When you cannot pay those who work for you it doesn’t matter whether you run a bakery or a car dealership, you are facing the grimmest situation for any business and that is called bankruptcy.
Kenya and the government that runs it today are exactly in that trouble and it could be a tragedy for its citizens if the country goes bankrupt, which could happen before the end of this year or most likely by the middle of next year. The country is heading there and everybody can see that.
Sri Lanka went bankrupt and the whole country fell to pieces with the political leaders running for dear life as the citizens chased them like wild animals for ruining a country that was once considered to be on the verge of major industrial transformation. Kenya could not be far from the same mess unless some drastic measures are taken to remedy the economy.
When Sri Lanka went bankrupt in 2022, it shocked the country into a meltdown nobody saw coming.
I happen to know a lot of Sri Lankans with whom I have worked in the human rights movement around the globe.
My friends are from both the Sinhalese Sri Lankans who live in the South around the capital city Colombo and the Tamil Sri Lankans in the north whose capital city is Jaffna. So when Sri Lanka exploded and their friends and families were in shock, I asked them what was going on down there.
They told me at that time their biggest worry was how to get their families out of Sri Lanka and possibly move them to neighboring India. The situation they told me was beyond repair.
They were damn right. The Sri Lanka uprising after the economic collapse was intense and the demonstrations were both national and personal. Sri Lankans wanted their economy fixed so they could get their lives back but they also wanted to deal personally with the politicians responsible for the mess. In time, Sri Lankans had invaded both the private and official residences of the two key leaders namely President Rajapaksa and Prime Minister Ranil Wickremesinghe.
Within days of the uprising, President Rajapaksa whose family had been in that office for decades was forced to run away and quit his office but that was after the demonstrators had invaded his residence which was a palace and tore it apart taking a swim in his grand swimming pools.
Then the demonstrators went to the residence of Prime Minister Ranil and they couldn’t find him to give him some deserved discipline so they set his residence on fire to let him know they were looking for his head for ruining the country.
Kenyans worry about what they see in the streets as the police come out to beat up demonstrators, but that is nothing compared to what happened in Sri Lanka. People had reached a point where they wanted to directly punish the political leaders who brought their country to chaos. That could come to Kenya if the politicians keep fooling around thinking Kenyans are dummies.
So when we look at the big picture, what is happening in Kenya today with mass action is still a warm-up to what could be a complete national meltdown should Kenyans go back to the streets and the economy sinks to the bottom,as seems to be happening right in front of us.
Right now the Ruto government is unable to pay civil servants and even MPs who are the priority of the government because they are supposed to sing for Ruto day and night, even in their sleep, they are supposed to dream about him. The bottom line here is that the government is broke and the salary issue is just a minor aspect but it is a very big deal for the government to reach that stage.
The government’s inability to pay civil servants and MPs is one thing but at this same time, the counties have not been allocated their money as provided for in the constitution and the laws of Kenya. Counties cannot pay salaries even for the most important sectors like paying nurses, doctors, and healthcare workers, and in every county, the threats of strikes by medical workers are everywhere.
The Ruto chaps at the Treasury are saying they don’t have the money the counties need so they are going to send whatever they have which will not meet the needs. Whatever the government sends to the counties will not even cover debts already owed by the counties. So they will pay what they can and the workers will be going without pay for another 3 months as the Ruto government begs for money all over the world to sustain the government. It will be a full circle of the same nonsense all over again. That cannot last.
Governors are currently in a stalemate with the national government over the delayed disbursement of funds, with the 47 devolved units demanding a shareable allocation of Sh. 425 billion in the 2023/2024 budget, while the commission on revenue allocation proposes a Sh 407 billion allocation but the Ruto government has told the counties they will try to send Sh. 380 billion and even that is nowhere to be seen.
On top of the sheer inability of Kenya to just meet the basic demands and get workers paid both at the national and county level, the biggest issue in our country today is the debt the government owes and the terrible one is foreign debt.
According to the latest released this week IMF report, ”African countries are facing large Eurobond redemptions,” said the World Bank in a report on Wednesday.
Kenya is preparing to retire the Sh264 billion ($2 billion) debut Eurobond whose maturity comes up in June 2024.
Other countries facing sizeable Eurobond redemptions include Angola which has a redemption estimated at Sh226.5 billion ($1.7 billion) in 2025.
Despite the recent trend, which saw yields on Kenyan Eurobonds tumble, interest rates on the securities have held up at double-digit rates with the return on the 10-year Eurobond maturing next year for instance standing at 13.7 percent as of March 30.
Simply put, Kenya has the largest Eurobond to redeem next year at Sh. 264 billion and the interest is super high already. What happens if the Kenya government is unable to redeem the Eurobonds?
Just before the present budget is released, the Treasury boss Njunguna Ndung’u has told Kenyans that half of the whole budget for 2023/24 will be for debt payments. The rest is not even enough for salaries and counties. So what is the point of commissioning endless projects which will not even be started?
