Why Kenya Airways doesn’t deserve Sh60b bailout

Numbers don’t lie. And Sh60 billion is not pocket change for Kenya. For many reasons. Here is a very short list of ten.

One, the main drivers of the economy in the last financial year were agriculture, forestry, fishing, construction, wholesale and retail trade, education, finance and insurance. The airline industry is not in that list. Any injection of additional funds in any of the key sectors will benefit us more now and for years to come.

Two, we have our own public debt to worry about. And it keeps growing. If anything, “Kenya” needs more free funds injection than any other industry in Kenya. By end of June 2014 our total national debt was approximately Sh2.22 trillion. That was 14 months ago. It has since risen. And we are still borrowing.

Three, by June 2014 we owed foreign creditors Sh1.14 trillion. By June 2014 we owed creditors based in Kenya Sh1.08 trillion. Credit is becoming more expensive and interest rates on loans will keep rising for as long as the government continues running on the borrowing treadmill. A meteoric rise in the number of people defaulting on their loans because of increased monthly repayments will shortly follow.

Four, Fitch has reduced Kenya’s credit rating. Simply put, within the global market we are considered a more poorly debtor than we were a year or two ago.

Five, our revenues from the last financial year were approximately Sh1.17 trillion. We owe more than we earn. We cannot meet our expenditure from our revenues without relying on further borrowing and grants. We may be a hotbed of many things, but monetary wealth is certainly not one of them. We can decide to play saviour and rescue those who are less indebted and slightly better off than we are. But can we afford it?

Six, Kenya will make payments of approximately Sh390 billion towards its public debt repayment obligation in this financial year. And Sh60 billion is 15 per cent of that planned expenditure.

Seven, water is life. Air travel is an out of reach luxury for a large part of our population. We have budgeted to spend approximately Sh30 billion in this financial year on water supplies and related services Someone somewhere is contemplating investing double that amount into a fledging airline industry.

What would Sh60 billion in water look like? How many more industries, schools and households would it improve?

Eight, the revenue we earned from tourism earnings in the 2013/2014 financial year was Sh87 billion only. That is only Sh27 billion more than the Sh60 billion. It is likely that an investment of only Sh10 billion in the tourism industry is more likely to create more employment and business opportunities than Sh60 billion in the airline industry. Further, such an investment in tourism, whether for external or domestic tourism, will also have a positive impact on the airline industry.

Nine, in the last financial year the National Government spent Sh44.8 billion on social services. This includes money spent on hiring of employees, capacity building and infrastructure development on the Laptop Project for primary schools.

This project is yet to be actualised. The choice between realising a long outstanding elections campaign pledge to children and plastic surgery on a prematurely ageing airline industry should be a no-brainer.

Ten, is for any remaining doubting Thomas. The list of nine above has been lifted from the introductory chapter of Kenya’s Economic Survey Report of 2015.

This report was released this year by the Kenya Bureau of Statistics in conjunction with the Ministry for Devolution and Planning. In that report there are 50,000,000,090 more patriotic reasons why not.