Lawyer and politician Willis Otieno, who was Jimmy Wanjingi’s running mate during the last presidential election, is irked about what he considers Kenya’s growing and unsustainable national debt.
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Many remember him as the advocate who had the country in stitches when he sang piki piki ponki paka mielo disco during the 2022 presidential election petition at the Supreme Court, but lawyer and politician Willis Otieno, who was businessman Jimmy Wanjingi’s running mate during the last presidential election, is irked about what he considers Kenya’s growing and unsustainable national debt. Otieno and others like him now want President William Ruto to stop paying some of these debts which Otieno says are odious. He spoke to Barack Oduor on why it’s time for Kenya to establish a judicial commission of inquiry to look into the country’s debt register and save Kenya from imminent economic collapse.
Q: What is Kenya’s national debt situation as we speak?
A: Our debt situation at the moment is unsustainable. For every one hundred Kenya shillings that the government collects in taxes, eighty shillings goes to financing debt, while thirty-five shillings goes into payment of salaries, meaning at this point we are operating at negative fifteen. And yet we haven’t even factored in the finances needed for other operations such as funding counties.
This state of affairs is making the country borrow even more.
Remember, the more we are borrowing the more the amount increases. President William Ruto’s response has been to try and get money from Kenyans, but the truth of the matter is that we have reached a dead end because there is nothing more to tax in people’s pockets. This is the genesis of the resistance you are witnessing today through maandamano. One of the bizarre proposals of the dropped Finance Bill 2024 was to introduce a Motor Vehicle Circulation Tax, evidence that when a government goes broke, it comes for its citizens’ assets.
Q: You have previously stated that Kenya should not pay back some of its debts that have now exceeded the Ksh 10 trillion mark. What is the way forward if we do not pay these debts?
A: The government is telling us that our debt book is KSh 11 trillion. Over the last 10 years, we know the government paid more than KSh 4.5 trillion as debt finance. This means much as Kenya has been paying its debt faithfully, that debt has kept increasing instead of decreasing. Which debt is this that keeps on going up when payment is being made?
Naturally, you will expect that when payments are made then the figures should go downwards, but this is not the case with Kenya. There are also some debts that were taken but they never funded any projects because, for instance, if you go out and take Eurobonds, and bring that money into Kenya and pump it into the economy through project financing, that money will circulate in the economy, so that when time for repayment comes, government should be able to mop it up from within the Kenyan economy since this is where the money was brought and circulated. But we are in a scenario where the government went and borrowed yet that money never came into our economy! But now they are coming to raid the economy in the pretext of mopping up money to pay for these debts!
That is why we are requesting for an audit of the national debt. Our laws are very clear. You only take debts to finance development projects and you only take debt with parliamentary approval. So if there is any debt that was taken by the government without parliamentary approval, or if there is debt that was taken but wasn’t utilised for development expenditure, then why should Kenyans pay for it? And if there is a debt somebody took in the name of the people of Kenya but it never landed here, why should Kenyans take the burden of paying for it?
I want to give an example of one of the Eurobonds Kenya has taken.
Let me pick the Eurobond that has a debt of $2 billion. You are able to trace one billion USD from that particular debt from J. P. Morgan in the United States to a Central Bank of Kenya account, where part of the funds were used to settle an existing debt. But there is another one billion USD that goes from J.P. Morgan to an account not of the Central Bank of Kenya.
Q: You have said that most of the loans that the government has borrowed both locally and internationally have been mismanaged by politicians while repayment falls squarely on taxpayers. What is so difficult in identifying and naming these people so that they get prosecuted?
A: We are saying that the starting point should be a national debt audit carried out by a judicial commission of inquiry. We want the debt books wide open.
Q: Recently, President William Ruto formed a task force to audit Kenya’s debt following sustained protests by Gen Z and other Kenyans. What is your take? Isn’t this progress towards ascertaining Kenya’s debt position?
A: No! No! What the President established is different from a judicial commission of inquiry. What he appointed was a task force whose functions are similar to those of the Auditor General. I am talking about a judicial commission of inquiry which can do a forensic audit of Kenya’s public debt since independence, starting with the legality of the loans. Normal audits including the one the President is proposing only looks at expenditure, where you can ask for receipts.
