Kenya Needs a Debt Equity Swap
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Countries that have witnessed intermittent conflicts have lagged behind in development, while those that have embraced peace are legalizing faster and sustainable growth. It is why, Kenya’s top Chief Executive quickly acknowledged the multilateral donations which means the country agrees with the lender of last resort cross – conditionality. Over the years our bilateral debts and multilateral debts have grown.
The visits by Ban-Ki-Moon and Kim thus came at a time when there is growing concern in Kenya that the ballooning public service debts are obstacles to development in most counties. Currently, most Counties in Kenya spend up to 75 percent of their revenues in debt repayments leaving them with little or no cash at all for more productive expenditures on education, health, water and sanitation, among others. This scenario is the same in East Africa where most countries are battling to repay foreign debts choking their economies.
According to the United Nations Charter, service to the common good and promotion of solidarity stretches to the entire planet by making sure that promotion of international socio-economic justice is through a preferential option for the poor. So when I heard that the World Bank boss was coming to Kenya, I was expecting a surprise announcement of plans in place for a debt equity swap. But they gave $8.3 billion donations redirected to other key development sectors. All right.
I anticipated a refinancing device that gives the debt holders an equity investment in exchange of cancellation of debts. I advance this argument because of the current state Kenya has found itself in. The sheer fact is that the Counties are proving to be a nightmare to run. Today, some Kenyan legislators have even proposed amendments to the law to do away with 35 counties at a time when the Opposition and Council of Governors are pushing for fresh constitutional amendment to ensure smooth governance.
The MPs also want hundreds of nominated members of county assemblies, the big number of nominated women MPs reduced and finally to have all judges of the Supreme Court work on a part-time basis. It is that serious and outrageous. It is serious because the National Assembly Speaker Justin Muturi has already delivered the petition to MPs to begin deliberations on this matter amid fears that the public service debt could become unsustainable for Kenya.
It is outrageous because it defies the logic of devolution or decentralization of power, goods and services to the people, which characterized the overhaul of the old Constitution of Kenya. Over 67 percent of Kenyans overwhelmingly endorsed the new constitution, to promote democratic and accountable system of government fortified with equitable distribution of the national resources. So anything contrary is heedless.
At the moment, the Council of Governors have drafted a Bill to push for fresh changes in the law and they are fighting hard to have 3.4 billion equalization fund placed under their control to make devolution realistic. It means therefore that any sustained effort either by way of executive or legislative decree to demean devolution, will be met by resistance from the governors, the intelligentsia public and the hoi polloi who subscribe to devolution principle of equality.
Does it mean that all public policy analysts and pundits in government and the private sector fell short of exploring the future implications cost of running the devolved units when the constitutional amendments was subjected to public plebiscite?
May be, Yes, or No. If MPs through representative democracy want to invoke their delegated authority to amend the law, they must go back to the very people who endorsed the legislations. Short of that, the MPs will court trouble as people begin to feel the cascading effects of the devolved units, albeit to minimum standard.
By Kepher Otieno
The writer [email protected] is a consulting Editor and Bureau Chief, East African Digest.