The wasted decade of Uhuru’s rule

The wasted decade of Uhuru’s rule

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Historians in the country are probably pondering over an appropriate term that will define Uhuru Kenyatta’s 10-year tenure in office.
However, all indications are that many Kenyans are likely to term Uhuru’s tenure as “the lost decade”.
Uhuru’s two-term presidency has been riddled with allegations of rampant corruption, unfulfilled promises, unbearable economic stagnation, massive unemployment, empty rhetoric and political squabbling.
Things have not been helped by the so-called handshake that has triggered a full throttle 2022 succession war between William Ruto supporters, those of president Uhuru and those of Raila Odinga.
It has to be remembered that, the 2013 Jubilee manifesto, the electoral platform on which the Uhuru administration was elected, was anchored on a promise of securing prosperity for Kenyans, and opportunity for all, built around the pillars of unity, the economy and openness.
The manifesto described 23 programmes covering elimination of ethnic division; keeping Kenya safe and secure from terrorists; making the country a strong trading partner in Africa; securing Kenya’s legacy as a sporting nation and celebrating its culture; building a healthier Kenya; empowering youth and women; increasing social protections; building an enterprise economy; leveraging Kenya’s information and communication technologies advantage.
It also promised to promote tourism; making Kenya a property-owning democracy through land reform; securing Kenya’s energy supply; ensuring safe and clean water for all; enhancing agriculture and food security; protecting Kenya’s environment; providing decent housing for all; creating a world-class transport and infrastructure system; improving governance and securing devolution.

