It was Nassim Taleb, the Lebanese-American scholar, who once opined that the curious mind embraces science; the gifted and sensitive, the arts; the practical, business; the leftover becomes an economist.
Apparently, Taleb could have unwittingly been talking about the managers of the economy in modern day Kenya, with Henry Rotich, the National Treasury cabinet secretary, being the high priest and Principal Secretary Dr Kamau Thugge the lead counsel.
Indeed under Rotich, the words of Canadian author Laurence J. Peter that an economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today have come to unravel.
When Rotich was unveiled as Treasury CS in May 2013, Kenyans got introduced to a little-known Treasury insider whose trademark was and has remained, a penchant for a rather deceptive smile that rarely leaves his lips even when Kenyans are mourning.
This was evident last week when Rotich maintained his trademark smile despite plunging the country into a deeper economic crisis with the implementation of the 16 per cent value-added tax (VAT) on fuel products.“We have held discussions with the leadership of Parliament and we will have more engagements to find a solution,” he said during a meeting in Parliament, a camouflaged way to say the tax is here to stay irrespective of the impact on the costs of living for millions of Kenyans struggling to make ends meet.
When he presented the Jubilee government’s first budget in June 2013, the country somehow fell in love with the Harvard University-trained public administrator and economist after the budget themed ‘Transformation for Shared Prosperity’ stressed that going forward, Kenya will prosper and every Kenyan will feel the benefits.
There were good reasons why Kenyans felt optimistic.
The Jubilee administration had inherited a country whose economy was on a strong footing, with all indicators pointing north and the world celebrating that following an unusual peaceful election, Kenya was creating a model to emulate in the ‘Africa rising’ narrative. “None of us can rest or sleep peacefully until every Kenyan can find a job easily, feed himself and his family and easily exploit available opportunities to improve their own lives,” said Rotich back then.
That was the promise then. Today, however, the effects of Rotichnomics are unravelling in the most profound of ways, leaving in their wake Kenyans wallowing in abject poverty, rising unemployment, high costs of living, hunger and where opportunities no longer exist with even erstwhile blue chip companies falling like dominoes.
At the top, he always assured the country that things were superb. It was until the President suspended new major project that Kenyans discovered things were headed south.
In fact, the algorithm in the minds of Kenyans has now been configured to associate Rotich with the failed policies of the International Monetary Fund (IMF), runaway debt, hike in taxes, ballooning wage bill, widening fiscal deficit, begging bowl directed to China, Eurobonds whose proceeds cannot be accounted, failed M-Akiba bond as well as failed austerity measures among others.
Besides mismanagement of the economy, Rotich has also been mentioned in scandals ranging from the Ruaraka land saga in which taxpayers lost Sh1.5 billion, sugar and maize imports where the Government lost in excess of Sh10 billion.
To many observers, the management of the economy under Rotich, who happens to be among the longest-serving finance ministers, has been nothing short of a disaster - and calls for his impeachment like the Iranian finance minister who was last month ousted due to ineffective policies have been on the rise.
“Kenya’s fiscal metrics continue to deteriorate, as large primary deficits combine with worsening debt affordability and rising debt levels,” said rating agency Moody early this year after downgrading Kenya to B2 from BI.
After defying Parliament and going ahead to implement VAT on petroleum products, the talk on the corridors of the August House is now gravitating towards impeachment.
Even as Parliament ponders action, Kenyans are at a loss at just how Rotich has presided over the ruinous management of the economy. Many are at a loss of just what went wrong with the CS, considering that as head of macroeconomics at the Treasury during former President Mwai Kibaki’s administration, he was credited as having played instrumental roles in the formulation of policies that ensured an affordable and sustainable path of public spending.
It is imperative to note that back then, Kenya was comfortably financing 95 per cent of the budget through domestic resources with the Kenya Revenue Authority (KRA) surpassing targets year on year.
With him at the helm, public spending is in a state of chaos with Treasury mandarins even being accused of engaging in creative accounting to balance the books particularly in relations to the Eurobond I proceeds. Under his stewardship, Kenya can no longer afford to live within her means and the management of the economy is being auto-controlled from Washington D.C by the Bretton Woods institution (IMF), an institution that is behind the VAT on fuel and other structural reforms measures that are hurting Kenyans. Despite inheriting a country whose gross public debt stood at Sh1 trillion in 2013, Rotich has presided over a system where the debt has exploded to hit Sh5.1 trillion.
Tragically, only a fraction of the debt has been utilised in tangible development projects owing to the fact that corruption and misguided spending have reigned supreme under the Jubilee administration.
To manage the debt, Treasury has resulted in abracadabra of borrowing from Peter to pay Paul instead of sound policies.
Examples abound. In 2016 Treasury issued Kenya’s debut Eurobond that raised Sh200 billion with part of the proceeds being used to settle a Sh60 billion syndicated loan.
The same strategy was in play this year when Kenya floated the second Eurobond to raise Sh202 billion and used part of it to clear a Sh75 billion loan.
“Kenya has a strong appetite for external borrowing and has remained politically intransigent about its downsides,” said Daniel Heal, Control Risks Senior Partner for East Africa.
Due to the debt burden, Kenya is spending at least a third of its annual revenues on debt financing, making it difficult to finance development projects.
Despite plunging the country deep into a debt trap, Rotich has remained unfazed, always maintaining Kenya’s debt is sustainable and within manageable levels.
Apart from placing a debt burden of Sh133,000 on the head of every Kenyan, Rotich has been unrepentant in increasing taxes, even of basic goods and services to squeeze more from overstrained Kenyans.
This, he has done without putting in place measures to arrest wastage, contain the rising wage bill of about Sh700 billion annually or even being willing to take responsibility for making life tough for the majority of Kenyans.
For Kenyans, the worst is still unfolding under Rotich with all indications showing that President Uhuru has no plans to fire him from Treasury and Parliament’s efforts of impeachment seemingly looking futile due to partisan politics.