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

I will be part of the delegation to accompany the President to the Asian country next week. The new SGR line will extend from Naivasha, Narok, Bomet, Sondu and finally Kisumu” – Raila Odinga on the 20th April 2019

We are now surely living in interesting days. Not enough that the “opposition” leader and Building Bridges Initiative leader Raila Odinga was stringing along with President Uhuru Kenyatta to Beijing and the Belt and Road Initiative Summit in Beijing this week. It was a grand summit with all the partners who are cooperating with the Chinese on their mission. Clearly, the Kenyan government officials had to go. As they have substantial investments, loans and projects already done in Kenya.

This being the Standard Gauge Railway (SGR) from Mombasa to Nairobi, now the second extension is to Naivasha. Clearly, that is not as golden as getting it to Kisumu. Then it would be a better deal to get the railway from Uganda connected too. The reason why President Museveni even took the ride in Kenya during the last month or so. Therefore, the trip to China now, seems abysmal. Even if they get to sell avocados. It is at least something.

I will first show you the two reports from the day before the Kenyan Officials flew to Beijing as they were scheduled to meet and negotiate a loan for an extension of the SGR to Kisumu. Alas, that has clearly not gone to plan. That is why I will show what one media house in Kenya wrote today and what the State House claims after failing.

CTGN reported on the 23rd April 2019:

Kenya’s president Uhuru Kenyatta will today travel to China to secure a Sh368 billion loan for the extension of the Standard Gauge Railway (SGR)” (Christine Maema – ‘Kenya’s President travels to China to secure Sh368b SGR loan’ 23.04.2019, link: https://africa.cgtn.com/2019/04/23/kenyas-president-travels-to-china-to-secure-sh368b-sgr-loan/).

Standard Media on the same day:

President Uhuru Kenyatta will today travel to China to negotiate a Sh368 loan billion for extension of the Standard Gauge Railway (SGR), a State House official has confirmed. Uhuru will be flanked by African Union’s High Representative for Infrastructure Development in Africa, Raila Odinga” (Moses Nyamori – ‘ Uhuru leaves for China to secure Sh368bn loan for SGR extension’ 23.04.2019, link: https://www.standardmedia.co.ke/article/2001322214/uhuru-goes-to-china-for-more-loans).

Citizen Kenya reports today:

However, there was no word from the Kenya – China talks on the Naivasha – Kisumu SGR extension. Instead, Kenya signed an operation and maintenance service agreement for the Nairobi to Naivasha segment of the SGR. “.. the most important investment right now is to connect the SGR to Naivasha MGR so that come August there will be seamless connectivity,” CS Macharia said, the government choosing to hold its head high despite not achieving the much sought after Ksh.368billion” (Citizen Kenya – ‘ SGR construction to end in Naivasha as China loan bid flops’ 27.04.2019, link: https://citizentv.co.ke/news/sgr-construction-to-end-in-naivasha-as-china-loan-bid-flops-242884/).

State House Press Statement:

It is important to note that the question of funding for the extension of the Standard Guage Railway from Naivasha to Kisumu was not on the agenda of the meeting between the two President’s. It therefore follows that the President cannot be said to be returning home empty handed for something he did not request. It further goes without saying that these headlines are are not only factually incorrect, they are misleading and extremely damaging to the reputation of the People and the Government of the Republic of Kenya. Whilst making it clear that the Government of Kenya did not discuss any funding proposals for the extension of the SGR at this meeting, it is very critical to state at this point that the SGR project is a regional project and the complexities in negotiating its completion involve several countries and securing financing for its completion could take several years of intricate negotiations” (State House – Press Statement, 27.04.2019).

First be first, the delegation from Kenya was a bit to excited and well prepared to come home with a giant loan. To a state and republic already high on the old loans. Where the SGR is already a losing money project and it is well established. As well, as the levels of loans compared to the budgets are already hitting the economy too. Therefore, that they were so pleased to travel for more loans is a crazy idea, but in the sphere of Jubilee, its just another Tuesday.