The National Treasury’s focus is currently on managing the national debt, which stands at Sh. 8.7 trillion.
Ndung’u stated, “If we borrow, we can only borrow to rescue the costly short-term debt, for example, domestic debt, so we have to borrow concessional to solve the expensive debt. We will solve that, it is solutions that can work, solutions that have been seen to work.”
So Kenya is now borrowing “cheap loans” to pay “expensive loans”. That is the surest path to State bankruptcy. Sri Lanka went broke for one reason only. The government was unable to pay the interest on their debts and they defaulted in July 2022 and that was it.
The entire international banking and monetary system did not want to have anything to do with them. Kenya is barely paying its interest on debts leave alone repaying any of that huge debt and we have that Sh. 264 billion Eurobonds due in June 2024. We crash out on that just once and the country is up in smokes for good.
In the midst of the swelling economic threats to the country, we have politicians in UDA including President Ruto himself saying they want fake and bogus Peace Talks with Raila and Azimio rotating around parliament and if the Azimio team does not want that, they can go back to the streets and have their mass actions.
Be very careful what you ask for when you face dire straits from all corners because chances are you might get exactly what you are asking for.
It was good Raila and Azimio stopped the mass action once they had a proposal from Ruto to have dialogue and find solutions. It will also be good if Raila and Azimio don’t just rush back to the streets. But after they set the agenda for the Peace Talks which will take a week or two and it becomes clear that Ruto and UDA are not interested in real talks to solve real problems then Raila and Azimio have no choice but to come to Kenyans to explain the situation and go back to mass actions which is the only language these UDA people will understand.
The real problem is that once the masses go back to the streets, putting a stop to that could be very difficult. Things could get worse if the economy keeps going south and it becomes clear that what is required is not a negotiation but a change of government.
The real issue here is that the Ruto and Raila talks must address the cost of living. Ruto says the demonstrations will not reduce the price of basic commodities for Kenya and he does not realize that is exactly why both sides are having talks on how to do that. If there are no practical plans and initiatives to lower the cost of living, the Peace Talks become completely useless to ordinary Kenyans and have to be stopped in their tracks.
The second big issue is the attempts to turn the talks into a parliamentary shouting contest. Nobody in the country is interested in that. If this parliament could solve the problems Kenya faces, they have had 7 months to do that. Can parliament tell Kenyans just one thing they have done for the good of the country?
It is clear that several organizations and even the media folks are calling for the talks for peace and stability in Kenya to involve a broader section of the community. The groups that many Kenyans want involved in the talks include faith groups and leaders, Kenya human rights organizations, and supportive international organizations among others. Why is UDA scared of those very open and widely popular groups in Kenya?
If the talks cannot accommodate other formations in Kenya that want the same goals as Azimio and UDA, they are not worth the time because it will be MPs and their bosses yelling at people and the Rigathis threatening to unleash Armageddon on Kenyans who hold mass actions.
Let them do it and Kenyans will meet them in the streets as they have already done when some of the loudmouths were hiding in their toilets. They can go back there and have negotiations with the stuff they are putting in their toilet. Nobody will bother them there.
Simply put. If Ruto and UDA want real negotiations, Kenyans seem to be eager for that from just every corner of the country. If they want war, they are going to have it because Kenyans will have no choice but to take them on. The choice is yours Mr. President and UDA.
If Ruto and co keep talking about this Nusu Mkate which no Kenyan wants, Azimio should tell them to take their whole rotten Mkate and eat it. They can then spend the rest of the time farting out the bad stuff while Kenyans fight for a better future in their country.
Meanwhile, nothing in terms of development is happening in the country as Ruto commissions one project after another when they know they have no money to build anything. In a new first in Kenya, Ruto is now commissioning the same roads twice and of course, blaming Uhuru for that. When you don’t know what you are doing Kenyans will figure that out very quickly.
Ruto now says oh, I launched it again because Uhuru did not build it. Why launch it again? Wouldn’t it be smarter to just allocate the money to have the road built then you can go there when it is done? Of course, Ruto knows none of the projects he has been launching all over the country will ever be built. The real party is at the commissioning not opening anything.
Does anybody remember the Galana Kulalu promises Ruto made with so much pomp last year?
The good news is that it is April in 2023 and according to the Ruto promise 10,000 acres in Galana Kulalu should be beeming with maize farms ready for harvesting soon. The problem is that not even one maize plant is there now. And yeah the other 10,000 acres will be ready to go by June this year.
You can fool some people sometimes but you can’t fool all the people all the time.
William Ruto is doing the same thing they did with billions given to companies to build tens of stadia around the country and that was just pocket money for a whole bunch of people, many of whom hold key offices in the Ruto regime today including his new KRA Chairman Antony Mwaura and Moses Kuria the Trade and Investment CS both got a total of Sh.600 million.