Wednesday, 26 October 2016

Kenyans Call on Safaricom CEO to Promote its Staff for Exemplary Service








In 1992, the US Congress proclaimed Customer Service Week as a nationally recognised event, celebrated annually during the first full week in October.

Since then, thousands of companies across the United States and around the world celebrate Customer Service Week between October 3 - 7, underlining the importance customers and people, who serve and support customers on a daily basis.

Customer Service Week provides a unique opportunity for service and support professionals around the globe to join in a celebration of the important role that customer service plays in every organization.

In Kenya, days after many companies took to social media to show how they were marking the week, today Kenyans took to the same platform requesting Safaricom’s Chief Executive Officer, Bob Collymore to promote one of his staff.

According to Kenyans on Twitter (KOT) the lady by the name Pauline deserved better as she had exemplified what customer service was.


The five core goals of Customer Service Week are:

Boost morale, motivation and teamwork.
Reward frontline reps for the important work they do all year long.
Raise companywide awareness of the importance of customer service.
Thank other departments for their support.
Remind customers of your commitment to customer satisfaction.



Tuesday, 25 October 2016

Increasing local production through improved quality seeds





Climate change, inadequate public investment and inadequate support to smallholder farmers are the triple challenges facing Africa’s food production according to Dr. Agnes Kalibata, President, Alliance for a Green Revolution in Africa (AGRA).


Further, rapid population growth and urbanization present the most daunting challenge to meeting the goal of eradicating extreme hunger and poverty in Sub Saharan Africa.


“Global food demand in 2050 is projected to increase by at least 60 percent above 2006 levels, driven by population and income growth, as well as rapid urbanization. In the coming decades, population increases will be concentrated in regions with the highest prevalence of undernourishment and high vulnerability to the impacts of climate change,” according to a new report from the United Nations.


The image of Kenya children in the arid and semi arid regions starving and dying from hunger and malnutrition is certainly emotive and swiftly moves the nation and international community to compassionate action.


Currently, close to 1.3 millions Kenyans are affected by the drought situation in the country according to the Devolution Cabinet Secretary Mwangi Kiunjuri.

Kilifi is the worst-hit county among the 23 counties affected by the drought. Other affected counties include Tana River, Kwale, West Pokot, Tharaka-Nithi, and all the counties in northeastern region.

The Famine Early Warning System Network,  (FEWSN) report states that deterioration of food security is expected to continue even after onset of the short rains.



“In northeastern pastoral areas, especially parts of Garissa and Tana River, rangeland conditions and livestock productivity are atypically poor, even for the dry season, since these areas experienced substantial rainfall deficits of 25 to 50 percent of normal during the last long rains.

As a result, poor households with substantial pasture, browse, and water deficits, and depleted incomes inhibiting effective market access are experiencing food gaps and moved to Crisis (IPC Phase 3) acute food insecurity in September. These households are likely to remain in Crisis (IPC Phase 3) acute food insecurity through at least January 2017.”

Read: Kenya: Drought Resilience: Special drought response edition - October 2016


Given the excruciating spectacle of death and hunger, it is easy to argue that low input, low productivity rain-fed small farm agricultural production systems are the culprit and must be replaced with production systems that utilize fertilizers, high yielding hybrid seeds, pesticides and irrigation.

“The challenge in Kenya and Africa is its diversity - different crops grow in different environments, from the highlands to the lowlands,” says Joe Devries, Chief, Agricultural Transformation, AGRA.

“70 million farmers are in these zones and everyone needs high yielding seeds to allow them to produce adequate levels and surplus that is drought tolerant, adaptable to climate change and has early maturity,” he adds.

“The base of everything else is good seed. The challenge is the disconnect between researchers and getting the seeds out to the farmers because it is the heart of agriculture transformation,” says Kalibata.

According to the experts, only an average of about 20 percent of farmers in Africa use seeds of improved varieties. The numbers are lower among smallholder farmers who account to 70 percent of the continent’s population.

Kenya has a more advanced seed sector in the region with about 60 percent of farmers using improved seeds according to Eng. J.A Nkanya, Chief Engineer Agricultural Engineering Service.

“The government in partnership with our development partners has funded the research and development of locally adapted, high yielding varieties and is willing to share this key technologies with private seed companies to ensure that we meet the seed demand in the country and indeed the continent.”

The stakeholders were speaking at the sidelines of the ‘10k Seed Club’ bringing together seed companies in Africa organised by the Alliance for a Green Revolution in Africa (AGRA) in Nairobi to review the progress and learn from each other on the best approaches towards the intended mark in Nairobi.

