infrastructure
infrastructure

Kenya’s rising debt should not be a cause for worry as the country is borrowing to invest into its future, a Kenyan analyst has noted.

Faith Munuhe, of the University of Nairobi, said Kenya is borrowing and investing in infrastructure projects that will boost its economy and better lives for the long term.

“The Kenyan government will sell seven- and 12-year Eurobonds in order to service a 750 million U.S. dollar Eurobond due to mature in June. This, to me, is looking at the bigger picture in terms of investing in our future,” Munuhe said in an analytical piece published Friday in a local newspaper, The Standard.

“Recent criticisms of the Kenyan government’s decision regarding debt financing and borrowing lacks basis,” she said.

The country’s debt stood at 53 trillion shillings (about 5.3 billion dollars), according to latest data from Kenya’s National Treasury.

Munuhe noted that a sizeable portion of borrowing funded the standard gauge railway (SGR), the largest infrastructure project since the birth of Kenya in 1963.

“Apart from improving public transportation between Mombasa and Nairobi, the SGR is going to revolutionize cargo transportation locally and in the region,” she said.

The project will also improve manufacturing industries’ access to outside markets, Munuhe said.

Movement of cargo port from the port of Mombasa to inland Kenya has improved greatly, so is travelling from Nairobi to the coastal city.

“Import and export exchanges of goods through our Mombasa port are now more reliable and convenient,” she said.

“Historically, unlike most African countries, Kenya has never defaulted on any foreign debt,” she said. “There is no reason to believe that this will occur in the future, since investments in the future tend to yield great returns.”

Munuhe noted that Kenya’s current account deficit is declining, and foreign direct investments are injecting growth into the nation’s finances.

“A new income tax bill the country is working on is set to increase revenue and as crackdowns on those in government jobs funneling state money into personal accounts go on, there will be a significant increase in reclaimed funds to give back to the public through social spending and debt servicing,” she said.

Increased investment in information and communications technology will have direct positive economic impact on the economy, Munuhe said.

“No doubt, Kenya is on the right track to being part of a fourth global industrial revolution,” she said. “Since 2013, more than 6,000 km of fiber optic broadband infrastructure network has been laid across the country.”

“Borrowing money to fund high-yield investments is the most responsible and effective way to achieve the prodigious development goals that will power us into a brighter future,” Munuhe said.

“The result of national expenditures on infrastructure and technology will help us become an economically prosperous nation, with an educated and tech-savvy young workforce,” she said. Enditem

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