 Hello everyone, thank you so much for keeping us company this is OAI 254 one in the morning is the shoe you watching and thank you for being part of this conversation we are talking about the state of Kenya's public debt that is ballooning what are we looking forward into so much is going to happen in the country just last week or two weeks ago we saw our president secure sentimi ua maha ua kubuwe na kuwa wala kajabita hede kuwa hwajendal ya maha mwendal wajendal ya maha mwendal ya maha mwendal evening kawapuri wajendal ya mwendal ya maha mwendal hai chikanya ua maha mwenda ngibunia karibuni ua maha mwenda ua maha kjwa ua maha kjwa mwenda kuchakwa We know every country like I have seen especially during this COVID-19 when things went south in terms of economy, every country went to borrow money either from abroad or within and we saw it happen even in our banks here. I have seen some of the bankers say things are not okay. What do you make of our current state in terms of debt? Well, our debt is big. That is what I can say. We've borrowed more than we are probably likely to afford paying to service. But in terms of the pandemic, I'll say we didn't borrow more than the way we normally borrow. If you look at the figures, the way we borrowed in the last half year of 1920, it's the same way we borrowed in the first half of financial year 2020-2021. So, I think we didn't borrow more because of the pandemic. All right. In the same breath, John, we borrowed for the health purposes in the construction industry. What can you say is that things are not fair, right? Yes? Because we expect every money borrowed to have an income generated towards the economy positively. So, if you borrow too much and there are no returns, we expect to have some good returns by the end of it all. If we borrow and dune the roads and then by the end of it all, some of the money is not accountant. By the end of it all, we will be required to pay the debts. True. If we have borrowed one billion and the amount accountant is 200 billion or we borrow one million and we account for 200 million or for some percentage is not accountant, that means we are going to pay money that is not used and that means the cost goes to taxpayer. Exactly. All right. Now, Job, how does public debt affect economic growth in consideration whether the debt is a means of a burden on economy? Having a review or a systematic review in regards to how does it affect the economy? Well, I think it just allows us to break debt down into what come on manainchi or even the youth in their small economies can understand. Debt can do two things to an economy. It can help you improve an economy. It can help you, it can be help you kill the economy. That is, ineza kukusidia ama ineza kukumaliza. True. Let's take for example the issues of help. Help, it's a kind of a debt that most of them who have been in colleges and universities know about help. They are people who prospered because of help. They completed their studies. Others I know someone who bought a plot using help. And then they are those who are killed by help in this Nairobi city. And had they not received that debt, they would be okay. Now that is the money directly killed them or missed their lives. Sorry. Then now when it came to repayment, some people are not able to repay their help. Penalties went up. Some were not genuinely able to pay. Others it's just because of poor management. You didn't use your money well. And as a result, things didn't go well. Now it comes to public debt. It's just like any other debt. Private debt, individual debt, mkopa is not a type of debt. Mkopa is not a type of debt. There is Tala, Fuliza exactly. That is exactly the same way the public debt is. It's only that now in public debt, it's the government boring on our behalf. Mostly we are not consulted. Whether we like it or not. Yeah, in individual debt you consult yourself. Now for you to develop a country especially the heavy infrastructural projects, you need debt. But now as my fellow economist here said, if you borrow, you must use transparently and you must account for everything that you borrow. If you don't do that, then the economy will dip. And this is how the economy will dip. You borrow 2 million shillings. You are supposed to do a road for 2 million. And now instead you do alone for 1 million and then another 1 million disappears somewhere. Now the rate of returns from the 1 million road will be less than what was expected from the 2 million road. So now the economy to grow, there are so many factors that contribute to the GDP. Then it means you will have to get some sources of revenue that were not meant for paying the debt to go and service the 1 million that was never pumped into the economy. So you are killing some sectors of the economy because their contribution will not be realized in the national GDP to go and service some debt that we never used. So debt can improve the economy. When mismanaged it can kill the economy. Now John, I remember one time the president say I think sometimes in 2018 he said when he goes out to borrow money for this country and for the purposes of infrastructure he will do it. And I remember he was having an interview on one of the local stations and he was adamant like yes I have to because the questions were you are borrowing too much but we are having so many corruption cases in our country. But the statement is I will borrow. For the sake of infrastructure I will borrow. Now looking back to years things that have happened in our country would you