Over the years, these companies have produced and sold an estimated 475,805 MT of improved seeds.on average, the use of improved seeds and the right farming practices have enabled farmers to more than double their yields, leading to the production of an additional 4 million MT of cereals, pulses, soybeans and groundnuts in 2015 alone representing about 2.2 billion US dollars in additional income for the farmers.

According to Kalibata, Africa was witnessing an agricultural transformation with countries that made the biggest investments in smallholder agriculture rewarded with sizeable jumps in both farm productivity and overall economic performance.

“Seeds of improved varieties are important in raising yields and ensuring food security, proper nutrition and prosperity for not only smallholder farmers but the general population,” she said. “Local private seed companies are a critical player in delivering a truly African green revolution. These companies should diversify the seeds they produce from maize to include other crops that can play a role in food security and climate change adaptation like sorghum, millet and legumes such as cowpeas, pigeon peas and green grams. The companies are also best placed to innovatively produce seeds and planting materials for crops that are vegetatively propagated like sweet potatoes and cassava,” added Kalibata.


has already begun to affect the world’s food production, anew report from the United Nations warns — and unless significant action is taken, it could put millions more people at risk of hunger and poverty in the next few decades.  

Dr. Eliud Kiplimo Kireger, Director General Kenya Agricultural & Livestock Research Organization (KALRO) however, says coming up with quality seeds that suits the market requirements and the environmental challenges is ‘an expensive process’.


“We are not deliver because of inadequate funding from the government. Research cannot stop, the demands keep emerging,” he says.

On the other hand, Kalibata says Africa still has a huge import bill that can be overcome if we doubled the production of maize, but we are still ‘talking about food security’.

“The Current import bill is at 35 billion dollars and it is estimated to be at 110 billion dollars by 2025.”

Subsequently, the  2014 Africa Progress Report notes that, “African countries spent US$35 billion on food imports (excluding fish) in 2011. The share accounted for by intra-African trade: less than 5 per cent. If Africa’s farmers increased their productivity and substituted these imports with their own produce, this would provide a powerful impetus to reducing poverty, enhancing food and nutrition security, and supporting a more inclusive pattern of growth.”

The newly released UN Food and Agriculture Organization’s annual State of Food and Agriculture report, ‘The State of Food and Agriculture - Climate change agriculture and food security’,  focusing on social protection and anti-poverty measures, innovation in family farming and designing food systems for better nutrition cites that climate change has already begun to affect the world’s food production, and unless significant action is taken, it could put millions more people at risk of hunger and poverty in the next few decades.

“Hunger, poverty and climate change need to be tackled together,” said Food and Agriculture Organization director-general José Graziano da Silva, in a foreword to the new report. “This is, not least, a moral imperative as those who are now suffering most have contributed least to the changing climate.”

Some years back, the US Secretary of State Hillary  Clinton at the Clinton Global Initiative Closing Plenary said, “Food security is not just about food, it is all about security – economic security, environmental security, even national security.”

“If we can build partnerships with countries to help small farmers improve their agricultural output and make it easier to buy and sell their products at local or regional markets, we can set off a domino effect,” Clinton explained. “We can increase the world’s food supply for both the short and the long term; diminish hunger; raise farmers’ incomes; improve health; expand opportunity; and strengthen regional economies.”

There is need to bring the knowledge and perspectives of farmers together with decision-makers at other levels. It is crucial that research in agriculture, food security and climate change continues to improve and deliver, to allow more confident decision-making and allocation of limited resources towards uncertain climatic futures this is according to a Policy Brief from the International Research Institute (IRI) Climate and Society No.1.

Going forward, José Graziano da Silva in the report says, “The time to invest in agriculture and rural development is now. The challenge is garnering diverse financing sources, aligning their objectives to the extent possible, and creating the right policy and institutional environments to bring about the transformational change needed to eradicate poverty, adapt to climate change and contribute to limiting greenhouse gas emissions.”

