As we talk about humongous Chinese loans gobbled up by
@UKenyatta‘s government over the last 6 years or so, are we aware of the ballooning debt’s impact on devolution, healthcare ( #PumwaniHospital), food security and basic services to the common mwananchi?
First things first, let’s go down the memory lane!
In 2002, Moi left each Kenyan with a debt of about Sh19,000. When Kibaki left office in 2013, each Kenyan owed the world about Sh43,900. Then came Jubilee in 2013 & 6 years later, every Kenyan owes the lenders Sh100,000. How did we get here? Is DEBT the new toll for colonialism?
Simply put Jubilee more than doubled the DEBT borrowed in your name by Jomo, Moi and Kibaki over 49 years in just 5 years!
Going by a June 2015 report from CBK, only 1.1 million personal bank accounts were holding at least Sh100,000. This means even at gunpoint, if each Kenyan was tasked to pay their loan, just a handful would escape the bullet, “but let’s borrow more,” Jubilee keeps saying.
In the FY 18/19 alone, treasury CS @HKRotich Rotich has budgeted a whooping Sh870.62 B to pay off maturing debt & interest in the current year. Kenya’s nearly half of the Sh1.743 trillion, which the Treasury targets to collect from taxpayers, will be spent on debt repayments. 1 in every 2 Shillings will pay debt!
The character of the debt we have acquired is not good. All our debts were concessional, bilateral & unilateral. If we had borrowed the SGR money from the World Bank, we wouldn’t have paid for it till 10 years later and then paid it for 30 years thereafter at about half the interest rate.
At some point, we had the best local debt market in Africa. We have to borrow more to keep afloat. We are on a treadmill. When the Chinese debt principal is going to come knocking, we won’t be able to pay it through revenues but through borrowing more.
Before 2013, Kenya did not have a single foreign commercial (expensive market rate) debt other than the syndicated loan, which the Eurobond was supposed to pay. When the Jubilee duo came in, using jungle economics, we moved from concessional to pure commercial loans.
According to the @OAG_Kenya, a significant part of what has been borrowed cannot be accounted for. Simply put its been stolen and a large part of the balance imprudently invested.
According to statistics, Kenya loses about 1/3 of its over 3 trillion budget to corruption. The more the treasury collect, the more we borrow to finance non-essentials, the more sacks leave our public coffers stashed with your hard earned cash
Beyond corruption, an even bigger problem is the economic decisions we make as a country, which rarely gives us returns. Why invest in Galana Kulalu without sufficient water while research shows that middle Tana & Yala are the places that can sustain irrigation?
A reputable economist once said the following, “Jubilee has borrowed about 2 trillion shillings, which has doubled our debt. Of the two trillion shillings, half of it has been stolen or squandered. And half that has been invested hasn’t been done well.”
As we struggle to pay high-interest rates on loans (top priority), transfer to Counties will dip (in July, there was 0 transfer to counties). Devolution is critical to people’s livelihoods & wellbeing including health, agriculture, sanitation, etc. Debt’s threat to devolution is real.
Debt repayments could soon overtake the wage bill, meaning that Kenya might soon not be able to pay salaries, eventually leading to poor service delivery. Then infrastructure (SGR, roads etc), which we have been shouting about, begins to deteriorate due to lack of maintenance.
Report by UNICEF indicates that African governments are diverting resources from health, education & other essential services to pay foreign debt. This has a direct impact on the number of women who die at birth and those of children who never live to see their 5th birthdays.
This will have a great impact on service delivery. For example, the Linda mama plan is no longer free. Those seeking services must have NHIF card & this cost money. This service only covers the mother & not the child. Those early vaccinations for newborn children are not covered.
Kenya is back to KANU days when we danced to the tunes of IMF. From Sept 18, we are going into a full swing IMF austerity measures. We will send thousands of civil servants home, levy more taxes, screw basic services while losing all the economic benefits we gained during Kibaki.
Numerous companies in the stock exchange have been posting profit warning after profit warning. If the stock exchange were in foreign countries, they would have collapsed. Economic collapse is imminent but it’s not going to be a total one in a single day but a brutal slow one!
In countries like Kenya, economic collapse isn’t dramatic because we have a dual economy (Mainstream & informal). If what is happening in Kenya would have happened in Belgium or other developed countries, the government would have been overthrown immediately.
In general, the life expectancy is shorter for many including men directly impacted by poor service delivery. The most affected are poor rural women & children who can’t access basic needs. This results in increased cases of GBV. There is a direct link to debt & the quality of life.
Drugs now disappear from hospitals, salaries remain unpaid resulting in strikes then things fall apart. Since medicine can no longer be availed at the hospitals, patients are forced to buy these at the pharmacies. Those who can’t afford expensive private hospitals DIE!
Tax measures such as exemptions & zero rating are removed to raise money to service debt. Coz most people aren’t in formal employment where funds can be raised through PAYE, they are hit with consumption taxes like VAT which purchasing power & increases the cost of living.
A tax on petroleum impacts every other good and service. This tax does not grow the economy. It shrinks it as there is not enough money left to be invested. Investments are needed to grow tax revenues.
Most people still fail to see how they contribute to the economy & hence remain detached from the issue of debt & taxation. When government officials misuse funds from the exchequer, this should hurt very much like that personal 1000-shilling that one might have been robbed.
Uhuru Kenyatta is 56 years old. Raila Odinga is 73. William Ruto is 51. Kalonzo Musyoka is 64. Gideon Moi is 54. Musalia Mudavadi is 57. These people will not be here when their mess hits home. Those 35 years and below who make up 76 per cent of this nation must stop them!
@DannishOdongo is a journalist who is passionate about governance