By Anthony Ngatia

The price tag on elective political posts in the coming polls is set to be the highest.

 With such premium, temptation to do everything to win is high. Some aspirants will spend all their lifetime earnings on campaigns.

Borrowing will be unavoidable item for others willing to mount well-oiled campaigns. But is it worthy to go into debts to spend on campaigns? Yes, borrowing to invest is a wise idea, but it is still an issue seen as quite controversial by many.

Financial experts say it is right for one to consider what they are borrowing for. The good versus bad debt is probably what most advisers dwell. But again, it falls short of specifics.

Good debt, we are told, is that which you channel to an income generating activity, acquire an asset that will earn income like a flat as well as increase your networth.

It is a debt, which you channel to improving human capital or education.

The use of cheap or low interest loans by business people to buy properties in prime locations, build houses, or increase their stocks, which will certainly increase in value over time, is a common practice today.

Personal finance experts consider this as a form of leveraging — literally ‘taking advantage of’.

Bad debt, we are advised, is for doing things that will not increase in value but are consumptive in nature. They include going for a holiday, shopping, buying a luxury car, gambling and financing ceremonies like weddings. This kind of debt should be avoided like plague!

Election funding

Is it wise to get a loan to stand for an elective post? Politics is a controversial topic in personal finance.

 Occasionally, there are stories in the media of politicians or aspirants under threat of having their property auctioned, owing to debts emanating from the past elections.

These serve as a caution to whoever intends to contest on borrowed money that sometimes, greed and ignorance can result in costly life lessons.

 Even if political ethics demand one not to use bribes to influence voters, contesting for any political post comes at a premium.

Finances are the lifeline of any credible campaign.  There will be the mandatory registration fees or bonds; both at party level and to the electoral body. Money will be required for campaign material like T-shirts, caps, stationery, equipment etc. Also, add the cost of logistics and campaign personnel, we are talking of big sums of money.

Equated to gambling

“With rewards after a political victory so alluring, spending all one has to get victory might obviously seem logical for many a time like now,” Edward Ngotho, a financial expert tells Shillings& Sense.

“Taking a loan to vie for an elective post is no different from gambling on debt,” he says. This is because the outcome can be either way just like in gambling.”

“No one can strictly say that one may not obtain a credit to facilitate their goals. Money is used for leveraging in many business situations, but an effective leveraging strategy like borrowing must be well calculated and responsible,” he says.

“Every day, we pursue our goals using different strategies with varying degrees of risks, and with each, there is certainly some financial costs. In case of a loss, debt can be disastrous if one banked on the new job to service the loan.” 

“Ideally, people standing for an elective post should “rely on their own savings. But you shouldn’t necessarily go broke just to finance your campaigns,” says Ngotho. 

“It is clearly an undesirable scenario for contestants. The stakes are such high that vying for an elective post requires deep pockets; hence no amounts of savings can be enough,” he says.

Personal finance experts advise that before borrowing for an election, first consider that you really need that money, the capacity to service the loan you are taking from other sources in case the job does not materialise and your chances of winning.

Today, polls and whatever chance a candidate has are closely monitored which can enable one avoid jeopardising family finances.