Opinion: China is starting to squeeze the Kenyan Economy!

If you were ever thinking that Beijing would loan and build without consequence. Those days should long be gone. The Chinese are planning to earn money on their investments, they don’t care about the Republic’s they are investing in, as long as they are profits on their investments. They want earn on these loans and since the rate of loans are so high. They are now starting to pick collateral for their infrastructure loans, especially the draining of loans to the Standard Gauge Railway (SGR).

While acknowledging China’s leading role in the Kenyan economy as a trading partner, the President called for increased Chinese investments in the country. “China now ranks as the number one trading partner with Kenya accounting for 17.2% of Kenya’s total trade with the World,” he said. “Kenya is open and safe for business. Kenya has one of the most conducive business environments in Africa,” the President added” (President.Go.Ke – ‘President Kenyatta Asks China To Give Preferential Treatment For African Goods’ 02.11.2018).

While Kenyatta are acting as it all positive, the reality is that the state are having giant issues with their “investments” and loans there. But Kenyatta wants to make it sound positive, when it really isn’t, just the rate of the loans have grown and the consequences of the relationship with China is now starting to cost. It is the Kenyans that has to pay these loans down and with every way possible. As the Chinese has leverage over the Kenyan government. Take a look at these quotes from media recently!

Loan Rate in Kenya:

Kenya’s current public debt stands at approximately 4.884 trillion Kenyan shillings (USD$49 billion) or 56.4% of the country’s gross domestic product.. This is up from 42.8% in 2008. In other words, the country owes more than half the value of its economic output (GDP)” (…) “China is Kenya’s largest creditor, holding about 72% of the country’s bilateral debt as of March 2017. Studies show that Kenya’s Chinese debt poses a threat because the loan agreements are not transparent, projects are not well prioritised, accounting procedures are weak and it’s not clear what projects are costing” (Odongo Kodongo – ‘Kenya’s public debt is rising to dangerous levels’ 05.08.2018).

Selling State Owned Enterprises:

The Privatisation Commission has approved sale of 26 state-owned corporations to raise funds to support the budget. The commission, under the Privatisation Act, 2005, was mandated to sell 26 poorly performing state corporations to cut down government spending. Those approved for sale are National Bank of Kenya, Consolidated Bank of Kenya, Kenya Meat Commission, Development Bank of Kenya, East African Portland Cement, Kengen, Kenya Pipeline Corporation, Kenya Ports Authority, and five sugar millers — Chemilil, Sony, Nzoia, Miwani and Muhoroni. Others are Agrochemical and Food Corporation, New Kenya Co-operative Creameries, Numerical Machining Complex and Isolated Power stations, hotels (Kabarnet Hotel, Mt Elgon Lodge Ltd, Golf Hotel Ltd, Sunset Hotel Ltd and Kenya Safari Lodges and Hotels Ltd). Also targetted are Kenya Tourism Development Corporation-associated companies, which include International Hotels Kenya Ltd, Kenya Hotels Properties Ltd, Mountain Lodge Ltd and Ark Ltd” (Cynthia Ilako – ‘State to sell 26 companies to finance current budget’ 03.11.2018, The Star Kenya).

China Selling Infrastructure Loans to Investors:

The plan will see Hong Kong mortgage insurer Hong Kong Mortgage Corporation (HKMC) buy a diverse basket of infrastructure loans next year and explore the idea of “securitising” or repackaging them into securities for sale to investors, allowing it extra liquidity that it can loan out to finance more infrastructure projects. “This initiative we believe will help ‘recycle’ commercial banks’ capital to be redeployed into other greenfield infrastructure projects, besides enabling wider capital markets participation in infrastructure development under the Road and Belt initiative,” said HKMC Greater China chief executive Helen Wong” (Allan Olingo – ‘China plans to sell off its African infrastructure debt to investors’ 05.11.2018).

