Over the past few days, the government has come under fierce criticism after procuring yet another loan which officials indicate is intended to secure the presidents legacy, the Big 4, and development goals. However, it’s prudent to question where this undertone full of insincerity on the Euro-bond proceeds is emanating from. President Uhuru Kenyatta in his inaugural speech made it clear that the next five years will be dedicated to the Big Four economic plan, whose pillars are manufacturing, food security, universal healthcare and housing. If the government is able to focus on and perfect these sectors, our economy will grow exponentially to the benefit of all Kenyans. The debate on Euro-bond though is a well-crafted distraction from the big 4 agenda, in practical terms, the superfluous allegations of a collapsing economy by the opposition, international brokers cum tenderprenuers like Jimmy Wanjigi and IMF is fictitious. Kenyans must focus on the big picture rather than the petty details to avoid getting lost in the weeds.
From an economic perspective, debt isn’t bad. In fact, countries world over are indebted; multinational corporations and individuals alike. The elephant in the room however is what we do with the money we borrow. Though debts can lead to a death of a thousand cuts, we cannot condemn the Euro-bond in its entirety; we must see the forest for the trees. At around 55%, Kenya is number 62 in Debt to GDP ratio. Japan is ranked 1st at 250%. US is at over 100%. Borrowed money must always be put in the kind of ventures that stimulate growth. Growth should on the other hand, spur businesses that at the end of the chain, aid the government by paying taxes. It’s a chain that unbroken can yield much. When Jubilee took over government in 2013 our external debt was mainly bilateral and multilateral as the terms were largely concessional. This meant that we could only spend the loans on specific sectors following the dictates of the IMF policy on Africa, regardless of how inessential they were to our needs.
Its important to know that World Bank and the International Monetary Fund (IMF) were set up during the end of World War II to rebuild the economies of Europe. However, in order for the World Bank and the IMF to implement their policies, they began offering loans to poor countries but only if the poor countries privatized their economies and allowed western corporations an almost free access to their raw materials and markets. That is the poverty trap that Africa plunged into which the local IMF surrogates like NASA chief financier Jimmy Wanjigi who is condemning our external borrowing will never tell us. In Ghana for example, there used to be some prosperous rice farming communities in the northern parts whom the government used to give farming subsidies. This enabled the farmers to successfully produce rice on a large scale, producing enough for the fast growing population.
However, the World Bank and the IMF arm-twisted the Ghanaian government insisting that they would not approve any more loans for Ghana unless the government cut the farming subsidies it was providing to the poor rice farmers. Ghana had to thus import rice from western countries such as the United States (a major IMF partner); today Ghana imports most of its rice from abroad at exorbitant prices as its growing population continues to languish in poverty. One may wonder who are the beneficiaries of these World Bank and IMF loans; the cartels. It’s in public domain that ‘marehemu’ Jimmy Wanjigi’s big fallout with Jubilee leadership was due to boardroom tender wars that lead to cancellation of several lucrative tenders where the canny businessman would have made billions. During Kibaki’s administration, the billionaire tenderpreneur and corrupt deal maker Wanjigi was at the center of virtually all mega tenders in the country. From the infamous Goldenberg scandal to the multi million-dollar Anglo Leasing scam where Kenyans lost hundreds of millions.
If indeed NASA coalition and their western sympathizers (the World Bank and IMF) were honest enough, Kenya would be addressing the real issues affecting us; wage bill and wastage. We must as a country, deal with our wage bill and recurrent expenditure. We project to collect Ksh. 1.5 trillion in 17/18; of this, 650 billion will go into paying salaries to government employees. Ksh. 400 billion will go into other recurrent expenditure and hefty allowances leaving only around Ksh. 450 Billion for debt repayment and capital expenditure. Otherwise even if we’ve an increase in expensive external debt our interest payment burden cannot expose us to forex risks as alluded by these political detractors.