Kenya is negotiating a loan for Sh6.077 billion humanitarian and economic aid to struggling South Sudan, whose leaders lead lavish lifestyles and own property in Kenya.
President Salva Kiir and former Vice President Riek Machar own luxury properties in Lavington, Nairobi, and others in East Africa, while their countrymen suffer and the economy nears collapse.
On August 16, the neighbour to the north sent a delegation to Nairobi to
ask Kenya for $60 million to buy food, provide basic services and help revive its faltering economy.
While Kenya has given aid to its neighbors, it has not previously extended a loan. This is under consideration, however, after the visit from an expert delegation.
The economy of the world's newest nation has been hard hit by recurring civil unrest, but
President Kiir's government is notorious for overspending on its political and military elite. The army has 745 generals.
A report by The Sentry released this week documents how leaders of the two sides responsible for mass killings and rapes looted funds and amassed enormous wealth inside and outside the country.
Families and top associates of Kiir and Machar own multi-million-dollar properties, drive luxury cars and stay at expensive hotels in East Africa. This "while much of their country’s population suffers from the consequences of a brutal civil war and, in many places, experiences near-famine conditions,” the report said.
One month ago South Sudan First Vice President Taban Deng Ga, met President Uhuru Kenyattato negotiate what it called “economic assistance”.
“We have appealed to President Uhuru Kenyatta because Kenya is a big economy. What the people of South Sudan need is unga. You are producing a lot of rice and a lot of mafuta," Deng Gai
told reporters at Nairobi's Intercontinental Hotel on August 17.
He said the country is experiencing serious inflation — the rate at which the prices for goods and services are rising, and consequently purchasing power is falling.
On
August 21, State House Spokesman Manoah Esipisu said Kenya was willing to assist South Sudan to the extent that it can, but first needs to understand the country’s needs.
“Essentially the meeting agreed that the government of South Sudan should send a delegation to Nairobi to deliberate on the subject,” Esipisu said.
The delegation is to include its Finance Minister and Central Bank Governor, as well as other officials involved with food security, economic management and humanitarian affairs. They "hopefully would present a clear proposal outlining the needs of our northern neighbor,” Esipisu said.
Kenya’s team led by Treasury CS Henry Rotich will then assess the proposal and advise the President and government on whether and how to move forward.
An agreement has not been reached.
“Discussions with South Sudan on possible support are very preliminary and details are yet to be worked out,” Rotich told the Star in a text message on Thursday.
The report titled 'War Crimes Shouldn’t Pay — Stopping the Looting and Destruction in South Sudan' — says leaders have amassed fortunes during the war. The group’s founders are actor George Clooney and rights activist John Prendergast, a former US government official. Both have long called for stronger laws to thwart the financing of conflicts in Africa.
Kenya’s neighbor to the northwest depends heavily on revenue from oil, but prices have dropped to below $50 (Sh101.2) a barrel this year. This has led to major revenue shortfalls in energy-exporting nations.
Kenya itself is relying on debt to bridge its budget deficit. This financial year, the government plans to borrow about Sh675 billion, including Sh450 billion foreign debt and Sh225 billion domestic.
By June 2015, total public debt had increased by 20.3 per cent from Sh2.36 trillion in June 2014 to Sh2.84 trillion — 53.1 percent of GDP.
This includes a Sh140 billion foreign loan in December 2015 to finance the second phase of the standard gauge railway.
“It is recommended the National Treasury take appropriate measures to ensure the public debt does not reach unsustainable levels,” Controller of Budget Agnes Odhiambo said in her budget review.
Last month, global ratings agency Standard & Poor’s warned that Kenya’s credit worthiness faces a possible downgrade in the next one year due to rising budget deficit and rising political temperatures ahead of next year’s general election.
The country’s sovereign credit rating is likely to drop to ‘B’ from the current ‘B+’ with a negative outlook, the agency said.
This could worsen external liquidity or financial conditions markedly deteriorate, leading to a significant reduction in foreign exchange reserves. Last month they stood at $7.78 billion (about Sh787.34 billion) .
South Sudan plunged into civil war in 2013, leaving tens of thousands dead in fighting that occurred largely between ethnic groups aligned with Kiir and Machar.
In 2015, the United States helped broker a peace deal between the two leaders.
But in July this year, that deal fell apart, violence erupted and Machar fled to DR Congo.
About 60,000 people have fled South Sudan since fighting broke out between rival army factions in July, the UN High Commissioner for Refugees says.
A UNHCR report in August says the country has about 1.61 million IDPs. About 52,000 people have fled to Uganda, 7,000 to Sudan and 1,000 to Kenya.