We are seeing the growth of loans, that is up 42,8% and the debt level of the 56,4% of the GDP. Because of that, the state are now selling of their State Owned Enterprises. Most likely to Chinese holding companies and investors, who are expecting to gets points on their dollars. As well, as securing their future on the investment. They are selling the central institutions and businesses, which was state controlled, but they will now become para-stalls of the Chinese.

But selling the institutions are not enough for the Chinese. They are planning to take it further. Planning to rehash the loans as sub-prime loans for investors, meaning they are taking the risk instead of the Export-Import Bank of China, where the loans are usually collected and distributed from. Therefore, the loans are another target of more profits as they want to earn on them as well into the Capital Market. Just like the US Banks did with House Loans and mortgages in the past.

While all that is happening and with the knowledge of this, the President is still keeping it cool. Kenyatta is still not saying the brazen truth, that they are a debt-slave to China. Are in such big trouble, that the investment of the SGR are killing the economy and they have to trade-off their assets to keep up with their payments. That is what is happening and this is not really developing, but hurting the economy even more. As this institutions and businesses has been controlling their markets. Now, they will have masters from outside, which are not there to secure the market, but make a direct profit. Therefore, the citizens are not only paying their loans for the railroads, but for destroying their economy. Peace.

Opinion: Jubilee rocked by another Maize Scandal?

In this treacherous world

Nothing is the truth nor a lie.

Everything depends on the color

Of the crystal through which one sees it” – Pedro Calderón de la Barca

The Jubilee government have another level of corruptness over themselves. The President is brazen in his public fight with corruption, but the behavior of the government is corrupt as it possibly can be. The things of nature, is that it repeat itself. This time without government subsidizes like it was on the way to the Fresh Presidential Elections of 2017. When the maize was subsidized and the maize came from Mexico. Then rebranded and restocked as local produce.

Now, were in the middle of 2018 there was also extra attention to it, as the National Cereal and Produce Board had already bought imported maize to stock, while the locals had to get lesser pay while selling to the millers. As that has happen and the months has gone by, there are now reports. That the NCPB silos has destroyed 60% of its maize. That is imported maize that has already cost the taxpayers about ksh. 9 billion and now they have to import more. This is happening right in the 4 Quarter and before the festive seasons of Christmas Carols and jingle bells.

Clearly, this seems like a ploy, as the Deputy President William Ruto are promising farmers more money and another ksh. 2 billion to buy more stock. This is consequence of the importing of 4.4 million bags of maize. We can wonder who are earning fortunes on these games with the farmers and with the citizens needing to buy the maize flour, the UNGA. This is the staple food the government is making a mockery of.

This is meanest way of destroying confidence and also showing utter disgrace of office. As the NCPB and Ministry of Agriculture, the CS Mwangi Kiunjuri and Chairman Mutea Iringo. Both of them should come clean in this mess. It is evident there is something behind the curtain and someone is trying to fool someone. As the NCPB and CS Kiunjuri should spare no mind, explaining how they could buy rotting maize and toxic of it, while also struggling to pay local farmers. If not, there are something else going on.

As there other interests, than paying the farmers a fair price, as the imported ones from Uganda and Mexico is hitting the markets at a lower price. While the farmers struggle to sell their produce to the NCPB. This is all deliberate acts, as the millers and cartels are securing huge profits of the imported ones. While the local produce are wasted and destroyed. Now, even the foreign ones isn’t all good and suddenly destroyed. The utter chaos and the mismanagement is clear. Even as the NCPB are calling themselves “The Leaders in Grain Management”. When concerning Maize, they are not, unless they are following orders of cartels and from above.

This all seems weird, it all seems like a deliberate act of misconception to get higher prices, trick the citizens and get more profits for the millers and importers. Not to generate a better environment or even selling the staple food at a reasonable price. The Jubilee government have tried to trick the public before with UNGA. Therefore, I am skeptical about the beneficiary and the ones getting paid by this scheme. As the amounts of money and the toll on the economy, as the NCPB and Ministry should know better.

