Wednesday, August 10, 2011



By Jerry Okungu

Nairobi, Kenya

August 10, 2011

It is day four and the riots in the UK do not seem to subside. If anything, all indications are that the violence is spreading in different cities of the Kingdom. Despite the 16,000 police force deployed on the streets, hordes of poor and unemployed youth do not seem deterred. Violence and looting continue unabated. As this madness entered its fourth day, it was obvious that the fight in UK streets was between the haves and the have-nots as mobs targeted shops, buildings and business premises. They broke windows, looted and burnt to ashes whatever they could not loot.

What the UK is going through is not unique in these troubled times. When earlier in the year a Tunisian young man set himself ablaze in protest against joblessness and perpetual police brutality on the streets of Tunis, the authorities least expected that such a lone act would spark a nationwide crisis that would eventually throw the government out of power. Yet, that is exactly what happened. When the masses feel that they have reached a point of no return, they are capable of almost anything.

The Tunisian crisis soon snowballed into Egypt, Bahrain, Libya and now Syria with serious casualties on the masses in their confrontation with government forces. In the case of Libya, the riots turned into an international crisis involving the NATO Alliance and powerful states such as the United States, Britain, France and the Arab League of Nations.

Just weeks before the UK riots erupted, the USA was in a crisis of her own. There was a stand-off in Congress over the nation’s escalating international debt, unbalanced national budget and of course growing uncontrolled public expenditure. As Congress agonized over the American debt, job losses continued to rise. With thousands out of work, many Americans lost their homes due to their inability to service their loans.

Much as the fight was in Congress to control the three –pronged economic problem, its impact went beyond Washington DC as several states laid off workers due to lack of funds. And the more people lost their jobs, the more the government lost tax revenues. The last such scenario was when the Federal Aviation Authority laid off 4000 workers in one day when Congress went on recess without approving the Authority’s expenditure.

Here in East Africa, Ugandans are demanding that the government should remove taxes on fuel because the high cost of fuel is triggering off the cost of living in the entire country. As the pump prices continue to escalate with fluctuating currency exchange rates, prices of basic commodities and the cost of transportation continue to go through the roof.

What Ugandans are asking their government to do- reduce the price of fuel- was done in Tanzania last week with serious consequences. As soon as the Tanzania government announced price reductions of pump prices, fuel vanished from petrol stations. The cartels chose to starve the market and force the government to reconsider its decision. In the case of Tanzania, there is a stand-off between dealers and parliament which has in turn threatened to close down dealers who would not lower their prices.

In this game of numbers with the prices of fuel, Kenya has not been left out. A few months ago, the situation in Kenya was so bad that the government was forced to remove taxes on some fuel products and reintroduce price controls for fuel products. With a price control authority in place to review fuel prices every month, Kenyans have seen price increases every month since the authority was established five months ago. Today, Kenyans are paying close to US $ 1.50 for a litre of unleaded fuel twice the amount it costs the Americans in the USA.

The reason economic hardships will continue to be with us for a long time is because all over the world, the economy is sick. With US $ 14 trillion debt weighing down on the world’s biggest economy, it means that the less America gives to poorer nations, the more the suffering manifests itself in Kenya, Uganda and Tanzania. As the dollar weakens against international currencies, as our own currencies weaken against the dollar, the euro and the sterling pond, Americans will continue to suffer high costs of imported goods as we equally bear the burden of paying higher prices for the goods such as oil that we do not produce.

This week alone, Kenyans suffered the pain of massive exchanger losses against the dollar. Today, the dollar fetches Ksh 95.00 making travelling outside the country the most expensive in our nation’s history, not to mention the prices of basic commodities that have since trebled. And as we shoulder this burden, it is a foregone conclusion that the rest of East African States will continue to share in this suffering for a long time to come.