William Ruto's government of multi-billion-shilling deals
President William Ruto, Taifa Gas Group Chairman Rostam Aziz and Nyali Mp Mohamed Ali during the groundbreaking ceremony of the 30, 000 Metric Tons plant at the Dongo Kundu Special Economic Zone in Likoni, Mombsa County on February 24, 2023.
President William Ruto’s administration has for the past six months lined up a series of multibillion-shilling deals, with concerns raised over some that leave loopholes that questionable entities, countries and brokers could easily exploit to rip off the taxpayer.
Some of the deals are also shrouded in mystery amid a controversial decision by the Executive to remove Parliamentary oversight in the sale of State-owned corporations on top of a major shift in the country’s foreign policy by allowing other countries and their missions to engage directly with ministries and State agencies, without going through Kenya’s Ministry of Foreign Affairs.
Some of these radical departures are seen to have loopholes that are prone to abuse by those in office and could end up costing the taxpayers.
Since assuming office last September, Dr Ruto has inked more than 10 dealings with countries and well-known businesspeople across the globe, something which his allies have defended saying the current sorry state of the economy requires what they have described as ‘desperate measures’.
Some of the deals lined up include the Sh31 billion tractor imports plan with Belarus, oil importation by Abu Dhabi National Oil Company (ADNOC), Saudi Aramco and Emirates National Oil Company (ENOC) and fertiliser importation.
Other deals include plans by the government to grow maize in Zambia on a 20,000 hectares of land, Kenya National Trading Corporation (KNTC) borrowing of Sh15 billion from a local commercial bank to fund duty-free imports and 500,000 retail shops to sell maize.
The new administration has also contracted eight new loans worth Sh43.4 billion in the four months between September 1 to December 31. Treasury says the new loans signed between the Kenyan government, and commercial bilateral and multilateral creditors will be repaid between 2030 to 2047.
The controversial Cabinet approval of the Privatisation Bill, 2023, which will strip MPs of their oversight role in the sale of State-owned corporations has since attracted heavy criticism and claims of a plan to sell some of the strategic corporations to individuals connected to top government officials.
Prof XN Iraki, Economics scholar, says taking away parliamentary oversight in disposal of State corporations is mischievous as it could be abused by the executive to dispose of public assets at throwaway prices without their involvement.
“Without parliamentary scrutiny, we cannot be guaranteed transparency and value for money. In fact, Parliament should decide on what should be privatised. The expediency of bypassing Parliament should not outweigh scrutiny,” says Prof Iraki.
Similar concerns have also been raised by Law Society of Kenya (LSK) President Eric Theuri, who says that by taking away parliamentary oversight, sales of State corporations would turn into a cash cow for those in the Executive.
“The fact that the board of the Privatisation Commission is designed in a way that the chair is appointed by the President and the other members are appointed by the Treasury Cabinet Secretary without any competitive process make it look mischievous,” says Mr Theuri.
He adds: “When we are talking of privatisation we are talking about dilution of government interest in strategic government entities. There has been no rationale in seeking to make these radical changes. If you look at the changes proposed, you are left with one thing that is mischievous and intended for deal making by a few individuals.”
Azimio One Kenya Coalition has also rejected the Privatisation Bill, 2023, claiming it is a scheme by powerful individuals in government to acquire them through their companies registered in Asia, the Middle East and Eastern Europe.
“Those are the people who want to take over our critical assets, make money then sell them further to foreign interests. We object strongly to the planned sale of these assets especially if it is to be done without the scrutiny of Parliament. We will not be party to this grand theft of public assets,” says National Assembly Minority Leader Opiyo Wandayi.
According to the Cabinet, the sale of non-strategic, non-performing public entities will help improve the upgrade of infrastructure and the delivery of services to Kenyans.
The Executive has also described parliamentary approval as bureaucratic.
“This is to avoid unnecessary tedious processes that inhibit efficiency within government. These parastatals are a burden to Kenyans saddled with debts,” says Nandi Senator Samson Cherargei in defence of the Executive.
In the decision to bypass the Ministry of Foreign Affairs, if a foreign nation wants to engage more than one ministry at any one time, such communication should go through Deputy President Rigathi Gachagua.
According to the Vienna Convention on Diplomatic Relations, all official business with the receiving State should be conducted through the Ministry of Foreign Affairs. In making the decision, the government cited the need for efficiency.
Macharia Munene, a professor of history and international relations, says some of the policy decisions by Dr Ruto’s administration are questionable.
“It is clear that the President is trying to consolidate power. Some actions appear questionable though,” says Prof Munene.
“Clearly there is heavy restructuring. I doubt if the intention is to render the ministry useless.”
Also, the government’s plan to purchase tractors, high-speed propelled forage harvesters, centre pivots and tipping lorries and assorted equipment from Belarus – an eastern European country – in a project estimated at Sh31 billion has raised questions.
Belarus is under United States, United Kingdom and European Union sanctions, making the deal a risky diplomatic gamble.
