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‘New Times’ captures Rwandan transparency in public borrowing

Nairobi is lately witnessing so much celebration within the political class over the so-called ‘avalanche of goodies’ brought home by President William Ruto and a host of his ministers from countless foreign visits.

So high is the crest of the inner-circle pomp and pageantry that whoever dares to ask questions about the spontaneous donor fiscal jerk is deemed as an enemy of the government.

Yet, there is a heavy sheath of opacity over government borrowing, committing generations to the yoke of foreign debt without official explanation. Members of the National Assembly and the Senate, elected by the people to – among other duties – represent them and check the government’s profligate ways, seem to have either connived to play ball, or (those of the Opposition) got wretched by projecting out solitary, overwhelmed voices in the wilderness.

Intriguingly, the Constitution of Kenya, 2010 contains unequivocal procedures the national and county governments must follow before taking a loan and empowers Parliament to prefect such borrowing.

Article 211(1) states: Parliament may, by legislation— (a) prescribe the terms on which the national government may borrow; and (b) impose reporting requirements.

The supreme law provides for further guidance in Article 211(2), where the Cabinet Secretary responsible is mandated to present before the relevant committee information concerning any particular loan or guarantee among other specific details.

Be the judge. When, in recent history, has any Finance minister complied with the Constitution, even as the government – this and its predecessor – borrowed so much the public cannot put a finger on what amount of money was brought, and for what purpose?

For that, ordinary Kenyans – sagging under the burden of uncountable taxes – stand to service loans worth trillions of shillings over which their permission was never sought through Parliament.

It’s for this reason that the Kigali-based publication, The New Times, offered Kenya’s Parliament and the media free lessons on how to report on public borrowing. In its fact-checker of Sunday, June 9, 2024, titled, Three things to know about Rwanda’s €200m deal with JPMorgan Chase’, the paper brought to light the Kigali administration’s spirit of transparency and accountability in public borrowing.

Listen to reporter Emmanuel Ntirenganya’s intro: “The Lower House on June 7 approved a law ratifying a €200m (approx. Rwf280 billion) loan agreement that Rwanda signed with JPMorgan Chase’s London branch to support the country’s sustainable financing framework for green and social projects.” That is the law; that the government had to seek Parliament’s nod to commit Rwandans to this foreign debt.

Having reminded his readers that JPMorgan Chase [& Co.] is the largest [multinational finance company] bank based in the United States of America [and is the world’s largest bank by market capitalisation by 2023], Ntirenganya turned to copiously quote Richard Tusabe, the Minister of State for the National Treasury at the Ministry of Finance and Economic Planning, on all the aspects of the proposed loan. The minister said “one of the government’s medium-term strategies is to look for means to back Rwanda’s efforts to be resilient to climate change.

“It is in that context that Rwanda mobilised funding under a new form of long-term commercial loan that is provided by JPMorgan Chase Bank and partly guaranteed by the African Development Fund (ADF) in line with contributing to a sustainable financing framework in Rwanda … €180 million is guaranteed by ADF, while the remaining €20 million is not.”

Pray, how will this loan be serviced? Minister Tusabe: “The €180 million of the loan covered by security from ADF will be repaid within 10 years that are counted after five years [of grace period], at 1.3 per cent interest rate per year plus an interest rate charged among European banks in a period of six months.”

The minister had more on this loan. Listen: “[T]he €20 million that does not have the ADF security will be paid back in a three-year period that will be counted after two years [of grace period] at an interest rate of 5.25 per cent per year, plus an interest rate charged among European banks for six months.”

And to counter-check and put into context minister Tusabe’s claims, reporter Ntirenganya provided a kicker para: “In a statement that the African Development Bank (AfDB) issued on June 3 after ADF signed an agreement with Rwanda to partly guarantee the loan, AfDB vice president Solomon Quaynor said “we are delighted to continue our partnership with the Government of Rwanda in its efforts to promote green and inclusive growth in line with its Vision 2050. This guarantee from the African Development Fund will enable Rwanda’s inaugural access to financing under its Sustainable Finance Framework at competitive terms.”

Very nice. If the Rwandan case doesn’t exemplify a government’s utmost transparency and accountability over public debt, what does?

Lesson learnt? That the media, the public and parliamentarians must agitate for the government’s full disclosure on local and foreign borrowing. It is not a matter of official pleasure and philanthropy. Nay, the Constitution demands so.

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