see just like you had mentioned the money that Kenya has been borrowing from abroad we have used it in the right way and if yes to what percentage? I may not be able to tell to what percentage but we have not used the money that we have borrowed why say. For instance we all know that commercial loans are expensive than the loans borrowed from matratal bodies like IMF and the World Bank. Why could Kenya and developing country borrow from commercial loans? Borrow from commercial loans instead of wearing from matratal bodies like IMF and the World Bank which their terms are better. I offer you alone at an interest of 4% and the other person offers you at 10%. You would automatically hope to go for the 4% which is in terms we have a better deal. So I don't agree that we are using the I disagree because in the first place we should currently we are borrowing more commercially we should shift back to the matratal bodies which give them better options because we have to pay either way and then all money borrowed should be accounted by the end of the borrowing season. So we have to create a very good channel to mount every coin if the person is going to borrow for instance 10 billion. How much do we need for the for the specific project that the project that the government is targeting if we need 5 billion why should we borrow 8 billion you see and in case this 8 billion that we need or we need the 5 billion why can't we borrow from the bodies that are cheaper than that that are cheaper that is a better deal. Now a job you have mentioned I actually want to throw the same question to you in terms of how we have been using our debt and you just spoke of the economic now can we see the public the public debt so far has stimulated our economy and for the sake of infrastructure the presidency he will borrow. Well if I were the president I would still say I will borrow but now one thing that I would like to say is the president has economic advisors at the treasury who advise the cabinet secretary and in turn advise the president and in my opinion those are the people I'll not say they are not schooled I'll not say they don't know economics what I'll say is probably they decide to misadvise the president or they give their advice with hidden motives because if you have to develop a country like Kenya you need money our GDP cannot provide us with all the money that we need you need to borrow but now when you're borrowing you don't just borrow and borrow and borrow like my friend here has said if you need it's like I'll say I'll come back again to the house if you had a budget of buying something in your home maybe you want to buy a plot or a car and you decide that you will take alone the car costs 500,000 if you borrow 700k alone sometimes in a kwa gata amu because in engi akama imesikana and in the process you borrowed 700k and your car is 500k remember when you're doing your maths you are decalculated how you will pay the 500 but now you decide what you're going to 700 see limit in afika squeeze in imesikia wa tu aki esabu tajiriwa wa na esabu pamoja na limits he's only metia fuliza limitia tala and everything now because your limit can afford you 700,000 you borrow the 200k itengia kwa yo numbana ita pata kazi now unfortunately ii kazi ita pati kana ii 200 iita kwa infrastructural it will be something like uh ii kwa zi itu me kula mbo gasana kwa ya stafte kanyama leo na una kula nyama alone my friend and even at the public level that is exactly what happens you live you're living here someone with that two billion shillings which have no job hapo sasa the okazi who pati kana and this work does not benefit the common man then we are not calculated how we will pay again we we are borrowing a lot of expensive loans ilihali we are party to IMF as John Adana said we are party to world bank so why are we borrowing from commercial banks in china and other countries then some loans there is something we say in economics that it is very expensive sometimes you go there borrowing and the economists at the treasury needs to tell the president this that sometimes the grants that we are given end up being very expensive i can decide to give you alone today here and tell you i'll give you 100 shillings at a 10 percent interest rate and that is how you will pay or i tell you at 10 percent of 100 shillings is 10 shillings or i give you a grant in meru i run a transport company uh then but one condition is you will have to use my transport company to bring this mahindi from meru to Nairobi so in the process you will spend a lot of money on transport which are benefiting now but to cater for the for the free mesh that i gave you sub grants that we have received they are conditional grants we will supply Kenya with these and these but now you have to pay for the shipment na hapusasandio sometimes tuna shikwa you have to spend more than we could have used to buy maybe from mista africa to bring whatever you are given abroad to this country yeah all right we'll be looking to some of the statistics from the international budget partnership and even as that comes jona you just mentioned why can't kenya come back to commercial entities that we borrow from within at this particular time and season or the period we are in do you think kenyas we are able to fund our infrastructure we are able to fund our health system education everything personnel i think we are not able to fund without borrowing we can't we cannot be able to finance all our needs and but borrowing excessively is not also a solution can we