The government should responsibly tame debt spiral

“Be indebted to no one, except to one another in love,” that’s Romans 13:8.

Nevertheless, we all know Kenya owes much more than love. International debt has been a subject for debate for a while. And, understandably, it’s not about to go away.

Kenya is still borrowing heavily from China, India, South Korea and others. However, this should not be seen as a negative thing. Unlike other top debtors of China, such as the Republic of Congo, DRC, Sudan, Zambia, Cameroon, Nigeria, or Ghana, Kenya is a responsible borrower.

Many commentators warn about some inevitable catastrophe that will follow the accumulation of an insurmountable debt. This is inaccurate. Not all debts are born equal. Some debt can be used towards responsible investments while other debt can be irresponsibly wasteful. Take a loan to buy a car that will help you drive to work or your children to school, and you’ve invested wisely in the future. Taking the same loan for the same car just to show off to your friends is reckless behaviour.

Kenya’s debt, importantly, has remained in line with its income. The Central Bank of Kenya reports that our government’s debt is below 74 per cent of our total annual economy (GDP). That may sound like a lot, but the UK has a debt of 87.4 per cent, Singapore, Japan, and almost all the entire European Union nations have higher debt to GDP ratios than Kenya. Unlike many of those countries, Kenya’s latest growth forecasts greatly exceed 5 per cent, making our debt far more likely to be repaid.

It is of course crucial that we don’t go back to the days when we spent one out of three shillings in our national budget just to return the interest on our national debt, instead of paying back our actual debt. Until quite recently, we only paid one out of ten shillings in our budget to pay interest on our debt. Most importantly, the debt is properly purposed. While some countries take debt for lavish projects that are wasteful and merely pleasing to the eye, President Uhuru Kenyatta has made sure that recent loans from China are designated strictly for sustainable and growth-generating projects.

Investing in infrastructure plans such as the Standard Gauge Railway and road networks from Mombasa to Nairobi has indeed cost hundreds of billions, but the expansion would serve to simplify trade, travel of goods and people.

Similarly, Kenyatta’s effective work with Lamu Governor Fahim Twaha on the Port-South Sudan-Ethiopia project, Lapsset, a project initially set as part of the Vision 2030, is bound to transform the socio-economic status of the region by connecting the Indian Ocean to the Atlantic Ocean. Sensible investment!

Finally, it’s one thing to borrow responsibly, but if the country isn’t heading in the right direction of minimising social gaps, then there will only be a small bunch of cronies that benefit from those loans. The fact that these investments are made to support an important egalitarian agenda, in the form of the Big Four, and that the President has made the war against graft his signature, means the economy is ultimately directed to serve the majority and not the few.

Having said that, yes - there was justified public alarm over the rapid increase in our public debt. Now our annual debt obligation in 2019-20 is bound to cross the Sh1 trillion limit for the first time in history. To avoid crisis, this steep rise requires rapid adjustments. This is, however, precisely what the government is set on doing by allocating  61 percent of our taxes to debt repayment. We cannot have our proverbial cake and eat. We all must play our part. Taxes are never popular in themselves, but we should now applaud making payments that we owe, so long as we can make them. To quote another verse from scripture, we as a nation must “not withhold good from those to whom it is due, when it is in…[our] power to do it” (Proverbs 3:27-28).

Taking a great leap forward in housing, food security, health, education and the employment of youth, closing the infrastructure gap - is the responsible thing to do, following exactly what this government was elected to do. Responsibly exiting the debt spiral is part of the popular and common sense demand. It is irresponsible and unfair, however, to elect a government to fulfill its promises, bemoan the high levels of debt it takes on to realise its plans, and then bemoan again when revenue collection is revitalised and that debt is being repaid.

- The writer is the Igembe North Member of Parliament