Kenya Archives - Page 2 of 5

High Public Debt Calls for Alarm in Kenya

Debt goes a notch higher than the approved ceiling

Kenya’s public debt has reached severe levels, levels that are way beyond what has been approved by the parliament, that is, 55% of the GDP. This is going by the figures released by the Controller of Budget (COB) for the same financial year putting todays’ debt at 67% of GDP and raising a lot of eyebrows as far as fiscal sustainability is concerned.

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In accordance to the National Government Budget Implementation Review Report of the 2022/2023 current fiscal year, Kenya’s public debt stock stood at Ksh. 10.79 trillion on September 2024 and the external debt constitutes 48%, while the domestic debt constitutes 52%. This, in turn, means a 2% increase since June 2024 to add more pressure to the country’s finances.

Out of all the revenues generated, the major portion is used to service debts.

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Today the report revealed established that nearly 70 percent of every shilling collected as government revenue, ends up servicing debts. Such payments are considered more important than the other expenditure, hence few resources are available for development and service delivery.

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Chronological Analysis of the Debt Ceiling

Parliament in June last year endorsed the new public debt management framework that sought to replace the Ksh.10 trillion cap with the new debt anchor of 55 percent of GDP. Nevertheless, the government has already crossed this limit by 12%, which testifies to the fast velocity of borrowing activity.

Structural Affair and Governance Problem

When discussing the increasing debt, Dr. Nyakang’o called for remedial action and laser sharpened on wastage, corruption, and inefficiency in the manner funds are utilised. Originally, a more radical shift in the processes has been addressed by means of launching the E-Citizen platform which contributes to minimizing some inefficiencies though more thorough reforms are necessary to interrupt the vicious circle of borrowing.

. The Significant of transparency when Making an agreement on Debt.

The High Court has directed the government to make all the debt obligation and sovereign bonds and expenditure breakup for the period public within 45 days. This ruling comes at the backdrop of heightened controversies with so-called “odious debt” – non-concessional international sovereign debts whose utilization lacks demonstrable links to development projects; the public questioned accountability and development benefits to deserves credit.

Campaigning Policies under the Lens

President William Ruto, who vowed to bring down Kenya’s debt levels during his campaign, has come under fire as indebtedness surges more than two years into his presidency. The government bond market shows that public confidence in government’s management of debt has been declining.

The Path Forward

This is because a number of scholars and stakeholders put pressure on the government to take measures to rein in debt levels. Recommendations include:

Reducing wastage and corruption: Reducing extravagancy aspects like purchase of sophisticated Governmental vehicles, enhancing a stronger checks and balances system.

Fostering economic growth: Investing in ways that boost GDP gives the country a way to pay the debts in a bid to minimize the debt-to-GDP ratio.

Enhancing transparency: Including full details of debt arrangements and making sure that money borrowed is tied to worthwhile initiatives.

The amount of public debts is steadily increasing in Kenya, which surely challenges fiscal balance and the nation’s overall growth. Unless the outlined problems are addressed, the country is headed for a debt crisis with dire developmental and political consequences in the future. The government has to show commitment on fiscal discipline, transparency and governance for its general recovery and to ensure that there is sustainably good economic management.

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The Diaspora Bond Proposal in Kenya: A State of Affairs Debates

The recent Kenya’s attempted to bring into context a financing model in the form of diaspora bond for infrastructure has raised stir among the citizens in the country and across the globe. Unveiled by the then Prime, Cabinet Secretary, Musalia Mudavadi during the Diaspora Day celebration held at the Kenyatta International Convention Centre (KICC). The program is meant to harness on the remittances from the Diaspora, which stands at a record $4billion (Sh520 billion from January to October 2024.

The government hopes that these funds will be used to fund infrastructure projects that can transform the country such as highways, power plants and water systems with a view of cutting on foreign expensive loans hence encouraging economic self reliance.

Government’s Vision

The government believes that diaspora remittance that currently stands at $7 billion could hit Sh1 trillion by 2027 to cement the shilling and boost development. The diaspora bond is aimed at mobilizing low cost funds as a source of financing as well as providing Kenyans living in foreign countries with a secure investment outlet.

Support for the Proposal

Some have noted that this is a one of a kind chance for Kenya to institutionalize a new source of incremental funding, thus easing fiscal stress. Explaining the nature of the scheme, financial gurus have viewed the initiative as a better prospect to foreign loans through considering following benefits; Lower rate of lending compare to foreign loans, Long repayment period for the borrow.

