Category Archives: Governance & Economy

Analysis of the trending political moves or economic shifts.

The Secret Deal: Why Transparency Matters

Posted on by

Despite the high stakes, the specific terms of the debt-for-food swap remain shrouded in secrecy, sparking legal battles and civil society alarm. A case filed at the East African Court of Justice, Wanjiru Gikonyo v The Attorney General, challenges the government’s refusal to disclose the full details of sovereign debt agreements. Litigants argue that committing future tax revenues and “savings” to long-term projects without public participation is unconstitutional. The lack of a public dashboard detailing exactly how the Sh129 billion will be spent creates a “transparency deficit” that invites mismanagement.

This opacity exacerbates the “sovereignty paradox.” By allowing the US-DFC and WFP to dictate the terms of expenditure, Kenya is effectively admitting that its own institutions cannot be trusted. While external conditionality acts as a safeguard against local corruption, the public remains in the dark about what exactly has been signed away. Are there hidden fees? What are the penalties for non-compliance? Without full disclosure, the Kenyan taxpayer is a passenger in a vehicle being driven by foreign creditors.

Transparency is not just a legal formality; it is the only disinfectant strong enough to prevent the “bureaucratic consignment” of funds. Civil society is demanding that the Treasury publish every shilling of the “savings” and every project beneficiary. Until then, the debt swap remains a “black box”—a deal negotiated in boardrooms in Washington and Nairobi, with the bill sent to the citizen who has no say in the menu.

References:

Afronomics Law Sovereign Debt News Update No. 147: The Promises and Transparency Pitfalls of Kenya’s $1 Billion Debt-for-Food Swap

The Institute for Social Accountability The High Court has ordered the National Treasury to disclose critical information on Kenya’s bilateral loans and sovereign bonds.

Ghosts of Galana Kulalu: The “Mega Dam” Obsession

Posted on by

As the government targets 2 million acres for irrigation under the new debt swap initiative, the ghost of the Galana Kulalu project looms large. Just days ago, on January 26, 2026, the government announced plans for six new mega dams, signaling a return to the large-scale infrastructure strategy that failed so spectacularly in 2014. The original Galana Kulalu pilot consumed Sh7 billion to produce maize at costs higher than market price, collapsing under poor planning and corruption. Critics argue that repeating this “big dam” strategy ignores the hard-learned lessons of the past.

The disconnect is palpable. While the state plans mega-projects in arid lands, small-scale farmers—who produce the bulk of Kenya’s food—are struggling with basic input costs and lack of market access. The “savings” from the debt swap would likely yield higher returns if invested in decentralized solutions: household water pans, small-scale drip irrigation kits, and the Warehouse Receipt System (WRS) to help farmers store grain and avoid price exploitation by middlemen.

If the Sh129 billion is poured into another series of mega-dams, the funds risk being absorbed by contractors and consultants, leaving the country with more debt and no food. The success of this swap depends on shifting focus from concrete structures to the actual economics of farming—lowering production costs and ensuring profitability. Without this shift, we are merely “mixing oil and water” again, hoping that high-finance infrastructure will somehow trickle down to the grassroots.

References:

Capital Business Govt plans six mega dams, targets 2mn acres in irrigation push

The Star Government plans six mega dams, targets 2 million acres for irrigation push

Oil and Water: Can Global Finance Fix Local Corruption?

Posted on by

The “Food-for-Eurobond” deal relies on a dangerous assumption: that savings from international debt relief can navigate the treacherous waters of Kenya’s local bureaucracy without being looted. History suggests this is an “oil and water” scenario—liquid finance attempting to mix with a rigid, opaque system. The recent scandals at the Kenya National Trading Corporation (KNTC) and the National Cereals and Produce Board (NCPB) serve as grim warnings. In the KNTC edible oils scandal, tax waivers meant to lower prices were captured by politically connected firms, resulting in a Sh16.5 billion loss with no benefit to the consumer.

Similarly, the NCPB’s recent distribution of “fake fertilizer”—bags filled with quarry dust—demonstrates how easily “agricultural support” can be weaponized against the farmers it is meant to help. If the swap funds are channeled through these same “bureaucratic consignments,” the initiative risks becoming another slush fund for cartels. The involvement of the World Food Programme (WFP) is intended to act as an “emulsifier,” forcing accountability into the system, but their oversight powers will be tested against deeply entrenched patronage networks.

Experts warn that without a radical overhaul of state agencies, the “savings” will evaporate before they buy a single bag of genuine fertilizer or build a working silo. The structural disconnect between the Treasury’s high-level deal-making and the Ministry of Agriculture’s operational failures remains the single biggest risk. Unless the government bypasses these compromised intermediaries, perhaps by funding private sector credit guarantees instead of direct procurement, the “oil” of finance will float to the top, leaving the “water” of development murky and stagnant.

References:

Milling Middle East & Africa Kenya’s edible oil scandal raises questions over accountability, transparency

AP Farmers in Africa say their soil is dying and chemical fertilizers are in part to blame

The Billion-Dollar Gamble: Inside Kenya’s “Food-for-Eurobond” Swap

Posted on by

Kenya is on the verge of finalizing a landmark $1 billion (Sh129 billion) debt-for-food security swap, a sophisticated financial maneuver designed to rescue the country from a suffocating liquidity crunch. By leveraging a guarantee from the U.S. International Development Finance Corporation (DFC), the Treasury intends to refinance expensive Eurobond debt with cheaper, concessional loans. The plan is financially astute: it swaps high-interest commercial debt for lower-interest obligations, a move that prompted Moody’s to upgrade Kenya’s credit rating to B3 and stabilize the outlook on the nation’s sovereign debt.

However, the deal comes with a catch that transforms it from a simple refinancing operation into a complex development experiment. The interest “savings” generated from this swap must be ring-fenced and funneled directly into food security projects, managed in partnership with the World Food Programme (WFP). This arrangement effectively outsources a portion of national planning to an international body, admitting that the state needs external discipline to ensure funds aren’t diverted. While this stabilizes the shilling and pleases bondholders, it raises a fundamental question: is this a genuine strategy to feed the nation, or simply financial engineering to avoid default?

The stakes could not be higher. With 3.4 million Kenyans facing acute food insecurity and public debt service consuming over two-thirds of tax revenue, the government is betting that this “financial oil” can mix with the “water” of local agriculture without separating. If successful, it provides fiscal breathing room and lowers input costs for farmers; if it fails, Kenya will be left with the same debt burden and no improvement in the cost of living for the average wananchi.

References:

Business Insider Africa Kenya plans to borrow $1 billion using debt for food swap

CNBC Africa Kenya, US agency to proceed with $1 billion debt-for-food swap