Secondly, the media showed and mirrored the events before, where both Raila Odinga and Uhuru Kenyatta was preparing for the loans. Kenyatta even had visit from Museveni to ensure his support and willingness to add the stakes for an extension. Because, that would mean, the same sort of deal and arrangement could be done with Kampala as well. Alas, the Northern Corridor Integration Projects with the SGR between the Republic is surely on hold. As the Republics are not capable or able to configure the stakes, the leverage or collateral for the Chinese to accept the conditions of a possible loan.

Third, when the State House comes out with a Press Release like today. It is sort of thinking that people have the memory of a gold-fish. Because, the statements of Odinga before leaving. Was all praising and willing to build a Industrial Zone in Kisumu in combination of the extended SGR. However, that dream is gone in the wind. The Jubilee and the President couldn’t fix another giant loan for the state to eat. Clearly, he missed the mark. Even if the State House claims he never intended to get it. Why have the meeting and greeting with Museveni before and later travel with a giddy Odinga? That doesn’t make sense to me? Can someone explain that to me, I don’t speak the language of gibberish.

We know there is more than what they say. The State House is trying to deflect it, surely soon Odinga is defending the State House. As the loyal subject he has become. He was planning not only to build a bridge, but also be a part of the belt and road initiative too. That would mean a double pay-off. Kenyatta nevertheless, will surely find another scheme to trick money to his businesses. We are just awaiting it.

The SGR Trick have been the same all along, awaiting the blessing and the nod from Beijing. Hopefully the Jubilee follows this old Chinese Proverb: “Timely return of a loan makes it easier to borrow a second time”.

If not, they might loose more than the good favours and possible loans from them. They might even loose, whatever collateral they made in previous engagement. Also, make it twice as harder to get more loans. Peace.

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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.

Kenyatta: What happen to the Life Style Audit, Mr. President?

Somewhere in between Eldoret and Nairobi, the Life Style Audit got lost. It was supposed to be launched this mid-June 2018. Since then it been just hot-air and nothing proven, the authorities and the public officials haven’t been touched. Neither have senators, cabinet secretaries or even representatives in the national assembly, neither have any of the county officials or leaders of the state owned companies. All of these have been left untouched and it has just been words from the Jubilee Administration and leadership itself.

Kenyan President Uhuru Kenyatta on Thursday announced that all public servants including himself and his deputy will undergo lifestyle audit as part of efforts to fight rampant corruption in the country. Kenyatta said in a statement that the public servants will be asked to explain the source of their wealth and those found culpable with the plunder of national resources will be required to defend their source of wealth. “You must be able to explain how you got your car, your house and land in comparison to what you earn,” Kenyatta said in the coastal city of Mombasa after launching a key road project” (Xinhua, 2018).

President Uhuru Kenyatta and Deputy President William Ruto have been all talk and no play. Because, they know that if they are really looking into it, they might end up finding more trouble than it is worth. The Jubilee administration have been fabulously oblivious to it all.

It is now soon August 2018 and two months has gone without any action. That is natural, as the Life Style Audit would hurt their allies and the inquiry into the funds would hurt themselves. They would reveal the money trail, the cartels of sugar and imports, it would reveal how the money is moving from the state to shareholding or shell-corporations that doesn’t exists. Clearly, the Jubilee don’t want that, they don’t want to reveal where all the money goes.

We will certainly wait forever, because the state don’t want their closest allies into trouble, neither their support or the cronies hurt. They are all there because of the Jubilee and don’t want to loose them now. That will just hurt their base and their network of power. Therefore, the postponement of the audit is the reason for this.

Kenyatta and Ruto have really planned this inaction… they are officially launching it, but will not really do it. Since that will just hurt themselves and who is foolish enough to hunt after their own. They will not do that and they would not criminalize and detain their own. That is not how it works, even if the Jubilee are clearly more corrupt, than in the past. Peace.

Reference:

Xinhua – ‘Kenya orders lifestyle audit of all public servants to curb graft’ 16.06.2018 link: http://www.xinhuanet.com/english/2018-06/15/c_137254473.htm

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