In a February 27 letter to the Office of the Attorney-General, the chief executive of the Agricultural Finance Corporation (AFC), George Kubai, requested help in drafting a government-to-government agreement between Kenya and Belarus, implying that the multibillion-shilling project will be funded by a concessional facility by Belarus.
Dr Ruto’s administration has also changed the system through which the country purchases oil dollars.
It floated what it has christened “a government-to-government arrangement tender” that is deliberately structured and closed to restrict participation to State-owned national oil corporations of the Gulf States, such as Saudi Aramco, Emirates National Corporation and Abu Dhabi National Oil Corporation.
Prof Iraki says that government-to-government deals are easy to misuse because of their opaqueness.
“Such deals can escape the scrutiny of statutory bodies like Parliament or the media. They are faster to execute but can easily be misused because they lack competition and openness which gives the consumers value for their money,” says Prof Iraki.
In yet another deal, the government seeks to grow maize in Zambia. The government said the decision is part of its plan to bring the cost of living down.
President Ruto argues that with climate change and cost of farm inputs hurting maize production in the country, a responsible government has to look for alternatives for the sake of feeding its people.
“Farming in Zambia is a bit cheaper than within and the country is still not under any kind of pressure when it comes to food security. Again, some of these deals eliminate any issue around guarantee/security due to trust between two governments,” he said.
But critics argue that the decision would take away the market for farm inputs on top of denying Kenyans who work in maize farms the opportunity to offer their labour. Some also say that the country is yet to exploit its potential in maize production.
“Why would a government think of growing maize in another country when various parts of the country have a conducive climate for the crop? The government will be creating job opportunities in another country when its citizens have nothing to fend for themselves?” says Vihiga Senator Godfrey Osotsi.
He adds: “All these things are being done to open business opportunities for people in Kenya Kwanza. The government has become an avenue for people to make money.”
ODM Secretary-General Edwin Sifuna says the policies which Kenya Kwanza administration has settled on are not pro-citizens but are likely to paralyse the country’s economy.
“We are coming to the conclusion that the Kenya Kwanza administration may be pursuing a silent policy of paralysing the country’s economy by crippling key sectors so that they can rule over suffering poor masses,” says Mr Sifuna, who is also Nairobi senator.
“We are staring at a clear case of sabotage of the economy and weapons-grade incompetence,” he adds.
Embakasi East MP Babu Owino says the many deals which the current administration has entered into since coming to office depicts how unprepared President Ruto and his team is as regards to the many challenges facing Kenyans.
The legislator claims a loophole is being created for a scandal which could cost the country billions of shillings.
Nyaribari Chache MP Zaheer Jhanda, an ally of President Ruto, came to the defence of the government, arguing that the deals would help in stabilising the country’s economy through having a steady shilling.
He was particular about the benefits of the oil deal with Gulf countries. “These firms are going to give us 180 days credit facility and during that period, this will help us absorb the shocks of dollar shortage which has hit the country hence stabilising the shilling. This will bring to an end pressure on consumers,” said Mr Jhanda.
He added: “We are trying to give Kenyans value for their money through these deals which are aimed at turning around our economy which we found to be in shambles and that is the beauty of government-to-government agreements.”
Lugari MP Nabii Nabwera, another ally of Mr Odinga, accuses President Ruto of entering into deals with private entities and governments around the world without going through Parliament.
“From the many deals President Ruto has been inking since assuming office, it has turned out that he is running this government like his personal property,” he said.
But for Kesses MP Julius Ruto, another ally of Dr Ruto, the Kenya Kwanza administration is avoiding expensive commercial loans.
“Our fiscal space is shrinking and to solve this, we have to go for government-to-government deals rather than the commercial loans which are currently giving us a headache. Secondly, these deals also give us room to speed up on the government’s objectives of efficient service delivery,” said Mr Ruto.
According to Gatundu South MP Gabriel Kagombe, the government has found itself in a ‘desperate’ situation which requires desperate interventions.
Cost-cutting path
“Government is on a cost-cutting path and to succeed in this, it has to adopt desperate measures because the situation is a desperate one. For instance, to cushion itself from the shortage of dollars which is giving us pressure now when it comes to exchange, government-to-government deals are necessary. Some of these deals are also not too expensive compared to loans,” said Mr Kagombe.
While launching construction of Tanzanian company Taifa Gas in Mombasa late February, the President said his government had approved construction of a 45,000 metric tonnes facility instead of the requested 30,000 to drive consumer prices in a sustainable way. As part of the subsidised gas plan, the government is mulling giving out gas cylinders for free or at subsidised prices.
The government, after signing a fertiliser deal with Morocco immediately Dr Ruto received instruments of power from his predecessor Uhuru Kenyatta, has also inked another with a private entity in Tanzania for the same product.
“The government will import fertiliser from Tanzania starting July this year as a short-term measure. I do not see the need to import fertiliser from far away countries when we have it in Tanzania,” said Mr Linturi.
During the visit of Italian President Sergio Mattarella recently, President Ruto also managed to strike another government-to-government deal in which the stalled Arror, Kimwarer and Itare dam projects will resume in the coming months and Italy will withdraw court cases surrounding the projects.
