The Kenyan government has dealt a blow to its own policy, acknowledging the failure of the G2G oil deal with Saudi Arabia and announcing its intention to abandon the program. This dramatic U-turn marks a significant shift in Kenya’s approach to tackling foreign exchange volatility, leaving experts and citizens alike questioning the future of energy procurement and economic stability.
“Following an evaluation of the G2G oil import arrangement, the government has made the decision to discontinue its implementation,” declared Treasury Secretary Ukur Yatani in a televised address. “While the initial intent was to stabilize the shilling, it has become evident that the program has introduced unintended distortions in the foreign exchange market.”
Mr. Yatani’s admission of “distortions” resonated with many who had criticized the G2G deal from the outset. Critics argued that bypassing established market mechanisms led to reduced competition and potential price manipulation, hurting local traders and ultimately hindering transparency.
“This whole G2G thing was opaque from the start,” commented Mary Atieno, a small business owner in Nairobi. “Now they’re telling us it messed up the currency? We need long-term solutions, not these backroom deals.”
The immediate impact of the G2G exit remains unclear. While the shilling experienced a slight depreciation following the announcement, market analysts are divided on whether the program’s cancellation will offer a swift remedy to currency woes.
“Some distortions undoubtedly occurred,” acknowledged Professor James Mwangi, an economist at the University of Nairobi. “However, the broader forex market faces deeper structural issues that need to be addressed. Simply scrapping G2G may not be enough.”
Despite the uncertainty, the government’s move signals a willingness to acknowledge missteps and course-correct. Critics urge renewed focus on promoting transparency, strengthening local competition, and diversifying energy sources to achieve true forex stability.
“Abandoning the G2G deal is a necessary step, but it’s not a magic bullet,” cautioned John Githongo, an anti-corruption activist. “Now the hard work begins. We need robust policies, effective oversight, and genuine commitment to tackling the root causes of our economic challenges.”
As Kenya seeks a path forward, the G2G exit serves as a reminder of the complexity of navigating economic policy. The road to a stable shilling and a secure energy future demands careful consideration, innovative solutions, and a strong dose of transparency to regain the trust of both stakeholders and citizens.