borrow some amount that we can manage to repay if we are the economists advising the president right now i think the beginning terms for us to borrow from the external from the external market either the wallback AMF or the commercial banks is the revenue corrected by from our country so if we correct like for example let's say we correct 5 billion pandi from taxes from VAT and the others we should be able to say if we pay the debts how much are we left with and how much are we left with after paying the debts and the recurrent expenditure so that if we analyze and realize we have too much debt why can't you the the the the fiscal policy analyst advise the president to to tourist like to resend you some loans or even sell out the commercial loans with the better beginning terms to they can we can even sell the expensive loans to banks like AMF and the world bank if they give us another great speed on like 2 to 3 years and some better interest rate then we for example the loans that we borrow to build the SGR and the rest if it is very expensive why can't the government sell the loans to the AMF and the world bank and then because we have some money that we are correcting from our revenue the economy is Kenya some good money but is not well managed if we if we are given like 2 to 3 years to start repaying the loans that we have been paying we realize we have we have started recovery because now the the commercial loans are expensive than the the others AMF and the world bank which we qualify so far so if we have some money that we are correcting then can we discuss and reset out the expensive loans so that now we see if the economy is going to recover because we have to borrow it either way and then make sure the next borrowing is going to be consentant from the cheaper direction that way we can because we are not in a very good place economy I reconians disciplined enough to pay our taxes because I know majority of us majority of us do not pay we we avoid paying tax and especially with the cases of unemployment in our country a currency currency the tax man is not choking with the tax evasion all then and confront with the tax man is very expensive so especially most of the people are trying to comply because the penetrate so high and to some extent most of this most of the Kenyans pay tax because they either rely with businesses or the employment by the end of it all the systems are very very very well currently the system the tax man system is very well organized all right so fair enough now job looking into the current state from marketing the exports that we have and the imports now what would be the role of the government in effectiveness of a trade balance well I think I will relate your question on trade balance or whatever you call balance of payments to public debt again and this is it when you borrow you borrow in two ways you borrow domestically the government can decide to borrow from my friend here and you will just go to the central bank buy some treasury bills alafo ambi seri kali ni to mi anyo pesa for one year that you kwa next year now in that case the the the government here will have borrowed in kenyan shillings so kamo aliyomba miya next year ntalipa to miya ntalipa na miya but now when it comes to balance of payments external debt is borrowed using other currencies like dollars euros and pounds now when you borrow the money that way any fluctuations on the strength of the shilling affect the amount of monies that we pay back and this is where now exports come in if you export if you are exporting you will export it dollars then we had borrowed externally dollars so at this point we can use our exports to settle our public debt externally using dollars that we had borrowed in and there the cost comes down a bit but when we are not able to market our exports when we are not able to increase our capacity of production so that we export as much as we can then it means we will borrow in dollars and pay everything in kenyan shillings yeah exactly so paying in kenyan shillings we will not give uh someone in china or uk kenyan shillings is you will carry the kenyan shillings convert them to dollars and pay during conversion maybe when we were borrowing the shilling was at 100 but now when we are paying uh it's at 108 shillings so we are losing eight shillings for every word dollar remember we had borrowed a billion dollars then we are losing eight billion in only one loan so what the government needs to do we need to rework on our production and the production farmers kenya to kona labor my friend to kona everything that we need for production but now uh do we produce to export the export business has so many restrictions in kenya those are some of the things that the government can relax so that as many kenyans can produce we stop more of imports and start exporting now using our foreign earnings we can service our debt using the dollars that we borrow din to save on the cost of our foreign exchange yeah i i would like you to to clarify on one thing the the terms of borrowing do we do we pay as per the time that we the the value of which we borrowed or we will pay at the current time when you are paying you pay you pay on the current time you are paying so that is why it's always advisable uh to borrow if you borrow internally the the time value of money does not apply because if you borrowed 200 shillings we'll pay you or maybe 200 or to 20 shillings but now if i borrow today i will borrow using the international rate of the dollar now if i'm paying two