Have you ever asked yourself how much money is saved by Kenyans in offshore accounts? Have you taken time to figure out some of the reasons that might lead someone to decide on saving their money in banks far away from their countries? Is it that our local banks are not reliable thus people being forced to seek for alternative means?
It is estimated that the super-rich Kenyans prefer saving their money outside the country and also using foreign private firms as compared to local or government firms. A report released by the New World Wealth indicated that about 50 per cent of the super-rich Kenyans are estimated to have saved about $10 billion (Sh.860 billion) in abroad, constituting to 30 per cent of the national wealth saved mostly in foreign private banks in UK, Switzerland, Cyprus and Channel Islands.
The result of such wealthy elites saving outside the country is that the local banking sector is totally under developed.
The Kenya Revenue Authority (KRA) failed to reach its first quarter target by over Sh.20 billion. As if this was not enough, it again failed to achieve its half year tax collection target by Sh.47 billion. All these shortcomings turn back to the citizen who will be forced to pay for some else’s mistakes. This also means that the budget deficit widens which in turn affects the economy of the country.
When Kenya borrowed Sh.278 billion through the Eurobond sale last year, the government stated that Kenyans would start enjoying lower interest rates since the government was going to cut domestic borrowing. We were made to believe that the issuance of the Eurobond and its timing was going to increase liquidity in the money markets, ease pressure on Treasury bill auctions and bring down lending rates. Instead, the end result of all these is that the government’s borrowing option remains the domestic market, further crowding the private sector and pushing lending rates even higher, thus affecting the tax payer.
As if that was not enough, an additional the government is also in the process of finalizing the stages of getting another Eurobond, yet Kenyans are not yet done with paying for the first one. This means that the tax payer will continue being burned with paying for the Eurobonds that its impact has not been felt. No one has come out to account for the money, how each shilling was spent, before even thinking of borrowing more.
Instead of the government borrowing from the international markets to finance infrastructure developments, energy generation mining activities and other capital projects, it can settle on domestic borrowing or getting loans from Kenyans with offshore accounts. If at all that option was or can be settled upon then the tax payer will be relieved of the burden of keeping on paying for the huge chunks of money being taken as Eurobonds.
It is a matter of we as Kenyans trying to figure out ways of sorting our own issues instead of seeking assistance from other countries at all times. Is it not possible for the government to request the loans from the offshore accounts, since that is enough to cater for the many projects in the country? The government needs the money, and whatever is needed can be found back on our own country.
Article by Vera Shawiza.