Wednesday, 19 October 2016

Mashujaa Day - A Country in Need of Heroes


MASHUJAA (Heroes) Day, formerly Kenyatta Day, is annually celebrated on October 20.
During this time of celebration and confrontation (Who should be designated a national hero? What exactly are the criteria), I can think of no better way to give people new vision and new hope than to point to those within their own society who are making a positive difference.
Like it or not, every society and every culture is built upon a moral and spiritual fabric. We are inspired by those around us to incarnate virtue.
Whatever the reputation of some of the nation’s founders, whatever the circumstances currently at work in the country, it is now time to look for everyday heroes among the people.
Some may be prominent while others quite insignificant by comparison.
Each one, however, is contributing to making our nation a better place in a very unique and specific way.
Just think what could happen when their names are made public and people across Kenya see that there are positive people and positive things going on. At that juncture, perhaps others will join and still others will not. In time, a new revolution - a moral, patriotic and spiritual revolution - can actually propel the nation in a new and more promising direction.
Mashujaa come from every branch of service, rank, race, gender and walk of life.
While addressing the Lenana school students on the eve of Mashujaa Day in 2012, then Prime Minister Raila Odinga said the country’s forefathers wanted nothing but the best for Kenya.
“They pursued this by working together, disregarding tribe, race or social status... this is the dream that faded before our eyes over the past two decades and it is a dream we have embarked on reclaiming,” Raila Odinga.
Harsh history For Western Kenya, it is vital to learn from our fallen heroes, and equally vital to remember their contributions.
At independence, however, because history has been harsh to the Luhya community heroes like Otiende were hardly heralded. Others like Musa Amalemba, Elijah Masinde, and Senator Machio and Arthur Caleb Ochwada of Samia, Dr Ngaira, Masinde Muliro and Martin Joseph Shikuku were sidelined and given decimal positions.
Our ancient leaders such as Mwanga, Muwanga, Shiundu, Nabongo Mumia ,Hammtalla, Namutala, Namachanja, Elijah Wanameme and others worked tirelessly to bring the community together, but how do we celebrate them?
Below are some of their stories:
Moses Amalemba pioneered initial steps at forging Luhya unity. Before independence Amalemba from Idakho formed Buluhya Political Union (BPU) as the voice of the Luhya in the political dispensation emerging in Kenya at the time. When he had a position in Kenya Airways, he was not ashamed to employ Luhyas. He is remembered by having a section of Kakamega town named after him- Amalemba Estate.
Eric Edward Khasakhala, former MP for Emuhaya, is indeed a fallen hero, who lived humbly without recognition of his role in pre-independence and independence struggle. This was justified during his death in July 2000, many were amazed at the response from leaders all over the country. Khasakala was born on March 26, 1926 as the eldest son of Daktari Zakayo Kwendo and Mama Damary Oyando Kwendo.
Like Jesus of Nazareth, he started off with a humble beginning, as the son of a Preacher and local doctor. He became an apprentice of his father, and at an early age he associated with the locals in assisting them in various projects.
Responsibility came calling at him at an early age of 29, when his father succumbed to illness and passed away on July 13, 1955. In 1958 he caused shock waves by defeating political heavyweight Tom Mboya to clinch the post of Secretary of All Political Parties of Kenya.
Mboya instantly became interested in this man and they became very close and intimate friends. Khasakhala, a Pan Africanist by heart, joined Gikonyo Kiano, Ronald Ngala, Mboya and others in travelling to Egypt and Mwanza, Tanzania to form the Convention of African Association, which would bring together African countries to form a united front to forge independence.
During his last dying moments, various people spoke volumes about this fallen hero:
“I have never witnessed such a crowd before; we even had people sitting by the pulpit”.
These were the words of Rev Peter Njoka, Provost, All Saints Cathedral.
“Eric was an honest man, never ready to change any aspect of his character to please anyone,” said former President Mwai Kibaki, then Chairman, Democratic Party of Kenya and old friend while addressing mourners.
“He was a good friend of mine, but more so of my father, the late Jaramogi Odinga Oginga. He always emphasized on enhancing unity among all Kenyans,” said Raila Odinga, then NDP leader addressing mourners.
“Hon Khasakhala emphasized that we should not let transient political associations divide the great Luhya nation,” said the late Kijana Wamalwa, Ford Kenya leader addressing mourners.
David Amunga, a renowned musician, born to a Luo mother, Elita Manyasa from the Umira Kager clan in Alego (the combatively traditionalist clan that made headlines during the SM Otieno versus Wamboi burial saga in the 1987), his maternal grandfather, Analo Okusimba was a traditional music artist and it was from his genes that Amunga owes his interest in music.
It was a talent that entertained both man and beast and brought fame if not fortune to young Amunga. Descended from Muchisa, the tribal ancestor who led the Kisa people from Samia several generations ago into their present locale, Amunga of the Abakambuli clan started singing as a herd’s boy.
Luhya musicians at the time included John Mwale from Tiriki, George Mukabi from Kisa, Bunyore Band led by Atwoli. Others were John Ondolo from Kisa, Jimmy Lasko from Idakho, Edward Nandwa from Maragoli, Joseph Kakai from Bukusu, Daudi Kabaka, John Nzenze and John Mwale all from Tiriki and Simekha from Bunyore.
Amunga’s first recording at Mwangaza studio - America to Africa - topped the music charts for six months and firmly established him as an accomplished professional artist and entrepreneur. Although inspired by his friend’s loneliness in the US, it was also a response to Daudi Kabaka’s Safari ya Tanganyika which was such a big hit it created a new benchmark on the local music scene.
The genesis of America to Africa started at a meeting in Kamukunji grounds at which Jomo Kenyatta, Tom Mboya and Jaramogi Oginga Odinga talked of airlifting people to go to America and Russia to study and return home to build the new independent 5 state.
This airlift which had started just before independence included US president, Barack Obama’s father. Although saints and heroes are never recognized in their own countries, for Amunga some measure of recognition came on December 12, 2004 when President Mwai Kibaki awarded him the Order of the Grand Warrior, the first Kenyan musician to receive a presidential commendation.
It was a fitting birthday present for Amunga, then 66, born on a day that would later coincide with Jamhuri Day.
While some of these heroes have all passed away, each and every day current service members distinguish themselves honorably in our communities. 51 years now, a lot of water has passed under the bridge.
Machakos County unveiled the state of Samuel Muindi Mbingu ahead of the 2016 Mashujaa Day.
While we celebrate Mashujaa Day with other communities here we will remember those who have served and continue to serve.
However, a question begs, what is our role today in creating a better future, not only for Luhya but for our nation as a whole?
Today marks a great milestone to us Kenyans.