years later i will not be charged using what was there in 2020 i will pay using the 2022 rate of the dollar now to strengthen the shilling we need to boost our exports if we don't have enough exports the value of the shilling goes down so the government can cushion itself by encouraging a lot of exports so that if the shilling today is trading at 100 shillings uh with the dollar even in 2022 let's have the shilling trade at 100 or even 99 shillings there if it trades at 99 shillings we will have gained yeah johnny he has mentioned of of of exports and that we are at a time in our country when tea sector kofi there have been problems uh flowers are not doing so well in the naivasha i remember during the pandemic what happened and we have so many things that we would want to export we have so many things we export abroad how can we increase our exports and how can we have good marketing out there to protect ourselves or to cushion ourselves from growing so much one of the ways of encouraging export is by increasing manufacture manufacturing and encouraging business people trained us to venture more into manufacturing actually the government can create incentives or even a free tax period for us a certain uh when when a company start to manufacture we are given some incentives because once you produce it is for the benefit of that economy for for for instance currently we are we are our exchange rate is around 110 110 108 112 it means if we are not exporting anything we are in trouble because we borrowed maybe at 100 shillings and now we are supposed to pay extra 10 shillings on every coin that we borrowed you see so if we don't if we don't encourage production which manner is through manufacturing or even through farming i agree the government is trying because now we are exporting something like avocados but to what extent what is the impact felt by the export of avocados or even tea or even kofi you see with the time the kofi tea and the other agricultural sector have been depresiting the production and everything the market is not very good i don't know the main reason but as far as uh we are basically an agricultural based economy we should more we should encourage more production of other goods that's the the only way we can manage to balance the change job when i was in school i'm trying to forget to remember this time whether it's on paper or in the curriculum but in reality does not exist there's things we used to call commercial touches we have people who will move from Kenya and go abroad to market our produce is is that thing really working in this country in fact they are your neighbors the department that is supposed to do that work is your neighbor somewhere around here and they are there and they go and do that work but let me ask you say is a hillary if you tell me uh in yende ni market kahawa from my village somewhere in meru i go and market kofi abroad from my village which kofi will i market them says they are pruted the kofi because our parents used to use that money to pay for our grandparents our grandparents used to pay that money to pay for our parents education but now what happened when they realize the kofi has no benefits again they are pruted wakapanda vitu zingine makadamiya avocado wengine wakapanda nyasiangombe because at least milk utakuniwa kuako lakini kahawa wezi wuna ukule and we do not have uh we have the ability to add value but uh we do not do it now the commercial touches are in this country the export promotion council is somewhere every consular uh that kenya has abroad that's all the embassies and all the uh high commissions half people who are supposed to market kenya and my question is when it comes to tourism the people in charge of tourism are really marketing kenya abroad from those foreign missions right why are we not marketing our produce the same way we put the same vigor i think one of the tourism bodies today has been nominated as the best to compete among the best in africa why can't we have our kofi and tea exports being nominated to compete among the best in this world the commercial touches should be somewhere there drumming up support let's say we are producing kofi grade one in kenya let them come and taste we have a big expo in kenya for people to come and taste kofi for free and then they will buy from us we have some of the best soils in this country but uh you know it all boils down again these are people who do not have most of them are unexperienced ground because they come from well connected families but they do not know the quality of soils somewhere in mount kenya where tea is produced they do not know the quality of soils somewhere maybe in nakuru where flowers and pyrentrum are produced now if these people had the basic knowledge of how to market like when i tell you uh let's pick something like uh mahindi mahindi planted in ukambani tastes different from mahindi planted in uh somewhere in charangani it was in gishu and uh transohiya all the the the maize belt up there now why is it like so it's because of the soils because of the rains and because of the quality of seeds now for you to market your maize you need to have knowledge of from production to the time you harvest do our people the ones we send abroad to market our products what can experience their ground do they know how to find international relations and marketing why didn't you pick someone who has done something to do with agriculture to go and market umfunze marketing atumia no lejake agriculture i endaka market so we need to recruit