Oil tanks at Kenya Pipeline Company headquarters Central Bank of Kenya governor Patrick Njoroge has warned that Kenya must curb its ballooning debt (see P11).
Historically, the governor has always expressed confidence that the Kenya shilling is competitively valued and the debt burden is manageable. If he is alarmed, then we should all take note.
Njoroge said that Kenya has never defaulted but there is now little room for further borrowing. Kenya’s debt has hit Sh7.7 trillion, around 69 percent of GDP, up from Sh3.6 trillion in 2016.
Appearing before the Senate Finance committee yesterday, Njoroge primarily blamed large infrastructure projects for the debt explosion.
The governor proposed that Kenya should only invest in infrastructure that brought clear economic returns; reducing the spending deficit from 8.4 to 3.9 percent of the budget; and refinancing expensive debt with cheaper foreign debt like the Eurobond.
Other unpopular measures are also needed: there should be a debt freeze on all infrastructure projects and accelerated privatisation to raise funds. Selling government shares in Safaricom and KPC on the Nairobi Stock Exchange could easily raise Sh1 or Sh2 trillion to substantially reduce the government debt burden.
Quote of the day: "Hope is being able to see that there is light despite all of the darkness."
Desmond Tutu
The Archbishop of Capetown was awarded the Nobel Peace Prize on September 15, 1984