Has Kenya gone bankrupt?
NAIROBI, Kenya - With only 34 months into the expiry of his term, President Uhuru Kenyatta had been caught in the middle of murky succession politics, race against time for completion of his flagship projects and unprecedented economic downturn.
Ever since taking over in 2013, Uhuru's regime has been subjected to criticism over alleged over-borrowing, massive corruption, and gross incompetence.
So dire has been the situation that even the immediate former Treasury minister Henry Rotich, who was fired in July over irregular payments for two dams, admitted that the country is 'ideally broke'.
And since his exit, his successor Ukur Yatani publicly admitted that his major headache is to reduce the country's ballooning debt levels that have hit $60 billion.
“We are planning to retire most of the commercial loans and replace them with concessional ones,” Yatani told reporters recently in Nairobi.
“If the debt is left as it is, we’re going to crash,” he further told senators last month.
When Mr. Kenyatta took over from Mwai Kibaki, Kenya's debt was $13 billion. The current level has raised concerns, with many citizens questioning inflation of projects funded by external loans.
As if that's not enough, Uhuru is currently in pushing Parliament to increase the debt ceiling to $90 billion, a move that could have a long-term negative ripple effect on the economy.
Of all the external creditors, China remains Uhuru's main partner, disbursing over $6 billion towards the construction of Standard Gauge Railway from Mombasa to Nairobi.
However, the SGR project, which is Uhuru's major flagship project, risks stalling at Naivasha, a small town West of the capital Nairobi.
China withdrew from the second phase of extending the railway to Malaba, a town in the Kenya-Uganda border. Beijing had initially promised to release $3.68 billion for the completion of the project.
With China now developing a cold foot to the funding of Uhuru's key I projects, the United States, on the other hand, has taken a back seat in the financing of the Mombasa-Nairobi highway at $3 billion.
“Kenya has hit a debt ceiling… the onus is on Kenya to put its debt in order," US envoy Kyle McCarter said in a recent interview.
He added: “We don’t want to put the debt on Kenyans. We want to do business in a transparent and ethical way.”
Despite the fact the US has expressed reservations on loaning Kenya, Mr. McCarter however, insisted that Washington DC has not withdrawn from the deal.
Kenya’s total public debt is currently around $60billion (Sh6 trillion), or 63 percent of the GDP.
To further demonstrate a cash stripped image of a struggling nation, Treasury slashed Judiciary's budget from $145 million to $115 million, a move that has precipitated to ugly confrontations between the executive and judiciary.
Chief Justice David Maraga on Monday came out guns blazing, accusing the executive of sabotage. The top judge announced grounding of major judicial activities until the stalemate is solved.
"The Cabinet Secretary for Finance has no control over the Judiciary budget," said CJ Maraga.
In September, Uhuru rejected the Governor's push to have $3.35 billion devolved to the counties, a blatant violation of the law.
For over two months, the country was subjected to an economic quagmire, with staff in the counties working without pay. The president had his way, signing only $3.16 billion for the devolved units.
"I want to tell the governors and those agitating for the increase of allocation to counties that they should work with what they have. That is all that is there. The government does not print money, we have to work with what we have," Uhuru had warned.
The Nairobi Securities Exchange (NSE) continues to experience a listing drought, while several businesses that went public either register losses or sharp profit drops.
The NSE 20-Share Index was at 2,733.5 on Friday. This benchmark index has gradually fallen from an all-time high of 6,161.46 in January 2007, under President Mwai Kibaki’s tenure.
Several companies have closed doors due to simmering economic depression, resulting in losses of jobs across the country. At least 20,000 people have been declared redundant by companies this year.
Economists have blamed Uhuru's financial ideologies, raising doubts about his priorities and appetite for loans without proper regulations.
David Ndii, the country's finest economist, has accused Uhuru of pumping billions to projects that are not viable. For instance, he dismisses SGR as a liability project.
"There is no economic rationale for the recently opened Nairobi-Suswa extension of the new standard gauge railway. Did the Kenyatta administration splurge KSh.150b (US$1.5b) to unlock value for powerful land barons? Ndii wonders.
"So, we have a debt problem because we have a revenue problem.
And we have a revenue problem because we have a debt problem," adds Saudi Arabia Monetary Authority advisor Mohamed Wehliye.
Corruption has been a monster in President Uhuru Kenyatta's government, with the country said to be losing almost half of the $21 billion budget do unscrupulous deals.
To minimize the malady, Uhuru has strongly spoken about graft, even inviting opposition leader Raila Odinga ostensibly to crush cartels.
But despite the goodwill from the opposition, Uhuru has struggled to tame some of his close allies in government accused of corruption. Also, the Judiciary has been linked to sluggishness in handling graft related cases.