the right people for those jobs and i believe uh kenya tkona potential and i want to introduce to you a potential potential if we continue with poor leadership exactly so it boils down to leadership and kind of policies that we have thank you so much for continuing being part of us this morning as we look at the state of kenya's debt and your comments are coming in please continue sending us i'm seeing baidi askly she says no it doesn't benefit my fellow kenyan i'm sure she's talking about the public debt we also have princes k e good morning to you too but the russia juja tuned government should stop borrowing money as the cities as the citizens they are giving us unnecessary pressure with these debts uh fletcher phelix says yes but as itumue visuri see killer wakati 80 corruption but alia kujenga taifa actually will be talking about corruption and uh the father are coming in um julius gashiru says yeah because we have nothing due to kattels in kenya the kattels okay sunko keeps on speaking about the kattels in this country we have uh raids in pisha that's foolishness they are borrowing money without knowing how they will pay and if they get money they can't give the youth's jobs that's a concern raya posik k e no matter how much they borrow but we never see the change so no need to borrow let's settle with the little that we have and this is on twitter we have uh but he's a pesa ziki come this is Emma james he says but he's a pesa ziki come zina endangawa because this year pesa zote zime tumika kwa korona na jerusalema challenge for our leaders ngekwa bora kujua advices uh phelix morturi impenderegi anase manani alipe hi omi kupo it is us kenyans and they will keep on borrowing john mualinga nop because those money do not benefit kenyans nile shaka says according to me that habit should stop juakuna kituana to say diana hezo do wa na kopa yes but wa na pa tiawa wa china kazi ataza has it to fight the cc kenyans speter says it's not but hata to kisa manini the government can't and won't take any advice from us survive no janjako okay so those are your comments that are coming in please keep on sending us your comments or your concerns and reactions to this particular conversation we are having about public debt and before we went I went to read those comments we were speaking about the komashu atachis good guys for their right job and that one has not been happening now we have had for I think for the last two weeks I've seen headlines on local investors or banks I should say when I say ma they have been pressed down because you know government has been borrowing now would you see the relationship that the government has been building with the locals in terms of borrowing is so good and if wanna complain saahi can we even trust the government again giving them our money come again the we have we've had bankers complaining the government has been borrowing yes they have borrowed because actually during COVID-19 they borrowed and we have that complain if they are complaining now because kuna shidi aku lipa can they trust the government again even as we look forward to us not borrowing money from IMFs under kina euro board to to work on what we have within can are we building the trust in the right way if the banks are complaining we are not building that we are not building any trust and borrowing within our country that is if we have no trust by the end of it or even the foreign countries will not be able to lend us because basically it is we the taxpayers who are supposed to pay the tax and then that tax paint on their basis is going to be used as the curatel the government will say we normally correct 5 billion from our economy so we can borrow extra how much like this amount so if the Komashu the local Komashu banks cannot trust the government the same case the citizens will not be able to trust the government and there is a way that the government normally borrows from the citizens by setting bonds yes and the central bank gets some money from the from the within so if the the the banks cannot trust the the government anymore we are in trouble how will we borrow mm-hmm yes so with the loss of trust job what is the role of institutional quality in debt growth relationship you see the whole essence of borrowing internally is to save cost especially on foreign exchange like we had said earlier so uh we the question on whether we can try the maybe the banking institutions and on not banking financial institutions whether they trust the government whether they should so do so or not should not be a question number one we have to trust the government you see the government operates with policies so if the government today says uh to Funga mask kwa kifua badala kwa pua you know even before we question why we are putting the mask on our chest instead of the nose then we will have kwanza utafunga alafu with a press conference so the government has policies but now the best business on earth is one that drives on trust and the trust is very necessary if we borrow internally we save a lot of costs on interest rates and on penalties that are charged when we delay in payments and the only way the government can borrow internally is through the banks so if we do not encourage a culture of trust in in this trust goes this way if uh today I lend you 1000 shillings so then na umebe ba boxe ya pizza na ka rose flower higi my friend in Tanzaku Baba Ika guy wu boss bila li kuha wenshuwa reinda kwenua business na nili pe next week sa easy pizza na ika lo rose flower my friend uta li pa