For us, what we are saying is that we go for a forensic audit where we look at the legality of the amount that was taken as debts. Were they lawfully taken? Was there parliamentary approval? Did Parliament give its approval for the loans to be taken and were these debts meant to finance particular projects? That is all we are asking for because if you do a forensic audit, you will be able to say these debts had parliamentary approval and ask Kenyans to service them.
However, if someone went abroad and took a loan in the name of Kenyans and that loan didn’t land in Kenya, then we say no to repayment because that is an odious debt. We believe a good chunk of what’s listed as our public debt was illegally taken while Kenyans have the burdensome responsibility to repay it.
Q: So what could be the intention of the President with this task force?
A: Looking at the terms of reference, I can say he is being mischievous. The terms of reference are not to address the problem. The terms of reference are to superintend the Auditor General’s functions, because these are things that the Auditor General has already done. The previous Auditor General, Edward Ouko, even said at some point that he was unable to trace some of these debts in the debt register. This taskforce will therefore not even have an opportunity to recommend prosecution. It will not have the mandate to trace debts. This is why we want a judicial commission of inquiry. A body with quasi-judicial powers.
It becomes like an inquest, where people present evidence and say that these are the facts of the matter. Such a commission has the powers to summon and even order sanctions just like the Goldenberg Commission did. However, a task force is just like setting up a committee in your office. It is a farce.
Q: You have previously referred to Eurobond as the most burdensome credit facility Kenya has ever taken. Explain what a Eurobond is in layman’s terms and tell us why it features prominently in conversations about Kenya’s growing debt crisis?
A: There are what we call sovereign bonds or syndicated loans. This is where Eurobonds fall. When the Government of Kenya goes to international markets to borrow money from private banks such as Standard Chartered or J.P. Morgan, the Eurobonds fall under this arrangement of borrowing. When these banks lend to governments, they are like traders, therefore their interest rates are higher than what you’d ordinarily get from multilateral financial institutions. These are the kinds of predatory loans even the World Bank has warned Africa against.
The problem with Eurobonds is that the terms are extremely harsh especially on poor economies such as ours. When you go to a commercial bank in Europe and take a loan, they tell you the interest is six percent and you risk tough penalties and conditions. If you default even once, they demand that money immediately.
The opposite of Eurobonds is concessional loans. Normally, their terms are very accommodative. Interest could be as low as two percent. And the repayment period can go as far as 20 to 30 years. But Eurobonds have to be paid within like five or ten years maximum. Concessional loans are taken from multilateral institutions such as the World Bank and the African Development Bank.
Q: What is the worst scenario if a country is unable to repay its loans?
A: Once a country is unable to repay its loans, there will be a default, and when there is a default what this means is that the country in question will not be able to access credit internationally. This will then result in inflation within the said country. The cost of goods will go up, and the currency will weaken. For instance, Argentina has been in default mode for 20 years now. Then there is Cyprus and Ghana where there has been so much pain because of their respective defaults. For Lebanon, they had to even close some banks and start limiting how much money one can access from their bank accounts, all because they defaulted.
Q: Does Kenya have the option of defaulting? And can the country go this route without risking dire economic downfall?
A: Defaulting is an option we have. We simply have to acknowledge the loan but say we are unable to pay because it is an odious debt. By odious debt we mean the loan was illegally taken. As for whatever was borrowed legally and the country is able to prove as much, then we must have a repayment agreement.
Let me give you the example of Mozambique and Malaysia. There was a time when both Kenya and Mozambique took Eurobonds. Mozambiquans went to court and challenged their Eurobond as being an odious debt because much as the country was unable to honour its repayment obligations, there were serious questions about the legality of the said bond, and so the legality or lack thereof of the Eurobond was litigated at the Mozambican constitutional court. The Court ruled that indeed the loan was taken without the approval of the people of Mozambique. As it stands today, those who orchestrated the Eurobond are either in jail or exile and the debt has since been declared odious.
When it comes to odious debt, people must go to jail. That is why the President will not want our debt declared as being odious because he was part of former President Uhuru Kenyatta’s regime and knew whatever was happening.
Q: You have been in politics. Could your view be informed by your political leanings and perceptions?
A: I am not doing this because I am campaigning for a seat. These are things I have spoken about since the days when I was working in civil society. Since I got into politics, I am now able to understand the political class even better. I have worked with them and understood them. To them, all they are preoccupied with is how to perpetuate poverty, for the sake of keeping the masses enslaved.
