Kenya is On the Verge of Economic Recession and the Government is Not Helping

Kenya risks slipping into serious economic recession if the current concerns of extreme cost of living, unsustainable debt, reduced consumer spending, corruption, and failure to pay suppliers by various levels of government are not addressed immediately.

Deny all you want, but we can all admit that the country’s economy is in shambles. In fact, those who deny the fact that Kenya is slipping into the abyss of recession is selling something, has been paid to be silent, or is just being an absolute ignoramus.

The government leads the pack, some high-ranking officials that we elected into leadership positions come in second. Then there are those who fill the fool’s paradise and are characterized by perpetual debates even on things that are self-explanatory.

It is ironical that the ordinary Mwananchi must point out key areas that need to be addressed by individuals who purport to know where the economy is heading. Foreign investors, obviously, have always been hungry for the resources in Africa, Kenya is one.

The Chinese no longer hide their game. They are everywhere, sweeping across African nations and establishing what might soon be their strongholds through excessive lending. Pitifully, African states are all smiles and jumping to the train not weighing the consequences of having too many debts.

Take Kenya for instance, the public debt, for the first time has gone past the 5 trillion mark, which is a long way from the 2 trillion in 2003. China, being the country’s largest creditor holds a significant percentage of the total debt.

According to the Economic Survey 2018 by the Kenya Bureau of Statistics, China holds 66 percent of the total debt after the country’s debt increased 52.8 percent to 478.6 billion shillings in 2017 compared to 313.1 billion shillings in 2016. 

Anyone of sound math will tell you that for the past one year, the accrued debt from the lender stood at 165 billion shillings. The data further reveals that the total debt Kenya owes China is 722.6 billion shillings.

The total debt to the lender back in 2013 was 63 billion. The current figure shows that the debt has risen sevenfold. Three years before that, China had lent Kenya a negligible 14 billion shillings, but everything went south when the country involved the lender in the development of the Standard Gauge Railway (SGR).

The SGR accelerated the debt elevating the lender’s debt stock from 252 billion shillings in 2015 to 465 billion shillings in 2016. And the debt is still rising. It is estimated that by the completion of the SGR, Kenya will have used another 1 trillion shillings. Where do you think that is coming from?

In light of understanding how we are slowly sinking into debts, it is worth noting that we owe other multinational institutions quite an amount. The United Nations and the World Bank had a combined debt stock standing at 526.6 billion shillings as at 2017.

Loans from Japan as at June 2017 stood at 91.4 billion shillings, whereas debt from France, the third biggest lender to Kenya, stood at 63.2 billion shillings in 2017.

At the rate at which Kenya is borrowing money may soon lead to more borrowing to repay other loans. Kenyans already owe lenders a lot indirectly and they, with the future generations, will pay the price.

The debts are becoming unsustainable. They are already categorized under harmful debts. The situation is critical and it is slowly beginning to crowd out development and social programs since much of the revenue collected is or will be used to service the debts.

Strategic national assets are at risk and Kenya might be forced to cede their control to be better placed at paying back the loans. Already, countries like Sri Lanka, for instance, handed over its port to the Chinese to settle the claims.