Kenya’s State of The Economy in Numbers: Why Kenya’s Economy is On Its Knees But Those in Power Are Too Blind To See
Kenya is ailing. The economy is on its knees. Those in power have refused to see the reality. They have refused to acknowledge that our motherland is moving at a terrific speed towards the land of no return.
The king is naked but those around him are telling him that he has the most expensive clothes on. Those with the courage of telling him that he is naked are ignored and even some shut from the surface of the earth.
Economists say that numbers don’t lie. Kenyan leaders have been shown the numbers but they are busy trying to convince Kenyans that somehow, the numbers are ‘lying’. The numbers available are dangerous and there is the reason for each one of us to take to the streets and mourn.
Public Debt
Kenya used to be a working nation, graduated downwards to a walking nation and now it is a borrowing nation. Our leaders are borrowing left, right and center without giving a damn of the consequences the massive borrowing has to the economy.
Kenya’s appetite for borrowing is just on another level. The country has reached the level where we are taking a loan to pay off another loan. We are now slaves to our lenders but those in power don’t want to think of this, because, after all, it is not them paying, but the common taxpayer in the streets.
The country’s debt now stands at approximately 5 trillion shillings or about 56.4 percent of the country’s Gross Domestic Product (GDP). Bringing this closer home, Kenya currently has a population of 51 million and dividing this number with the total debt means that every Kenya owes creditors at least 98,000 shillings.
Kenya’s largest lenders are the Chinese and the World Bank. These two have been competing on who should lend more to us. Initially, China was leading at 72 percent of all the loans Kenya owed but the World Bank has since overtaken them.
Stats released by the Treasury during the month of August indicated that in a period of three months from March, the country had borrowed 54 billion shillings from the World Bank. This raised the money that the country owes the World Bank to 581 billion shillings slightly above the Chinese who we now owe 557 billion shillings. (This is without the additional loans that President Uhuru Kenyatta went to look for in Beijing. The loans from China are set to increase.)
At the end of June 2018, Kenya’s domestic debt had hit 273.7 billion shillings, 25 billion shillings more than what the Treasury had targeted to borrow. Initially, the Treasury had targeted to borrow 248.7 billion shillings from the domestic market after revising it downwards from 279.5 billion shillings.
Already the same World Bank that has continuously given us loans has raised concerns over the country’s roaring appetite for borrowing. The International Monetary Fund (IMF) also raised concerns and even spelled out a number of measures the government had to adopt, including raising of taxes, in order to cut down on borrowing. Until recently, the National Treasury insisted that we were still the ‘borrowing range’ and now that the reality is dawning on them, they want Kenyans to carry the cross.
The fact is massive borrowing does more harm to the economy than those borrowing might think. Given the fact that the debt is already becoming unmanageable, creditors would soon be on our neck demanding for their cash. The country might even be forced to secede control of strategic national assets to foreign creditors. If we are not careful, which it is clear we are not, the port of Mombasa might be going to the Chinese. They are known for taking over ports in the event that those who owe them fail to pay. They might also take over full control of the Standard Gauge Railway (Rumor has it that they are already doing it) so that they can channel all the revenue to themselves.
Overburdening Kenyans With Taxes to Pay Off the Debts
In order to sustain its appetite for borrowing and avoid defaulting the numerous loans it already has, the Kenyan government has resolved into taxing the already heavily taxed Kenyans.
Some of the notable taxes include the implementation of the 16 percent Value Added Tax (VAT) on petroleum products. The move has seen super petrol, diesel, and kerosene move up by between 11 and 13 shillings.
The 16 percent VAT was introduced in 2013, given a grace period of three years and was supposed to come into effect in 2016 but was suspended for two years to 1st of September 2018. The National Assemb