Go for cheap loans for Kenyans’ sake

Eight years go, for every Sh1,000 Kenya earned from its exports, former President Mwai Kibaki’s government paid foreign creditors only Sh18. Today, the National Treasury Cabinet Secretary is paying as much as Sh173. And this does not even include principal payments.

Slightly over half, or Sh3 trillion, of Kenya’s total debt as at June this year was external. Most of these loans, three quarters, were in US Dollars. And they are given at commercial terms.

Truth is these loans are drying up the country’s coffers at a worrying proportion, leaving so little to pay drugs, pay teachers or even build hospitals and other vital amenities.

We understand that there is no gain without pain; that we need to endure these loans to build better roads and ports railways that have been funded with this cash. But this, we urge, should be done with thought and great care.

Investing in development projects is good, but the Jubilee administration should realise that every dollar put in capital projects is a salary hike lost to a nurse.

While we may not ask the government to stop borrowing, we will not shy from reminding it that the debt as a percentage of GDP is at 60 per cent. And a good chunk of it is not our local currency as is the case with Japan- which gives them room to reschedule or even, well, print money- it is in US Dollars.