Declining Economic Growth Driven by Chain of Debts

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The most pertinent questions arising today include; why does the government have to borrow money? doesn’t it have taxing power? Shouldn’t it be able to raise the money it spends as it spends it? Of course it should, and of course it can. So why doesn’t it? We always witness promises of better infrastructure, good health facilities, better learning equipment, good roads and a better future, to a few these promises have been kept but most of them ultimately go down the drain.

Corruption has been the song of the day with national funds stolen by individuals since the early days; the Turkwel Hydroelectric Power  station which was built at three times the estimated cost, the longest running scandal is the Goldberg Scandal, a Sh360 million helicopter servicing in south Africa, a $.1 Navy ship deal, Prisons department losing  $3 million after contracting Hallmark International, the construction of Nexus, a secret military communication center in Caren, the Anglo Leasing,  the sale of imported maize, the triton oil Scandal, currently the NYS scandal and many  more. While a certain level of corruption goes on in every country, corruption in Kenya is particularly a large problem.

The series of corruption and bad governance has led the country into a state of economic stunt, these has seen the country get loans and borrow money to sustain its economic growth cycle. Kenya is extremely in debt and it’s clear that it is a symptom of many years of unplanned borrowing and mismanagement of public money.  The scandals that are facing the current regime are a testimony of how public funds have been mismanaged over the years through fraud, looting and collusion of fake companies here and abroad.

However, although poor governance and corruption have been the major blocks in economic woes in the country, debt has equally distorted the economy and complicated macro-economic management. Over the years, the country has resorted to occasional debt rescheduling and expensive short term borrowing to finance government expenditure. Ironically, the more the government borrows the more it declines over time. The debt burden has denied Kenyans their social, economic and political rights and consequently impoverished many of them in different ways. This is so because lenders terms bring more problems than solutions and hence the debt burden continues to grow.

The government has borrowed and still borrows money heavily internally from individual, companies and banks; huge government spending on luxury continues to increase the internal and external debt. E.g. 878 million spent in the first two years of the Narc government to buy limousines for senior public officials.

The government recently borrowed a massive sh95 billion in four months which led to Kenya sinking more in debt; this has seen Kenya’s foreign debt shoot up sharply just six months to the general election, a report from the treasury. Experts warn that this debt is unsustainable. What should be done to get Kenya out of this predicament?

Today, Kenyans are reeling under a debt burden that threatens to make the country unviable. It does not matter what party or coalition one belongs to. If the government does not lift the debt burden off the backs of Kenyans, this country will continue to wallow in poverty. Millions of Kenyans will derive no benefit.

Related: EACC to work with Business Community in fighting Corruption


Written by Amina Martha.

 

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