Such high remittance numbers depict the financial might of diaspora, which has substantially funded health, education, housing and most areas of rural development. Some of them involved with this issue hope to see this impact taken to national projects so as to facilitate development and reap the benefits in the long-run.

Concerns and Criticism

However, some people have questioned it, and so it has not been implemented as proposed below: Skeptics argue that Kenya has a history of embezzlement of public funds; the government’s capacity to realize its identified projects is questionable.

Critics attributed the social bond could raised Kenya’s high public debt if corruption is not tackled and checks instituted. But there were also questions about what precisely the bond would bring to investors and the entire economy.

Opportunities and Challenges

The diaspora bond’s success depends on several factors:

Transparency: The valiant effort sheds particularity to a definition of term and the implementation of such to keep investor confidence intact and in due course, update as needs be.

Accountability: A strong framework to check cases of embezzlement and fraud.

Delivery: To familiarise clients with our services and establish credibility, timely and effective implementation of projects.

Investor Trust: To persuade the diaspora that their hard earned money will lead to developmental changes for the better.

Countries such as Israel and India have also applied diaspora bonds and hence the case for Kenya is feasible. Nevertheless, the challenge that is likely to persist is trust because it was eroded in previous management of similar projects.

The idea of Kenyan diaspora bond is an indicative of the government of Kenya’s quest to mobilise the financial resource of the diaspora community for the nation’s development. That said, the opportunity to provide access to more innovative funding sources is commendable and could be boosted by optimizing such factors as the state’s capacity to resolve the existing concerns on transparency and accountability of project implementation.

The debate a manifestation of a more general and recurring problem in economic development trying to strike the right balance between the ambitious goal and the need to be credible and attract investors. If well implemented, the diaspora bond could change the way and manner of financing infrastructure in Kenya and open a new chapter of financing infrastructure within the country.

Main Outcomes of President Ruto’s Statements

Nairobi-Nakuru-Eldoret dual carriageway construction

Timeline: Construction works on the planned dual carriageway to start in the year 2025.

Extension: End of the project, the corridor will stretch to Malaba to enhance the connection and business on the stretch.

Purpose: Traffic congestion along this stretch especially during festive seasons should be tackled along the Nairobi-Nakuru highway.

2. Economic & Agricultural Progress

Achievements

Lower inflation rates.
Increased exports.
Food security improvements that result from subsidy on agricultural inputs.

Outcome: Elimination of maize and sugar imports because of increased local production of food.

Healthcare Reforms

New Insurance Plan

It has been billed as a revolution in Kenya’s health care sector.
Intended to provide sustainable positive impacts to the population in their society.

Commitment: Commitment to guaranteeing the success of the program to increase the availability of health care services.

The program of Livestock vaccination throughout the country

Objective: To avoid diseases such as foot and mouth which are calamities for the livestock economy.

Criticism Addressed:

From the selection of dismissed claims about vaccines, ones safety is dismissed.

Brought out the fact that we now use locally made vaccines and that a key manufacturing center exists in Kabete, Africa.

Importance: Establishes economic stability in areas where the major source of income is livestock rearing.

Members of the Opposition in the Government

Rationale:

Promote unity and stability throughout the region of the nation.

Minimise the number of divisions arising from previous protest.

Goal: They have to enhance the process of development by implementing bipartisan cooperation.

6. Call to Address Social Issues

Gender-Based Violence and Femicide

Called on churches in particular to become more proactively involved with addressing these matters.

Indicated that ‘this was a preventive measure mainly proposing vigorous moral values that a child should be nurtured with’.

President Ruto’s disclosures emphasize physical development and the economy, growth stability, healthcare system improvements, and consensus in administration, and social issues via religious partnerships.

HF Group has successfully raised KSh 6.4 Billion in its just concluded over-subscribed rights issue

Important Stakes about the Rights Issue

Oversubscription:

The Rights Issue was subscribed 138.32 times and thus investor response remained quite positive.

The offer which was at KSh 4.00 per share enabled the shareholders to acquire additional two shares for every share they held.

Funds Raised:

As many as 1.59 billion shares were applied for, which at their average offer price of KSh 4.02 generated a gross amount of KSh 6.38 billion, thereby raising more than the targeted KSh 4.6 billion.

The high demand was absorbed through green shoe up to 30% or 384.614 million shares.