A day our country is being reborn, a day that inspires by the opportunities that will make each day afford us to wake-up and live another day striving to reach our goals as a nation.

(Editing by @Obed Muindi)

David Kenani Maraga is Kenya's New Chief Justice


President Uhuru Kenyatta presided over the swearing in of  the new Chief Justice of the Supreme Court of Kenya.





Justice David Kenani Maraga, 64, formely the Presiding Judge of the Court of Appeal in Kisumu. He was named to the post on  Wednesday a day after the National Assembly unanimously approved him.

He was appointed to the High Court in October 2003 and to the Court of Appeal in 2011.
A holder of both an LL.B and an LL.M from the University of Nairobi, he also chairs the Judiciary Committee on Elections tasked with overseeing election petition hearings that may arise after the 2017 elections within the prescribed period in the constitution.
Maraga, was nominated by the Judicial Service Commission on September 22. He replaces 69-year-old Willy Mutunga who served as Kenya’s Chief Justice since 2011.

Below is the Chief Justice's speech after being sworn in:

Allow me to thank the president for hosting this event, and to appreciate all of us who have honored the invitation to attend this swearing in ceremony.
We, also, collectively thank God for an occasion such as this.
The broad representation here today is a testimony of Kenya at its best -a people always able and willing to pull together, united by a purpose which reflects our culture, national character and a belief in constitutionalism.

It is tempting to take an event such as the one we are having here today as ordinary and routine.
Taking the oath of office as the 15th Chief Justice of the Republic of Kenya may not, in and of itself, be an event of monumental novelty. But we must not lose the significance of this historic day.
This day affirms the country’s recognition and acceptance to be governed as a constitutional democracy.
The transition from one Chief Justice to another, conducted through an open, competitive recruitment process– a constitutional device the rest of the world holds in remarkable awe – is not only a testament to our strong democratic traditions but also a vindication of the independence of our institutions such as the Judicial Service Commission.
Today shows that when we allow institutions to thrive, and when those institutions are populated with men and women who put the country first, they will always do what is right. Throughout the process of choosing the holder of the Office of the Chief Justice, the JSC manifested both independence and accountability – conducting a process that is open, transparent and responsive to the concerns of the Kenyan people.
I am proud to be a product of that process and I am committed to protecting and enhancing the Constitutional ideals of judicial independence and accountability. Given the high caliber of other Kenyans who applied for the job of Chief Justice, the burden for delivery of the essentials of this office is certainly high for me. I salute my worthy competitors.
I am confident that with the support of all the justice sector stakeholders I will succeed.

