“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.
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.
The Government of Kenya and the Government of Uganda, should both worry about their arrangements and their growing debts, as the non-sustainable rates of debt and higher interests. As the unnatural growth of the national budget, where the lack of revenue is covered with more state debt. To cover both salaries and development projects. All of this has happen over the recent years. As more and more of the yearly budget goes to pay interest on old loans, as the old loans also mature and the rates will become more dire. As the strength of the economy isn’t going in the same rates as the loans. This is in the end a debt trap. A debt trap China has used in other countries.
Sri Lanka is the recent example, which has come into a debt trap, where the Chinese loans has become so dire, become so big and not able to recover. That the collateral for the state was to favorable lease the harbor of Hambantota to the Chinese. They had too, since they couldn’t repay the creditor from Peking. That should be realization from all the others who borrows big and think that the Chinese will not get something valuable back for their funding.
This should be a warning for the Kenyan and Ugandan counterparts, this should be a warning for President Kenyatta and President Museveni. That is if they care about the state resources, about their minerals and about the possible extractions from their republics. If they want to be debt-slaves, or lease away the crown jewels to the Chinese, because they promised favorable debt plans, that in the end put them in juxtaposition, that they cannot come out off; unless they trade away something very valuable. If that would be licenses to drill oil in Turkana or in Bunyoro.
Who knows what the end-game of these massive loans are and if the Presidents and their parties plans to repay them. Or hope that the next generation will try to invent new way of generating money. If so, then they are saved by rare luck and not by planning ahead. These loans are big and taking bigger and bigger slices of the GDP. They are going far beyond the levels of revenue and possible future forecast of funds. Therefore, the loans can only at this point benefit the ones giving them. They will get the repayments and the interests. If they don’t get that, they will take collateral and take other state entities to get their values back. The Chinese are doing that in Sri Lanka, they could easily do that with Kenya and Uganda too. They are in for the taking and ready to muscled out.
The Chinese doesn’t play and doesn’t play with money, they will recollect and they will recover the funds spent. As they are not playing games, they are really investing and hoping to get paid-in-full. They are waiting for the numbers to go from red to black. They don’t expect to loose, and if they do. They will figure other ways to collect the lost.
President Kenyatta and President Museveni should know this, but I doubt they are thinking in this direction right now. They are eating and not caring, but their states and their economist should worry. As the growing debts has a backside, not only the interests and the lack of development it creates, as they have to find bigger revenue to cover the debt and the mature loans, as they have to settle old affairs and such. They don’t go away or get deleted over nothing. They got to take charge and find a way to solve it.
The Chinese will take advantage if they start to default, if they struggle to pay, which could come, if the loans and the negative spiral of lack of revenue continues. That is if the state doesn’t find ways to repay. Than, the Chinese might take a port, might take state owned enterprise, but surely they will be paid-in-full. Peace.
I know I am born in 1985, but I am tired of the year of 1986 and the year National Resistance Army (NRA). The now National Resistance Movement (NRM) and President Yoweri Kaguta Museveni. The liberation movement that has run the republic since 1986. This war lasted from 1981 to 1986, the NRA went out of the Milton Obote II government after the illegitimate election of 1980s. Which from then on has been used as the scapegoat and the ones to put to blame for ever since.
The 1986 is the magical year that Museveni entered into supremacy. The Supreme kingpin and mastermind of all it. Sowing the mustard seed and creating a newer safer Republic. The one time the peasants was supposed to have their say in government and make the republic a democracy. The Republic of Uganda was going from strong-men and big-men to run the Republic. Instead, it has been now three decades with manufactured democracy in-line with the vision of Museveni.
President Museveni have used all techniques to fix election results, paying villagers and making new government forms to fit his paradigm. Instead of releasing his promises he has built elite around him that is loyal to his brown envelopes or public fearing his security organizations. This is a special coming from the man promises all the possible governance and government structures needed, if he got into power. Instead, he has done the opposite.
It was supposed to get into a middle-Income Country instead of the Less Developed Country, which is the state is in now. The LDC that Uganda now is because of the state of government that President Museveni has created around him. That can be seen with amounts of debt, the massive overspending on the State House and the pledges around the President. Government of Uganda, GoU have been built around Museveni, instead of institutions and procedures. Therefore, the state are following the orders of the President and his Presidential Handshakes.
That is why, every-time in a speech at any sort of occasion the President will mention 1986 and how the state used to be. As of today 1 out of 5 in the Republic or 21% are between 15 to 24 year old. And by 2016 there we’re only 2% who are older than 65 years old. Which means that the President are part of a minority age bracket. President Museveni 30 years old rule are older than many of the youths in the Republic. They should also wonder what is so special about the years they never we’re living and about governments they never lived under. There are big proportions of the population who cannot remember or has been apart of the first years of the NRA or the civil-war during the 1980s.