Fund Allocation:

The remaining 85% of the funds will go to business growth investment, where improvement of products and customers’ base will be prioritised.

15% shall be spent on technology and digitisation as this will cause the firm to optimise on its operations and enhance its service delivery to the consumers.

Leadership Comments

Robert Kibaara, CEO, HF Group

They thanked shareholders for their overwhelming support they received.

Highlighted the importance of the capital raised in fueling HF Group’s next growth phase:

“And with that the company is set up nicely on a trajectory to power its next wave of business development.”

Olive Mugenda, Chairperson, HF Group.

Noted the confidence demonstrated by shareholders, including key stakeholders such as Britam and NSSF:

“This is a big boost to our company’s investment้เกิด by our shareholders. We have now lay down the foundation for growth and we are now eager to start unlocking shareholder value in the short run.”

Strategic Impact

Regulatory Compliance:

The capital injection thus prepares HF Group for future compliance with other regulations such as the 500 billion basic capital level of banks by 2028.

Growth Prospects

Increased resource leverage will help HF Group to improve its market positions, introduce new financial products, and enhance its activities.

Enhanced Shareholder Value

It is in this backcloth of success of the Rights Issue that the company is placed in a vantage point to deliver returns and restore shareholders’ confidence on the path the company will take.

HF Group experience is a significant indicator of the company’s breakthrough in the competitive financial stream and its ability to adapt and grow in the future.

President Ruto makes Key Appointments in Central Bank, Governance as well as in Public Agencies

President William Ruto is stepping up on his word to revamp institutions with top appointments in the CBK, EOP, governance and public sectors.

Some key Appointments

Central Bank of Kenya (CBK)

Gerald Nyaoma Arita: Promoted to the position of the Deputy Governor for a key position in the monetary and financial stability of the bank.

APPROVAL SHEET Office of the President/ Executive Office of the President

Prof. Adams Oloo: Senior Communication Advisor in the President’s Economic Council of Advisors.

Dr. Silvester Okumu Kasuku: Advisor on Governance.

Maj. (Rtd) Ali Mahat Somane: Advisor for security, Inspector of the Office of the National Security Adviser.

Joe Owaka Ager: Secretary of Governance.

Diplomatic Role

Noor Yaror Gabow: He was appointed a Consul General at the Kenyan Consulate in Port-Au-Prince, Haiti.

Public Sector Appointments

Mwangi wa Iria: Former Governor of Murang’a District appointed to Chair Public Procurement Board.

Peter Kenneth: Presidential hopeful joins KEBS board as Chairperson The company has a new chief in the person of a former presidential aspirant in Kenya.

Bruno Oguda Obodha: Promoted to the position of Managing Director of East African Portland Cement.

Douglas Murei Kaibos: Appointed as the Chief Executive Officer to the Central Rift Valley Water Works Development Agency.

Official Statement

Arthur Siya, who works in the Office of the Head of Public Service and holds the title of a Principal Administrative Secretary, said that the citizens should expect that these appointments will ultimately help the government increase its capacity to fulfil its functions.

“These appointments have been done under advice of the Public Service Commission and in accordance of the laws provided to each public office,” he said.

Constitutions of those appointments

The experts’ choice also can be explained by the administration’s priorities in governance, economic strategy, and institutional change. The participation of leaders such as Mwangi wa Iria and Peter Kenneth marks a change towards using political and administrative experience for enhancement in delivery of public services in the country.

The appointments also show President Ruto’s intention to have a diverse team for dealing with various challenges in governance, stability of the Kenya economy and efficiency in public service delivery.

CAF President Motsepe to Tour East Africa as Preparations for CHAN 2024 Begin

CAF president Patrice Motsepe will arrive in the country on Friday for a two-day tour of East Africa to assess the level of preparedness for the upcoming CHAN that will be hosted from February 1-28, 2024.

Inspection Schedule

Dr. Motsepe’s itinerary includes

Thursday: They begin from Tanzania’s Dar es Salaam where he will make an assessment.

Friday Morning: Charles David interviewing people on construction of stadiums and other facilities during his visit in Nairobi, Kenya.

Friday Afternoon: Having completed the tour in Uganda, at Kampala.

Focus of the Visit

In the course of the tour, Dr. Motsepe will engage top government dignitaries, football administrators and Local Organising Committees (LOCs) of the three hosting nations. The agenda includes inspections of:

Stadiums and training sites under construction.
Shelter of teams and officials for the programs.