This is, also, an important day for the Judiciary. The Judiciary was the first arm of government to transit from the independence Constitution to the 2010 constitution when it recruited the first Chief Justice under the new Constitution.
This exercise was achieved five years ago with widespread national and international acclaim.
Today, the Judiciary, again, is the first arm of 3 government to oversee the first peaceful transition and transfer of power under the 2010 Constitution. This is a remarkable feat and the Judiciary and the JSC, are very proud that we are setting the pace for the rest of the country.
We hope that other arms of government will follow suit in this now well beaten path of proper conduct in the management of leadership succession at the top echelons of government. But our pace setting has not just been in transitions. It has also been on reforms both in terms of constitutional implementation and institutional transformation.
For the last five years, the Judiciary, under the leadership of my predecessor, Hon. Dr. Willy Mutunga, has been implementing an ambitious and successfully transformation agenda, which has been a benchmark for other public sector institutions. We have been resetting the button for the kind of Judiciary that Kenyans want and need.
A Judiciary that is people-centered and a fair and firm defender of their rights. A Judiciary that is independent, and one that robustly upholds the Constitution. A Judiciary that gallantly fights corruption within its ranks, and one that is transparently managed.
A Judiciary that is financially strong yet accountable. A Judiciary that is open and friendlier to the public, and one that has now finally embraced performance contracting. I want to thank Hon. Dr. Willy Mutunga for his leadership and for laying the strong foundations of transformation on which I will build.
As I assume office, I promise to focus on a number of fundamental undertakings:
I will endeavor to turn the Judiciary into a world-class justice institution. My overarching interest will be on improvement of service delivery in the justice sector- to the Kenyan people. I will seek to eliminate corruption from amongst our ranks, reduce the backlog of cases and automate court proceedings.
I will aspire to enhance access to justice for all and improve performance and accountability within the Judiciary. The Judiciary must be accountable on its finances and on its jurisprudence, both in quantitative and qualitative terms.
I can assure the country that the judicial work ethic is going to change – for the better.
The core function of the judiciary is to ensure that citizen’s rights are protected, that all are equal before the law and that the rule of law is observed.
While cultivating a collaborative and mutually supportive relationship with all arms of Government, we will continue to discharge our constitutional mandate fairly, impartially but firmly. We shall respect the constitutional independence of other arms of government and expect that they, too, shall similarly respect the independence of the judiciary.
The principle of separation of powers is central to our constitutional architecture.
Leadership is about service and teamwork. I intend to build a positive culture amongst the staff, an attitude of service, and collegiality. In the same vein, I will strive to ensure that the Judiciary delivers value for money to the Kenyan public.
Our service is justice.
Kenyans must feel the quality and speed of our service and be satisfied with it. This requires continuous improvement and accountability. Although more than three quarters of our Judges, Magistrates and Judicial Staff are honest and hardworking people, corruption continues to be a dark blot on the Judiciary as an institution. Whereas considerable progress has been made in the fight against this vice, I must admit that the information I have indicates that it is on the rise.
I promise to deal with this problem in a direct and frontal manner. I will strengthen the Office of the Judiciary Ombudsperson, reinforce the disciplinary processes in JSC, and bolster the Directorate of Internal Risk and Audit among many other recommendations that will result from the ongoing Anti-Corruption Mapping exercise being led by Transparency International.
I will institutionalize the war against corruption so that it is not a periodic event but part and parcel of our culture and management systems and processes. I recognize that the steady and consistent support of the Executive and the Legislature as well as that of other institutions is crucial in the fight against Corruption.
I plead for maximum support in this regard. I am aware that the legal profession is linked to the Judiciary in a special way. I will endeavor to extend and fortify this relationship.
But as the Judiciary reflects on improving on judicial performance, we must expect the same of the bar.
I will seek to engage both with the leadership and membership of the Law Society of Kenya to play their part in improving service delivery, clearing case backlog, enhancing integrity in court processes and improving the quality of legal training and legal services provided by both the bar and bench.
Lastly, let me turn my attention to the role of the Judiciary in the next elections. Elections and Election Dispute Resolution is a key priority for me. I have been the Chairman of the Judiciary Committee on Elections and I have confidence in the preparations that we have and are putting in place. But we are just one actor in the chain. We require all agencies, other actors, the political class and the Kenyan citizenry to play their part in ensuring that the next elections are undertaken in accordance with the set Constitutional standards.
I want to assure the nation that the Judiciary is ready to satisfactorily determine any disputes that may arise from the electioneering process.
The Judiciary is ready to hear and resolve any election disputes that may arise in a fair and timely manner.
We shall continue to invest in cultivating the trust and confidence of the Kenyan people in our arbitral role in electoral disputes.
I am determined to do what it takes, to engage as widely as is necessary and as is permitted under the Constitution, to achieve this objective and to ensure that justice prevails and peace abounds amongst the Kenyan people.
Finally, I want to thank the Almighty God for this appointment. I want to thank the Judicial Service Commission for recommending my appointment, the President for appointing me and the Legislature for approving my appointment.
I also want to thank the Kenyan people who have demonstrated their overwhelming support for my appointment. I do not take lightly the constitutional provision that judicial authority is derived from the people. There is no interest group or institution that doesn’t need a strong and independent Judiciary. Under the guidance of the Almighty God, I am determined to do my best to an independent Judiciary.

