Nairobi: Every Kenyan has to pay at least Sh100,000 in order to clear the country’s mushrooming public debt that reached Sh4.58 trillion in November. Kenya recorded its highest public debt in 2017. Latest data by the Central Bank of Kenya shows that the government’s internal debt at Sh2.22 trillion in November last year, while the external debt stood at Sh2.31 trillion in September 2017.
An analysis of public debt reveals that the government borrowed an average of Sh62.7 billion per month last year, compared to Sh54 billion in 2016 and Sh55 billion the previous year. The public debt moved from Sh3.89 trillion in January last year to reach Sh4.58 trillion in November, meaning that a total of Sh690 billion was borrowed during the period.
This is Sh110 billion more compared to the same period in 2016, when the government borrowed Sh580 billion. Pundits have it that the debt could be more, considering that guaranteed loans and borrowings of state agencies running into hundreds of billions in Kenya shillings has not been factored in.
The debt is expected to swell further this year, with the 2017 Budget Review and Outlook (BROP) report indicating that Kenya’s debt-to-GDP ratio is expected to rise to 59 per cent in 2018/2019, up from the current 57 per cent, due to upcoming infrastructure projects and an expected drop in revenue collection compared to last year. Kenya has borrowed heavily in the past 10 years to fund its infrastructure. Even so, the Standard Gauge Railway, expected to sink the country into at least $10 billion (Sh1 trillion) debt from China stands out, considering that it accounts for at least 22 per cent of Kenya’s total public debt.
In the first phase of the SGR that saw the railway line move from Mombasa to Nairobi, Chinese banks and the government lent Kenya Sh327 billion for the 472-km stretch and a further Sh150 billion to push it to Naivasha. In May last year, President Uhuru Kenyatta led the Kenyan delegation in making a formal request for an additional $3.59 billion (Sh370 billion) from Exim Bank of China to finance the construction of the third phase of the SGR, a 270km-line between Naivasha and Kisumu, bringing the total loan from China to more than Sh850 billion.
China is also playing a major role in funding other infrastructural projects like geothermal energy and the geothermal power project. China is also funding construction of major roads in the country. This perhaps explains why Beijing led another 14 countries that advanced bilateral loans to Kenya in 12 months to September last year. According to the National Treasury, Kenya received $4.7 billion (Sh487 billion) from China, compared to $879 million and $688 million from Japan and France respectively.
Even though bilateral loans are earmarked for development, critics have questioned the sustainability of some of the projects funded, key among them the SGR. Besides accusing the state of inflating the construction price of the railway line, they argue that project may not repay the loan, forcing Kenyans to pay from their pockets.