haje now in that case I will start losing trust in you and next time you come telling me niku wenua atau kili pa next week nisa waa but hi chance kama ni pizza uta li pa ju wu kwenua biz now next time when you come to me boring and you tell me you're going to pay you're going to lift your maybe to jumpstart your business somewhere I will not trust you what will I do I'll give you 500 challenges instead of 1000 the other time when you come I'll tell you leo sena domazi so jipangi and that is why now trust comes in the government has floated sub bills drew central bank to the Kenyans and financial institutions and the objective of these alone that we are soliciting from Kenyans is to go and construct a windmill somewhere in Trukana to provide electricity wuko at the northern part nioia kinda rumana kiamberi shuguliki e Mount Kenyan, Nairobi and Rift Valley we should see that one happening that we really bought these bills bonds and the government has gone ahead and instilled a power mill somewhere in Trukana now that way the internal lenders now will build trust but sa sa yo pesa tulipatiana yaku jenga huko enu naskiya supplementary budget me kuja kusoma kwa ambat sasimamisha ile project kimoare re daro sasimamisha kidogo tukutu shuguliki e PPEs Nairobi then PPEs yunaskiya zimevuka boda naman ga samu ya hatuna so we do not have the windmill and we do not have PPEs yo pesa me kunyu amaji me kunyu amaji yuko kwaizodamili yuko now in that process internal lenders will lose trust with the government and what will the government do? it will borrow abroad now if it borrows abroad then that debt is expensive ma nainchi anawumiya yo manu naskiya awa tuwa powa pendarege kwa tuitawa kisema serikali siyombetena because the government has not shown them what they have done with the money but that guy if he is in juja or samu in Nairobi a kukuapokwa kwa kuna dispensary serikali zeme today we are borrowing to jenga dispensary ma aliflani juja we go ahead and borrow the money and then we end up with jenga dispensary samu in juja and this guy who used to track all the way to Dika or to Ruiro to go to a dispensary aengi a dispensary ambaya na juho kwaili gavaili yomba ni mekuji ka jenga then Kenyans will have more confidence in the government borrowing actually boys now go to corruption cases we have had on muna muna mombuna corruption here I don't know to in your own opinion Jona I don't know to to what limit to what magnitude do you say corruption has injured the the rate of borrowing and how and the payment as in would you say would you say corruption in me in miaribu everything for the borrowed money have you seen it being put into proper use the money has not been put into proper use first of all and corruption who's alone is more is more written with the readership and for instance I think this is your last year our apartment raised the cup the borrowing cup up to think 9 trillion ya 9 trillion ya from 6.7 6.7 I think 6.7 to 9 trillion why did you do so was it necessary have we accounted for the money that we have been borrowing in the past 3 or 4 5 years so what I would say is corruption has really affected our development so far but at the same time our leaders should be very cautious with the deaths that we have job in relation to corruption that we have it has been a pandemic in our country we hope we will get the virus very soon and just like he's mentioning of the it ends down to the kind of leadership the terms of payment it's true we have borrowed critics will say we have borrowed so much or too much are we in a position to repay our debts and maintain the standards of living of every individual in this country especially the I don't want to say the middle class because actually those are the voters allow me to say a big no if there is someone could if there is a way someone could speak in capital letters I'll say no we are not able to pay the debt and service the lives of Kenyans and this is it you see again sometimes and you see now when it comes to corruption it's very hard for me to maintain a conversation in English these are points as well as because of the big pain that corruption causes in this country now let me touch on the 9 trillion that my friend Jonathan has talked about Hilary let me ask you why did we waste time in class 6 studying ratios and percentages when our parliamentarians people who are earning over a million shillings per month are advising the government or ratifying a government's decision to put a cap using what we call raw figures 9 trillion we don't do that in economics the best way to express your decisions use ratios and percentages the IMF has put for all developing countries like Kenya the cap is 30% of your GDP you should not borrow beyond there then our parliamentarians put a cap using figures raw figures we can borrow up to 9 trillion now this 9 trillion is a percentage of what who told these parliamentarians that our GDP will keep growing they should have given us a percentage such that if we are borrowing 30% and our GDP this year is worth a billion to do it to naomba 333 billion shillings to kiaendele anu jinga majuwa anu se maga ingekua siu jinga inzi ingetengeneza asali and that is exactly the case for Kenya ingekua siu jinga saizi Kenya ingekua mahali Singapore Malaysia and other big countries are and it's because we have the potential but Hillary these guys are telling the government or they are ratifying a government decision that we borrow up to 9 trillion what if our GDP goes less than 1 billion will we still go ahead and borrow