They would be like me, they would feel the same fatigue of the NRA and Museveni rule, the extension of the liberation from Obote and Amin. The ones that Museveni mention whenever he needs someone or somebody to blame. Certainly mention 1986. The 1986 that are the most important year since independence, therefore, the NRM Day, the 26th January 1986, liberation day. Instead of the Independence Day 9th October 1962. That one is not so often mentioned by the President, since he didn’t get them out of the British Empire and not be a British Protectorate anymore.
Still, the 9th October 1962 doesn’t seem to be important for Museveni, the 26th January 1986 is the most vital one. The one that sets the standard, the day that changed everything and gave him total access. Therefore, the celebration of 1986 is so key and be levied at any occasion, and at any speech. President Museveni praises his overthrow of Amin, Obote, Okello and Biniasa.
They all just had to be overthrown, he had to make coup d’etat and make folklore out of it. So his name can ring out and be praised. Let it be clear, the President sings 1986… 1986… 1986… like a jingle never stopping. Peace.
The Bus Rapid Transport system together with a Metropolitan Area Transport Authority (MATA), in the midst of the Kampala Capital City Authority (KCCA), Kampala City Hall and Ministry of Kampala. This are having different heads combined with the mastermind on the top President Yoweri Kaguta Museveni. Doesn’t matter what the ones in the parishes are considering, the Division Mayors, Lord Mayor Lukwago, KCCA Director Musisi or even State Minister Kamya. The one rubber-stamping the initiatives is and will be the President. Since he has his finger into everything.
That is why I have no faith in BRT. Even if it is stop the congestion, the lack of public transport in Kampala and problems of control of the Boda-Boda’s, the authority of the Taxi’s and the Specials. There are still significant issues to be reached. It doesn’t matter if they are banning or stopping certain transport options. As long as the ones working, are the taxis and boda-boda’s. These are the ones who has designated routes and travels with licensing for their routes. The Taxis are usually used Toyota Hiace imported from Japan, second-hand ones who was former bread-trucks, who are rebuilt to fit as many people as possible.
While a BRT means there will be heavy investments in stages, in divisions and in congested areas to fit the paradigm of buses. It isn’t barely putting buses on the road and assume the population will start taking it. The need for steady implementation of road structure, of bus-companies, of driving schools and of time-tables has to be put on order to make sense for the citizens to use it. Since it needs to be better than the transportation options that are today, like the taxis, boda-boda’s and specials. At this stage the Uganda Investment Authority (UIA) in their feasibility study estimates the needed funds to get it going at this point to be the staggering $612.06 Million. With today’s value of the Uganda Shillings it is about Shs. 2,193,883,999,999 UGX, in other terms over 2.1 trillion shillings. Which means one tenth of the Financial Year budget of 21 Trillion Shillings in FY 2017/2018. Just to put in perspective.
This infrastructure project of this size and ramification better make the roads of Kampala into bricks out of gold. Clear every single pothole and make sure the gravel grade more than standard. This project has been going on for ages without any movement or significant progress. Why I am writing about it, well there suddenly if it is true, some Chinese Investors who wants to touch the erratic transport system of Kampala. This are together with the Chinese Ambassador to Uganda, at the State House discussing investments into it. Therefore, the sudden move of actual fueled money into it. As the 2.1 Trillion shillings doesn’t grow on trees.
President Museveni stated this today:
“The Kampala Metropolitan Rapid Bus Transport project is a necessity. We should not continue to have so many cars with limited capacity” (…) “The investor will construct 26 rapid bus stations, 420 stage shelters and an initial 400 buses with a carting capacity of 74 passengers” (Museveni, 18.06.2017).
With this unknown Chinese Investor, they are clearly indicating some infrastructure and some buses to put up. If this will see the light of day and will be honestly implemented, than there are start, but it takes time to find routes and needed ways to make it profitable, as there will also be lost oppertunities for the ones who used taxis, specials and boda-boda’s on these roads. That is if this isn’t a scheme and plot of manufacturing more monies through the state-house. Which wouldn’t be surprising knowing how the President often operate.
