Billions of dollars are being pumped by the World Bank, the United Nations and donor countries into initiatives that will help aid countries grow their economies and stabilize. The sole belief for this concerted effort is: shared prosperity guarantees global peace.
Looking beyond the World Bank, the International Monetary Fund (IMF), the United Nations and donor countries, one easily notices the desire in the hearts of global governments and leaders to create stable economies for their citizenry.
Economic stability refers to an economy that experiences constant growth and low inflation. It is an economy of increased productivity, improved efficiencies, and low unemployment.
I am, however, disappointed to pen that instead of looking optimistically for an economic turn-around, Kenyans must get ready for tougher times which calls for further tightening of belts ahead.
The undying thirst of borrow and borrow more by the Jubilee government sets the stage for this bleak economic prospects. Borrowing has become deeply ingrained in us as a nation. Worse still it is sacredly celebrated in our monetary policy frame work. The question I may pose to Finance CS Henry Rotich: is it economically sound to take high interest loans to service recurrent expenditure? The answer definitely is in the negative!
Secondly, the weak and unstable shilling has led to high interests rates. This 103 level is one of the lowest since October 2011. Though Kenyan exports are now cheaper in the international market, imports are more expensive. This not only sabotages the purchasing power of our people but also lowers government revenue from imports. This inflation has informed Central bank of Kenya’s decision to increase the base rate. This will surely slow down growth as Kenyans will shy away from the high-interest bank loans curtailing the cash flow.
Thirdly, President Uhuru Kenyatta has made it clear on several occasions that should we come to the worst, raising the value added tax (VAT) will be the government’s last resort of meeting the tax-revenue target. Raising VAT from 16% to 21% will limit and minimise the purchasing power of the people. Plainly speaking, commodities and services are bound to be expensive in such a scenario.
I find it hard to buy the lie and carefully choreographed propaganda that Kenya is broke. The truth is our spending outstrips our income. We are not unable to fund our necessities; the problem is either lack of discipline or wrong priorities.
To achieve an economic turn-around; let’s collectively pull with one overriding goal of creating a sustainable society where economic prosperity is shared equitably.
We need to encourage those with the money to use it locally, invest it locally and spend it locally instead of hiding it in some “Swiss” accounts.
This will increase cash flow throughout society, employment will rise, and projects designed to help the needy and those dependent on the society will be better resourced.
Onoka, a Masters student at Jaramogi Oginga Odinga University of Science and Technology, is an anti-poverty crusader and currently finalising his thesis work in Pure Mathematics.
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