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Businessman and politician Jimi Wanjigi has issued a stark warning regarding Kenya's economic trajectory.
In a statement on his official accounts, Wanjigi highlighted what he perceives as critical mismanagement within the Treasury and Foreign Affairs ministries.
Wanjigi outlined several pressing issues, including the nation's struggle to meet debt obligations, alleged manipulation of economic data, and potential constitutional violations in budgetary processes.
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Key Concerns
Debt Sustainability and Risk of Default: Wanjigi argued that Kenya is facing significant challenges in servicing its debt, with the risk of default looming if corrective measures are not implemented promptly.
This assertion aligns with recent analyses indicating that debt servicing consumes a substantial portion of government revenue, thereby constraining funding for essential public services.
This follows similar remarks by the former National Assembly Budget Committee Chair, Ndindi Nyoro, on Tuesday.
Nyoro has recently issued a strong warning about Kenya's escalating debt crisis, cautioning that the country is on the brink of defaulting on its debt obligations.
Speaking at the Institute of Public Finance annual budget review, Nyoro highlighted that Kenya's public debt has ballooned to approximately Sh11 trillion, a sharp increase from just under Sh2 trillion about a decade ago.
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Under President William Ruto's administration alone, the debt has surged by over Sh2 trillion, rising from Sh8.7 trillion to Sh10.9 trillion as of December 2024, with 54% owed to local lenders and 46% to external creditors.
Nyoro criticised the government's celebration of repaying a 2014 Eurobond loan, pointing out that it was replaced by borrowing at higher interest rates, likening it to "taking a loan from a shylock and celebrating."
Debt Restructuring Efforts:Wanjigi alleged that the National Treasury is engaged in negotiations with creditors, including a visit to China by Treasury officials, aimed at restructuring existing debt and securing concessional financing.
Similarly, Nyoro expressed concern that President Ruto's upcoming visit to China is likely aimed at securing more loans, signalling the precarious state of Kenya's finances.
Nyoro warned that any attempts to renegotiate or restructure the debt could have catastrophic effects on the economy and damage Kenya’s credibility with international lenders and financial markets.
“Any indication that we are going to default or are unable to service our loans is more catastrophic to our economy,” Nyoro said.
Budgetary Process
Wanjigi alleged that final budget decisions are being made at the State House, bypassing Parliament, which would contravene constitutional provisions mandating legislative oversight of budgetary matters.
Regarding the budget, Nyoro noted that the government plans to spend about Sh4.2 trillion in the 2025/2026 financial year, with nearly a quarter of that amount—around Sh1 trillion—earmarked for debt interest payments alone.
He broke down the interest payments into Sh750 billion for domestic debt and Sh200 billion for external debt
Economic Data
Wanjigi accused the government of manipulating economic figures to present an inflated picture of economic growth, potentially to justify increased borrowing.
Nyoro also warned that Kenya is nearing a "cliff" in debt repayment and stressed that the government cannot continue to manipulate figures without facing consequences when repayments are due.
According to Wanjigi, the government will face a hard task in increasing tax measures in the upcoming financial year, warning that any efforts will further weaken the economic activity in the country.
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“Raising taxes won't lead to increased revenue collection, but on the contrary, revenue collection will decline,” he said.
Nyoro has also criticised the government's tax policies, arguing that increasing taxes to raise revenue is counterproductive as it distorts economic decisions and discourages spending and investment, ultimately reducing revenue collection.
“Increasing taxes to get more revenue is a fallacy. By increasing taxes, you distort economic decisions. If I was planning to buy a car, I would withhold that decision because the government is coming for my money. That means even the little revenue you would have gotten—you won’t get it,” said Nyoro.
Wanjigi and Ndindi Nyoro’s remarks highlight the urgency of addressing Kenya's fiscal challenges through transparent and constitutionally compliant processes.
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As the government navigates complex negotiations with creditors and implements economic reforms, maintaining public trust and ensuring the integrity of economic data will be crucial in stabilising the nation's financial standing.