Other infrastructures and installations, thereof; airports.

This visit comes after a second assessment of CAF facilities in the host nations by a CAF delegation in November.

Don’t Mess with Nairobi’s Roads; Governor Sakaja Weighs in

Nairobi Governor Johnson Sakaja has recently respond to the increasing concern from the public in regard to the poor standard state of the roads in the city due to roles played by both National and County governments.

Points not missed by any ear from the speech made by Governor Sakaja

duty of road maintenance

National vs. County Roads: Sakaja sought to explain that most of the broadways including Jogoo Road, Uhuru Highway, Arwings Kodhek, Gitanga Road among others are controlled by national departments and parastatals including KeNHA and KURA.

Limited County Resources: He however pointed out that the county has no capacity to maintain such roads as most of them are funded and managed by the national government.

Road Maintenance Levy Fund

Allocation Challenges: Sakaja has accused the current system whereby the road maintenance levy fund, which is collected through fuel levies, is controlled by the national government and provided to MPs through CDF.

Council of Governors (CoG) Advocacy: The Council of Governors has advocated for the money to be channeled to the counties so as improve on maintenance of roads which interconnect the sub-counties or cut across several counties.

Efforts to Address the Issue

Funding Secured: In his address, the governor was quick to mention that the government has set aside Ksh.5 Billion to undertake road repair work including the CBD, Jogoo Road, and Soweto in Kayole.

Cooperation with National Agencies: Sakaja said that, according to the Urban Areas and Cities Act, both the national and county government have the legal basis for partnership on infrastructure in the capital.

Commitment to County Roads

Accountability: The governor noted that there have been raised concerns on some of the roads that are managed by the county such as Chania Avenue, Kindaruma and Wood Avenue tarmacking on black cotton soil it deteriorates very fast.

Reconstruction Plans: He promised on definite rehabilitation not repaving to sustain these roads for the longest time possible.

During his speech, Governor Sakaja pointed out the current inadequate cooperation between the national and county governments in providing adequate infrastructure in Nairobi. In absolving his administration of responsibility on roads under the jurisdiction of the national government he vowed to improve on county roads and advocated for increased reforms on the funding of road maintenance to adequately support Nairobian citizens.

President Ruto inaugurates LPG initiative to move public schools to clean energy

Kenyan President William Ruto has launched the LPG Initiative for public schools, where Washington International School is participating, as the program that is firstly beginning to use cleaner and sustainable Liquefied Petroleum Gas (LPG) energy instead of biomass-based fuels such as firewood.

The launching event which took place at Jamhuri High School shows government’s seriousness in eradicating environmental vices, enhancing people’s healthy living together with ascertaining fast and accelerated economic development through enhanced adoption of clean energy.

In the course of the LPG Initiative, the following points were highlighted:

Environmental Benefits

It will eliminate the continued use of firewood and burning of charcoal hence eliminating deforestation and pollution, which creates a high biomass requirement, which the world needs to fight in afforestation.

The initiative is in line with the national environmental objectives on improving forest cover with a view to addressing effects of climate change.

Economic and Health Impacts

Improved Learning Environments: Renewable energy will lessen pollutants affecting the indoor air quality and thus improve the general safety of the learning environment of students.

Economic Growth: Increase in investment in LPG sector will open employment opportunities and the economy of Kenya will improve.

Affordability: The government has come up with measures that include removing taxes on LPG and enhance on the storage methods of LPG to reach more families including the less fortunate ones.

Strategic Objectives

From the current level of 6.5kg per capita raise The LPG per capita usage to fifteen (15) by 2028.

Ensure that LPG reaches 70% population Coverage.

This pilot involves 20 schools across the country with the goal of expanding the program to all the boarding schools in the country within a year.

Speaking at the Gusii Institute of Business and Management, President Ruto said public-private partnerships would be crucial in the success of the idea. These collaborations will focus on:

How to promote the LPG imports and minimize its costs.

This partly involves /availing of information, formally through a national LPG awareness campaign to reduce incidences of explosion due to lack of knowledge and acquaintance with the product’s advantages in terms of a cleaner fuel.

Broader National Priorities

The shift to LPG aligns with Kenya’s long-term goals, including:

Reducing the cost of living: This means that anyone who needs energy to run an institution or home, and is also struggling financially; will benefit significantly from clean and affordable energy resources.

