The first time that Kenya went broke was in 1960. We couldn’t pay, and Britain had to take over the armed forces’ salaries. And for those who want to delve deeper into the archives, let us remember that 130 years ago, the Imperial British East Africa Company (IBEA), which had been given a charter to “colonise” the territory (which was renamed Kenya in 1920), also went bankrupt.
By then, IBEA, founded by Sir William Mackinnon as a trading company, could not pay salaries, and it ordered John Ainsworth — the 28-year-old officer running the Machakos headquarters — to evacuate and return to Mombasa in 1893. Ainsworth wrote back and said he would go without pay, and it was not until 1895 that the country was transferred from company rule to Crown rule.
The rest of the story is that Ainsworth — after being employed by the Crown — was ordered to follow the railway to “Mile 327” (later known as Nairobi) and coordinate the establishment of a town.
Now that President Ruto is running on empty, he should learn something from Ainsworth — and the most important lesson is that you can cut your expenditure.
The second time on record that Kenya went broke was in December 1960. The Minister for Finance, K.W. McKenzie admitted to the Legislative Council (Legco) that the government was £1 million down in its revenue collection compared to the previous year. Things were getting worse, he said, and Britain had stepped in to pay the armed forces' salaries.
The minister said the deficit would worsen by the end of the financial year in June, and they would have to slow down.
McKenzie — and our Finance Cabinet Secretary Prof Njuguna Ndung’u can check from the archives — lowered expectations and ran a budget proportionate with the revenue collected.
He told the House: “We are not, quite obviously, fully justified in our optimism about revenue and it is quite clear that our expenditure policy will have to be reviewed accordingly, not only for this year, but also for next year.”
He said: “It is most unlikely that we shall be able to find all the capital we need to provide for our essential task of fostering development. It is quite likely that existing development plans will have to be held down in 1961, 1962 and the following year.”
And that meant they were to hand over a broke government that could not meet its budget or existing plans.
But you don’t hear this story of a broke independent-era government because Jomo Kenyatta — unlike Ruto, Rigathi Gachagua and Kimani Ichung’wa — did not use it to justify the delivery or non-delivery of his promises.
Instead, he rallied the community to fill the void with self-help projects, and that is how the spirit of Harambee came into being.
That was before politicians and aspiring politicians used it to corrupt the electorate — and the voters started thinking that the man (and woman) with lots of money is “development-conscious”.
Back to McKenzie, his statement surprised African members of Legco, who were still negotiating for a new Constitution in Lancaster, and who had promised a new heaven once the colonial order closed shop.
But, if you read between the lines, McKenzie was telling the incoming government that they have to collect taxes, set good policies and attract direct foreign investment, which would absorb the unemployed youth. Also, they have to create political and social order for business does not thrive in disorder and scaremongering.
McKenzie was a bit blunt: “No one in Kenya (and I think he meant settlers) owes the people of Kenya a living. It is only by constant hard work and increasing our sources of capital that we shall obtain our living.”
The next speaker was Dr Julius Gikonyo Kiano, the minister for Commerce, and he agreed that if peace was maintained, it would be easier to attract international capital into the country.
Kiano said: “Every clash, even those between various political parties, makes the situation worse. International finance will only come to countries where there is peace and stability.”
This statement is as important today as it was in 1960. The kind of chest-thumping we see between Kenya Kwanza and Azimio is unhealthy for a country with empty coffers. The losers will be the subalterns, for they have few shock absorbers.
My reading of history is that there was a genuine desire to construct a multi-racial state in Kenya. But that failed after the politicians abandoned the nationalist cause and started building a tribalised nation — where tribe was used as criteria to access “fruits of independence”. In that scenario, the country — as Gachagua has been telling us — had its shareholders, and they came first in accessing power, the kitchen and the granary.
But was Kenya facing an economic crisis? “The trouble is entirely psychological. I believe it is still within the powers of the people of Kenya to get themselves out of this mess,” said McKenzie. And that seemed to get support from an editorial in the Daily Nation, which said that Kenya’s economy had been built not only by the settlers but also by the civil servants, businessmen and professionals “who have worked just as hard, contributed just as much, to the progress of this country and who are just as indispensable to its future”.
And what was needed was a government that people would have faith in — and where everyone saw and felt as citizens of an independent Kenya.
Given the economic scenario unfolding at independence, it was important for Jomo Kenyatta to lure Ronald Ngala, Masinde Muliro and Daniel arap Moi — and the other KADU members — towards the government.
Jomo understood that, minus that, he could not rule smoothly. His son, Uhuru Kenyatta, would later do the same to tame Raila Odinga for five years via the controversial handshake for near-similar reasons.
We are again at that point where we have a powerful opposition, and a divided and broke nation. President Ruto is being asked to learn from history, but — if memory serves me right — he has previously talked ill of historians and the teaching of history as a subject.
As president, he will come across slick and cynical people. He will come across hardliners who would want to take him hostage. He will have to rely on moderates.
When the Dalgleish Report on the state of economy was published in 1960, Kanu President James Gichuru, a moderate, told the Asian-dominated Kenya Freedom Party dinner that all races must stay in Kenya.
He described as “irresponsible talk” the statements made by some politicians that the immigrant races would lose their property once independence was achieved.
Last week, we saw some people invade some private properties, and history seemed to be repeating itself.
“We are expected to put more money into the pockets of the Africans and we are not prepared to bring about any changes that will harm the economy and lower standards. They are low enough as it is,” said Gichuru.
It was the bickering among politicians that was worrying and scaring investors. The kind of exchange you see between Gachagua and Azimio, or as Dr Kiano called it: “this business of taking the trousers off one another…”
At the dawn of independence, Kanu and Kadu were promising voters free primary education, free health services and more hospitals.
The only omission was where all that money was to come from. The British Daily Express branded the two parties as “irresponsible rabble-rousers”. How Kenyatta survived is a lesson Dr Ruto can learn.
And so, Dear President Ruto, when the economy is bad, you have to rally everyone — and I am not talking of the handshake between a traffic police officer and a makanga . But more than that, read the history of the country.
