Kenya is among African countries with the highest debt-to-GDP ratio and was categorised as at high risk of debt distress by the IMF in 2020. In just ten years, the debt-to-GDP ratio has increased by 30 per cent, from 38 per cent in 2012 to 68 per cent in 2021. This has been attributed to resource demands for offsetting perennial budget deficits, largely occasioned by expansionist policy on infrastructure development, the weight of a bloated government, corruption and waste in the civil service. Consequently, the government’s ability to efficiently deliver essential public goods and services to its citizens has been substantially constrained.

In recent times, many developing countries including Kenya have demonstrated an increased appetite for commercial debt, preferring to borrow from private companies, local and international bond markets, or banks rather than relying on concessional loans. Kenya’s shift to commercial borrowing can be attributed to various factors, including ineligibility to access concessional funding due to its change of status from a low-income country to a lower-middle-income country following the rebasing of its national accounts. Additionally, loans from private creditors often come with less scrutiny and conditionalities compared to loans from multilateral financial institutions and traditional Paris Club lenders.

As a result, Kenya’s commercial/private debt component has significantly increased, accounting for more than half of total national debt. Between 2012 and 2020, debt from private creditors averaged 58 per cent, with the highest share recorded in 2014 (60.5 per cent), 2018 (62 per cent), and 2019 (62.2 per cent), which aligns with the periods when Kenya had Eurobond issues. The majority of Kenya’s private sector debt consists of loans from domestic creditors, accounting for an average of 81 per cent between 2012 and 2020. Domestic sources include debt instruments such as treasury bills and treasury bonds, while external sources mainly comprise loans from commercial banks. Some of the major commercial banks that have issued credit to Kenya include China Development Bank, Citigroup Global Markets, Erste Group of Banks, First Mercantile Securities Corporation, Société Générale, Standard Bank Limited UK and Trade plus Development Bank.

In 2019, half of total tax revenues were spent on servicing debt from both local and external private creditors.

Existing scholarship indicates that debt from private creditors is associated with three major components that are detrimental to economies, especially in the developing world—high interest rates, shorter maturity periods and limited transparency in contractual agreements. Each of these components has its own repercussions, which are now manifesting in Kenya.

On transparency and accountability, debt from private creditors often lacks sufficient scrutiny due to limited public participation and availability of information regarding its acquisition and management. Private credit is also argued to have fewer conditions compared to concessional loans, leaving room for corruption and mismanagement of borrowed funds, especially where legislative oversight of debt management is weak. A notable example is the 2014 Eurobond issue, where KSh215.5 billion from the proceeds could not be accounted for, as revealed by an audit by the Auditor General. This involved alleged expenditure of the borrowed funds outside of the government’s Integrated Financial Management Information Systems.

On the cost of borrowing, private creditors generally offer loans at higher interest rates compared to the more favourable concessional loans offered by traditional multilateral and Paris Club creditors that are often below market interest rates. According to the National Treasury, the average interest for concessional external loans has never exceeded 4 per cent. In contrast, private sector debt, particularly in the form of Eurobonds, carries higher interest rates. For example, the 2018 Eurobond issue had an interest rate of 8.25 per cent, significantly higher than the rates for concessional loans. Interest rates for domestic-issued private debt have also been high. The average interest rates for treasury bills with maturities of 91, 182, and 364 days were 6.7 per cent, 7.3 per cent, and 8.4 per cent respectively in 2021. These rates are still higher compared to the interest rates for concessional loans. Generally, the higher interest rates have translated to greater debt servicing costs.

Further, loans from private creditors have shorter maturity periods of up to five years, while loans from multilaterals and Paris Club creditors have grace periods of five years and maturity periods of up to 30 years. The shorter maturity period coupled with higher interest rates implies that governments have a limited window to invest resources from such debt instruments into the economy and begin to accrue economic benefits, before commencing repayments.

