A while ago Deputy President William Ruto stirred the hornet’s nest when he launched a scathing attack on the government over heavy borrowing which continues to cripple the economy.
While some lambasted the DP for attacking the government he serves in, it is imperative to note that he was echoing sentiments expressed severally by Amani National Congress leader Musalia Mudavadi that the economy is bleeding because of the high debt and unless the National Treasury restructures and reschedules the national debt, the situation will worsen.
Going by the sentiments, it is clear time has come for Kenyans to have a conversation on the rising debt. Indeed, one of the challenges the post-Uhuru Kenyatta government will face is tackling the rising debt. According to the Central Bank of Kenya, the country’s public debt crossed the Sh7 trillion’s mark in August last year, comprising Sh3.4 trillion in domestic debt and Sh3.7 trillion in foreign loans.
The public finance management law set the debt ceiling at Sh9 trillion but the Treasury has warned that total debt, including committed balances that have not been disbursed, is edging closer to the ceiling.
Since 2013, the Jubilee government has been on a borrowing spree to get money to complete campaign pledges. Some of the projects include expansion of the road network by tarmacking of 10,000km; the Standard Gauge Railway; free maternity services in all public hospitals; upgrading of Jomo Kenyatta International Airport (JKIA) Terminal 2 and slum clean up, among others.
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Unfortunately, some of the borrowed money was misappropriated as recently disclosed by the President that the country was losing Sh2 billion daily to corruption. As Farmers Party, we submit that it is time the country held a conversation on the rising public debt.
We must take into account the fact that the decreasing revenue generation due to effects of the Covid-19 pandemic will mean the country has to allocate huge resources to repay the loans at the expense of education, healthcare, manufacturing and agriculture, which will further lower productivity and might even lead to default.
Some of the loans were also borrowed in mystery which is in breach of Article 201 of the 2010 Constitution that requires among other things openness and accountability, including public participation in financial matters.
It is to be recalled that in 2018, the then Auditor General Edward Ouko revealed that the government used the Mombasa port to secure the multi-billion shilling loan it took from China Exim Bank to build the SGR, leaving the cash-flush Kenya Ports Authority (KPA) exposed to seizure by the Chinese in the event of a default.
But Treasury Cabinet Secretary Ukur Yatani later denied reports that the Mombasa Port was at risk of takeover by China over defaulting loans though he shied away from stating whether the port had been used as collateral. We submit that the world is replete with examples of nations that mortgaged strategic assets to China for failure to service loans.
Zambia’s national electricity company ZESCO, a major airport and broadcasting corporation are under the threat of takeover for failure to meet loan repayments. Other countries such as Djibouti, Kyrgyzstan and Pakistan are facing debt-trap diplomacy in which China offers cheap infrastructure loans laced with the sting of default.
We also note that most of the mega projects the public will be financing debt repayment were awarded to foreign contractors who import skills and technical know-how from their countries and end up repatriating the financial resources.
The rising debt comes as the country’s key revenue sectors such as tea, coffee and sugar get crippled due to sheer neglect and corruption. The country’s high tax regime is also driving companies to shed off employees while international firms are avoiding Nairobi due to high taxation. It is time Kenyans demand debt management to be a key plank of the manifesto of political parties wishing to contest in elections.
All presidential aspirants must explain to voters how they will tackle this challenge if elected.
-The writer is the Farmers Party leader farmersparty@yahoo.com
