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Kenya: Court halts proposed lease of JKIA to Adani

Published

1 week ago

September 10, 2024

Kenya’s High Court has temporarily halted plans to lease the Jomo Kenyatta International Airport (JKIA) to Indian conglomerate, Adani Enterprises.

In an urgent lawsuit certified by the High Court, the Kenya Human Rights Commission (KHRC) and the Law Society of Kenya (LSK) contested the Indian company’s effort to take control of JKIA for a 30-year term.

The two organisations contended that JKIA is a strategic and profitable national asset. As a result, the transaction is irrational and contradicts the values of good governance, accountability, openness, and cautious and responsible use of public funds.

Under the terms of the contract, the Indian company would upgrade the airport, including the construction of a second runway and a new passenger terminal, during a 30-year build-operate-transfer period.

However, KHRC and LSK contended that Kenya can raise the projected $1.85 billion (Ksh238 billion) needed to expand JKIA without leasing the airport for the specified period.

“Thus, the Adani proposal is unaffordable, threatens job losses, exposes the public, is disproportionate to fiscal risk, and offers no value for money to the taxpayer,” lawyer Dudley Ochiel said in the application.

High Court Judge John Chigiti certified the matter as urgent and issued an interim order suspending the deal awaiting the outcome of the litigation.

The judge ordered that the case be heard on October 8 to determine a judgment date.

Mr. Ochiel argued that if KAA and Adani sign the deal and Adani acquires JKIA, the application will be deemed invalid and moot.

The two organisations stated that they had unsuccessfully written to JKIA seeking information under Articles 35(1) and (3) of the Kenyan Constitution and Section 4 of the Access to Information Act.

LSK proposes selling Kenya’s lucrative and functioning JKIA to Adani for $1.85 billion over 30 years.

“Thus, the proposal would deprive the public of, and transfer to Adani, all the current revenues, receipts, expenditures and other financial transactions over JKIA. Although the project is dubbed a Built Operate Transfer, KAA would be handing over an existing and operational airport to Adani,” Mr Ochiel said.

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Nigeria’s central bank issues fresh guidelines for ‘Ways and Means’ to govt

Published

9 hours ago

September 18, 2024

Ifeoluwa Dada

The Central Bank of Nigeria (CBN) has issued new guidelines on Ways and Means which limit Ways and Means Advances to the federal government to 5% of the previous year’s revenue collection.

The apex bank made the position known in its fiscal year 2024-2025 monetary, credit, international trade, and exchange policy guidelines.

“Ways and Means Advances shall continue to be available to the Federal Government to finance deficits in its budgetary operations to a maximum of 5.0 per cent of the previous year’s actual collected revenue. Such advances shall be liquidated as soon as possible and shall in any event be repayable at the end of the year in which it was granted,” it said.

The Treasury Single Consideration (TSA) system requires these advances to take into consideration Ministries, Departments, and Agencies (MDAs) sub-accounts, which are linked to the Consolidated Revenue Fund.

The federal government’s consolidated cash situation will be more precisely reported, improving public financial management openness and resource availability. The CBN also stated that Ways and Means Advances must be repaid by the end of the fiscal year they were awarded, encouraging short-term borrowing.

In the Nigerian context, “ways and means” refers to the Federal Government’s ability to borrow money from the Central Bank of Nigeria (CBN). This means that the government may use “ways and means” to meet short-term needs or emergencies, which is why the CBN is referred to as the “lender of last resort.”

Over the past seven years, the facility had grown 2,900% to an extraordinary N23.7 trillion by 2023. This fast surge, which exceeded legal restrictions, increased inflation and Nigeria’s debt.

The CBN Act allows the bank to grant temporary advances to the federal government for budget revenue deficits at a rate deemed appropriate, but the total amount of such advances “shall not at any time exceed 5% of the previous year’s actual revenue of the Federal Government.”

In addition, it stipulates that “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”

The Senate and House recently enacted a bill to increase the CBN’s federal Ways and Means borrowing ceiling. The upper chamber of Nigeria’s legislature boosted the central bank’s loan capacity to the federal government from 5% to 10% of annual income.

Yemi Cardoso, CBN governor, announced earlier this year that the bank would stop making Ways and Means advances to the federal government until existing loans were returned. He said this is one of the bank’s key strategies to handle the country’s economic issues.

VenturesNow

Kenya, IMF discuss economic and fiscal issues

Published

15 hours ago

September 18, 2024

Ifeoluwa Dada

The International Monetary Fund (IMF) said on Tuesday that it had had productive discussions with Kenya’s government on its economic and fiscal goals after widespread protests prompted it to shelve tax rises.

In June, President William Ruto abandoned this year’s finance bill, leaving the deeply indebted government with a larger budget deficit, unpaid payments, and a delay in IMF funding.

“We remain fully committed to supporting the authorities in their efforts to identify a set of policies that could support the completion of the reviews under the ongoing program as soon as feasible,” the IMF said in a statement.

Kenya signed a four-year IMF loan in 2021 and another for climate change measures in May 2023, totalling $3.6 billion. The country secured a staff-level agreement with the IMF on its seventh review in June, but the protest and finance bill withdrawal delayed the executive board’s sign-off and payout.

Public debt helps development. Governments utilise it to fund spending, protect and invest in their citizens, and improve their futures. However, too quick governmental debt growth can be a burden. The developing world which Africa forms core is experiencing this.

Kenya’s government debt was 70.10% of GDP in 2023. Kenya’s government debt to GDP averaged 56.36% from 1998 to 2023, peaking at 78.30% in 2000 and falling to 38.20% in 2012.