Regarding fiscal justice, increasing repayment obligations for private sector debt (especially external creditors) has had negative implications for the economy and undermined the realisation of fundamental social and economic rights outlined in Article 43 of the constitution. For instance, the government’s development expenditure as a proportion of total revenues (and total budget) continues to reduce as the government diverts revenues to debt servicing. In 2019, half (KSh761.4 billion) of total tax revenues were spent on servicing debt from both local and external private creditors. This trend has continuously limited government expenditure on pro-poor sectors such as health, education, agriculture, and social protection, denying the majority of citizens access to quality and affordable public services. For instance, in 2020 the government allocated KSh548.41 billion to servicing private sector debt, which was twice the allocation for the health sector (KSh247 billion) during the same period. These debt servicing amounts could have been channelled towards improving COVID-19 response interventions, such as acquiring respiratory equipment, personal protective equipment and hiring additional health workers.

Additionally, due to overwhelming debt repayment obligations, the government has had to initiate tax reforms aimed at raising more revenue that also have fiscal justice and human rights implications. The proposed Finance Bill 2023 includes amendments to various laws relating to taxes and duties, which depict the dire state of the country’s finances. Some of the proposed amendments include introducing a 1.5 per cent housing levy deduction, increasing VAT on petroleum products from the current rate of 8 per cent to 16 per cent, implementing a 35 per cent tax band for those who earn above Sh500,000, increasing the Turnover Tax (TOT) from 1 per cent to 3 per cent, and introducing a 15 per cent withholding tax on proceeds from digital content creation, among others. If passed into law, these tax reforms will be regressive, imposing an increased burden on people’s livelihoods and businesses.

Lastly, increased domestic borrowing by the government (largely from the private sector) has also had a negative impact on micro, small, and medium-sized enterprises (MSMEs). According to the Central Bank of Kenya, there has been a declining trend in access to credit for MSMEs. The 2020 Access to Credit Business Survey revealed that the average loan size to MSMEs has reduced from KSh6.03 million in 2017 to KSh3.56 million in 2020 from commercial banks, and from KSh1.88 million in 2017 to KSh1.64 million in 2020 from microfinance institutions. During the same period, government debt holdings in commercial banks stood at 54.1 per cent. The increased holding of domestic debt by the government risks crowding out the private sector, leading to declining investment and financial market instability.

Despite participating in the 2020 Debt Service Suspension Initiative (DSSI), Kenya is currently trapped in a debt conundrum. Kenya’s maiden Eurobond issue is due for repayment in 2024, and the government plans to issue a new Eurobond whose proceeds will be used to repay the maturing 10-year bond. However, this approach only postpones the government’s chance to address the worsening debt situation and amplifies resulting implications, as seen when the government prioritised debt repayment over civil servants’ salaries in March 2023. The country’s deteriorating debt situation has also led credit rating agency Moody’s to recently downgrade the country’s foreign currency issuer ratings from B2 to B3, the lowest classification of “high credit risk” and just one level above “very high credit risk.”

Nevertheless, the country’s debt situation is not beyond redemption. There is a clear need for better debt management, with more effort directed towards pursuing opportunities for debt restructuring from private creditors. In 2020, International Financial Institutions such as the World Bank and the IMF called on private creditors to participate in the DSSI, but unfortunately, only one private creditor participated. Discussions on private debt restructuring need to begin by engaging private sector creditors, urging them to recognise their role in the country’s public debt problem. This could create space for negotiation, restructuring and debt relief programmes that could expand fiscal space for government spending on essential public goods and services.

The government plans to issue a new Eurobond whose proceeds will be used to repay the maturing 10-year bond.

Further, it is crucial for both state and non-state actors to advocate for the operationalisation of laws or policies that promote transparency and access to information regarding public debt, including loans obtained from the private sector. Transparent and accountable management of private debt is essential to prevent corruption and mismanagement of borrowed funds. The Kenyan legislature (both the National Assembly and the Senate) also bears the responsibility of effectively utilising its oversight role to hold the Executive accountable for fiscal policy decisions and debt management practices.

Additionally, ordinary citizens, who are increasingly bearing the brunt of the implications of the shift to private credit among other bad fiscal policy decisions, also have a significant role to play. Through advocacy and private litigation, citizens can push for publication of information—such as contracts between the government and private creditors—and demand accountability in the management of private sector debt. By actively engaging in these efforts, citizens can contribute to creating a more transparent and responsible debt management system that prioritises their interests.