The BRT would be a bonus and strengthen the congestive traffic of Kampala, a needed one for more time working and less time stuck in traffic jams. It would be important for the citizens leaving the divisions and traveling across town to work. But the state haven’t been able in the recent years to pull it off. Maybe Chinese investments would help it and their involvement in it would see it moving. But it shouldn’t just be the President’s blessings over the investments. The KCCA, Ministry of Kampala and City Hall should all have a say and make reports on how to build it properly. As the UIA even states there have only been a feasibility-study. That is preparation for the solution, but not the white paper or even framework for the Divisions or Central Business District of Kampala to make the BRT a success. Right now it is dream, which most likely could turn into a nightmare before its shuttle.
NAMA Proposals in 2013 are even more costly: “The capital costs budgeted over the 15 year period were estimated to total some US$ 1.181 Billion”. That is the double of the estimates from UIA in 2017. Therefore, something has either been scaled down or the NAMA was considering more aspects in their plans, than the UIA has. But is not like the President today has delivered any paperwork or reveled any sort of information what sort of possible deal he done with the “the Investor”. He could be scapegoat or even a mirage for all we know. Because none is on the up and up.
Especially considering he had a meeting with them at the State House in Entebbe with none of the leadership of Kampala. The ones in Kampala will just later get the news of the building and investments, therefore has to figure out how to implement it and work-out the perks. Parts of me wonder if the President even has looked into the documentation and considered the needed partners in play. But that is just how the President operates. He just can build Rome on his own or Kampala for that matter. He has all the skills and the brown envelopes at his disposal. Peace.
Today I am dropping numbers that are devastating, as the numbers of debt that the National Resistance Movement (NRM) isn’t paying, show’s sufficient motives for malpractice when it comes to budgeting and the structure of payments. There are certainly not enough transparency and clear audit of the state reserves, as the State is misusing seriously amount of funds. The NRM Regime and their President should be ashamed by their record.
Emmanuel Katongole is the Head Information Technology in the Ministry of Finance, Planning and Economic Development (MoFPED) in Uganda on the 12th April 2017, he dropped a document on their web-page that show’s the domestic arrears of the Republic of Uganda in the last Financial Year.
If you wonder what Domestic Arrears means: “The amount by which a government has fallen behind in its payment of interest and principal on debt to lenders within its own country” (Encyclo.co.uk). So Katongole will literately show how bad the National Resistance Movement is on paying their bills and expenditure. All the sums of this report is in Ugandan Shillings (UGX).
Like under the Office of the President and the Internal Security Organisation (ISO) who itself leaves arrears in the margin of 3.8bn shillings and 8bn shillings in other payable arrears. That one part of the budget and current audit of the Office of the President as the total of verified arrears at June 2016 was 37bn shillings alone. So the Office of the President owes a lot of funds that it hasn’t paid, not only for the ISO!
The State House by the verified arrears at June 2016 was 1bn shillings. What is more unsettling is that the Pensions and Gratitude for Veterans are the sum of 183bn shillings, Survivors 315bn shillings, EXGRATIA 10bn and UNLA 26bn shillings. The Ministry of Defense by June 2016 verified arrears was 718bn shillings! So the MoD are a lax payer of their expenses and expenditure.
Ministry of Justice and Constitutional Affairs owes verified arrears by June 2016 the amount of 684bn. Shillings Court Awards unpaid by the Ministry is 203bn shillings. The Electoral Commission has growing verified arrears by June 2016 because of Unsettled penal insterest for URA in the total sum of 3.2bn shillings. Uganda National Roads Authority (UNRA) has by June 2016 billed up verified arrears by 283bn shillings.
This is just some of the government that has not paid their dues and their expenses, their salaries or pensions, even their lacking covering of funds to pay debt, either internal or external. So the National Resistance Movement are clearly running an economy and fiscal policy that isn’t healthy for the republic.
Just to drop the total sum that the Government of Uganda has failed to pay or failed payments on their debt are by June 2016 the total of 2.7 Trillions of Uganda Shillings! Which is an insane number and amount of misspent monies by the state. The strategy by the Republic to fail so miserably cannot be sustainable, as the invoices and the target to pay their debt should be the most important. Still, the NRM doesn’t seem to think so. They are surely missing steps to having a sound economy when the verified arrears are hitting 2.7 trillions by June 2016. So the Financial Year of 2015/2016, the Ugandan government failed to serve out over 2 trillion of their needed expenses!
What is troubling that the year before, the total state had not paid on their debt and failing expenses in the Financial Year of 2014/2015 as by June 2015 we’re totally 1.389 or close to 1.4 Trillion shillings. So the miss-match between FY2014/2015 and FY 2015/2016 are 1.3 Trillion shillings. So the clear picture is that the Election Year for the NRM is very, very expensive.
Just think about that… eat the bill and pound on the amount of lost monies in the system. Peace.