HON. MR. JUSTICE DAVID K. MARAGA CHIEF JUSTICE & PRESIDENT, SUPREME COURT OF KENYA.

Monday, 17 October 2016

Kenya's new Eurobond could become "odious debt" - Raila Odinga

The 2014 Eurobond (or any proposed issuance) runs the risk of being converted into or being declared an Odious Debt on the basis of three widely acknowledged tests for Odious Debt :
a. Absence Of Consent: That the Eurobond debts were incurred without the consent of the People of Kenya (in respect of any portion of the proceeds not deposited into the Consolidated Fund)b. Absence Of Benefit: That the expenditure of the Eurobond Proceeds were not applied towards the public benefit or for the intended purposes to fund Infrastructure Projects (in respect of the expenditure from the Eurobond proceeds that the National Treasury cannot account for or provide a list of projects funded by the Eurobond .


I. BACKGROUND TO PUBLIC STATEMENT
1. The Government of the Republic of Kenya issued its first International Sovereign Bond (Eurobond) on 24 June 2014 that raised a Gross Amount of USD 2 billion. Kenya raised a further USD 815million from a “Tap Sales” re-opening of the Eurobond in December 2014. The proceeds of the Eurobond were intended to be applied “for general budgetary purposes, including the funding of infrastructure projects and repayment of a US$600 million Syndicated loan that was maturing in August 2014”. At the time the Government stated that the Eurobond would provide additional economic and financial benefits to the country including reduction in domestic borrowing by Government and lower interest rates.
II. FAILURE TO ACCOUNT FOR THE PROCEEDS OF KENYA’S FIRST EUROBOND
2. The Government and the National Treasury have persistent failed to accurately and completely account for the Net Proceeds of the Eurobond. The failures in respect of the first Eurobond constitute material and significant breaches of the Constitution of Kenya 2010 and the Public Finance Management Act 2012.
3. The Government of Kenya, and more specifically the National Treasury, failed to deposit Net Proceeds of the Eurobond amounting to US$1,999,052,872.97 (KSh.173,917,599,948.39) into the Consolidated Fund as required by law. The Constitution of Kenya, 2010 atArticle 206(1) and the Public Finance and Management Act, 2012 at sections17(2)(a) and 50(7)(a) require all National Government Revenues, including all loan proceeds, to be deposited immediately and in full into the Consolidated Fund.
4. Of greater concern and more troubling is that the Government of Kenya has to date failed to deposit or remit Net Eurobond proceeds amounting to USD 999,018,457.60 into the Consolidated Fund (“National Exchequer Account”) maintained at the Central Bank of Kenya.
5. The official audit report of the Office of the Auditor General (OAG) on the Financial Statements Of The National Government for FY2014/15 does not support the Government’s claims that it transferred the “missingUSD 999,018,457.60 into the Consolidated Fund on 8 September 2014 from the offshore “special account” at JP Morgan Chase Bank in New York through “an account” at the Federal Reserve Bank of New York.
6. The Auditor General, a Constitutional Office Holder and the National Audit Office, has beenunable to ascertain, verify or confirm to his satisfaction the receipt of Eurobond Proceeds amounting to US$2,419,016,127.10 (KSh.215,469,626,035.75). He accordingly issued aDisclaimer of Opinion on Eurobond Proceeds amounting to US$2.4bn (KSh.215.5bn) on the basis that he has not ascertained the accuracy or veracity of those proceeds.
7. The Auditor General’s Disclaimer of Opinion on the receipt, accounting and use of Eurobond Proceeds over 28 months after the proceeds were first received in the offshore “special account” at JP Morgan Chase Bank in New York completely disprove the public statements issued by the National Treasury and the Central Bank of Kenya.
8. Its disturbing that the official reports of the Auditor General and the Controller of Budget over theFiscal Years ended 30 June 2014 and 30 June 2015 confirm that only USD 395.4mn from the Eurobond Issue of 24 June 2014 and USD 815mn from the Tap Sales proceeds on 17 December 2014 have to date been deposited into the Consolidated Fund.
9. It’s clear that the National Treasury and the Central Bank of Kenya have utterly failed to prove to the satisfaction of the two Constitutional offices that all proceeds of the Sovereign Bond and the Tap Sales were paid into the Consolidated Fund.
III. FAILURE TO ACCOUNT FOR EXPENDITURE FROM THE EUROBOND PROCEEDS