In summary, addressing Kenya’s public debt challenges requires a multi-faceted approach involving better debt management, engagement with private creditors, transparency, accountability and citizen participation. These are now critical issues that Kenya must prioritise in alleviating the debt burden and risk of default, ensuring sustainable economic development and promoting fiscal justice for its citizens.

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This article is based on insights from ACEPIS, East African Tax and Governance Network (EATGN) and Tax Justice Network Africa (TJNA) publication — Risky Borrowing and Economic Justice: The Role of Private Creditors in Kenya’s Public Debt Problem.

Pat Robertson, the American televangelist who described natural disasters that decimated New Orleans and Haiti God’s vengeance on the victims, died this month at 93. Following his death, the US media has largely fastened its eyes on the long shadow he cast on American politics. That is to be expected: over his six decades in the public eye, Robertson played the Washington influence game from two sides. First, he promulgated hatred for Muslims, feminists, the LGBT community, and other social outcasts on the television channel he founded to build an audience, the Christian Broadcasting Network (CBN). Then, he leveraged that audience to buy himself access to the highest levels of power in the US Republican Party. The bigotry is so common on the American right nowadays largely because Robertson demonstrated that, far from diminishing power and influence, spewing vitriol in the name of God could actually win it. And yet, as poisonous as his influence was on American politics, Robertson left a far more cynical legacy in Africa.

In 1991, people in Kinshasa, Congo began demonstrating, often violently, calling for the nation’s dictator, Mobutu Sese Seko, to step down. Mobutu came to power with the help of the United States government. But as the Cold War slid to a halt, his allies in Washington became less interested in taking his phone calls. So he sought out new ones, and he found one in Pat Robertson.

According to a report from Religion News Service, at first, Mobutu only wanted Robertson to bring his TV channel, CBN, to Congo (then called Zaire). But the request led to a relationship. According to Time, at one point Robertson even traveled from Paris to Kinshasa in Mobutu’s private plane, then continued to the despot’s estate onboard his private yacht, where Mobutu’s wife served dinner.

Early in their relationship, Mobutu invited Robertson to launch a farm project near Kinshasa. The project’s declared intent was to make money for humanitarian causes in the region. When anti-Mobutu demonstrations resumed in 1992, Mobutu asked Robertson for a favor. Within a few weeks, Robertson was denouncing those demonstrators on air, hailing Mobutu as a “good Christian” and a “democrat” in front of millions of viewers around the world. Later that year, and with Mobutu’s blessing, Robertson secured land in Congo to mine for diamonds near the Angolan border.

Robertson’s diamond mine might have been nothing more than a dirty side quest made by the televangelist if the Rwandan genocide hadn’t turned the eyes of the world to Congo, giving the televangelist and his flailing project a lifeline. In the aftermath of the genocide, hundreds of thousands of Rwandans crossed the border into Congo by foot, where they congregated in refugee camps. When aid workers landed on the scene, Robertson dispatched his people to join them as part of his new charitable effort called “Operation Blessing.” Simultaneously, he directed his millions of viewers to call the number posted on their TV screens to donate money to the organization so that it could aid the refugees.

“We are out there. We’re doing what God says,” Robertson said in a typical fundraising request that was featured in Mission Congo, a 2013 documentary on the endeavor. “Don’t be surprised at the blessing … He’ll bless you mightily, beyond anything you can dream. But you must be obedient to what He says. So please, go to your phones.” Time and again, Robertson aired footage of medical workers (captured by CBN’s cameras) and told viewers their donations would support them.

“The tragedy is still there for the so-called innocent victims of all this killing,” he said in an update on the situation from his studio in Virginia. “We have a major medical presence to help those people, and we would ask [for] the prayers of people for them.”

But Robertson had no medical workers. The ones his cameras showed were from Médecins Sans Frontières (Doctors without Borders, or MSF). According to an African who drove for the French aid group and was featured in Mission Congo, Operation Blessing’s work in Goma amounted to little more than distributing bibles to people desperate for water.

Robertson also spoke of Operation Blessing’s logistics effort. The group, he said, had two planes, each able to carry 7,000 pounds of equipment and land on short runways. Those planes, at least, were real. But as an investigation from the Virginia Pilot-News revealed, they brought few, if any useful medical supplies to Goma. Rather, they only delivered mining equipment to Robertson’s diamond mine hundreds of miles away. Unbeknownst to viewers who called CBN to help refugees, their money was mostly being squandered on the televangelist’s collapsing mining project.

