • It is spatial in character - based on geographic location and distance from the main arteries of economic life of a nation and therefore market centers.

The wide and irregular swings in social exclusion have been viewed as constituting a significant element of a wider, if normal, process of economic growth and social differentiation as closely related to instances of occasional misdistribution of resources, inevitably leading to social differentiation and accompanying stratification in society. Increasingly, it has begun to defy the otherwise contentious narrative and logic of the Kuznets curve;1 confirming for the umpteenth time the alternative narrative predicated on the common knowledge that ‘not all boats will float in the wake of an economic flood of unqualified growth’.

At the global level, the ongoing spate of economic crises constitutes an ironical, if painful, reminder that abundance of wealth can uneasily sit side by side with unimaginable levels of poverty and purportedly inexplicable precarity. Globalization and liberalization of the economy have re-arranged economic principles, activities, social relations, including modes of production, patterns of settlement and consumption patterns, in a manner that has left particular sections of society and economic jurisdictions highly concentrated or thinly scattered in places no longer favored by the neoliberalized markets and allied centers of economic activities away from increasing concentration of wealth and power.2 That is why gross and increasing inequality has become a global problem, intensifying misery at the national and sub-national levels and causing unsustainable proliferation of identitarian politics, a good part of which may end up obscuring the essential elements of bona fide democratic struggles around State-society relations or government authority, which – under truly democratic circumstances - should be working to reduce the widening gap between the rich and the poor, but no longer have the reserves to do so, having had to employ multiple fiscal crisis counter-measures with no success. Fewer than 200 giant corporations now control not only world trade but the financial resources of the world economy. Obscene wealth is increasingly concentrated in the hands of a few. In 2017 alone, the world’s billionaires increased their combined global wealth by one fifth. Wealth inequality is at its highest since 1905. The world’s richest 1 percent owns half of the world’s wealth, thereby demonstrating the growing gap between the super-rich and everyone else.

Colonial origins, modalities and patterns of wealth creation and concentration

Kenya as a political-economic entity is a creature of a colonial project of European imperial-capitalist conquest and subjugation. The country still lives uneasily with a colonial past and its legacy of unequal development, arising from acute asymmetry of power relations associated with the continuation of a colonial system that had merely engaged a strategic retreat gear against the false belief that the post-colonial dispensation marked a systemic transformation of the colonial societies. As a territory, it was first managed by the British East Africa Association, mainly for the extractive economic interests of the British commercial oligarchy but also on behalf of the British Government for imperialist adventures. The clamor for extractive economic opportunities, driven solely by the expansionist imperial interests determined, to every conceivable detail, what and where extractive economic activities would open up new frontiers for British imperial capital to extract profit from wherever opportunities presented themselves. Such opportunities are, throughout the checkered history of capitalism, never distributed equally across any geographic space. Their strategic appropriation and eventual exploitation, therefore, results in an unequal spread of fortunes and misfortunes for the very victims and potential beneficiaries of the colonial project respectively. That is how the colonial-capitalist corridor along the Mombasa-Kisumu-Busia railway line/road network, meandering purposefully through anachronisms of the Happy Valley, became the strategic lifeline of and provided the commercial artery for Kenya’s colonial extractive political economy. Having produced an enduring legacy of market-dominant groups versus market-subjugated communities, the Happy Valley syndrome has left behind a festering wound of inequity alongside an enduring legacy of economy that is yet to give the necessary slack to the post-colonial modernization efforts. It is now being replaced by a Mount-Kenya corridor of industrial and infrastructural highway/hub and corresponding concentration of hegemonic market forces around the center of gravity of an enduring bureaucratic-capitalist power base.

Kenyan communities occupied certain portions of land where people lived either as pastoralists, cultivators or as hunters and gatherers, while some communities cultivated and fished. Their land laws were the customary laws. Through the Land Acquisition Act of 1894, the first Crown Land Ordinance of 1902, Crown Lands Ordinance of 1915, and the Kenya Native Areas Ordinance of 1926, native African communities were evicted to give way to settler farmers and to facilitate the construction of the Kenya-Uganda Railway. All ‘waste and unoccupied’ land in the protectorate was in effect declared ‘Crown Land’ which was demarcated into either ‘Scheduled Areas’ (for European settlement) or Non-Scheduled Areas (for African Reserves). In most cases, the indigenous owners of the confiscated land were relegated to mere laborers on the British farms.

