The government is often forced to bail out financially strapped State entities and/or quasi-government owned companies. Sometimes it works, most times it doesn’t. Then, there’s the point that little is done to fix the factors causing all the mess namely, mismanagement, underfunding, corruption, political interference, moral hazard (read implied government guarantees), to name but a few.
Most of these are fixable (if the will is there), others require careful execution. A good example is the problem of “defective hedges.” This is seen in the cases involving Kenya Airways and East African Portland Cement specifically. While the solution was rightly ordered, missteps around timing and structure produced undesired outcomes. As a result, the government has had to foot the bill. Now, the story behind Portland Cement’s failed currency swap is well told, KQ’s, not so much. I will try.
