The National Treasury building in Nairobi.
The government has been ordered to provide information on how billions raised through sovereign bonds in the past nine years to 2022 were spent, within 45 days.
Further, High Court judge Lawrence Mugambi said the information should contain all sovereign bond agreements or contracts signed by the government and any bond that contains the terms and conditions in case of default, as set out in the agreement.
“A declaration is hereby issued that the failure to provide information relating to sovereign bonds floated for and on behalf of Kenya in the past nine years by the National Executive is unconstitutional for infringing the principle of openness and financial accountability in matters of public finance as is required by Article 201,” said the judge.
Kenya Human Rights Commission (KHRC) and Wanjiru Gikonyo moved to court stating that they wrote to the Treasury on February 7, 2022 seeking the information but the same was declined.
Kenya has floated multiple Eurobonds among them a 10-year $2 billion (Sh258.5 billion at the current exchange rates) sovereign bond in June 2014 and trades on the Irish stock market, which was settled in June this year.
The country’s stock of outstanding Eurobonds currently stands at Sh854.8 billion with further maturities expected in February 2031, May 2032, June 2034 and February 2048.
Kenya is expected to retire its next Eurobond in May 2027, clearing a liability of 900 million (Sh116.3 million).
The judge said Treasury did not give a proper justification when it refused to provide the information as sought by the lobby group.
Recent disclosures by the Treasury shows that Kenya plans to return to the international capital markets with fresh Eurobond in 2026.
The planned new Eurobond revealed continued reliance on the international capital markets for cash despite the Treasury’s shift towards external borrowing from cheaper sources such as the World Bank and the International Monetary Fund (IMF).
The Treasury had insisted that the information was available in the budget policy statements. However, the judge said what is contained in the budget policy statements are proposals for borrowing and not records of what has actually been borrowed.
Treasury further said it has issued the records in line with Section 49 and 53A of the Public Finance Management Act, 2012 and that the information on any sovereign bond issued by the government is accessible on the prospectus for the years the bonds were issued and the reasons for issuance.
The government further said the bonds are traded at the London Stocks Exchange and changing hands consistently, hence the beneficial owners’ information changes with every trade conducted.
Further, the Treasury said individual bond holders’ information is protected within their jurisdictions’ data protection laws.
The government maintained that the Annual Budget Policy Statement provides information for all the monies borrowed in each year and the same is subject to public participation.
Regarding Treaties and Agreements procured between Kenya and other states or international financial institutions, the government said the information is held by the Ministry of Foreign Affairs as provided under the Treaty Making and Ratification Act.
The government argued that the information relating to sovereign bond agreements and any bond holder is protected under Section 6(1) (d) and (f) of the Access to Information Act.
The provision, argued the government, protects against the invasion of privacy of an individual investor.
Law Society of Kenya (LSK) supported the case arguing that public servants are bound by the dictates of Article 10 of the Constitution to ensure that Government transactions are transparent.
The LSK said unquestionably, this cannot be achieved without access to the information in relation to these transactions.
The LSK dismissed the argument that the information sought revolves around individual bondholders, stating that public interest outweighs these investors' private rights.
The lobby group maintained that the citizenry has to be informed about the affairs and conduct of government so as to be capable of making informed decisions owing to the information obtained.
As such, public participation can only be possible with access to information.
The judge agreed stating that the refusal to supply the information requested by the lobby group violates the right of access to information under Article 35 (1) of the constitution as well as the principle of openness and accountability in financial matters.
“In my view, the state has not justified the non-supply except into a very limited way, that is revealing the names of companies, institutions or names of persons that hold Kenya’s sovereign bond could breach privacy laws of investors in some countries,” said the judge.
