Is Eurobond bad for Kenya?
SEE ALSO :Kenya’s borrowing costly, experts warnRotich’s statement further said throughout the roadshow “the investors appreciated and welcomed the strong and resilient economic growth that Kenya has registered particularly the strong 6.3 per cent growth for 2018, and the expected growth for 2019.” Indicating that Kenya was borrowing from a point of strength, Rotich said the growth of the economy continued to surpass, by a wide margin, that of the sub-Saharan African region and the global growth. “This resilient growth is broad-based and strongly driven by strong growth in the non-agriculture sectors. The non-agriculture gross domestic product (GDP), in real terms, has grown by an average of 6.5 per cent per year over the last three years, a reflection of the sustained implementation of Government policies,” said Rotich’s statement. Some observers also see the success of the Eurobond as a blow to commercial banks that have refused to lend to private sector preferring the comfort of lending to the government. There has been a jump in government borrowing since President Uhuru Kenyatta came to power in 2013 - a rise that some politicians and economists say is saddling future generations with too much debt.
SEE ALSO :Eurobond money 'earned, but no project'Kenya’s public debt as a percentage of GDP has increased to 55 per cent from 42 per cent when President Uhuru took over. The government has defended the increased borrowing, saying the country must invest in its infrastructure, including roads and railways. In 2018 Kenya obtained a Sh200 billion dollar-denominated bond. The country issued another Sh275 billion Eurobond in 2014. Critics of the Eurobond say case studies of other African countries that have issued Eurobonds show that it is going to take more than an economic miracle for them to disengage from debt. Over a dozen African countries that have issued the Eurobond in the last 10 years have been forced to return to the market to refinance the debt - technically borrowing from Peter to pay Paul - at even higher rates. Some of the sub-Saharan Africa (SSA) countries that have issued Eurobonds are Ghana, Nigeria, South Africa, Angola, Gabon and Mozambique. Others are Ethiopia, Senegal, Tanzania, Namibia, DR Congo and Seychelles.
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