Ruto offers Kenya as test case on African risk

President William Ruto has offered Kenya as a test case for how African risk is assessed, saying the country will open its default and recovery data to rating agencies and accept changes to the methodology if the evidence supports them.

Ruto said financial rules are steering African pension savings towards government securities rather than infrastructure, even where regulations allow greater investment in projects.

He made the proposal Monday, September 21, at the Africa We Build High-Level Roundtable on regulation, risk and reward in New York. The Africa Finance Corporation (AFC) convened the event on the margins of the 81st session of the United Nations General Assembly.

Kenyan pension funds hold 46 per cent of their Sh3.2 trillion ($24.7 billion) in government securities but only 0.02 per cent in infrastructure debt, Ruto said. The rules allow pension funds to invest up to 10 per cent in infrastructure.

“Africa's problem is no longer the amount of capital available to it. Africa's problem is the set of rules that decide where that capital is allowed to go,” Ruto noted.

Ruto returned to an argument he made at the inaugural Africa We Build Summit in Nairobi in April, where he said African countries should use domestic capital to finance their own infrastructure.

At the New York roundtable, he revisited his earlier phrase, “he who pays the piper calls the tune”, using a teacher in Eldoret who has contributed to a pension fund for 20 years to illustrate his point.

“In Nairobi I said that he who pays the piper calls the tune. I meant it as a warning about depending on other people's money. This morning I mean it as an opportunity. The teacher in Eldoret is paying the piper. She has earned the right to call the tune,” Ruto explained.