Willis Otieno: Kenyans should not repay debts taken without Parliament’s nod

Lawyer and politician Willis Otieno, businessman Jimi Wanjingi’s running mate during the last presidential election, is irked by what he considers Kenya’s growing and unsustainable national debt. He now wants President William Ruto to stop paying some of the debts which he says are odious. He spoke to The Eastleigh Voice reporter Barack Oduor on why it’s time for Kenya to establish a judicial commission of inquiry to look into the country’s debt register and save Kenya from imminent economic collapse.

What is Kenya’s national debt situation?

A: Our debt situation at the moment is unsustainable. For every one hundred Kenya shillings the government collects in taxes, 80 shillings go to financing debt. In comparison, 35 shillings go into salary payment, meaning we are operating at negative fifteen. Yet we haven’t even factored in the finances needed for other operations such as funding counties.

This state of affairs is making the country borrow even more.

Remember, the more we are borrowing the more the amount increases. President William Ruto’s response has been to try and get money from Kenyans, but the truth of the matter is that we have reached a dead end because there is nothing more to tax in people’s pockets. This is the genesis of the resistance you are witnessing today through maandamano. One of the bizarre proposals of the dropped Finance Bill 2024 was to introduce a motor vehicle circulation tax, evidence that when a government goes broke, it comes for its citizens’ assets.

You have previously stated that Kenya should not pay back some of its debts that have now exceeded Sh10 trillion. What is the way forward if we do not pay these debts?

The government is telling us that our debt book is Sh11 trillion. Over the last 10 years, we know the government paid more than Sh4.5 trillion as debt finance. This means much as Kenya has been paying its debt faithfully, that debt has kept increasing instead of decreasing.

Naturally, you will expect that when payments are made then the figures should go down, but this is not the case with Kenya. Some debts were taken but they never funded any projects because, for instance, if you go out and take Eurobonds and bring that money into Kenya and pump it into the economy through project financing, that money will circulate in the economy, so when the time for repayment comes, the government should mop it up from within the Kenyan economy since this is where the money was brought and circulated. But we are in a scenario where the government borrowed yet that money never came into our economy. Now they are coming to raid the economy on the pretext of mopping up money to pay for these debts.

That is why we are requesting an audit of the national debt. Our laws are clear. You only take debts to finance development projects and you only take debt with parliamentary approval. So if there is any debt that was taken by the government without parliamentary approval, or if there is debt that was taken but wasn’t utilised for development expenditure, then why should Kenyans pay for it? And if there is a debt somebody took in the name of the people of Kenya but it never landed here, why should Kenyans take the burden of paying for it?

You have said that most of the loans have been mismanaged by politicians while repayment falls squarely on taxpayers. What is so difficult in identifying and naming these people so that they are prosecuted?

We are saying that the starting point should be a national debt audit carried out by a judicial commission of inquiry. We want the debt books wide open.

After the Gen Z protests, President William Ruto formed a task force to audit Kenya’s debt. What is your take on this?

What the President established is different from a judicial commission of inquiry. His is a task force whose functions are similar to those of the Auditor General. But I’m talking about a judicial commission of inquiry which can do a forensic audit of Kenya’s public debt since independence, starting with the legality of the loans. Normal audits including the one the President is proposing only look at expenditures where you can ask for receipts.

We are asking for a forensic audit where we look at the legality of the amount that was taken as debt. If you do a forensic audit, you can see if these debts had parliamentary approval and then ask Kenyans to service them.

However, if someone went abroad and took a loan in the name of Kenyans and that loan didn’t land in Kenya, then it shouldn’t be repaid because that is an odious debt. We believe a good chunk of what’s listed as our public debt was illegally taken while Kenyans have the burdensome responsibility to repay it.

What could be the intention of the President with this task force?

Looking at the terms of reference, I can say he is being mischievous. The terms of reference are not to address the problem. They are to superintend the Auditor General’s functions because these are things that she has already done. The previous Auditor General Edward Ouko said at some point that he could not trace some of these debts in the debt register. This task force will not even have an opportunity to recommend prosecution. It will not have the mandate to trace debts. This is why we want a judicial commission of inquiry — a body with quasi-judicial powers.

Such a commission has the power to summon and even order sanctions just like the Goldenberg Commission did. However, a task force is just like setting up a committee in your office. It is a farce.

You have previously referred to Eurobond as the most burdensome credit facility Kenya has ever taken. Why?

There are what we call sovereign bonds or syndicated loans. This is where Eurobonds fall. When the government of Kenya goes to international markets to borrow money from private banks such as Standard Chartered or J.P. Morgan, the Eurobonds fall under this arrangement. When these banks lend to governments, they are like traders, therefore, their interest rates are higher than what you would ordinarily get from multilateral financial institutions. These are the kinds of predatory loans that even the World Bank has warned Africa against.

The problem with Eurobonds is that the terms are extremely harsh, especially on poor economies like ours. When you go to a commercial bank in Europe and take a loan, they tell you the interest is six per cent and you risk tough penalties and conditions. If you default even once, they demand that money immediately.

The opposite of Eurobonds is concessional loans. Normally, their terms are very accommodative. Interest could be as low as two per cent.

What is the worst-case scenario if a country can’t repay its loans?

Once a country is unable to repay its loans, there will be a default, which means the country in question will not access credit internationally. This will then result in inflation within the said country. The cost of goods will go up, and its currency will weaken.

Does Kenya have the option of defaulting?

Defaulting is an option we have. We have to acknowledge the loan but say we can’t pay because it is an odious debt. By odious debt we mean the loan was illegally taken. As for whatever was borrowed legally and the country can prove as much, then we must have a repayment agreement.

There was a time when both Kenya and Mozambique took Eurobonds. Mozambique went to court and challenged their Eurobond as being an odious debt because much as the country was unable to honour its repayment obligations, there were serious questions about the legality of the said bond. The legality or lack thereof of the Eurobond was litigated at the Mozambican constitutional court. The Court ruled that the loan was taken without the Mozambicans. As it stands today, those who orchestrated the Eurobond are either in jail or in exile and the debt has since been declared odious.

You have been in politics. Could your view be informed by your political leanings and perceptions?

I am not doing this because I am campaigning for a seat. These are things I have spoken about since the days I was working in civil society. Since I got into politics, I am now able to understand the political class even better. I have worked with them and understood them. To them, all they are preoccupied with is how to perpetuate poverty for the sake of keeping the masses enslaved.