Over the last two decades there has been a remarkable shift in the composition of domestic government debt in Kenya, with long-term debt instruments (bonds) increasingly preferred to short-term debt (T-Bills).
The financial market in Nairobi is telling us a thing or two about creditors’ perceived time horizon of the Kenyan government; and Treasury’s capacity for credible commitment.
Source: The World Bank
For curious readers, I would argue that the explanation for this structural change (especially after 2003) is more Stasavage than North and Weingast.
The following campaign message by Martha Karua, a presidential candidate in Kenya’s election in March of 2013, highlights the material value of the Kenyan presidency.
“Tufanye hesabu tena…Let’s count the cost and keep all of us accountable. A recent research suggested that some presidential candidates will spend as much as Ksh. 11 billion shillings ($130 million) each to try and capture the presidency. Now, at around Ksh. 3.2 million a month including allowances, the President of Kenya earns Ksh 38.4 million ($452,000) a year, much more than what President Obama, the German Chancellor and the PM of England earn, and which translates to Ksh. 192 million in a five year term. So in one five year term, the most a president can hope to earn is around Ksh. 192 million, quite a substantial sum by world standards.
My question; why would anyone spend Ksh. 11 billion to only earn Ksh. 192 million? Does this math add up to you dear Kenyans? How would that individual be hoping to recover the remaining Ksh. 10.78 billion to cover their campaign expenses including buying of votes and bribery? The answer is simple! Corruption and impunity! Inflated government tenders to well connected family and friends. These inflated tenders drive the cost of living for all Kenyans sky high, the very reason ordinary Kenyans can barely make ends meet last 49 years!