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A super CS drowning in a pool of borrowed billions

By Dominic Omondi | October 23rd 2019
Full hands: Transport, Infrastructure, Housing and Urban Development Cabinet Secretary James Macharia. [Wilberforce Okwiri)

Nairobi, Kenya: If money is power, then James Macharia, the Cabinet Secretary for Transport and Infrastructure, is truly a powerful man.

And if money changes people, then it may have found the perfect candidate in the former managing director of NIC Bank and alumni of the University of Nairobi.

From being pragmatic in his responses while in the private sector, Macharia, the public servant, now refers to his critics, ardent taxpayers, as being “unschooled”.

Cold shoulder

He called striking pilots “criminals” for demanding better working conditions, and gave transporters protesting job losses to the Standard Gauge Railway (SGR) the cold shoulder. A hastily crafted directive forcing traders to transport their cargo through SGR was lifted earlier this month, though it is yet to be implemented.

Financial reporters do not remember dealing with a condescending Macharia back when he was fielding questions from them on the banking sector.

But now, the soft-spoken but influential Cabinet Secretary is a force of nature.

The five State departments under his watch are swimming in a pool of borrowed billions, and as the CS, he controls a budget many of his peers can only dream of.

Every financial year, the man who once occupied the C-suite of what was a tier-two bank lays claim to a development budget of nearly Sh200 billion, which is shared among his five Principal Secretaries of Transport, Infrastructure, Housing and Urban Development, Public Works, and Shipping and Maritime Affairs.

For every Sh1,000 that is disbursed annually to the 72 Government agencies to be used for development, his five departments consume an average of Sh470, leaving the other 67 State bodies to scramble for the remaining Sh530.

Intermittent Cabinet reshuffles that have been the bane of many public officers have so far been a boon to Mr Macharia. After what some analysts saw as an average performance while at the helm of the Health ministry, President Kenyatta catapulted him to the current docket that dominates tender logs.

Another reshuffle in May 2016 saw him emerge even more influential after he got the Housing and Urban Development, and Public Works dockets, which were hived from the Lands ministry.

And with the President planning to build half-a-million affordable houses by 2022 under the Big Four Agenda, the torrential flow of cash can only get bigger.

At a time when different ministries, departments and agencies have been quaking in their boots as Treasury trims budgets with funds channelled to the Big Four Agenda, Macharia’s departments have benefitted.

As to whether Macharia has used the power of the shillings under his control well, the jury is still out.

Since November 2015, when President Kenyatta entrusted him with the expansive ministry, to June 2018, Macharia’s five State departments combined have received a staggering Sh800 billion in development cash, most of it borrowed.

Stimulate economy

With this money, he has tried to craft a legacy. Gerisshon Ikiara, an economics lecturer at the University of Nairobi and a former Transport Principal Secretary, awards him an A+.

“The President and Macharia have done very well by going for the mega projects, which is the way to stimulate the economy,” said Ikiara.

But others, such as his former PS Irungu Nyakera, prefer not to comment on Macharia’s performance.

“Regarding Macharia, let me not comment on his strengths or weaknesses,” said Mr Nyakera in a text message.

Part of the Sh800 billion was used to construct the Standard Gauge Railway (SGR), the most expensive project in Kenya since independence.

The modern railway, whose Phase 2A from Nairobi to Naivasha President Uhuru Kenyatta recently commissioned, has been close to Macharia’s heart.

To the CS’s credit, the first phase from Mombasa to Nairobi was opened ahead of schedule.

Official data also shows that he has overseen the construction of 2,388 kilometres of new roads and built 62 bridges. Another 359 kilometres of roads have been rehabilitated, a boost to the country’s development agenda as people and goods can now move easily around.

But available data shows that these kilometres of road and railway have come at a brutal cost. In some instances, a kilometre of road has cost Sh1 billion, factoring in the cost of bridges and culverts.

Other countries, such as Ethiopia that have done similar projects to the SGR, have done it at a relatively lower cost. The Government, however, insists that the country’s terrain required many bridges and tunnels, land compensation and specifications that would handle greater cargo volumes than Ethiopia’s line.

Stalled projects

As of June 2018, Macharia was overseeing stalled projects valued at around Sh100 billion, according to a report by the Parliamentary Budget Office. These projects have already absorbed Sh24.4 billion, which taxpayers will have to pay for, regardless of whether they got value or not.

“This is the most profitable, viable project in  Africa. We started with one train in January 2018,” said Macharia in an interview with KTN last week.

He went on: “Those people who talk about SGR being loss-making, those are people who need to be put in a classroom and taught about SGR.”

For 10 years from 2020, Kenyans will start paying the Sh327 billion loan that the country got from China for construction of the ambitious project.

Part II of this special report continues tomorrow.

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