This archive report was first published on 5 November 2019.
Published on November 5, 2019, by Kennedy Chesoli, a New York-based development economist and global policy expert.
Kenya is on the brink of a major economic crisis, and it's not a question of if but when. Years of self-delusion and plunder of public resources have led to a point where the country's public coffers are almost empty.
The era of borrowing for infrastructure development is over, and the government may continue to borrow only to retire old loans. However, this may not be enough, as new loans may be costlier, and delays in accessing credit could force the government to cut its recurrent expenditure or default.
Attempts by the Treasury to find wiggle room through a higher borrowing ceiling will have no long-term effects. In the absence of development loans, the political elite may be turning to public-private partnerships as a new frontier to sustain their status.
However, these PPPs ultimately privatise gains and socialise losses. A recent example is the Westlands expressway project, which had no public participation and will allegedly privatise and toll one of Nairobi's transport corridors.
Claims that it will have no effect on the sovereign debt burden are ridiculous. The country is courting foreign funders for a railway line from JKIA to Westlands, a more attractive and sustainable alternative.
It's tempting to blame the Chinese for the impending economic woes, but our government is responsible for this mess. The government's struggle to sustain the SGR by forcing transit cargo off the highway is a clear indication of its priorities.
There are striking parallels between the expressway project and the proposed Mombasa Road superhighway, which is suspect. The ultra-modern road to the Coast has no justification, given the government's struggle to sustain the SGR.
Expect the upcoming cataclysm to force deal-making investors to abandon their projects and flee. Our Latte- and wine-sipping middle class, most of whom are 'tenderpreneurs' and tail-end beneficiaries of illicit wealth, will be in pain.
Empty malls, high-end apartments, and office spaces are signs of our unravelling economic 'prosperity'.
Mr Chesoli is a New York-based development economist and global policy expert. @kenchesoli
