The Youth Cafe at the Okoa Uchumi Campaign
PEOPLE’S NATIONAL ECONOMIC RECOVERY CONFERENCE
The Okoa Uchumi Campaign is a civil society platform committed to collaborating with stakeholders to redress Kenya’s public debt crisis. The coalition seeks to push for political accountability and bolster constitutional safeguards in public debt management for debt sustainability through a balanced and equitable budget.
Objectives – the objectives of the conference will be:
1. To enhance public awareness and understanding of Kenya’s fiscal accountability issues.
2. To initiate debt options discussions and explore viable solutions to address public debt as the overarching problem in fiscal accountability.
3. To develop a national economic recovery strategy addressing fiscal accountability concerns in Kenya.
Expected outcome – the expected outcomes of the forum will be:
1. Increased awareness of Kenya’s fiscal accountability issues and adherence to budgetary accountability principles as outlined in Article 201 of the Constitution.
2. Recommendations for establishing a localised home-ground mechanism for managing debt.
3. Development of a platform for constructive local dialogue and collaboration among stakeholders in addressing fiscal accountability issues and public debt.
Participants
This forum aims to bring together key stakeholders from state and non-state actors, including policymakers, faith-based organisations, international partners, economists, civil society organisations, professional associations, university students’ leadership and the private sector.
Date and Time
This conference is scheduled for Tuesday, the 19th of December 2023, from 9:00 am and ending at 3:00 pm at the Bomas of Kenya.
Event’s Schedule
8:00 am – 9:00 am -Arrival, Registration and Introductions
9:00 am – 9:30 am- Welcome Remarks - Diana Gichengo, TISA National Coordinator
-Keynote Speech - Margaret Nyakang’o, Controller of Budget
9:30 am – 10:30 am - Unpacking Fiscal Accountability Status in Kenya - By Institute for Economic
Affairs
-The State of Kenyan Coffers - By Parliament Majority and Minority Leader
10:30 am – 11:00 am - HEALTH BREAK
11:00 pm – 12:00 pm- Exploring Public Debt Options- By OXFAM in Kenya
-Public Debt and Privatization Committee - By IPF Kenya and IBP Kenya
12:00 pm – 1:00 pm - National Economic recovery strategy Sam Mwaura - By Kenya Bora Tuitakayo
1:00 pm – 2:00 pm - LUNCH BREAK
2:00 pm – 3:00 pm - Plenary Session - By Mzalendo
-Reading of the Communique - By Student Associations
-Adoption of Public Petition - By Social Justice Centres
-Closing remarks and the way forward- By Action Aid Kenya
Background
The latest National Government Budget Implementation report generated by the Office of the Controller of Budget (OCOB) highlights three overarching fiscal indiscipline issues:
1) pending bills,
2) low budget absorption, especially in critical sectors like education and health, and
3) the growing public debt stock. The report indicates that as of 30th September 2023, the national government's pending bills amounted to Sh. 630.6 billion.
This is despite the National Treasury Circular Order 10/2020, which puts pending bills as the first order item to be charged in the government budget. The buildup of the pending bills has harmed the economy, affecting service deliveries across government institutions. In the same reporting period, the report indicates that the national government budget performance was 86.6%, with the absorption rate for development expenditure being 81.1%, suggesting poor budget formulation, weak public finance administration, and inadequate monitoring of budget implementation.
Of great concern is the Cabinet Secretary for the National Treasury’s admission on 6th December 2023 that the government is in a fiscal crisis – cannot meet its wage bill or provide critical services to citizens, warning that “Kenyans should prepare for tough times ahead.” These revelations appear amid Kenya’s growing public debt, which amounted to Sh 10.5 trillion as of 30 September 2023. a Sh. 1.8 increase from Sh. 8.7 trillion in September 2022. This is in addition to the Controller of Budget’s revelation of the recently procured loans about Sh. 1.4 trillion is yet to be disbursed, subjecting the country to high-interest payments and fees. The alarming depreciation of the Kenya shilling against major currencies in the 12 months ended June 2023, as well as the first quarter of fiscal year 2023/2024, have resulted in the revision of the US dollar 2.0 billion Eurobond maturity payment due in June 2024 by Ksh. 69.9 billion to Ksh. 311.6 billion from Ksh. 241.7 billion in the supplemental budget in 2023/2024 due to the weakening Shilling.
While Kenya's debt sustainability analysis (DSA) is only left to the IMF and World Bank, who have maintained that Kenya’s public debt is sustainable over the years, the current happenings and the dwindling economic activities suggest sustainability concerns. There has been an increase in dependency on multilateral institutions (IMF) to settle our debts, with the President’s Economic Advisor recently mentioning that without the IMF, “we would have already defaulted.”
While the government has entered a fiscal consolidation program with IMF, including Extended Credit Facility (ECF) and Extended Fund Facility (EFF), with the hope of improving budgetary management, in our view, the initiatives or arrangements have resulted in mixed results. The arrangements with the IMF have prioritised increased taxation at the expense of growing the economy. It has also prioritised change in the funding model of critical sectors, including higher education and health, suggesting a possible increase in the cost of accessing these essential services.
What this has meant in the first quarter of fiscal year 2023/2024 is reduced fiscal space, with the government prioritising debt servicing, which averaged 84% of the total revenue collected in the month of July-August, at the expense of spending on critical sectors that directly impact the well being of low-income households. Concerns by the Public Debt and Privatization Committee, OCOB, AOG and PBO on the hidden or unclear actual cost of loans, lack of transparency on public debt lent and owed to national government entities, budgeted corruption and unclear purpose of loans given to Kenya, poor disbursement of loans, growth in debt obligations at risk of crowding out other critical expenditures including those supporting strategic priorities under the BETA.
These challenges occasioned by the growing public debt, debt servicing, and the looming debt defaults call for urgent national discourse on the state of Kenya’s economy, public debt, and pre-emptive debt default. On this note, the OKOA Uchumi Campaign plans to hold a national Multi-Sectoral Forum on fiscal accountability and public debt.