Kenya’s annual debt obligation will in 2019/20 rise to more than Sh1 trillion for the first time in history, exerting more pressure on the country’s fiscal plan. According to the Budget Statement for 2019/20 presented to Parliament by the Leader of Majority Aden Duale, the country is expected to spend Sh1.1 trillion to repay loans, of which Sh366.4 billion will be interest.
The report shows the Government will incur interest of Sh215.4 billion on domestic debt and a further Sh150.9 billion on external loans during the year. China Exim Bank will gobble up Sh37.8 billion and China Development Bank Sh4.7 billion. Nairobi County's debt has risen to Sh66.6 billion from Sh56.5 billion in July 2017. This is 17.9 per cent increase in a year.
According to the Country's Fiscal Strategy paper 2019/20, drivers of the high debt include an increase in penalties on statutory debt, updating of creditor's register, unpaid suppliers and contractors due to under performance in revenue collection.
It is high time Kenyan experts educated people on the management of loans and debts and how they affect people's lives. If a loan is taken for a development purpose and one can pay it successfully, that is okay. But a loan taken and terms of repayment outweigh the country or an individual, is a dangerous trend.
Let TV talk shows and radios invite experts on loan management and debt to educate people on the pros and cons of talking loans. Let them talk about savings, investments, budgeting and debt management so that Kenyans can grow and avoid risky living. This will ensure Kenyans are not borrowers but also savers and the economy will grow. Most Kenyan borrow to meet every day needs.