Are Kenyan loans odious debts? Jimi Wanjigi weighs in

Businessman Jimmy Wanjigi.

The majority of Kenya’s public debt is odious or ‘repulsive’, businessman and former presidential aspirant Jimi Wanjigi has maintained.

Wanjigi, speaking on Spice FM on Tuesday, January 9, averred that majority of the loans are not legal hence the government needs to find a way to default on them.

According to the businessman, it is unfair to continue overtaxing Kenyans as a means of acquiring more revenue to repay loans which were never beneficial to them in the first place.

“70 per cent of our debts consists of odious debts. Even after paying about Sh2 trillion last year, we are still at Sh11trillion. The trajectory keeps rising and yet we are still being taxed and the debt continues to chew more of our revenue,” noted Wanjigi.

He added: “If this government continues to pay loans that are not legal, then there is definitely danger ahead.”

What are odious debts?

In this context, odious debt can be described as money borrowed and misused by the State.

They can also be termed as illegitimate debts that are incurred by a national despotic regime; and payment should not be enforceable.

Others refer to these debts as those contracted and spent against the interests of the population of a State, without its consent, and with full awareness of the creditor.

Legally, any sovereign debt incurred without the consent of the people and not benefiting the people is odious and should not be transferable to a successor government, especially if the creditors are aware of these facts in advance.

Wanjigi suggests that the government should set aside what is odious and focus on repaying the legal debts only.

The odious debts on the other hand will go through a vigorous audit process to determine how the money was acquired and spent.

According to him, if the State still maintain that the debts need to be paid off, then it should explain to Kenyans why the country is owed the money and why it should be paid.

Currently, Kenya’s public debt stands at Sh10.2 trillion including the 2 billion USD Eurobond which is due in June this year.

The Gross Public Debt comprises Sh5.66 trillion (53.5 per cent) external debt and Sh4.92 trillion (46.5 per cent) domestic debt.

According to National Treasury Principal Secretary Chris Kiptoo, the depreciation of the Kenya shilling has been the primary driver of nominal growth of external debt.