The colonial state intensified the spread of cash crops and dairy cattle in the African reserves, on the startling new basis of generalized private, freehold, property. For the Kikuyu people of central Kenya, land registration and consolidation during the Emergency was the final, bitter, codification of their clan history and land tenure system. This amounted to a mental revolution for those at the bottom of Kikuyu society, destroying the ahoi (tenant subsistence farming groups) option for these landless poor, amounting to around one-third of thecommunity’s population. Henceforth, they had no kin, no ancestral land, no marginal marshlands in the reserves to go to and eke out a living from; a new Kikuyu society was born - propertied and non-propertied - and left to face an uncertain future in the face of the highly antagonistic politics of formal decolonization.

The 1902 Crown Lands Ordinance, the first version of today’s Government Lands Act, Chapter 280 of the Laws of Kenya, legitimized a situation in which the indigenous population would be allowed to continue occupying land which had been appropriated by the colonial settler farming community. The plan was designed and implemented to remove the revolutionary steam off the Mau Mau uprising. It therefore served the strategic needs of colonialism and helped it diffuse the gradual buildup of anti-colonial movement. In this particular respect it performed two complementary functions: the consolidation of the extractive interest of the colonial economy and the creation of an African agrarian capital. In the words of the Special Commissioner for Central Province, “The land consolidation was intended to complete the work of the State of Emergency: i.e., to grow a pliable middle class to a manageable level, to stabilize its traditional instinct for conservative engagement with capital and to inflect its social energies in favor of a reactionary attitude towards decolonization, based on the loyalist politics of the emerging landed bourgeoisie; and, as confiscated land was to be thrown into the common land pool during consolidation, it was also to confirm the landlessness of the rebels.”3

It goes without saying that to maintain systems of inequity and an undemocratic balance of social forces, inherited from the colonial experience, required a highly centralized public administration and hegemonic rule to boot in both colonial and post-colonial Africa. This accounts for the spatial re-distribution of economic activities (by the colonial authorities) the residual effects of which were faithfully embraced by post-colonial ruling elites; once more rationalizing and institutionalizing the theory and practice of what has become known in political economic parlance as chlorophyll approach4 to development planning. As a development policy and a carryover from the colonial unequal development, it provided the context, social content and historical process in which certain regions, sections of society or groups were to be systematically and structurally blocked from (or denied access to) various rights, opportunities and resources that are normally available to members of different groups, but which are, at the same time, fundamental to equitable and sustainable social integration.

Institutions and the accompanying connective infrastructures, hardwiring the colonial enterprise in place, had been designed to sustain the extractive behavior, prolong and intensify the hegemonic character and malfunctioning tendencies of the colonial economy and consequently firm up the trajectory of unequal development of Kenyan society. Therein, and nowhere else, lies the legacy of wealth concentration that has been associated with the historical roots and political-economic practices of exclusion and marginalization; first, of Kenya vis a vis the imperial West, second, in regard to the so-called low potential regions and ‘natives’ of the protectorate and third, in respect to the native areas/populations in relation to settler economic zones, fourth, of the subsistence, distinct from commercial agricultural activities, and fifth, of ‘civilizable’ and ‘uncivilizable’ or uncontacted tribal groups/natives. It follows, therefore, that the extractive demands and political excesses of the imperialist metropolitan economy back home informed the preference, choice and operational sites for the extractive activities and sectors, peoples, regions and demographic formations to benefit from the attendant colonial government investment policies, resulting in unequal development of the native populations. Consequently, it led to the systematic neglect and historical devaluation of other non-strategic sectors by the standards and preference of the colonial extractive economic activities; particularly those that did not qualify for high potential considerations.