Negligence, waste, and self-aggrandizement are common themes in stories of humanitarian aid in Africa, of course. But Robertson’s Congo endeavor wasn’t simply a well-intended if poorly managed, humanitarian gambit. More than a few pilots and aid workers joined Operation Blessing thinking that Robertson’s combination of capital and political clout made him unusually well-positioned to do good in a desperate situation. He probably was. But very quickly, those recipients of aid realized that they had been duped, as did the mostly female and elderly supporters who Robertson had spent his entire career preying upon.

In many ways, Pat Robertson’s Congo adventure was no different from the endeavors of countless prospectors and explorers who have gone to the country looking to get rich. Congo is not just rich, it is invisible to the world. Whatever greedy Westerners do there, how much or how little they share of their experience is generally up to them. But what others have largely done in secret, Robertson did in the broad light of television and under the guise of Christian charity.

Through the narrow screen of a TV, Robertson could tell his viewers to look only where he told them to look and to see things only as he wanted them to. Poor and desperate Africans living on the edge of a country his viewers knew nothing about, were in Robertson’s hands, just more people to exploit for money and power – not unlike the gays, the Muslims, or feminists on other occasions.

“I tell you, you’ve never heard such music in your life,” he said of an African choir he featured on CBN in 1994. “The minute those folks are born, this rhythm comes out of the pores of their skin. It’s fantastic.”

After spending most of a century in public life, the only people Robertson seemed to have considered his equals were strongmen who never let conscience obstruct their political careers — people like Donald Trump and Mobutu Sese Seko. Power, not piety, was the only thing he respected. The world is better off without him.

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This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site every week.

The South African media has recently been abuzz, yet again, with talk of Andre de Ruyter, the former CEO of embattled power utility Eskom, who, until his recent departure, oversaw the parastatal for three years. Notoriously, Eskom is in what seems to be a state of “permacrisis.” Out-of-date technology, ineffectual maintenance, endemic corruption, and criminal inefficiency have combined to the point that the country is crippled by waves of so-called loadshedding—otherwise known as planned power cuts—designed to forestall total grid collapse.

Amid the national panic and governmental inertia about the failures of Eskom, de Ruyter has emerged as a divisive figure, with some believing he should take responsibility for what happened under his watch and others insisting he was scuppered by shadowy figures within the ruling African National Congress. His newly released tell-all book, Truth to Power: My Three Years at Eskom, has made a series of scathing accusations that have once again pushed him to the top of the news cycle.

But de Ruyter’s attempts at crafting a narrative about his tenure at Eskom began before the book was released. Having announced his resignation in December 2022, and then survived an alleged poisoning attempt, in February this year de Ruyter gave a dramatic exit interview to veteran journalist Annika Larsen on eNCA (South Africa’s most watched 24-hour news channel). The interview is fascinating for what it reveals about how de Ruyter used the interview, and Larsen’s failure to ask critical questions, to influence public opinion and bolster his personal brand. The interview also exhibits a set of assumptions about the morality and competence of white men that remains infuriatingly common in public discourse, where tussles over race and meaning continue. South Africa’s power crisis is also, of course, a crisis of power.

In the best traditions of media spin, de Ruyter uses the interview to “set the record straight,” emphasizing the image that he wants to associate with his name and reputation. Unsurprisingly, he positions himself as the good guy in a bad situation, the one non-rotten apple in the barrel. He uses several metaphors to drive home this message, in language pulled straight from popular TV serials:

• De Ruyter as doctor, the skilled surgeon trying to operate on the “metastasizing tumor” of corruption, which keeps growing faster than he can cut it out or treat it.
• De Ruyter as plumber, the knowledgeable artisan trying to fix the leaking taps, to “turn off the spigots” that are pouring public money into private pockets.
• De Ruyter as honest cop, the lone actor trying to bring down the organized crime network, investigating abuses of power with informants in every corner, “making arrests” and doing a “perp walk.”