President Uhuru and former PM Raila

However, Kenyan voters, both those who voted for Uhuru and those who voted for the opposition are a disillusioned lot.
The lofty promises made by the Jubilee administration that included giving laptops to all school children in Standard One, building five high-class stadiums across the country among others during its first tenure, were not only never fulfilled but there are no indications that they will ever be fulfilled.
The Jubilee government is now emerging as the implementing agency of former president Mwai Kibaki’s government signature projects.
The much-hyped standard gauge railway project was mooted during the Kibaki government before it was taken over by the Jubilee administration and implemented and so are major infrastructure projects and the expansion and modernisation of health facilities across the country.
But what is irritating Kenyans most about the Jubilee administration is economic decline under their watch compared to the robust economy under Kibaki’s government.
Kenya’s economic performance in the last five years of Kibaki’s administration was on the upswing from its low of 2008 performance caused by post-election violence. In 2010, 2011 and 2012, the economy grew at 5.8pc, 4.4pc and 4.5pc per annum, respectively.
It was projected to grow at an annual rate of 5.1pc, 6.0pc and 7.1pc in 2013, 2014 and 2015. However, these growth rates remained below the 10pc per annum target envisaged under the national development blueprint Vision 2030, and they remained removed from the double-digit growth rates promised by the Uhuru administration.
Economic indicators show that government resources are stretched with a rising wage bill estimated at Sh458 billion—about 12pc of gross domestic product. While revenue performance at approximately 24.3pc of GDP remains strong, the pattern in the growth of taxes has not aligned with overall government policy aimed at encouraging savings and investment.
Income taxes continue to contribute more than 35pc of the total revenue. These income taxes are growing faster than their respective tax bases.
Moreover, Kenya’s population is growing at 2.7pc per annum, accompanied by an ongoing demographic shift.
The proportion of the population that is youthful, relatively skilled and urbanising and either underemployed or unemployed is growing quickly. This shift compounds the pressing need for resources to implement devolved governance structures.
The prevailing circumstances have seen Uhuru attempt to ramp up his legacy through his Big Four Agenda.
The Big Four Agenda represents the pillars of the Vision 2030 that aims to position Kenya as a middle-income, industrialised nation with a climate resilient, inclusive economy, offering a high quality of life for its people.
It is projected to result into an economic growth of at least 7pc per year. The Big Four Agenda entails boosting manufacturing, universal health coverage, food and nutrition security, and supporting the construction of at least 500,000 affordable houses by 2022.
However, Big Four Agenda critics say it is another unachievable undertaking that is likely to even taint Uhuru’s supposed legacy given the prevailing economic scenario in the country and the timing.
Kenyans are increasingly becoming disgruntled with Uhuru because of corruption. Uhuru is seen as paying lipservice to battling corruption.
For example, when Uhuru said that the anti-graft axe will spare no one, including his closest political allies, it was widely interpreted as a dupe on Kenyans that he meant business.
The truculent position by the country’s top two leaders have been the clearest signal that the gloves are off in Jubilee, with the President and his deputy headed for an open confrontation.
These contradictory positions have now escalated the internal strife in Jubilee with two groups emerging – with the pro-Uhuru group popularly known as Kieleweke opposed to Ruto whose grouping is dubbed Tanga Tanga.
Matters came to the boiling point during the State of the Nation address by Uhuru after Kenyans resorted to social media to lambast him for failing to take decisive action against government officials linked to mega corruption in his government.
Kenyans were livid with their president for failing to sack cabinet secretaries who have been implicated in graft who include Treasury CS Henry Rotich, Agriculture CS Mwangi Kiunjuri, and Water CS Simon Chelugui among others.
The president in his State of the Nation address had indicated that he wanted investigations on corruption to follow due process and institutions investigating corruption to ensure prosecutions are based on solid evidence a development that irked many Kenyans who believed that the DPP and the DCI had done a good job in investigating corruption cases.
The president’s failure to “spill blood” as majority of Kenyans had anticipated has convinced Uhuru is afraid of starting a real war against corruption lest it boomerangs to his own family. Uhuru’s inaction has also confirmed suspicion that he is a lame duck president – a president who is in the last part of his term in office and so does not command the respect and wield influence over his juniors because they know that he will soon be of no consequence as far as their political future goes.
There is no secret that Kenya is bleeding under from excessive corruption in the public sector with billions of shillings of taxpayers money meant for the implementation of various projects being embezzled by high-ranking government officials.
Since 2013 the Jubilee administration has been rocked by allegations of corruption that include the Sh200 billion Euro bond loan, inflated cost of the Sh320 billion SGR, the Sh65 billion Kamwarer and Arror dams scandal, Sh11 billion National Youth Service 1 and 2 scandals, Sh5billion maize and fertiliser scandals, Sh5 billion scandals at Kenya Pipeline Company, Sh1.5 billion Ruaraka land scandal, Sh10 billion National Hospital Insurance Fund scandal and Sh 4.5 billion Kenya Power defective transformers scandal.
Kenyans dissatisfaction with Uhuru’s State of the Nation came against the background of him not addressing the precarious national debt situation that has led no less a body than the International Monetary Fund to declare Kenya as facing a high risk of debt distress.
Financial analysts warn that with the Eurobond and syndicated debts that were contracted by the country in the last few years about to mature, the government will be forced to take on new debt to repay old debts.
Financial commentator Jaindi Kisiero, avers that debt-financed expenditure has allowed Kenya to keep infrastructure spending at very high levels a development that has made the country’s economic outlook unhealthy.
Global rating agency Moody’s has downgraded Kenya’s credit scores, citing pressure from the country’s rising debts.
The global rating agency’s assessment adds voice to rising concerns over the possible impact of heavy borrowing on Kenya’s future.
The ratings agency — which had in 2017 said it had placed Kenya’s B1 rating on review for downgrade due to persistent deficits amid high borrowing costs — downgraded the issuer rating of the Kenya government to B2 from B1 but assigned a stable outlook.
“The drivers of the downgrade relate to an erosion of fiscal metrics and rising liquidity risks that point to overall credit metrics consistent with a B2 rating,” explained Moody’s of its move. The fiscal outlook is weakening with a rise in debt levels and deterioration in debt affordability that Moody’s expects to continue,” it stated.
A rating downgrade is significant because it can affect how much it costs a government to borrow from international financial markets.
The Treasury has budgeted for nearly 45pc, of projected Sh1.44 trillion tax revenue for payment of domestic and external loans, in the current financial year, that ends in June.
Moody’s said it expects Kenya’s fiscal metrics to continue to “deteriorate”, as large primary deficits combine with “worsening debt affordability and rising debt levels”.
Moody’s forecasts government debt to increase to 61pc of GDP in fiscal year 2018/19 (the year ending in June 2019), from 56pc of GDP in FY 2016/17 and 41pc of GDP in FY 2011/12.
Recent forecasts indicate that Kenya’s borrowings could soon take the debt load past 60pc of GDP.
“Debt affordability is deteriorating as reflected by the increase in government interest payments as a share of revenue to 19 per cent in Financial Year 2017/18, from 13.7pc in Financial Year 2012/13,” said Moody’s.
Kenya’s public debt crossed the Sh4 trillion mark at the end of March last year, reflecting the government’s sharp appetite for loans.
Kenya’s current public debt stands at approximately Sh4.884 trillion or 56.4pc of the country’s gross domestic product. This is up from 42.8pc in 2008. In other words, the country owes more than half the value of its economic output.
The IMF recommends that ratios of public debt to GDP should not be higher than 40pc for developing countries.
Policy analysts are worried about the country’s public debt compared with its national income. Kenya has a population of about 51 million, implying that every Kenyan owes about Sh97,219 – and produces Sh118,139 a year.
According to Odongo Kodongo of University of Witwatersrand in South Africa, unsustainable debt levels can be harmful. They can “crowd out” development and social programmes because huge portions of government revenue are taken away from essential services and used instead to service debt. In the worst case scenario, Kenya might be forced to cede control of its strategic national assets to foreign creditors. This has happened in some countries such as Sri Lanka which had to hand over a strategic port to China.
The concern is not just about the amount of debt relative to national income, but where the debt comes from. The National Treasury reports that, more than half of Kenya’s total public debt came from outside the country.
However, interest and principal repayments on external debt are made in foreign currency. This depletes a country’s foreign exchange reserves and may devalue the domestic currency.
A weak domestic currency makes a country’s exports more competitive. That is good. But a weak currency can lead to high inflation rates in the long term because it costs the country more to import what it needs for production and consumption.
Economists are warning that this inflationary effect is bad for a country like Kenya, which imports more goods and services than it exports. The inflationary pressure is fuelled by low domestic production. Kenya’s domestic production base has shrunk in recent years and manufacturing has dipped from 12.8pc of the GDP in 2007 to a paltry 8.4pc in 2017 owing to bad economic policies.
The country has recently issued two debt instruments (bonds), first in 2014, and then in 2018. The bonds were made available on the international debt market. In any case, Kenya raised (borrowed) approximately over Sh200 billion.
In fact, fear is that if deputy the DP decides to run on the ruling party Jubilee in 2022, then it is likely to cost him heavily. Uhuru decision to befriend Raila was aimed at averting looming revolution in Kenya which Raila could have led his supporters in achieving.
In the short term, measures must be put in place to reduce government spending and to enhance revenue collection.