The World Bank has raised a red flag over this propensity for expensive mega projects.
- If radical surgery does not take place to remedy the growing maladies, then we are in for big trouble.
Governments come and go but the debt burden incurred on behalf of its citizens lasts long after.
The fiscal recklessness of the Kenyan government is coming home to roost for the Kenyan government.
In the same breath, we should remember that governments borrow on behalf of its citizens in theory for the ultimate benefit of those citizens. If it borrows wisely and prudently for projects that give value for money, with the relevant multiplier benefits, that is money well spent. If it does not, then its citizens get shackled with debt it has little to show for it.
Governments come and go but the debt burden incurred on behalf of its citizens lasts long after. And it is a burden because the citizens have to pay dearly for it out of their taxes year in, year out. That means a chunk of the money extracted from us by the government goes straight into debt repayment and interest charges instead of paying for goods and services.
The money diverted to debt servicing does not go into improving health and education facilities, for example, but paying for the relevant projects contracted over the past years. For example, the SGR debt repayment and interest is around Sh1.4 billion monthly.
This arguably biggest of the mega infrastructural projects, SGR I and II, has been trumpeted as one of the great feats the Jubilee government has pulled off. But besides the massive cost factor versus value for money, one must measure other key factors, such its overall value to the citizens.
The May 2017 cartoon of the SGR passing through protesting citizens carrying placards with demands for affordable unga comes to mind. SGR is, so far, a great boon for the middle class and, in time, possibly our commercial transport needs. But could it have cost less, so that the overstretched and underfunded budgets for basics got the money instead? When and whether its huge cost will be justified is an open question.
Now, the World Bank has raised a red flag over this propensity for expensive mega projects. It has also questioned a related area: The predisposition for wastefulness in the public sector in the form of poor value for money spent and its massive public wage bill. It argues that it crowds out development expenditure, which is one of the keys to sustainable economic health and growth. The bank casts the net wider to include county governments.