PATRONAGE IN MOMBASA: THE KENYA PORTS AUTHORITY

C O N F I D E N T I A L NAIROBI 000315

SIPDIS

SIPDIS

DEPT FOR AF/E, AF/RSA

E.O. 12958: DECL: 01/24/2016
TAGS: ECON EWWT KCOR ETRD PGOV KE
SUBJECT: PATRONAGE IN MOMBASA: THE KENYA PORTS AUTHORITY
GETS A NEW BOSS

REF: 05 NAIROBI 1668

Classified By: Econ Counselor John F. Hoover, EO 12958 reason 1.5(d)


1. (C) Summary: Based on demands from local
politicians for an appointee from Coast
Province, Kenyan Transport Minister Chirau Ali
Mwakwere appointed Abdalla Mwaruwa to the
critical position of Managing Director (MD) of
the Kenya Ports Authority (KPA). The Minister
ignored the KPA Board,s recommendation to
renew the contract with former MD Brown
Ondego, who had recently improved port
efficiency, and made KPA profitable. If
Mwaruwa succumbs to likely patronage demands,
it may slow or reverse the efficiency gains
KPA recently achieved, damaging the economy of
Kenya and the other countries that rely on
Mombasa for imports and exports. End summary.

GOK Bows to MPs, Demands for Local Son to Run
KPA
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2. (C) On January 13, Kenya,s Transport
Minister Mwakwere appointed Abdalla Hemed
Mwaruwa to a three-year term as KPA,s MD,
replacing Brown Ondego, who served as KPA MD
from 1999 to 2005. Mwaruwa's selection
followed demands by Coast Province Member of
Parliaments (MPs) led by National Heritage
Minister Suleiman Shakombo that a person from
the province be appointed to head the
parastatal. (Mombasa residents have long
pressured their MPs to push for a Coast native
to run the port, mainly in hopes that this
will secure more port jobs for locals.)
Although Mwakwere claimed the appointment
procedure was legal, the KPA Act mandates that
the Board of Directors should choose the
Managing Director for appointment by the
Minister. Press reports claim the KPA Board
found Ondego,s performance had met or exceeded
his contract,s performance goals and
recommended renewing Ondego,s contract, (which
had expired in December) but that Minister
Mwakwere got permission from President Kibaki
to ignore the Board,s recommendation. Both
Mwakwere and Mwaruwa are ethnic Miji Kenda
from Coast Province. Ondego told Poloff that
Mwaruwa is also a cousin of Heritage Minister
Shakombo.

Why Not Retain Previous Managing Director?
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3. (SBU) KPA and the Port of Mombasa are the
biggest revenue earning enterprises in Coast
Province, and as noted reftel, their
performance is critical to the economy of
Kenya and neighboring countries that rely on
Mombasa for imports and exports. While
himself dogged by allegations that he
participated in or condoned corruption at the
Port, Ondego made some important progress in
improving KPA and port performance in the
later part of his 1999-2005 term. Container
theft declined, and KPA,s losses turned into a
profit of $10 million in 2005. KPA embarked
on an aggressive upgrade and expansion
program, and all key indicators of efficiency
for the parastatal improved slightly.

Who is Mwaruwa and What,s His Agenda?
--------------

4. (U) Abdalla Hemed Mwaruwa is largely
unknown in the area of corporate management.
Prior to his appointment, he was Senior
Assistant Commissioner in charge of research
and corporate planning in the Customs and
Excise Department at the Kenya Revenue
Authority (KRA). He previously led the
investigations branch at the Customs and
Excise Department, Southern Region (Mombasa).
He worked at KPA in the Mombasa port for 23
years in various capacities before joining
KRA. KPA funded his Masters of Science degree
at Southampton University, UK. He is 53 years
old, married, Muslim and ethnic Miji Kenda.


5. (C) Mwaruwa is believed to have performed
satisfactorily at KRA, and it is too early to

predict his performance as the new chief of
KPA. His overarching dilemma will be having
to choose between pushing hard to implement
KPA,s strategic plan and continue increasing
port efficiency, or repaying his benefactors
by providing patronage jobs and inflating
KPA,s wage and compensation budget. The early
signs are not good, as Mwaruwa,s selection for
the post is being met with less enthusiasm
than expected among the Coastal business
community. Local business leaders told Poloff
during a recent visit that they fear Mwaruwa
will not be able to continue with the progress
Ondego made in reforming the ports, and many
are upset that nepotism dominated the
selection.

Comment: Appointment is Sign of Political
Weakness; Sends Bad Signal
--------------

6. (C) Pandering to family, tribal, and
regional interests - and ignoring or
downplaying merit - is nothing new in Kenya,
but the phenomenon appears to be more
pronounced following the GOK,s defeat in the
November constitutional referendum. President
Kibaki and his insiders at State House appear
increasingly desperate to do whatever it takes
to shore up political support ahead of the
looming general elections in 2007.


7. (C) What is unfortunate is that this
pattern is being repeated in an administration
whose initial reform program called for
infusing private sector management practices
into the public sector * starting with state
corporations. Brown Ondego, who came from the
private sector, was among the first parastatal
executives to sign a contract with performance
targets at the beginning of 2003. Replacing
him with a career bureaucrat with
underwhelming credentials does not bode well
for hopes of continuing the long and painful
process of revitalizing Mombasa port, which as
noted reftel, is in many ways the economic
linchpin of the entire East Africa region.
The move also sends a signal to other
parastatal chiefs in Kenya that making
decisions based on political calculations,
rather than sound management, may be the key
to job security.
End comment
BELLAMY