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Pain, gain of Uhuru’s grand dream to catch up with Asian Tigers

President Uhuru Kenyatta with visiting State Counsellor and Minister for Foreign Affairs of the People’s Republic of China Mr Wang Yi during an inspection tour of the ongoing construction of the new offshore Kipevu Oil Terminal at the Port of Mombasa on January 6, 2022. [Standard Group]

For four years since he was re-elected in 2017, President Uhuru Kenyatta unilaterally run the government without the help of his deputy William Ruto.

On November 30, 2021, as Kenyatta gave his State of the Nation Address to a nervy public whose spirits had been bloated by the Covid-19 pandemic, the President looked unbothered by the breakdown in his marriage with his deputy.

The union had been consummated eight years earlier when the two euphorically swept to power with the ‘dynamic duo’ envisioning a future of prosperity and opportunity for all Kenyans in the Jubilee Manifesto.

Despite the myriad challenges that beset his administration in the second term- including accusations and counter-accusations of betrayals in the ruling Jubilee Party, the President was confident he had secured his legacy.

Among some of the gains under his legacy is helping the country to bake a bigger cake for Kenyans with the size of the economy more than doubling in eight years.

He had connected thousands of households to the electric grid; stretched tarmacked roads to the remotest corner of the country; built Kenya’s first modern railway and a new major port in Lamu County and issued title deeds to the landless.

But there was no gain without pain.

Debt burden

President Kenyatta’s lofty dream of quickly industrializing Kenya had a steep price.

There was an unprecedented build of debt – particularly expensive loans such as Eurobonds and syndicated loans- to build railways, roads, airports, bridges, electric substations.

The repayment for these loans crowded out other critical public services.

Money that would otherwise have been used to offer Kenyans critical public services necessary to elevate the standard of living for Kenyans was instead used to pay interest on the many loans that had been borrowed to build the mega infrastructural projects.

There was also another problem. Access to goods and services by ordinary Kenyans suffered as the government pursued its big projects.

President Uhuru Kenyatta flags off Standard Gauge Railway (SGR) Phase 2A at Syokmau Railway Station in Nairobi, in these photos taken on October 16, 2019. [David Njaaga,Standard]

Even though the headline numbers such as GDP, GDP growth, Inflation Rates, Exchange Rates and many other macro-economic indicators have been attractive, development economists were dismayed by the fact that most wananchi could scarcely afford decent housing, nutritious food, quality healthcare and had no jobs that could allow them a better standard of living.

As a result, a 2020 report by the Kenya National Bureau of Statistics (KNBS) showed that multi-dimensional poverty, which also looks at access to goods and services, has been on the rise: From 46 per cent in 2016 to 53 per cent in 2018, the latest period when this data is available. 

However, the proportion of Kenyans living below the overall poverty line stood at 36.1 per cent, as of 2016.

Anyone who spends less than Sh3,252 per month in rural and peri-urban areas and less than Sh5,995 in urban areas is categorised as living below the poverty line.

Moreover, unlike during former President Mwai Kibaki’s time when the government generally stayed away from the domestic market, Kenyatta’s administration jostled with the private sector for loans from commercial banks, a situation that starved firms and households of critical capital to start or expand their businesses.

Private sector credit growth has hardly touched double-digit numbers in the last nine years, a period in which economic growth has been driven largely by huge government spending. 

In his State of the Nation Address, Kenyatta noted that he more than doubled the size of the country’s economy, technically known as the Gross Domestic Product (GDP), or the national cake since 2013, said an ebullient Kenyatta.  

Kenya’s GDP in 2013, he said, was estimated at Sh4.74 trillion, and the country was Africa’s 12th wealthiest nation.

“This GDP was accumulated in a span of 123 years through the four administrations before ours. But in just 8 years, My Administration has multiplied this GDP by a factor of two PLUS,” he added.

His administration, he noted, had gone for the “Big Push Investments” and “Economic Acceleration.

'Asian miracle'

His two-pronged approach was inspired by the 'Asian Miracle' in which countries like China achieved, in a single generation, what took the advanced nations decades.

