Kenya human rights commissions calls for debt transparency
On October 19, 2023, the court started proceedings to hear the case sovereign bonds contracts, marking a pivotal moment that could establish a significant precedent about the right to access information.
Also the move is aimed at foster accountability and transparency in public borrowing and the commission hopes the ruling will be announced soon.
In the petition, the commission asked the court to compel the office of the CS of the National Treasury or any other responsible state and public office to provide the contracts for the bonds Kenya floated.
Additionally, Kenya human rights commission seek the court’s declaration that the previous minister for finance in Kenya refusal to provide the contracts constitutes a violation of the law and is, therefore, unconstitutional citing that every person has a fundamental right to access information held by the State.
The reason for disclosing information is to ensure Kenyans are well-informed about the government’s actions. This information allows people to make informed decisions and participate effectively in public matters.
Reason for the Kenya human right commission court submission
The need for the submission by the KHRC on 18th October 2023 emerged after the previous Cabinet Secretary had refused to submit contracts Kenya had signed with other states or International financial institutions relating to bonds the country had floated over the past last nine years back on February 7 2022.
The commission’s report shows that the bonds included, among others, a debut US$2 billion Eurobond in 2014—the largest in Sub-Saharan Africa at the time—where, of the proceeds, US$600 million were used to repay a syndicated loan contracted in 2012. The remaining funds were to substitute for domestic financing of energy and infrastructure projects.
The commission had also asked Treasury CS to provide information on sovereign bond holding, treaties, contracts, and financing agreements the government had entered with other states, international financial institutions, and international corporations. The period covered the Jubilee regime’s first and second terms, which witnessed the highest borrowing levels.
According to the report of the Auditor General on June 24, 2014, the money received from the sale of Kenya’s first international bond, Sh176 billion, was deposited in an offshore account, breaching the Constitution. Ever since, several bonds were issued, including a Sh60 billion infrastructure one in 2020.
The commission further disclosed that by the time the commission made the request, a total of Sh128.6 billion (Sh1, 285,720 million) had been paid towards the domestic debt maturities in the financial year 2021/22. The payment of the principal of external debt amounted to Sh184 billion (Sh184, 536 million), comprising bilateral, multilateral, and commercial loans.
Around that time, the Treasury’s annual public debt report for 2021-2022 showed Kenya’s major external creditors were the International Development Association, International Sovereign Bond Holders, and China. External debt service paid to multilateral creditors was Sh51 billion (Sh51,005 million), bilateral creditors Sh101.9 billion (Sh101,931 million), and commercial creditors Sh151.8 billion (Sh151,825 million).
Still, the government contracted 15 external loans in 2021-2022, with a value of Sh221.5 billion (Sh221,531 million). Eleven were multilateral lenders, and four were bilateral lenders.
Kenyans were only made aware of these substantial borrowings through media reports, despite them directly impacting their lives. The specifics of what these loans would do and how they would be repaid were however not immediately clear.
The commission opined that its request for information about the significant historical borrowings should have been straightforward, but it proved quite the opposite.
Then Treasury CS, Ukur Yatani, was legally obligated to provide the requested information, according to the Public Finance Management Act and Procurement Act that demand proactive disclosure. However, he refused to disclose this crucial information, intensifying suspicions surrounding Kenya’s agreements with foreign states and financial institutions.
Kenyans pay these debts through heavy taxation at a time when the cost of living is over the roof. But the lack of transparency leaves them in the dark about what exactly they are paying for.
On April 21, 2022, the commission filed suit against the National Treasury CS and the Attorney-General (AG). The commission’s prayers were simple: let the CS show the contracts of Kenya’s debt and sovereign bonds acquired in the last nine years. Failing to show us the contracts will mean that Kenyans will never know whether the Jubilee regime complied with the constitution in public borrowing.
Sources: Kenya human rights commission
Samuel Mbogo
Kenya