His chosen metaphors reveal de Ruyter as a hardworking, admirable, ordinary man. This self-presentation rests also on ideas about the altruistic and honest nature of Afrikaner masculinity: the farmers who just want to feed the nation, the engineers whose only desire is to keep the railways running, understandings of Afrikaans history that ignore the violent exclusions of both farms and trains. Larsen, meanwhile, made a point of reminding viewers that de Ruyter took on the Eskom job out of a sense of public duty, in keeping with his self-branding as trustworthy and straightforward.

Here, de Ruyter is doing a kind of universe-jumping, offering us images of himself in multiple parallel vocations and life positions. But de Ruyter the plumber, de Ruyter the cop and de Ruyter the doctor are also always de Ruyter the CEO, who earned more than R7 million (about 350,000 USD) annually during his time at the helm of a failing public enterprise, and who previously held well-paid CEO positions at other large companies.

De Ruyter skilfully uses the interview to entrench the message that he is a good man, or more specifically a good white man, while also being an abused and vulnerable victim who deserves special protection. Much of his claim of moral uprightness is embedded in ideas about money, consumption, and luxury. De Ruyter, the interview makes clear, is not an obscene conspicuous consumer, like others he mentions who wash their hands in whiskey “because they can,” and who finagle the system so that they can drive their McLarens through the potholed streets of eMalahleni (a town formerly known as Witbank, in South Africa’s Mpumalanga province). He is sensible and frugal, as signaled by his chinos, blue shirt and veldskoen (leather shoes similar to desert boots). An obvious symbolic departure from the CEO uniform of suit, tie, pressed shirts and polished shoes, this new appearance is designed to suggest an ethical orientation of restraint and good sense, as well as taste, so often used to mask class judgments.

While there is of course an obvious and important link between consumption and corruption, de Ruyter’s particular employment of these tropes echoes a common racialization of consumption, in which luxury enjoyed by black people is perceived as outrageous, excessive, inappropriate, and fundamentally immoral. De Ruyter does not deliver this critique directly, but foregrounds the horrors of brazen corruption, with excessive consumption provided as evidence. What is important here is not just the enormous problem of corruption at Eskom, but also the fact that black people enjoying luxury lifestyles is represented as inherently immoral, in contrast to the moderation and sense of white men like de Ruyter, who, we must assume, enjoy their wealth in socially acceptable ways. (Let us briefly recall that R7 million annual salary.)

De Ruyter places the entire responsibility for the Eskom disaster onto the (implied black) corruption that ruins everything. He emphasizes how he led investigations and handed information over to the police, who did nothing. State security also did nothing. Indeed, according to the narrative presented, everyone was complicit except for de Ruyter, who alone was trying to save the country from acts of treason. He positions himself as an honest and altruistic servant of the people with no ulterior motive but to do his duty. (Once again, we must gently nod in the direction of the annual Eskom salary, and wonder what the longer-term career consequences will be.)

De Ruyter’s self-branding as a good white man is enhanced throughout the interview by displays of racial self-awareness. He makes starry-eyed mention of one “wise colleague,” implied to be a black woman, who helps him understand his white Afrikaans blindspots. Like a local version of the US mammy stereotype, this generous and supportive black woman seems to have been happy to educate de Ruyter, helping him to bypass the prejudices that are one of the few negative elements of the version of Afrikaner identity on show here.

He also namechecks his personal assistant “Zodwa,” another generous and helpful supporting character, thus putting black femininity into its stereotypical place as servile to the CEO, who is naturalized as male and white. Zodwa has been “educated” to keep the coffee coming to service de Ruyter’s caffeine addiction, which is then implicated in the alleged poisoning attempt. This incident is the central pole for his claims of victimhood, pivoting away from a state of privileged knowing towards one of physical suffering and pain.

De Ruyter seems to claim that the attack on him was also an attack on the state. He argues that the story was reported in major US and European news media, which affected investor confidence, highlighting his own significance as a national asset. In this narrative, he appears as a crucially important public servant who should be protected by the state that he is serving. While of course no public servant should be subjected to violence or threats of violence, the current facts of the South African polity make this disturbingly common. In suggesting that he, and he alone, should be offered special protection by the state, as opposed to the many honest civil servants and whistleblowers who take huge risks to protect South Africa’s failing assets, de Ruyter perhaps unconsciously echoes the hysterical mythos that equates murders of white farmers to a planned genocide. This is a statement of white exceptionalism, insisting that his contribution and presence are unusually significant.