10. The National Treasury has failed to account for expenditure from the Net Proceeds of the Eurobond to the satisfaction of the Office of the Auditor General. Specifically the National Treasury has failed to produce or provide a List of Projects funded by the Eurobond.
11. The National Treasury utilized USD 604,560,737.50 (KSh.53,201,344,900.00) from the Eurobond Proceeds at source to repay an outstanding Syndicated Loan without the prior approval of the Controller of Budget, a Constitutional office holder, in contravention of the Constitutional provisions at Articles 206(2)(c), 206(4) and 214(1).
IV. UNRESOLVED MATTERS ON CURRENT EUROBOND COULD CONVERT THE EUROBOND INTO ILLEGITIMATE OR ODIOUS DEBT AND JEOPARDIZE FUTURE EUROBOND ISSUES
12. Illegitimate Debt: A significant portion of the proceeds from Kenya’s 2014 Eurobond amounting to US$ 999,018,457.60 were not deposited into the Consolidated Fund.Continued failure by the Government to satisfactorily account for these “missing” Eurobond proceeds exposes investors to the risk of the 2014 Eurobond being converted into or declared an illegitimate debt (or Partially Illegitimate Debt) to the extent of the USD999mn of the Eurobond proceeds that were not received and thus did not benefit the people of Kenya.
13. Odious Debt: the 2014 Eurobond (or any proposed issuance) runs the risk of being converted into or being declared an Odious Debt on the basis of three widely acknowledged tests for Odious Debt :
a. Absence Of Consent: That the Eurobond debts were incurred without the consent of the People of Kenya (in respect of any portion of the proceeds not deposited into the Consolidated Fund)
b. Absence Of Benefit: That the expenditure of the Eurobond Proceeds were not applied towards the public benefit or for the intended purposes to fund Infrastructure Projects (in respect of the expenditure from the Eurobond proceeds that the National Treasury cannot account for or provide a list of projects funded by the Eurobond .
c. Creditor Awareness: that lenders, investors and the international banks that acted as transactions advisors in Kenya’s Eurobond (and any proposed Eurobond issue) were aware, or should have been aware, of the above two conditions. Specifically Investors need to demand resolution of the unaccounted for proceeds and all unresolved matters on Kenya’s 2014 Eurobond prior to participating in any proposed future sovereign bond issue.
V. HEIGHTENED DEBT DEFAULT RISKS DUE TO THE ABSENCE OF TANGIBLE EUROBOND REPAYMENT ARRANGEMENTS
14. The Republic of Kenya has an excellent record since independence of honouring all its obligations including sovereign debt owed to external creditors and international capital-markets institutions. The Government of Kenya bears the responsibility of addressing and resolving to the satisfaction of the National Audit Office the significant and material issues raised in respect of Kenya’s 2014 Eurobond.
15. The inability of the National Treasury to account for expenditure from the Proceeds of the 2014 Eurobond and to provide a list of projects funded by the Eurobond is evidence that the source of repayment of the Eurobond is uncertain and unknown. Further the National Treasury has not made or is unable to announce tangible financial arrangements for repayment of the principal outstanding amounts of the Eurobond on maturity, for example by establishing Sinking Funds from annual Budget revenues.
16. This places Kenya at risk of sovereign default.At the minimum it places Kenya in A Pre-Default Stateand heightens the risk of external debt distress that could lead to sovereign default - and the attendant painful Sovereign Debt Restructuring (SDR). Both outcomes place the Country at risk of Collective Action Clauses by institutions and investors who subscribed to the Kenya’s inaugural Eurobond of June 2014. They could enforce their rights under the laws of the State of New York in the United States (following the example of the actions of Vukture funds in Argentina’s Sovereign Debt Restructuring).
17. In the event of harsh and painful Sovereign Debt Restructuring Kenyan taxpayers face the risk of paying for the tough fiscal conditions that are likely to be imposed by private creditors and investors who subscribed to the 2014 Eurobond. The IMF by virtue of the USD 1.5bn Standby Arrangement (SBA) and Standby Credit (SBC) Facility that it extended to Kenya in March 2016 could also impose further conditions.
VI. NEED FOR AN INDEPENDENT EUROBOND AND NATIONAL EXTERNAL DEBT AUDIT
18. The Government needs to facilitate an independent, international audit of Kenya’s 2014 Eurobond and the nation’s external debt prior to accessing the international capital markets for the second Eurobond issue proposed.
