Did you know the SGR -China -Kenya contract is sealed? The government citing that it will publicly endanger national security and injure foreign relations? Why is there an NDA on public money? How much is Kenya is expected to pay to Exim bank? What’s the collateral should Kenya fail to pay.
China accounts for about ⅓ of Kenya’s external debt service after the World Bank. The government plans to spend 117.7 billion on the Chinese debt period of which 24.7 billion shillings is interest payments and 93 billion in redemptions.
Kenya’s debt increased to 8 trillion as of September 2021.
Unfortunately, the past year has seen the cost of living go high whilst the economy struggles to stay afloat. An increase in taxes ripped a hole in already torn pockets of Kenyans struggling to make ends meet. 16% tax levied on fuel, food and transportation. Adding salt to injury, Covid 19 come Delta variant, come Omicron to whatever it is we are calling the mutated version now.
Should Kenya default, the Auditor General confirmed that KPA was given as principal security in the SGR deal and, word on the street is that, Kenya will relinquish its sovereignty to China in a worst-case scenario.
CBKs’ Patrick Karanja stated that.. ‘the SGR is around 11% of Kenya’s debt. Terms of lending are what have pushed the high debt burden.’ Terms that Kenyans are not privy to.
From 2015-2019, Kenya’s economic growth averaged at 5.7% making it the fastest growing economy in EA & Sub Saharan Africa. Come 2020, the economy was hard hit by Covid 19 shocks that caused this activity to slow by 0.3%.
Inflations since 2020
- Kenyan Shilling to the dollar from Ksh.96.00 – Ksh.112.00
- Fuel Prices from Ksh.96 – Ksh.130/litre ( Petrol)
- Electricity from 18/kWh- 26.7/kWh = up by 5%
- VAT: from 14%-16%
- Cost of living up by Ksh. 6.57 on food prices = Up by 10%
- Transportation up by 7%
Weaknesses in the services and industries have weakened the economy. Pre Covid, Kenya’s economic trajectory was positive. It was a point of entry to countless Startups and corporate expansion. However, the pandemic shifted the Countrys’ focus and brought to light the struggle to offer sustainable and inclusive economic growth from within.
Coupled with running challenges including corruption and economic inequality, Kenya’s heavy debt to China and IMF is not going away anytime in the future. The decimal point on that trillion figure seems to be moving in the opposite direction than intended.