International body calls for a halt on loans to Kenya amid debt audit

The International Centre for Policy and Conflict (ICPC) has urged both domestic and international lenders to halt providing financial assistance to the Kenyan government until the Auditor General completes a thorough forensic audit of the nation's debt.

ICPC, on Monday, argued that the current economic crisis is a direct result of fiscal mismanagement and illegal debt accumulation.

Additionally, ICPC mentioned that while an independent debt audit is underway, development partners can continue funding essential service projects.

Emphasising the importance of transparency in the forensic audit process, the statement highlighted the need to publicise every detail.

“For purposes of independent forensic audit transparency, it will be important for the process of identifying the audit agency to be made public. This includes the total amount of state guarantees to all state-owned enterprises and governmental agencies in order to track exactly what has happened with all the loan money. Additionally, the audit’s terms of reference should be published promptly to allow external stakeholders to verify the details of the audit agreement,” the organisation said.

The lobby also criticised local banking and financial institutions, accusing them of being key facilitators of illegal and unconstitutional domestic debt. It argued that these institutions should be held accountable for providing loans to the government in violation of constitutional and budgetary laws.

Auditor General Nancy Gathungu addresses journalists during the official opening of the African Organization of Supreme Audit Institutions (AFROSAI-E) Governing Board meeting in Kampala in May 2024. (Photo: Office of the Auditor General)

“The economy has reached its breaking point due to decades of low productivity growth, significant reductions in private sector investments, public investments intended for theft, a decline in exports, and excessive government spending beyond its capacity,” ICPC said.

Also criticised was the reliance on tax revenue-raising measures as the sole solution to the economic crisis.

“To adopt tax revenue-raising measures solely as a solution is grossly defeatist. There has to be a comprehensive debt audit combined with radical fiscal policy reforms anchored on revenue increases and radical government expenditure rationalisation to reduce fiscal deficits and deep growth-enhancing structural reforms,” the organisation said.

Police brutality in Kenya during the anti-government protest led by Kenyan youths was also raised as a concern by the ICPC. The organisation urged the United Nations High Commissioner for Human Rights (UNHCR) to initiate an independent investigation into recent incidents involving police violence against protesters.

“ICPC notes with deep concern the unjustified and unacceptable Kenyan government's brutal and cruel response to public protests against deep-seated economic deprivation grievances,” the organisation said.

“With a history of police impunity in Kenya, we urge the UNHCR to open expeditious independent investigations into police brutality and violations with direct recommendations on accountability, redress for victims, and dismantling police systematic criminality.”

It emphasised that state violence cannot address the youth's grievances, which stem from economic deprivation.

“Rising Kenyan citizenry anger about economic deprivation problems cannot be resolved by state violence. The Gen Z-led protests are an economic crisis. They are demanding governance for economic dignity,” it said.

Nane Nane protesters carry flags on Kimathi Street in Nairobi on August 8, 2024. (Photo: Justine Ondieki)