Clearly, another Maize scandal, but this government are rocking with scandals all the time. Peace.

Another Institution to fight Corruption: Rev. Lokodo didn’t plan the cost for it though!

Just like so many other things with the National Resistance Movement (NRM), they have giant plans and even laws to abide. As the Leadership Code Act Amendment of 2016, which stated that a Tribunal would be created and elected by the President and Public Service Commission. That Tribunal was supposed to follow up on the possible breaches of the Leadership code, have inquiries and collect reports of these within the government.

However, that has not happened, because the NRM, haven’t had the same wish for that or even tried to allocate funds for this They have anticipated that someone else is paying their tab. The Minister for Ethics and Integrity Simon Lokodo wanted, as he was the sponsor of the amended code. However, he never considered the costs of making a Tribunal, meaning someone has to pay for the manpower and the elected people for this. That is bad leadership in itself. As the Ministry should have had the funds before the Parliament enacted the changes of the law. The Parliament should also know about these provisions and the possible outcome of amending the Leadership Code. However, they didn’t!

Government plans to spend a total of Shs117.7 billion to implement the new zero tolerance to corruption policy approved by Cabinet on Monday” (…) “Fr Lokodo said the European Union has so far given government Shs 3.1b to establish the Leadership Code tribunal. He said the tribunal should have been established shortly after the amendment of the Leadership Code Act last year, but did not take off because of lack of funds” (Draku & Wandera, 2018).

So, this isn’t only a story about the Government of Uganda has yet another body to fight corruption and doing it through the Ministry of Ethics and Integrity. As the Tribunal under Lokodo Ministry, will be a part of a collective of government institutions doing similar actions. This being Uganda Police Force, Public Procurement And Disposal of Public Assets Authority (PPDA), Office of Attorney General (OAG) and Inspectorate of Government (IGG). All of these should be more than enough, as even the Judiciary and the Uganda People’s Defence Force (UPDF) are an investigatory body. Certainly, knowing the NRM, they could be involved in the manners of these. Especially, if the person was a big-man in their view.

Therefore, this is yet another expert facility and another institution to fight the same thing. As the mushrooming of the state continues. This is bound by law and until the law is repealed, the Tribunal is bound to appear. Because, it is in law and was enacted.

What I wonder, what will the Tribunal do, that the Police, PPDA, OAG, IGG, The Judiciary and UPDF isn’t doing already and what results will differ from what they are doing today?

I don’t think any of these possible institutions will really fight the corruption. As the finalization and the orders of confirmation comes from upon high. The President and State House is deciding what is happening in the end. The biggest deals are happening their without public insights in the State House. Therefore, if the NRM wanted it to be real.

They have to change the pattern of the President and his State House. The cronies and the elites around the President has to keep things transparent and open. However, they are not doing so. Therefore, any of these institutions will not make a significant difference. Peace.

Reference:

Fraklin Draku & Derrick Wandera – ‘Government to spend Shs117b on fighting corruption’ 01.11.2018 link: http://www.monitor.co.ug/News/National/Government-spend-Shs117b-fighting-corruption/688334-4831334-jswwdm/index.html

The SGR Trick: Which was all based on, if Beijing blessed Kampala!

The Standard Gauge Railway in the East African Community was all based on if the Chinese counterparts wanted to fund the infrastructure and the grand enterprise of rails in the region. Today, it was revealed, not shockingly that the SGR works in Uganda has been suspended. This after reports in the Daily Monitor revealed this:

Uganda’s first phase of SGR, the eastern line running from Malaba to Kampala, about 273km (338km rail length), is expected to cost $2.3bn. Mr Kasaija admitted that Uganda has currently taken a back seat on the SGR venture, but will resume “serious discussions once Kenya is about to reach” the Ugandan side. President Museveni, according to sources familiar with the venture, in recent months had been directly involved in discussions on the project, and had hoped to secure financing for the first section of the railway line during his visit to China last month when he attended the seventh Forum on China-Africa Cooperation (FOCAC) summit. But he returned empty-handed. However, Mr Kasaija revealed that during the discussions in Beijing, it was agreed that “Uganda and Kenya will embark on joint financing negotiations” after Kenya has completed the current Nairobi-Naivasha section” (Daily Monitor – ‘Uganda puts SGR on hold over unresolved issues with Kenya’ 30.10.2018, link: https://www.businessdailyafrica.com/news/ea/uganda/Uganda-puts-SGR-over-unresolved-issues-kenya/4003148-4828902-156c5upz/index.html).