Continuing the thread of his exceptional victimhood, de Ruyter bemoans the neglect and incompetence that characterized his case, as though these are not the absolute norm in police investigations in South Africa. He points out how he was treated with suspicion by powerful people in government, that he was the subject of spy investigations, had tracking devices placed in his car, was called derogatory names by ministers, and so on. The narrative here is that despite being a good guy, a superhero even, trying to single-handedly fix a very, very broken thing, he was victimized and attacked rather than being rewarded for his efforts. The result of all this injustice is a kind of discursive shrug: “Guys, I tried, so now I’m going to lay low in Europe.” Such options were not available to Babita Deokaran.

Curiously, de Ruyter also uses the interview to present himself as an environmentalist. He namedrops his visit to COP27. He emphasizes the importance of wind and solar power, worries about air pollution and water scarcity, and wants to contribute to keeping the planet liveable for future generations. Regardless of any attempts he may have made to push Eskom towards renewables, it is disconcerting to witness someone who was at the helm of one of the world’s filthiest energy companies so unctuously suggest that he is a climate activist. These claims ring hollow. Having departed from a position where he could conceivably influence energy policy, de Ruyter now, conveniently, wants to champion a transition to just energy.

Further to his narrative of being a good, rational, environmentalist, de Ruyter strategically uses science in his self-promotion. He cites University of the Witwatersrand  climatology expert Professor Francois Engelbrecht, notably favoring a white man’s expertise, as evidence for a coming mega-drought. He talks about the high-tech, artificial intelligence cameras and programs that he implemented in the fight against sabotage within Eskom. He goes into detail about the attempted cyanide poisoning and the medical and toxicological aspects of the testing. His comments suggest that he is comfortable with the science, and more importantly, that he knows all the experts personally. He repeatedly mentions his new environmental stance and actually ends the interview with his desire to fight climate change. He does not say how, or indeed whether, his professional track record might impact meaningful participation.

There are various competing and intersecting claims to power in this text. De Ruyter is at once victim and superhero, both scared and brave, both racially self-aware and emphatic about his authority. He offers himself as a mouthpiece of white middle-class outrage about how Eskom has been allowed to fall apart, deflecting all blame towards the democratic government while strategically ignoring any responsibilities of the apartheid state. He talks about his direct line to government ministers and powerful people high up in intelligence, to professors, to scientists, while criticizing the ANC for its “embarrassing” socialist discourses. The party is, de Ruyter would have us believe, stuck in the 1980s, while he—the very image of a modern, educated, and urbane Afrikaner—looks to the future, obliquely suggesting yet again that white South Africans are better placed to be in charge than those who took over from them.

De Ruyter engages common scaremonger tactics, warning of impending social and environmental catastrophes (mega-droughts, total blackout, and concomitant crime and looting), but is forthright about his plans to leave the country and “lay low” for a while. There is no sense here of the intense irony of this contradictory position: that de Ruyter the man of morals, the superhero who wants to save South Africa, the victim at the mercy of the government, is able to access an easy life in the imagined white citadels of civilized Europe. He is a victim when it is discursively convenient to be one and a figure of authority when it is not. He is patriotic when it suits him, but ready to jet off at any moment. Is he powerful or powerless, or a strategic combination of both? How do we read his position, suspecting as we must that a rich, elite white man with a long corporate history would be skilled in using the media spotlight to his advantage?

Notwithstanding his masterful massaging of the narrative, supported by Larsen’s uncritical approach, there is one point in the interview where the reality of de Ruyter’s worldview creeps through. About midway through he cautions that the country should accept that Eskom can never be returned to “its former glory.” But what glory is this? What glory was there in a state utility that served only white communities, keeping the lights and the pool pumps on all through the decades of apartheid while black communities languished without power under clouds of coal smoke? Eskom was never designed to serve all South Africa’s people. And similarly, it seems that this presentation of de Ruyter as the savior of Eskom, hampered by the evil forces of the ANC, is designed less to serve the nation than to serve himself.

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This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site every week.