Tuesday, November 03, 2015

Don't rock the Eurobond Boat

Article 10 prescribes the national values and principles of governance and how they bind public officials. Sub-Article (2)(c) states that (The national values and principles of governance include) good governance, integrity, transparency and accountability.

Integrity connotes honesty, strong morl values and moral uprightness. Transparency means that we have the right and the means to examine the process of decision making by our government. Accountability, finally, implies that when a decision is made and an act or omission done in pursuit of that decision, someone must be responsible for the decision, the act or the omission.

When it comes to the public finances of Kenya, there is a web of public institutions that have a lot to answer for: the National Treasury; Parliament; the Central Bank; the Kenya Revenue Authority; the Auditor-General; and the Controller of Budget. None of them has been able to adequately explain what happened when Kenya sold bonds in Europe in 2014. Despite all attempts to the contrary, we have been unable to ascertain for sure how much money was borrowed, for what that money was borrowed, whether it was ever employed for what it was borrowed, or who handled it and for how long.

The Cabinet Secretary, the Governor, the Commissioner-General, the Auditor-General, the Controller of Budget and the Chairpersons of parliamentary Finance committees have refused to take responsibility for providing the answers; instead, each institution has busily distance itself from the matter. Parliament has singularly failed to hold the Cabinet Secretary's and Governor's feet to the fire; was the money deposited in an account controlled by the Central Bank or wasn't it? Did the National Treasury use the money for "general budget support" or for "infrastructure?" We don know the answers to these or any other germane questions because Parliament has become as transparent as mud. It will nt be holding any member of the Executive to account over the Eurobond.

That does not absolve the Cabinet Secretary or the Governor. Neither has the liberty to treat the public finance of Kenya in such a cavalier manner. The billions borrowed abroad must e paid back, just as the billions borrowed before have been paid back. Promises were made regarding the fiscal effect of the borrowed billions by the Cabinet Secretary and the Presidency. None of those promises came to pass. Little of the money went to "infrastructure" and the amount that was invested in "general budgetary support" remains a mystery to this day. The cost of credit for the small business borrower or the individual has shot up to the mid-twenties and the cost of living has skyrocketed. The Eurobond has proven more trouble than it was worth.

At the heart of the confusion is the dispiriting idea that none of the men and women at the centre of the Eurobond saga care too much for the values or principles of Article 10. Nothing they have done since the $2.75 billion was borrowed demonstrates their commitment to the public good in any way. On that ground alone, they should all resign and for the misleading statements they have published about the Eurobond, they should all be prosecuted. But they won't. After all, the loudest whingers among us over this Eurobond saga, have no intention of rocking the boat too much that we don not get a piece of the action, right?

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