The civil society is pushing the government to rally the rest of the continent to form a borrower’s alliance, with the hope that this move would soften the interest rates levied by multilateral lenders.
The lobby bodies in the public finance space argue that negotiating loans as a bloc would ensure Kenya and the rest of the continent is treated fairly.
This, in the end, would help in the campaign to restructure the global financial architecture, as currently spearheaded by President William Ruto.
The civil society, while unveiling a campaign dubbed ‘Freedom from Debt’, detailed how the ballooning liabilities have shrunk public spending on social services such as health.
Aids Healthcare Foundation (AHF) Country Director Samuel Kinyanjui says there cannot be a lenders club, while referencing the multinationals, without the existence of a borrower’s club.
“I equate this to a goat taking a case about a wolf before a courtroom full of wolves. The best outcome is coming out alive, leave alone the case,” he said during the campaign launch.
Dr Kinyanjui said the borrowers are the majority, and therefore should have a voice. “This isolation, that we go to the lending club individually, is one of the weakest points,” he said.
He insisted that African countries must be firm and insist on one way of negotiating for loans. “We agree on the repayment period, restructuring, debt pausing during the crisis and interest rates on all our members,” he said.
President Ruto has been on record pushing for a similar view of the African continent, saying the rates being offered by multilateral and bilateral lenders are punitive to the continent and do not take into account the vast resources it hosts.
As such, most African economies are saddled with heavy debts, some even defaulting, yet they sit on vast minerals and natural resources.
In the current financial year, the government will be spending Sh2.3 trillion on both interest and principal amount. This is against a projected revenue outlook of Sh3.63 trillion.
With a debt that has surpassed Sh13 trillion, Kenya is spending Sh70 of every Sh100 it collects on servicing its liabilities.
Data presented at the event shows the government spends nine times what it allocates to health on servicing debt.
Margaret Lubaale, Executive Director Health NGOs Network (Hennet) said the health sector has the most compelling anecdotes of how the ballooning public debt has affected social services such as health.
As such, these anecdotes can be used to push for reliefs and debt swaps in favour of these services.
“Because we can start a movement and this money comes back to do another Standard Gauge Railway to Uganda or a highway in someone's backyard,” she said.
She said the implication of the 70 per cent debt to gross domestic product (GDP) ratio, means all other needs that are to be met by the government depend on 30 per cent of the remaining revenue.
The situation gets worse when cascaded to counties.
“When you look at governors, what is their first priority? Visibility. So, they will build schools, hospitals and not do what we need to be done on health. We have to realise 30 per cent is not enough,” she said.