I have doubts that it will help reaching more agreements with the Kenyan counterparts at this time. As they have had plenty of agreements, joint communiques and meetings with the Northern Corridor Integrated Project (NCIP), which is going back to 2015. Where there was back in October 2015 on the 11th NCIP Communique, where the document stated: “the summit noted progress made in the finalisation of bankable proposals for some sections and directed the Ministers of Finance, Infrastructure, Attorney Generals, coordinated by the Ministers of Foreign Affairs, to undertake a joint visit to EXIM Bank in China to conclude Financing Agreements” (11th NCIP Summit – Joint Communique’ Safari Park Hotel, Nairobi, Kenya 17.10.2015).

If you follow it clearly, the progress of the 2015 have been stalled or rejected, but the parties still want to pursuit the goal of building the rails. Even as even the Chinese doesn’t believe in it or seeing the lack of fortunes in Kenya to maybe wishing to extend the tracks further at this given moment. What we are seeing is that the Ugandan government has persisted, but not gone through.

They even had the idea of the SGR Railway in the National Development Plan II of 3rd March 2015, which also holds the idea of the rails alive with this statement: “Joint formal agreements for plans to build a new Standard Gauge railway (SGR) have been signed by the EAC Countries. The SGR project starts in Mombasa through Nairobi, Kampala, Kigali and Juba. A cross section of the different routes of the SGR to the South Western, Northern, North Western and Eastern Uganda will aid the mining industry through transportation of equipment and raw materials. The overall objective of the SGR is to jointly develop and operate a modern, fast, reliable, efficient and high capacity regional railway transport system as a seamless single system and as a mechanism to stimulate overall economic development” (NDPII, 03.03.2015). By the way, the implementation of the NDPII is supposed to be between 2015/2016 to 2019/2020 to fulfill the Vision 2020. However, by the SGR failure, this shows the lack of progress and just the major agreements, but not the needed funding or possibility of partners to invest in the huge infrastructure projects the government has.

While on the 3rd of October, the Ministry of Works produced the 14th Joint Transport Sector Review Workshop presentation, where they by June 2018 stated: “The financing agreement for the SGR was not signed. However, negotiations to sign the financing agreement are in advanced stages” (Ministry of Works, 03.10.2018). So, you see, the government knows perfectly well, they cannot and doesn’t have finances for the building of it. It is soon November 2018 and getting closer to Vision 2020, but no sign of a working rails across the Republic. Especially not, when they are waiting for the Chinese to see it as a viable project in the first place.

What the government didn’t tell today or yesterday, is that the Chinese said no a little while ago:

For it to make business sense, the proposed line has to reach Uganda in order to take over a huge chunk of the haulage business in the landlocked country ahead of the Tanzania-Rwanda SGR line. Uganda is said to have decided to revamp its old metre-gauge railway when it became apparent that the Kenyan line could delay for up to three years. A regional weekly recently reported that the ministers for transport and finance of the two countries were supposed to have engagements with China Exim Bank on the sections of Kisumu to Kampala via Malaba” (…) “This, however, flopped and instead the executives from China Exim Bank flew to Kampala and later Nairobi last November to carry out due diligence on the Uganda project proposal and contract application” (Guguyu Otiato – ‘Worry as China puts SGR funding on hold’ 06.03.2018 link: https://www.standardmedia.co.ke/business/article/2001294667/alarm-as-china-puts-sgr-funding-on-hold).

