In fact, by today's numbers he has borrowed less than President Ruto who has been in power for a year and has borrowed approximately Sh1.5 trillion, yes that is trillion with a “Tr”. There is no doubt in my mind that this news may come as a shock to some of us but these are the facts.
The question which lingers is this: Is President Ruto over borrowing against the backdrop of his campaigns not to borrow?
Why these numbers startle us is simply because we forget how debt is determined by the overall GDP of a nation. To make an example of our daily lives, imagine if your salary is Sh100,000 per month, it is highly unlikely you will be given a Sh10 million loan to pay back in a year or two. However if your salary is Sh5 million per month you will be given Sh20,000,000 to pay back at your utmost leisure and pleasure.
Similarly when Moi was in power he oversaw a $10 billion economy at its peak. At his best, if he put on his best clothes and spoke to funders with the best finance jargon he would only be given a paltry Sh5 billion or so. Why? Because those who loan money always check your ability to pay back.
We have easily forgotten how in the 90s we could hardly build roads or even invest in schools or hospitals. Power rationing was a normal phenomenon and generally we were not in good stead. This should then tell us that low debt has generally been bad for our country, negatively affecting GDP growth and ultimately the well being of Kenyans.
Similarly, President Kibaki borrowed up to 43 per cent of GDP. Bringing his total figure to Sh1.9 trillion of the Sh4.4 trillion GDP. Now this is a great leap from Sh600,000,000,000 billion and by today's logic we would argue that Kibaki was a worse president, but we know he wasn't. Kibaki borrowed more than our GDP under Moi because he grew the GDP by 400 per cent in 10 years above what Moi had.
As such if you looked at success in term of least borrowing then Kibaki would lose to Moi in terms of borrowing. But in terms of growth investments and infrastructure then Kibaki's 11 years were a boon for our nation.
I am aware that this is an unpopular opinion but it is my view that presidents who borrow better develop our country more. Uhuru, for example, grew Kibaki’s Sh4.4 trillion to Sh11 trillion. Making Kenya one of the top five richest countries in sub-Saharan Africa. A feat achieved without gold, diamonds, oil or any other natural mineral wealth. We are a nation built by the grit, sweat, tears and the very clever brains of our people.
As such we must all face up to the reality that Ruto will borrow. He will borrow because Kenya still needs roads and infrastructure, and we need hospitals and schools. We can’t develop on our own revenue because other than taxes we have no other resources to expend. Were we oil rich or diamond rich, we would easily use those resources to develop our country. But, alas, we were not blessed in mineral wealth like South Africa or the UAE.
Instead of wealth under our feet, God decided to put all we need in the brains, hands and feet of our people. We are Kenya’s main capital, we are all we need. Yes we are what can lift us from the bottom up.
It is this people-centric ideology that made Ruto president. It is therefore the same mentality that will deliver his promise to Kenyans. It is because of this that I believe the head of state has aimed at increasing our tax base, to allow for more comfortable and within-budget borrowing to spur our growth. This is growth by the people for the people.
We are essentially betting on ourselves creating a buffer between us and the maturing debt payments. To use an old idiom: a stitch in time saves nine. In other words, after the borrowing we have experienced we needed to urgently increase revenue so that we could effectively achieve two things: to pay our bills on time and allow ourselves to borrow more to develop more.
It is therefore no shock to me that President Ruto is borrowing, but he is borrowing based on more taxes collected as well as a tighter fiscal framework to deliver better for Kenyans. In light of this I would urge our politicians to stop vilifying debt and instead scrutinise government spending of the debt and ring fence our prosperity from the ultimate enemy: corruption and greed.
The writer is an economist
