Kenya’s President William Ruto has cancelled two multi-billion-shilling projects that had been awarded to Indian company Adani after bribery allegations were levelled against the firm. Following this development, Kenya’s securities exchange NSE20 share index declined by 1.29 per cent in the face of uncertainty. William Ramogi, Economist and CEO Elim Capital joins CNBC Africa for this discussion.
Well, Kenya′s President William Ruto has cancelled two multi-billion-shilling projects that had been awarded to Indian company Adani after bribery allegations were levelled against the firm. Following this development, Kenya′s securities exchange NSE20 share index declined by 1.29 per cent in the face of uncertainty. Well, first off, let′s listen in on the pronouncement by the President. Thereafter, I′ll be bringing on board William Ramogi, an economist from Elim Capital, and also the CEO, for a more in-depth discussion. to the expectations of the people of Kenya. Honourable Members, I have stated in the past, and now reiterate today, that in the face of undisputed evidence or credible information on corruption, I will not hesitate to take decisive action. Accordingly, I now direct in furtherance of the principles enshrined in Article 10 of the Constitution on Transparency and Accountability, and based on new information provided by investigative agencies and partner nations, that the procuring agencies within the Ministry of Transport and the Ministry of Energy and Petroleum immediately cancel the ongoing procurement process for the JKIA expansion public-private partnership transaction. Let me repeat this for clarity. I have said that provided, because of the information that has been provided to us by partner nations, I have directed agencies within the Ministry of Transport and the Ministry of Energy and Petroleum to immediately cancel the ongoing procurement process for JKIA expansion public-private partnership transaction, as well as the recently concluded Ketrako transmission in public-private partnership. And immediately commence the process of onboarding alternative partners, because these are important projects. Honourable members, the work of taking our nation forward is our collective responsibility as citizens. Well, that is Kenya's President William Ruto. Now, let's go into a conversation and Ramogi, you were listening to that speech. What is your immediate reaction to this? Well, it's a classic Machiavellian politics. The President is playing politics on another level, where you come up with a dubious idea and then you realise the public does not respond well to this idea. And then you come with a messianic complex and, you know, order that the idea or the deal be put aside. This is what the President did yesterday. But the company has had issues historically. You know, it's been reported by Deloitte Consulting about how Adani has been involved in fraud. Hindenburg Research puts it as the biggest con in history with a report on how they've been involved in bribery across the globe. And right now, by the time the matter is getting to the US authorities, Bloomberg Business had already put it on their website that Adani Group was involved with a whole engineering company. And they had inflated prices of coal and prices of other products, infrastructure, electricity, by over 180 million US dollars. And so they are not entirely clean. And this is information available on the internet that anybody within the ministry were willing to do due diligence would have found and would have spared the President the embarrassment he had to endure for over a month and now come to Parliament and say he's put away the deal with Adani. And so I think it's just dishonest on the President's side. I think they knew exactly who they were dealing with, but refused to take action. All right. And Ramogi, so what does this mean in terms of the country's perception as well as investor sentiment on taking a chance on the country? Well, first of all, you know, from a legal standpoint, the President has scored, because you really cannot accuse him for a deal he has not gone into. And the finance minister, the treasury cabinet secretary clearly alluded that they had not even gotten to the negotiations level. So nothing has been signed as yet. And that's gone. So it pertains to a country, a government that is keen on having deals with clean people. But the question, of course, remains, why did they do the due diligence at the beginning? The bigger problem is not the announcement of the President. The bigger problem is the announcement by the U.S. embassy that certain senior level officials, government officials, will be affected by the Adani deal. Their visa is being withdrawn as the U.S. does its cleaning around the Adani problem. So that now would affect as negatively as it is viewed that our leaders are corrupt, which it is possible they are. But, you know, now when it is that official, it communicates to potential investors from those countries that our country's leadership cannot be trusted. And that puts us in an awkward position, really, to attract investment that we really badly need at this time. I have seen that the market has responded negatively to the announcement, because on one hand also the President's speech would be taken as an admission of guilt towards the fact that you are in bed with someone whose credentials are wanting. So the stock market has been affected significantly by this. However, I expect that this is maybe a short-term response. In the long term, if they manage the situation better and get rid of the baby and the bath water, really, we will get to a better position. All right. And quite an interesting development there. Thank you so much, Odiambola Mogi, for joining us on the programme.
Theme: Impact of President Ruto's decision to cancel Adani projects on Kenya's financial markets and investor sentiment
Kenya's President William Ruto has made the unprecedented move to cancel two multi-billion-shilling projects that were awarded to Indian company Adani after serious bribery allegations surfaced against the firm. The decision came as a shock to many, including investors and citizens alike, causing a ripple effect across the country's financial landscape. Following the announcement, Kenya's securities exchange NSE20 share index took a hit, declining by 1.29 per cent as uncertainty loomed over the canceled deals. President Ruto's directive, delivered in a speech addressing the nation, emphasized the government's commitment to transparency and accountability in all dealings. He cited new information provided by investigative agencies and partner nations as the basis for canceling the ongoing procurement process for the JKIA expansion public-private partnership transaction and the Ketrako transmission public-private partnership deal. Renowned economist and CEO of Elim Capital, William Ramogi, joined CNBC Africa for an in-depth analysis of the situation. Ramogi characterized the President's actions as a strategic political move, highlighting the perils of engaging with tainted entities like Adani. He pointed to reports by Deloitte Consulting and Hindenburg Research that detailed Adani's involvement in fraudulent activities and bribery schemes worldwide. The cancelation of the Adani deals raises critical questions about Kenya's reputation and investor sentiment. While the President may have avoided entering into a questionable agreement, the fallout from the scandal has already tarnished the country's image. The subsequent withdrawal of visas for senior government officials implicated in the Adani controversy by the US embassy further compounds the negative perception of Kenya's leadership. The impact on investor confidence was palpable, with the stock market reacting swiftly to the news. The short-term repercussions were evident in the immediate decline of the NSE20 index, reflecting concerns about the government's judgment and integrity. However, experts anticipate a potential rebound if the situation is managed effectively and corrective measures are swiftly implemented to restore faith in Kenya's commitment to ethical governance and investment practices. In conclusion, President Ruto's decision to revoke the Adani mega deals serves as a wake-up call for the government and investors alike. It underscores the importance of due diligence and accountability in forming partnerships that will drive Kenya's economic growth and development. Moving forward, rebuilding trust and credibility will be paramount to attracting much-needed investment and securing the country's financial stability in the global market.
"The cancelation of the Adani deals raises critical questions about Kenya's reputation and investor sentiment. While the President may have avoided entering into a questionable agreement, the fallout from the scandal has already tarnished the country's image."
['Kenya', 'President William Ruto', 'Adani', 'bribery allegations', 'financial markets', 'investor sentiment', 'transparency', 'accountability']