Weak shilling breaks Kenya’s arms deal – newsdubai

Economy

Weak shilling breaks Kenya’s arms deal

Friday, April 29, 2022

Military vehicles seen in the port of Mombasa on 11 April 2019. PHOTO | LABAN WALLOGA | NMG

Kenya demanded more money to buy smaller military equipment such as weapons and tanks last year due to the weakening of the shilling against the US dollar.

Data from the Sweden-based Stockholm International Peace Research Institute (SIPRI), an independent global security think tank, show that the government spent an extra Sh2.4 billion on buying smaller equipment for Kenya’s Defense Forces (KDF).

The think tank says the country used Sh121.1 billion to acquire equipment worth $ 1.113 billion last year when the shilling lost three percent against the dollar.

In contrast, it bought several weapons worth $ 1.115 billion by spending 118.7 billion sh. in 2020, reflecting the effect of the weaker shilling on the price of imported goods.

The shilling averaged Sh109.6 against the dollar last year compared to Sh106.4 a year earlier and is now trading at Sh115.74 on increased demand for the dollar from importers after the full reopening of the economy, which has triggered an accumulated demand for both consumption and capital goods.

Currency problems add a new layer of factors limiting Kenya’s military spending, which has fallen over the decade, even as neighboring Uganda increased its purchases of equipment by 203 percent in a regional arms race.

“Between 2012 and 2021, military spending increased by 203 percent in Uganda, but remained relatively stable in Kenya, a decline of 4.5 percent,” SIPRI said of trends in global military spending in 2021.

The dollar has risen against other currencies globally in the midst of the crisis between Russia and Ukraine, as investors see the currency as a safe haven, indicating pressure on the shilling.

The increased demand for dollars has triggered shortages. This has forced industrialists to start seeking dollars in advance as the shortage puts pressure on supplier relations and the ability to negotiate favorable prices in the spot markets.

The shilling weakened from Sh109.2 in January against the dollar to an average of Sh115.85 units on Thursday.

Reduced spending on military equipment appears to ease Kenya’s grip on the region as Uganda acquires arms purchases.

Kenya leads with $ 1.1 billion in regional military spending, followed by Uganda ($ 1.06 billion), Tanzania ($ 742 million), Rwanda $ 164 million and Burundi ($ 68 million).

Ethiopia is the only other country that has reduced its dollar spending on weapons to $ 487.8 million last year from $ 504.07 by 2020, despite waging a civil war against the Tigray forces for two years.

President Uhuru Kenyatta’s administration has increased military spending since coming to power in 2013, except for the past two years.

Military spending often diverts money from urgent social needs in developing countries like Kenya, which have large budget deficits.

Uganda has tripled military spending over the past five years to bridge the gap to Kenya. It spent $ 346.7 million in 2017 when Kenya sprayed $ 1,015 on weapons.

Widespread conflict and terrorist threat in East Africa have fueled an arms race in the region to combat the threat, while interventionist wars have been launched across borders to isolate the stable countries.

In 2021, Kenya, Uganda and Angola were the third, fourth and fifth largest military users in sub-Saharan Africa, respectively.

Kenya, Uganda and Rwanda have pursued aggressive foreign policy in the region through interventionist maneuvers in their backyards and multilateral peacekeeping missions while building their military capabilities.

Kenya sent troops to Somalia a decade ago to fight the militant group Al-Shabab, before joining the African Union (AU) mission in Somalia (AMISOM), which supports the Mogadishu government against the rebels.

Kenya is also involved in the Democratic Republic of Congo (DRC) through the UN Stabilization Mission in the Democratic Republic of Congo (Monusco), which fights the terrorist group Isis Central African Republic in the eastern part of the country.

The operation also involves armies from Tanzania, South Africa and Nepal.

President Kenyatta ordered the KDF to send its Quick Reaction Force (QRF) to the DRC last year to help stabilize the region.

Uganda and the DRC are currently launching a joint military operation in the eastern DRC against the Islamic State-affiliated group, the Allied Democratic Forces (ADF).

Rwanda has also been an active player sending troops into Mozambique’s troubled Cabo Delgado province in late July 2021 to fight an al-Shabaab outlaw, Islamic State-Mozambique.

They fight along the Southern African Development Community Mission in Mozambique (SAMIM), whose troop-contributing countries include South Africa, Botswana, Tanzania, Angola, Lesotho, Namibia, Malawi, DR Congo and Zimbabwe.

Rwanda also operates in the Central African Republic through a battalion that operates independently and as part of the UN peacekeeping force, the Multidimensional Integrated Stabilization Mission in the Central African Republic (Minusca) with 21 contributing countries.

SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament.

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