So, when the government are saying it wasn’t signed, is that the Exim Chinese Bank rejected it and hasn’t accepted the infrastructure project at this point. Certainly, they don’t see it viable or even possible for profits. They have already started in Kenya, but has to finish that part, before they extend to the other Republics in the EAC. Therefore, the SGR is still a dream elsewhere in the Northern Corridor, as they seemed more ready in 2015, than the donors or the development partners ever where. Because the GoU are not ready to finance it self and not have the ability to do so. Without getting funding from the outside. They have to beg for loans and grants to get it. Peace.

Zimbabwe: The Press Statement on the Breakfast meeting between government and business (29.10.2018)

MoFPED Matia Kasaija letter to All Development Partners: “Re: Clarification on the Decision of Cabinet of the Republic of Uganda Concerning the Reorganization of Government Institutions” (26.09.2018)

Reserve Bank of Zimbabwe: Press Statement – Purported Sale of Demonetised Zimbabwe Dollar Notes (26.10.2018)

Zimbabwe: Second Republic – Fifth Meeting Decisions Matrix 23rd October 2018 – Price Hikes and Depressed availability of Basic Commodities and Medical Drugs (23.10.2018)

PM Abiy Ahmed – Press Release: Ethiopian Diaspora Trust Fund is Now Live! (23.10.2018)

Zimbabwe: Acie Lumumba was fired, before he was really hired!

That Finance and Economic Development Minister Mthuli Ncube looks clueless these days is evident. As on the 19th October 2018 he had an photo-op and a letter appointing Acie Lumumba as the Chair of his Communication Taskforce. However, on the 22nd October the Ministry of Information, Publicity & Broadcasting said this:

Mistakes were made but advice from govt lawyers indicate there are legal housekeeping issues regarding the Procurement Act Cap 22:14 which need to be regularised and the Ministry of Finance is dealing with that” (Ministry of Information, Publicity & Broadcasting, 22.10.2018).

Clearly, the foul-mouthed, free-talking former ZANU-PF was to much to handle. This is like the mouth of Anthony Scaramucci in the White House. Who was hired and fired before really starting his job as White House Communication Director. The ZANU-PF are going within the same parameter with this hiring and firing. It is the same level of incompetence and lack of due diligence.

Now, the mistakes and regulations has to be looked into, as the operative Communication Taskforce wasn’t in full effect. However, someone knew this was happening and someone had given a heads-up for doing this? If not they are looking even more clueless and lack of procedures before hiring and appointing boards or operations within the government.

They knew before hiring, that Acie says whatever he feels like and acts a big-shot. He wants to be big-man in the family and wants to ride the fancy car, even if he complains that the civil servants has one. He wants himself two of them and without cost. We all know it, but acts indifferent.

Lumumba knows the game perfectly well, but that this Taskforce would back-fire this quick. That the mouth of Acie would have aftermath. That was special. Even as the Minister Ncube are getting other to speak on his behalf. As he knows perfectly well why he did it and why he hired him. We don’t know that yet. But this is mere days after the appointment and still no effort of explaining. Just that it is a mere mistake. Like putting salt instead of sugar in the tea. I know it is ghastly, but that is why refill and try again with new boiled water.

Clearly, Ncube isn’t a big game changer from Chinamasa, as the new Minister hasn’t proven any skills or any ways to make it better. Only to ensure the same old troubles of inflation, lack of foreign currency and trying to forge a narrative of someone else fault for failing economy. Instead of coming out saying, that he had no idea what the consequence would be if they levied the newly minted taxes. Which has hit the economy and the foreign exchange to a manner, that the Republic haven’t seen in 10 years. When the economy went of the rails.

We just have to wait and see, as the damage control is under way. Lumumba saying no one can hire him and has the biggest company ever. However, he did smile and have the photo-op. We are not that stupid. Even if he thinks the people is…

ZANU-PF, stays Pfee the future away. Let see how this will twist. Certainly, it will not boring. Peace.