If I were the government, I would think more of fiscal sustainability than additional spending.
They have done a bad job of cutting spending. Our debt has consumed more than Sh1 trillion in servicing interest alone and maybe Sh1.9 trillion in repayments.
We are already seeing a drop in tax revenues. November 2024 tax revenue was lower than November 2023. The fiscal sustainability picture is not good.
They are in default. They are not even able to pay pending bills to the tune of more than Sh600 billion.
That is default to creditors, with hospitals and road contractors being the largest proportion.
Therefore, if you can’t pay contractors and hospitals, and cannot put medicine in hospitals, why take new debt for projects?
Public Private Partnerships, which they say is an option, are difficult because we are not dealing with good people, in my view. We saw the Adani deal whose terms were terrible.
PPP remains a viable avenue like they could give JKIA to local fund managers who are happy to invest in it.
The other aspect of PPP is that many people have lost money, meaning one has to be careful when dealing with the government.
I have seen it firsthand and it is because we are dealing with fundamentally dishonest people. If you are going to PPP with the current team you better have a government on your back.
That’s why many guys will do joint ventures with foreign entities which have direct participation of those governments, otherwise when dealing on your own, it is almost certain they will mess you up.
You can have all the legal clauses to protect you but this doesn’t stop them from making life hard for an investor.
They (Kenya Kwanza) don’t have the fiscal space and the question is whether they can get a viable partner willing to work with them.
They have been looking for a buyer for Kenya Airways for a long time. Why haven’t they got one?
Economist spoke to the Star
