Kenya is facing an economic crisis, with the high cost of living a key concern. The high cost of living is only indicative of our economic decline to a point, and it is hence a symptom and not the disease or root cause of the crisis.
The disease is corruption and wastefulness in government. Corruption is deeply embedded in our political culture, with every new government feeding us promises then looting our resources.
How is such a state ever to change if we, time after time, let ourselves be governed by those with the best stories to sell, disregarding their poor leadership or even their track records and previous performances?
The current debt stock is above Sh9.4 trillion by June this year and it will cross the Sh10 trillion ceiling by June 2024. This projection is according to a 2023 Public Finance Management Regulation Amendments report presented by the Parliamentary Budget Office (PBO) to the National Assembly Public Debt and Privatisation Committee.
This essentially means that with the public debt limit set at Sh10 trillion, the borrowing space to finance the Financial Year 2023/24 will be expected to be less than Sh600 billion. This amount is insufficient to finance the budget deficit estimated to amount to Sh720.1 billion, as indicated in the 2023 Budget Policy Statement.
The government will therefore have to find alternative ways of financing the deficit, and unfortunately, the options are more debt and more taxes. The government is unable to internalise and appreciate the gravity of the fiscal crisis facing the country. It continues to borrow and spend as if money is running out of fashion. Cash is being expended in a manner reminiscent of a bank on fire. Yet the citizenry is in perpetual pain occasioned by the ever-thinning disposable incomes.
How do you start increasing salaries and expanding the wage bill when the country is spending the equivalent of 60 per cent of tax revenues on debt servicing? Is it that these people are in denial or hell bent on sending the economy to the dogs? Or is it just the way the government chooses to operate, without transparency or accountability?
The high debt servicing burden is exerting incredible pressure on the economy. The high external debt servicing burden is causing rapid depreciation of the shilling hence imported inflation.
The oversized budget deficit is creating an insatiable need for revenue mobilisation. The endless tax rate adjustments are not only having an inflationary effect but also making the country uncompetitive as a business destination.
Our neighbours are laughing at our folly. Take an instance, Tanzania compared to Kenya, whose GDP growth in 2023 is at 5.2 per cent, with ours standing at 5.3 per cent.
However, projections show that their GDP growth will surpass ours from 2024. Based on the economic outlook provided by the IMF and banking on the GDP growth trends of the two countries, Tanzania will outpace Kenya's economic growth and have a larger economy in the next 10 years. Anyone could have seen the collapse of East Africa's economic giant from miles away with the current state of our economy and with our governance, especially from 2013. If nothing changes, our economy will continue tumbling.
Years of poor prioritisation of development spending on agriculture and irrigation have exacerbated food insecurities, thus adding to the food inflation nightmare.
There is never a shortage of money when it comes to splashing cash on vendor-driven projects. Yet the moment you mention a project that can significantly enhance our economic productiveness, suddenly the coffers run empty.
The solution to our economic woes is to live within our means. This requires firm political will and decisional independence by the professionals. The temporary political cost of such decisions should not blind the leadership to the dangers that will materialise due to inaction. The government should cease to operate without accountability.
-The writer is a former NCIC commissioner