19. We make the call for an Independent, international audit of Kenya’s 2014 Eurobond, this would be a Specific Eurobond Debt Audit covering the receipt, accounting and use of the Net Proceeds of the international sovereign bond. We recommend that this specific Eurobond Debt Audit be undertaken by an international audit firm working jointly with the Independent Evaluation Office (IEO) of the IMF, the African Development Bank (ADB) and UNCTAD.
20. We also recommend an Independent, international audit of Kenya’s National External Debt that goes beyond the current Debt Sustainability Assessment (DSA) framework. This debt audit needs to cover all national external debt owed bilaterally and multilaterally. Critically it must cover all national external debt contracted from the international capital markets and ensure that there are no hidden or previously undisclosed borrowings. This recommendation is consistent with the IMF’s call for an independent international audit of an International Bond was not disclosed to the executive agencies of an emerging country nor approved by its legislature as required.
21. The National Debt Audits above should also comply with the UN Principles on Promoting Responsible Sovereign Lending and Borrowing especially the key principles on Agency, Due Authorization, Responsible Credit Decisions. In the context of Kenya these include:
a. Agency Principle: that Kenya Government Officials involved in the 2014 Eurobond transaction (and any proposed Eurobond issuance) are responsible to the country and the people of Kenya for protecting the public interest for which they are acting as agents.
b. Due Authorization Principle:that lenders and investors in Kenya’s Eurobond (and any proposed Eurobond issue) bear the responsibility of determining, to the best of their ability, that the Eurobond is appropriately authorized under Kenyan laws; and that the resulting Sovereign Bond Agreements are valid and enforceable under relevant jurisdictions.
c. Responsible Credit Decisions: that lenders and investors in Kenya’s Eurobond (and any proposed Eurobond issue) bear the responsibility of making realistic assessment of
Kenya’s borrowing capacity and ability to service its Eurobond debts based on the best available information.
22. Recent international experience of the concept of odious debt include discussions on Iraq’s debt in the Odious Debt Terms by Nobel laureate and economist Joseph Stiglitz. In 2008 Ecuador declared its debt to be illegitimate on the basis that it was Odious Debt
23. We also call on the International financial markets and investors active in the sovereign Bond market to require, through the Transaction Advisors,
a. post disbursement (post-ante) verification and monitoring of projects financed by the 2014 Eurobond and
b. prior (ex-ante) investigations and verification of the projects to be financed by any proposed future Eurobond to be issued by the republic of Kenya
VII. CAUTIONARY NOTICE AND NOTIFICATION OF MATERIAL FACTS TO INVESTORS
24. We wish to formally issue a Cautionary Notice and Notification of Material Facts (stated below) to Legal Counsel, Lead Managers and Transaction Advisors engaged or proposed to be engaged and potential International investors (hereinafter collectively “Named Persons/Entities”) by the Republic of Kenya on the planned issue of its second Eurobond.
25. We wish to place On Notice the Named Persons/Entities (as defined above) that the Government of the Republic of Kenya has not accounted for the receipts and expenditures of the Net Proceeds of the International Sovereign Bond issued on 24 June 2014 as required under the Constitution of Kenya, 2010 and the Public Finance Management Act 2012, and to the satisfaction of the Constitutional National Audit Office. Further we caution the International markets that the Government of the Republic of Kenya needs to account completely for the Net Proceeds of the Eurobond prior to the Issuance of any new International Sovereign Bond.
26. We further caution and serve notice that should the above Named Persons/Entities proceed with the issuance of any new International Sovereign Bond (Eurobond) by the Government of the Republic of Kenya without satisfactory resolution of the unresolved matters raised in respect of the 2014 Eurobond, then the Named Persons/Entities risk declaration of such debt as Odious Debt by the Government of Kenya, acting on behalf of the People of Kenya.
27. This Cautionary Notice and Notification of Material Facts is based on the Concerns and Significant and materials Unexplained and Unresolved Issues that arose from the International Sovereign Bond Issued by the Republic of Kenya on 24 June 2014 which are presented above.