In an interview with The Africa Report on the sidelines of the African Union summit in Addis Ababa, Ruto said Kenya’s current finances enable it to issue a Eurobond if there is a need to.
“Today, Kenya can go into the international financial markets with a Eurobond if we so wish,” he said. “We will be assessing our situation, our financial situation.”
Speculation abounds as to whether the East African nation may opt for a return to the international market in the near future to refinance $2bn Eurobonds maturing in June 2024, amid less aggressive monetary tightening in the US.
In June 2022, Kenya cancelled the sale of a KSh115bn ($982m) Eurobond due to high yields induced by the Russia-Ukraine war. Last December, Fitch downgraded Kenya’s credit rating from ‘B+’ to ‘B’ due to increased default risks, sending its borrowing costs higher.
Ruto says Kenya insisted on 5.7% of their GDP as a fiscal deficit and cut down KSh300bn ($2.4bn) from the national budget so the country can “live within their means”.
Ruto, who is pushing for economic reform in Kenya, says Africa holds the key to the future.
Even so, Kenya was one of several African nations, including Ghana and Nigeria, which were downgraded by financial agencies, as Russia’s invasion of Ukraine and the ongoing war continues to have an impact.
Ruto said he is supportive of a call by Senegalese President Macky Sall and Secretary-General Antonio Guterres for the cancellation of Africa’s deepening debt.
African countries cannot develop with one hand tied behind their backs
“Many of the countries in our continent are saddled with huge debts occasioned by an unbalanced financial system,” he says. “How did these countries come to these levels of debt? Was the financial system fair to them?”
Today, Africa’s external debt alone exceeds $700bn. In a speech to the AU, Guterres said African countries cannot develop with “one hand tied behind their backs”, calling for a “new Bretton Woods moment to radically transform the global financial architecture”.
Ruto said he supports this action. “We insist that the IMF, the World Bank and all the multilateral lenders must be redesigned, or altogether, we must have a different financial system that responds to our situation.”
Last week, many heads of state spoke of their outrage over the fact that the poorest developing countries on the continent have been hit disproportionately by climate change, despite being some of the lowest emitters in the world.
Ruto called for those who emit more harmful gases to be held to account, terming the imbalance as “insensitive” and “unjust”, adding that “African leaders are paying 100 times more to access development financing”.
“The current financial system has a world of difference between the Global North and Global South. The Global North today can access development financing from anywhere between 0.1% and 0.2%.”
Ethiopia’s Prime Minister Abiy Ahmed, who recently worked with Ruto to establish a truce with the Tigrayan alliance, came down hard on developed emitters.
“Not all of our problems are the products or our own making. We all know that Africa’s contribution to global warming is insignificant,” said Abiy. “Climate change is an African problem, but its roots lie elsewhere.”
Ruto said the Global South wants to come to the table to have an honest, balanced conversation, not to look for favours. He cited African resources as crucial for the future.
“We have the youngest population in the world, we have [a] 1.4 billion people market. 65% of the world’s arable uncultivated land is in our continent. We have the largest renewable energy sources in the world, [and] we will be coming with that to the table.”
The Green Growth initiative is a primary way that Kenya intends to pursue economic growth. “The potential, whether it is sustainable agriculture, green cloth, energy or industrialisation, is in the African continent because we have fifty times the world’s demand for renewable energy.”
Ruto called for the switch to green investment an “existential imperative”.
He added that Africa also has 60% of the global solar energy, and 40% of the world’s platinum, manganese, and cobalt, which is currently used for new battery and hydrogen technology in the west.
Taxing for the future
Ruto said he is also planning to increase domestic revenue by coming down harder on taxes after a standoff with the Kenyatta family over allegations that they have not been paying national taxes.
“Tax is the reason we exist as a country, it is the price we pay for our independence. We must finance our way, we must finance our government, we must finance our development,” said the president.
In the past, we have had exceptions. We have had people with connections, friends, [and] family. Under my administration, I will lead the way in paying tax
“I am very clear in my mind that the tax drive will not be targeted at any one person or any one individual because it’s not fair to do that. All we are saying is that everybody must pay tax without exception,” he said, referring to the recent Kenyatta family palaver.
“In the past, we have had exceptions. We have had people with connections, friends, [and] family. Under my administration, I will lead the way in paying tax.”
Ruto said he believes this is the best way of eradicating debt in the country, while also facilitating domestic development. “We must cut the size of the cloth that feeds us.”
“Last year, we were unable to access the international market because of our situation. The work I have done [in] the last five months has seen a complete change.”
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