Thread by @Ramah_Nyang

Mr. Kenyatta’s #SOTN2021 speech was an interesting exercise in obfuscation, given how the data he presented was framed. It can certainly make for interesting course material in future communication course.

THREAD.

Mr. Kenyatta would point to spending plans his administration made and/or implemented, but he conveniently ignored the lethal debt mountain he’s built up since 2013. This, IMO, is the key recurring theme in #SOTN2021

The word ‘debt’ comes up twice in his #SOTN2021 speech - and only one of those actually refers to financial debt.

He was speaking about credit relief efforts to the private sector when the pandemic hit, in that specific case. On the public debt crisis he’s built up, there’s not a single word. No admission of error.

In the 16-and a bit- months to November 19, the Kenyan Government had borrowed KES 1.332 Trillion Shillings. We were a fraction under KES 8 Trillion shillings in debt by end September, according to Treasury data. We’ve definitely blown past that by now. #SOTN2021

It is very disingenuous to frame government expenditure as being a 'consequence free' event. This isn’t, to use a biblical phrase, manna falling in some arid desert. It’s about spending way beyond our resources, with no fiscal discipline in sight. #SOTN2021

Same argument applies to the framing of other data points which Mr. Uhuru laid out in his speech.

Consider the 10.1% y/y growth in Q2-21 . It’s compared to an abysmal quarter.

Put another way, it’s like asking Usain Bolt to run the 100 meter sprint, against a 5-year old child with a cold. It’s a wholly inappropriate comparison. #SOTN2021

Mr. Kenyatta spoke of interventions in the sugar sector.

The older ones among us will recall a time when the Govt admitted that it was time for the Govt to get out of the sugar sector.

Anyone remember this? #SOTN2021 Or this?

Continuing to take limited taxes to provide life support for a dead industry is pretty poor policy. #SOTN2021

More missing context on the poor quality of policy decisions. Kenya’ Government just keeps seeking more tariff protections for a sugar industry it’s refused to get out of. Vide:
comesa.int/comesa-extends…
#SOTN2021

With respect to energy prices - Mr. Kenyatta speaks of the risk of having an economic recovery neutered by high energy prices.

What he doesn’t say: an electricity tariff review, which by law should happen every 3 years, is yet to be done. #SOTN2021

What he also does not say, with respect to energy prices, is that subsidies for petroleum prices at the pump is just terrible, unsustainable policy with arguably shaky legal grounds. #SOTN2021

More missing context on KRA's performance . Leaving out the fact that tax cuts were in effect for part of FY 20/21 = very disingenuous. So’s the act of ignoring the fact that his administration has been running unsustainable deficits for nearly a decade. #SOTN2021

Even the performance numbers are misleading in some ways.

At KES 410.8 Billion, consumption taxes [i.e. Value Added Tax] in FY 20/21 were lower than collections in FY 18/19. A recovery would imply that citizens would have more disposable income. They don’t. #SOTN2021

Incomes didn't change much either, if we use income tax collections as a crude proxy here.

There’s a 1.3% difference between income tax in FY 20/21, and FY 18/19 [i.e., before the pandemic], and I’m not factoring in inflation. #SOTN2021

In fact, if we speak of real wages [i.e. once inflation’s taken into account], Mr. Kenyatta’s government has been destroying purchasing power even before the pandemic hit. #SOTN2021

Real average ages fell between 2015-2017. Real per-employee wages rose by 4.4% between 2015-2019. That’s hardly reflective of strong economic ‘growth’. #SOTN2021

Equally odd. The World Bank stopped publishing its Doing Business reports in September. [More on that here: worldbank.org/en/news/statem… and here: linkedin.com/posts/ramahnya…

So, why refer to the “Ease of Doing Business” when it is a widely discredited metric?

Even leaving the problematic framing of the GDP increase aside for the moment, a rather large chunk of that output’s driven by unsustainable, costly, debt-fuelled govt spending. That’s hardly a legacy to be proud of. #SOTN2021

In any case, remember this pledge to make the debt contracts signed with the China Exim Bank for Kenya’s #SGR, public? Lying & obfuscation is a language unto itself, in government. #SOTN2021

More missing context, on the #SGR: its operations are draining scarce taxes at a time when the country can’t afford it. @KenyaRailways_ posted a KES 24 Billion loss in FY 20/21 *AND* it also had a negative equity position of KES 25 Billion.

Value for money, eh? #SOTN2021

There’s an equally amusing bit of revisionism in Mr. Kenyatta’s #SOTN2021 speech. We’ve doubled generation capacity in my administration, he says. Conveniently forgotten: the 5000 MW installed generation capacity target by 2017. Vide, this:

That wasn’t the only generation expansion target which needed to be drastically revised, downwards. Vide: reuters.com/article/kenya-… #SOTN2021

Even on housing, there was crucial context missing. It’s one thing to say that we have ‘x’ extra housing units available in the market. Doesn’t mean much without sizing up the housing deficit. #SOTN2021

In 2017, annual housing deficit was 244 000 units, p.a. We had < 25 000 mortgages then. By end 2020, we had 26 971 mortgage accounts in the country [per CBK data]. #SOTN2021

As imperfect a metric as mortgage accounts are, there’s lots to do in expanding access to affordable housing in #Kenya. #SOTN2021

There’s a ton of missing data to properly frame the developments since 2013. Here are the main themes Mr. Kenyatta avoided this afternoon:

[1] the debt binge
[2] the fiscal indiscipline
[3] how the later compounded the former.

#SOTN2021

In many ways, Mr. Kenyatta’s speech creates the impression that from a fiscal perspective, everything’s just...fine.

It really isn’t. When we come off the buzzy debt high, the fiscal hangover will be anything but pretty.

Fin.