An explosion in public borrowing has seen the debt burden on each Kenyan grow 73 per cent over five years, from Sh34,116 to Sh58,859, a Nation Newsplex review of economic data reveals.
Kenya’s debt per capita is almost as much as the Sh50,354 average monthly wage in 2015 and 10 times as much as the minimum monthly wage of Sh5,437 for unskilled workers.
Kenya’s public debt in 2015 nearly doubled to Sh2.6 trillion from Sh1.35 trillion debt in 2011, according to data from the Economic Survey 2016.
If Kenya had a one-year deadline to pay the debt it owed by the end of 2015, every Kenyan would have paid Sh4,905 a month for a year.
Critics argue that the if the debt is not controlled it will in the long run expose the economy to systemic risks.
In the first seven month of 2016 Kenya borrowed Sh171 billion, an increase of 46 per cent compared to the same period the previous year, according to data from the Public Debt Management Office. That amount translated to Sh800 million a day.
More than a half (55 per cent) of the public debt in 2015, equivalent to Sh1.4 trillion was borrowed externally while 1.2 trillion (45 per cent) was borrowed internally.
Economists say that although the share of internal borrowing decreased slightly the high internal rates of borrowing could crowd out the private sector and drive up the lending rates.
EXTERNAL DEBT SERVICE
The analysis, done jointly with the Institute of Economic Affairs (IEA) shows that both external and internal debt service charges have been increasing over time, with the exception of the fiscal year 2011/2012 when there was a slight dip. Annual Debt service refers to the total amount required each year to make payments on the principal and interest on long-term loans, bond interest and the principals of maturing bonds.
In the 2014/2015 financial year, external debt service charges almost quadrupled to Sh113 million up from Sh31.8 million in the fiscal year 2010/2011.
Internal debt service charges on the other hand have increased 81 per cent to Sh288 million in the 2014/2015 fiscal year from Sh159 million in 2010/2011.
Overall, annual debt servicing charges have more than doubled from Sh190 million in 2010/11 to Sh400 million in 2014.2015.