“Instead of taking the 200 years it took England to industrialize, China took only 35 years. Similarly, the Four Asian Tigers of Hong Kong, Taiwan, Singapore, and the Republic of Korea took 25 years to industrialize instead of hundreds of years. And that is why their accelerated growth was called the ‘Asian Miracle',’” said Kenyatta.

The President sought to turn back the hands of time, undo the missteps that his father, Kenya’s first President Jomo Kenyatta, had taken leading to the growth of the huge gap in development between Kenya and the Asian Tigers.

At independence, it is said that Kenya was at par with these Asian countries.

Unlike in the first term, the President tried to do some damage control by fighting corruption, even going after his trusted Cabinet Secretaries such as former CS Henry Rotich.

Former Treasury Cabinet Secretary Henry Rotich at a Milimani court on March 19, 2021 when he attended his case where alongside other individuals they are charged with corruption involving Arror and Kimwarer dams. [Collins Kweyu,Standard]

The government has also indicated that it will cancel about 157 dormant projects as part of its deal with the International Monetary Fund (IMF) to cut wasteful spending.

This would see the Kenyan administration save about Sh150 billion, or 1.5 per cent of GDP in expenditure.

The global lender said some of these projects “have been drawing funds from the exchequer for over 10 years and yet remain less than 50 per cent complete”.

Kimwarer and Arror dams in Elgeyo Marakwet county are some of the two dormant projects that had been absorbing cash yet nothing was happening on the ground.

President Kenyatta had in 2019 cancelled the Kimwarer dam which had already absorbed Sh22 billion.

He, however, ordered the immediate commencement of the implementation of the Arror Multipurpose Dam project with the new design components and cost rationalization plan as developed by a technical committee tasked to review the projects.

It is the two dams that cost Rotich his job.  Along with his former Principal Secretary Kamau Thugge, Rotich was subjected to multiple criminal charges, including abuse of office, conspiracy to commit economic crimes, single-sourcing for projects, and approving payments contrary to the law.

Yet, it is as though Rotich had a premonition and tried to forestall his fate.

Having been in charge when white elephant projects mushroomed all over the country, he made last-ditch efforts to save himself -- and by extension his office --by instituting policies and issuing directives aimed at stemming further build-up of wasteful projects such as Arror and Kimwarer dams.

As the man in charge of the country’s purse for six years, history will either condemn or vindicate the ex-CS on, not just the two controversial dams, but a myriad of other projects that heaped upon generations of Kenyans an additional debt burden of Sh3.7 trillion in under six years.

The contract for the construction of the two dams was awarded to CMC di Ravena, a broke Italian company, on February 1, 2016.

Not only did Rotich approve the award of the contract to build the two dams to a bankrupt firm, but investigators say the company was also paid even before a feasibility study was done or land compensation was completed.

Public Investment Management

Yet, in August 2018, Rotich unveiled the Public Investment Management (PIM) guidelines which, for the first time, required that before a project is funded, a feasibility study, land acquisition and compensation, stakeholder management and other development partners be completed.

All the mega projects had been done without these regulations.

And after years of dithering, Rotich revamped the Public Debt Management Office, which he placed under a new director-general who would be responsible for public debt management and operations.

Another office that was created at the National Treasury, and filled up, was that of Public-Private Partnership (PPP), as the state moved to steer clear of debt-driven projects.

But it was too little, too late for Rotich.

When Kenyatta read gave the State of the Nation address, there were less than nine months to the general elections on August 9, 2022, and the President, who had teamed up with his former nemesis, former Prime Minister Raila Odinga and fallen out with his deputy.

He had also ruthlessly purged some of his erstwhile lieutenants from the power Parliamentary committees and hounded others in court for various improprieties.

Uhuru’s graft axe would occasionally land on some of Ruto’s allies, with the deputy president decrying what he thought was political witch hunt.

In recent public utterances, Ruto has vowed to to free the Directorate of Criminal Investigations and the Kenya Revenue Authority (KRA) from he thinks is state capture.

“We have witnessed the criminalisation of enterprises,” Ruto.

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