Improving food security: Improved cooking energy also leads to better food preparation and improved health in school going children.

Promoting environmental conservation: A decrease in biomass use thus results in afforestation and sustainable practices.

President’s Vision

Speaking at the launch, President Ruto emphasized the transformational potential of the initiative:

“Today’s launch therefore ushers in a new paradigm shift that change the learning environment for the betterment of children and at the same time would contribute to conservation of the environment.”

Working on prioritizing LPG as a more safer and sustainable option the government is to solve the number of social, economical, and environmental obstacles so to think about a brighter and greener tomorrows of Kenya.

President Ruto Optimistic on Addressing Taifa Care Challenges

President William Ruto on Monday seek to reassure Kenyians that the problems observed in the migration from the National Health Insurance Fund (NHIF) to the Social Health Authority (SHA) now called Taifa Care will soon be ironed out.

President Ruto, while addressing the 11th National and County Governments Coordinating Summit at the State House, Nairobi said he was aware that citizens were struggling to seek medical services under the new system. These problems he laid blamed on the ‘scale and ambition’ of the Taifa Care programme.

“On record, Taifa Care is enormous in scale, ambitious in undertaking, and historically unprecedented, however, we trust available solutions to multiphase the hitches soon,” Ruto said. On this, he said that the government was determined to provide affordable health care for all the citizens, through ensuring that all citizens of Kenya can have a right to quality health care services at an affordable cost regardless of their wealth.

The problem of Taifa Care and Government’s Defense

Since its inception, there are numerous complaints in regard to compensation at Taifa Care and their ability to getting proper health care. Several Kenyans have also been aggrieved by the working difficulties arising from the shift as a result of the scheme from NHIF.

However, President William Ruto and Health Cabinet Secretary Deborah Barasa have stood firm in support of the program, stressing on Kenyans patience as the government sorts out the efficiency of the program.

To support the implementation of Taifa Care, Kenyans are expected to make a contribution of 2.75% of their earnings with a cap of Ksh.300 per month.

Enrollment Progress

In his Seat of the Nation Address that was delivered on the 21st, President Ruto stated that over 15 million Kenyans had registered to the Taifa Care program. He especially pointed out that the given initiative could dramatically shift the healthcare accessibility in the whole country.

Looking Ahead

While the government is working to overcome the technological and operational challenges affecting Taifa Care, Kenya’s president Ruto has urged patient to wait since his regime is committed to implementing the bottomed promise of delivering quality and affordable healthcare to every citizen.

Good News for Motorists as EPRA Reduces Fuel Prices

The Energy Petroleum Regulatory Authority (EPRA) has given some respite to motorists in Kenya by providing a list of low prices that are to be implemented in the country for the month of December in its latest roller coaster.

Price Adjustments

Effective at midnight, the pump prices for Super Petrol, Diesel, and Kerosene have been reduced as follows:

Super Petrol: Reduced by; Ksh. 4.37 per litre.

Diesel: Reduction by Ksh.3.00 per litre.

Kerosene: Reduce for Ksh.3.00 per litre.

The new prices in major cities include:

Nairobi: Super Petrol – Ksh.176.29, Diesel – Ksh.165.06 and Kerosene – Ksh. 148.39.

Mombasa: Super Petrol at Ksh, 173.05, Diesel at Ksh 161.82 and Kerosene at Ksh 145.15.

These prices are in line with the 16% Value Added Tax (VAT) policy in the Finance Act 2023, the Tax Laws (Amendment) Act 2020, and Legal Notice No. 194 of 2020 adjustments to inflationary excise duties.

Reasons for the Drop

EPRA attributed the price reduction to a decline in the landed costs of imported petroleum products:

Super Petrol: This is quite a drop from the US$ 641.14 recorded per cubic metre in October to US$ 612.53 in November, 4.46% decline.

However, for Diesel and Kerosene products, the landed cost experienced a slightly higher increase thus Diesel by 5.76% and Kerosene by 1.87%.

Context and Impact

This is the second time that the prices of fuel have been reduced in a row – good news for consumers after months of having to pay steep fuel prices. Lower fuel prices should impact the rest of the commodity cycle and I believe it would impact transport costs thereby decreasing the inflation rate on goods and services.

Still, EPRA’s review corroborates such tendencies and proves the virgin intention to adhere to fair pricing strategy which corresponds to the international fuel costs and local taxes.