Markets & Finance
How global private corporations keep Kenyan workers poorThursday January 26 2017
If Kenya’s big flower farms that export their produce to the United Kingdom added just five pence (Sh65) to the price of a £4 (Sh518) bunch of roses the wages of a flower farm worker would double, according to a report by UK charity Oxfam.
Oxfam International, which is moving its headquarters to Nairobi, says in the report that pricing of Africa’s fresh produce in European markets is one of the many factors deepening the huge wealth disparity between Kenya’s commercial farmers and their workers.
“Owners of these rose plantations, the people who get the money just keep adding bonuses for themselves every year, must be made to understand that such disparities are not sustainable in the long term,” Winnie Byanyima, the Oxfam executive director, told the Business Daily on the sidelines of the World Economic Forum’s Annual Meeting in Davos, Switzerland.
Oxfam’s wealth disparity report, titled ‘An Economy For the 99 Percent’, shows that eight billionaires own the same wealth as the bottom half of humanity — made up of 3.6 billion people.
It offers a gloomy assessment of the global economic system that enables the super-rich and global corporations to influence political decision-making, leading to market distorting policies such as tax breaks for big business and poor compensation of workers while executive compensation continues to skyrocket.
“This extreme concentration of wealth in the hands of a few people is damaging for all of us,” Ms Byanyima, a former Ugandan member of parliament said. “People will not be lifted out of poverty with these levels of extreme inequality whose ultimate outcome is social conflict and weak democracy.”
Income inequality featured strongly in various sessions in Davos, perhaps ironically for a gathering that is traditionally seen as dominated by the one per cent — the global elite in business and politics.
International Monetary Fund managing director Christine Lagarde said in one panel discussion that all was not lost and that there are things that can be done to correct the situation.
“We must aim for fiscal, structural reforms as well as monetary policies that are granular and regional-focused on what people can get out of it. It probably means more redistribution [of wealth] than we have in place at the moment,” she said.
Ms Branyima gave the example of Kenya, which the Oxfam report says is losing $1.1bn (Sh110 billion) every year in tax exemptions for corporations, nearly twice the country’s Sh60 billion budget for health.
That has very serious consequences for the health sector where women have a one in 40 chance of dying in childbirth.
The country is currently in the grip of a public health crisis, with a doctors strike that has lasted nearly two months and which is centered on poor remuneration of health workers.
Oxfam says corporations are often blinded by the pursuit of short-term returns to shareholders and the increase in crony capitalism.
“Oxfam wants to support developing countries to demand global tax reform that will ensure big companies are transparent about where and how they make their profits as well as pay their taxes,” she said.
Ms Byanyima cites the Kenyan flower farms as an example of cases where people with jobs remain poor, making a case for guaranteed minimum wages.
Former US vice-president Joe Biden delivered the same message just three days before he left office.
“Our goal should be a world where everyone’s standard of living can rise together,” he said in a keynote address, adding that there’s an urgent need to improve access to education and job training, ensure basic protections for workers and implement a progressive, equitable tax system.
Social justice activists have, however, had to contend with accusations of being anti-success and wanting to punish financial achievement instead of celebrating it.
“Oxfam isn’t anti-wealth, Oxfam is anti-poverty. For as long as there is extreme wealth that is crushing the opportunity of lifting people out of poverty, we will attack,” Ms Byanyima said.
READ: Eight men own half the world's wealth: Oxfam
Dhananjayan Sriskandarajah, a five-year veteran of the Davos forum, said the global economic system needs structural change to establish an economic order that promotes equality rather than the hoarding of wealth by a few.
Dr Sriskandarajah, the secretary-general of Civicus, worries that Davos has become something of a routine for its elite clientele and that they have no intentions of making any significant changes.
While the battle of inequality was playing out in the air conditioned sessions overlooking the snowcapped mountains of the Swiss Alps, there was also some good news for Kenya.
The JLL City Momentum Index 2017 named Nairobi as the 10th most dynamic city in the world and the only one from Africa to make the list. Bangalore (India), Ho Chi Minh City (Vietnam) and Silicon Valley (USA) took the top three spots.
“The CMI isn’t a measure of the ‘best’ cities in which to invest,” cautioned JLL research director Jeremy Kelly in a blog post. “It’s intended to identify change and highlight which cities or metropolitan areas may be best at positioning themselves to compete in today’s ever-changing economic landscape.”
Trade and Industrialisation secretary Adan Mohamed said Nairobi had its strengths that had enabled it to attract a large number of foreign investors.
“Nairobi and Kenya in general continue to be one of the best investment destinations. We have attracted more than $1.5 billion in investments and continue to grow,” he said.
He sought to play down reports that multiple bluechip companies have been downsizing over the past year due to a tough economic environment.
“There has been a lot of negative vibes out there focusing on companies either downsizing or closing down and totally ignoring a lot of the investments that are coming in,” he said.
Reinforcing his position on the issue in an NTV interview, the minister has insisted that “up to 900 firms have invested in Kenya over the past three years”.
Centum Investment CEO James Mworia, a WEF Young Global Leader, was reading from the same script, stating that Kenya was rated highly among international investors.
“I think we’re doing well but because we are in the situation, we sometimes tend to be very self-critical,” he said.
Kenya has also applied to host the WEF Africa Annual Meeting in 2018 in Nairobi after Durban this year.