Patterns and modalities of the concentration of wealth in post-independence Kenya

Post-colonial Kenya has never experienced a radical departure from colonial Kenya in so far as economic policies and social-development priorities were concerned. Neither did it promise a complete break from the tight grip and systemic stranglehold of the hegemonic interests of the post-colonial cosmopolitan West. While decolonization was fought for and achieved in order to ensure that all sections of Kenyan society (including ethnic groups) would prosper through balanced social development, subsequent unequal social development is a key factor, having turned the colonial-historical fault lines into active sources of sub-national conflicts around accumulation and concentration of wealth. The seeds of inequality and the trajectory of unequal development remained intact and on course; it only awaited the stunted growth and democratic immaturity of a significant section of the post-colonial elite to continue along the same path of antagonistic social differentiation and the underlying concentration of wealth. In fact, to some extent, disparities in the scale of private and public-sector investment in infrastructure, and market incentivization and employment creation experienced rapid but toxic escalation.

In the post-independence era, the country’s development strategy was anchored on Sessional Paper No. 10 of 1965 on African Socialism and its Application to Planning in Kenya.5 Ostensibly, according to the policy, the state had an obligation to: ensure equal opportunity to all its citizens; eliminate exploitation and discrimination, and; provide the needed social services such as education, health care and social security. The policy framework emphasized investment in high potential areas hoping that the rest of the country could benefit from the trickle-down effect. In reality, however, the paper was a perpetuation of a colonial development policy which defined economic potential of the country through agro-ecological zones, preferred by the colonial settler economy. The trickle-down effect could not work as envisaged because the Sessional Paper failed to provide for an auspicious framework to redistribute revenues and economic benefits from the high potential areas of productivity to the low potential areas.

In addition to the lip service given to the need for rapid economic development by the Sessional Paper No 10, it instead provided fuel for toxic tribal elite competition for State capture that left a precipitously shrinking space for the operationalization of the principles of equity and fairness in the generation, management and distribution of public resources to drive planning and implementation of policies that would correct the structural imbalances inherent in and inadvertently inherited from the colonial extractive political economy. Riding on the post- ‘iron curtain’ capitalism and, at the same time, performing the arrogant victory dance of neoliberal capitalism, the Kenyan political economy has precipitated the emergence of new faces and unusual systemic dynamics of exclusion and marginalization in different spheres of post-colonial political economy, the overall effects of which make a joke of liberal democracy and the dream of sustainable development.

Corruption – translating State-bureaucratic authority into economic power

The culture and practice of corruption has grown deep and enduring roots in Kenyan society and, in the process, become pervasively endemic. Systems and institutions, which were designed for the regulation of the relationships between citizens and the State and between the State organs are being used instead for the personal enrichment of public officials (State and political bureaucracies) in a clientalist system in which corrupt private agents (individuals, groups, businesses) partake in widespread corruption with shameless impunity. Corruption persists in Kenya primarily because the political and bureaucratic leadership benefit from it and the existing governance institutions either kick the can down the road or lack both the will and capacity to stop them from doing so. This allows for concentration of wealth within the ruling circles and enables them to influence public decision-making in favor of accumulation and concentration of wealth by the ruling tribal elites.

Harambee – Entrenching concentration through rampant rent-seeking

In the late 1960s mobilization of resources at the local level for economic social development was transferred to communities giving rise to the Harambee philosophy which inadvertently compounded inequality. Funds pooled through Harambees seemed to gravitate around the political gravity of the bureaucratic elite. The corporate sector stampeded Harambee events, mawkishly seeking to attract the overbearing attention of the national bureaucratic elite for a wide variety of favours, leading to concentration of resource around Harambee projects patronized by the bureaucratic elite. The resources so generated were used to build schools, health facilities and other community projects previously provided by local authorities, once more leading to concentration of development in areas from which the powerful politicians hailed. Though a noble idea, the Harambee philosophy meant that communities that lacked capacity to raise their own funds lagged behind, hence perpetuating inequality in distribution of development projects among regions. The Gatundu Self-help hospital6 is a historical monument, exemplifying the desecration of a noble humanitarian practice into an unequal development strategy and, therefore a wealth concentration scheme.

Mega corruption scandals: Anglo-Leasing, Chicken Gate, Eurobond, Youth Fund

Mega corruption scandals including Anglo-Leasing, Chicken Gate, Youth Development Fund and many others have fueled the obscene concentration of wealth among individuals and groups who are well connected to the State bureaucracy. This has involved the misappropriation of billions of Kenyan Shillings, pilfered from taxpayers’ money by the very State bureaucrats (in alliance with private sector actors) who are supposed to oversee their proper and prudent use.

The Anglo-Leasing scandal started when the Kenya Government wanted to replace its passport printing system in 1997, but came to light in 2002. It was among the many corrupt deals that were inherited by the National Rainbow Coalition (NARC) from the Kenya National Union (KANU) Government that had ruled Kenya for 24 years. A sophisticated passport equipment system was sourced from France and forensic science laboratories for the police were sourced from Britain. The transaction was originally quoted at 6 million euros by a French firm, but was awarded to a British firm, Anglo-Leasing Finance, at 30 million euros, who would have sub-contracted the same French firm to do the work. The tender was not publicly advertised, and its details were leaked to the media by a junior civil servant. It was later revealed that the scandal involved the criminal collusion of local corrupt officials and their multi-national corporate counterparts, with shrewd middlemen doing the bidding for their political clients. The fraud had been facilitated by a plethora of phantom entities, including some UK companies, used to perpetrate fraud on the Kenyan taxpayer through non-delivery of goods and services and massive overpricing.

The Eurobond scandal involved the theft of about US$ 1 billion; money which was meant to meet the debt repayment obligations of the Kenyan Government (owed to several lending bodies) and also to build infrastructure for the national economy. Instead, the money went into individual bank accounts. The recipients have since capitalized it for funding electoral campaigns, using Western political and financial institutions such as Cambridge Analytica, JP Morgan and Federal Reserve banks. As a political and self-enrichment scheme rather than a development plan it not only helped broaden the middle class collaborative base but also consolidate the global concentration of financial power by the international bourgeoisie. Kenya’s National Youth Service (NYS) scandal was a corruption scandal perpetrated by and carried out within the country’s Ministry of Devolution and Planning. It involved a colossal amount of about US$1.8 million. The money is said to have been stolen from the ministry's coffers, using fraudulent procurement procedures to pay ghost companies, domiciled in questionable jurisdictions.

As corruption continues unabated under the tyranny of a capitalist class rule, protected by a thin but resilient tribal-identitarian integument, popular confidence in the institutions of both economic and political governance will wane beyond the need for the rule of law. Glorification of the hustler mentality will replace commitment to a politics of solidarity and the underlying imperative of democratic economic governance as a condition for a sustainable society.


1 Simon Kuznets, “Economic Growth and Income Inequality”, American Economic Review 45 (March 1955). Kuznets recognizes that there were powerful economic forces that tended to increase inequality in a market economy. But he argued that, even in the absence of government interventions such as taxes and transfers, a range of powerful economic forces would operate to offset the trend towards increased inequality.

2 Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2013).

3 See Tabitha Kanogo, Squatters and the Roots of Mau Mau, 1905–63. (Nairobi: East African Educational Publishers, 1993).

4 An economic analogy model of resource limitation in plants, developed and popularized by Arnold J. Bloom, F Stuart Chapin and Harold A. Mooney to substantiate the logic that development policy should follow regional distribution of so-called high potential economic zone, opportunities and activities to allow for the logic of trickle-down economics to take over.

5 Ministry of Economic Planning, African Socialism and its Application to Planning in Kenya (Nairobi: Government Printer, 1965); available at: https://books.google.com/books/about/African_socialism_and_its_application_to.html?id=VzE0AQAAIAAJ

6 A hospital initiated by former President Jomo Kenyatta in his home village in the early and mid-1960s which attracted enormous politically-interested philanthropy, mainly from Asian and corporate business interests, seeking favours from the Kenyan post-colonial state.