the 333 billion we should not we should borrow if our GDP now comes to 720 billion we should borrow at that of that which is somewhere like to 40 billion but now what our parliamentarians did wakana tukia wa tunna fanya witu kuhu mitaani tukia wa tunna dance jerusalema the parliamentarians came and said 9 trillion not a percentage of anything not a ratio of anything just 9 trillion now if they were sincere these people should have gone ahead they said now as the government borrows up to 9 trillion then the government should do 1, 2, 3 to increase our GDP they didn't do that now the corruption comes in here there must have been a reason why the MPs did that kuspuku anezima projects they will not get kickbacks we should not feel ashamed to say that our debt is the money we borrow and we are in capital projects and that is where anytime kuna scandal Kenya NYS kutahuna some MPs, some Senators, some ministers supplied you go everywhere MPs even in the finance committee supplied so if the misadvisory comes in here they are advising the president whoever borrows to borrow externally But they get their kickbacks if I borrow from the commercial banks in Kenya, if I tell you the tbil, the 91 day tbil is 10%, that is it 10% and will give it to a Kenya, but if you go to China, you will tell them to partia 10 billion to see if you can not buy that contract, we have tender prenoir someone who does nothing Nelson t a qt wear ka kua thi na Sirikali ko tilewa mkupatia wa se wa lo kichar samu ya chakula, but China will come calling, surrender your securities or pay our loan. The government will take the priority to paying the loans, so ana inchu wa tendele ya kukufanja. Actually what we have here behind me is the percentage of the external borrowing and internal. We see it went, it lives for the year 2019, it went as low as 48% the internal borrowing and the external went to as high as 52.0% if I'm seeing it right here, 52.0%. Is it worrying too much kwa percent just as compared as within? Yes, it is worrying because external borrowing is more expensive than the internal borrowing. So how are we going to pay? What are the terms? Why should we not borrow lo kari which is cheaper than the external than borrowing externally? So that should be very worrying to us as Kenyans. Job, is it a worrying state? So if you look at that graph, that thing, that one is a leadership crisis and I'm calling it a leadership crisis because look at the years. The first year there if I can see very well in that graph is 2012, 2013. 2012, 2013. 44.5% that is external debt and then the internal debt and let me tell you, those people who draw graphs there is something about colors. Atawale wa nafunzi wa koshule they should not ignore colors when it comes to doing graphs. The red shows there is some danger somewhere. It was not a coincidence that the external debt is put in red. Ya, it's called presentation of data. And the data presented in red there shows it's less favorable than the one it blew. Now what is happening? In 2013, 2014 that is another government. 2014, 2015 same government up to currently, 2018, 2019. So what is happening? The red which means danger is going up. The blue which means a safer zone is coming down. And you can see the V-shape from 2013, 2014 that is the 55% in 2012 versus 44.5% that is the external debt we had. As we speak in 2016, 2017, Zili Badilishana. Now we borrowed 52.1% externally and 47.9% internally. Why would we do that? Johnathan has said the external debt is very expensive. My friend, atawale mwenye unaju, kikopa kwa beshte ako, it's always easier. So why are we ignoring loans from within and running for debt outside? If you ask me why we are doing so, those people who have advised the country to borrow abroad have their hidden agenda. And it's because it's possible to get kickbacks from all the projects from those loans. So why are we ignoring loans from within? I want the external debt service. So the external debt services, I'm saying it went as high as 76%. This was between 2013 year. No, this one, the other one. But we can still work with this one here. You see, external debt services growing but erratically. The service provided by the money that comes in. And this was between 2017, 2018 and 2019. We could say about this year as we conclude our interview this morning, our discussion. Job, what do you make of this graph? Well, this is how we pay our loans. You can see the internal debt, inagama nene ngingi, na inalipo tui with a lot of ease. Up to 76% wuna unahuko. Then the total external debt service. How much have we paid externally? Now in 2012 and 2011 we only paid 28% to external lenders. Now in 2017, 2018 and 2019 we paid 48%. Which means there was a 20% change in the amount of money we gave to people abroad. Now why this is a very worrying trend? It's because if we had borrowed internally, then we paid internally. He passed it atumua hapa tu Kenya. Kusa idea vijana wetu. Kusa idea all the businesses in Kenya. But now what are we doing? All the money we are using to pay for our loans. We have started sending a lot of money abroad. In 2011-2012, kaziografu kiangaliya the two of them had to 100%. Tu lituwa na shilingi na umoja. Tu lituwa na shilingi na umoja. Yakulipa deni. What we did, tu lilipa 72 shillings wako peshajuwe tui internally. Then tu kalipa 28 shillings maju. Now in 2017, 2018 what we did, we paid 52 shillings to our people and paid 48 shillings abroad. That is 20 shillings more than we had paid in 2011-2012. So the thing here is we are getting our money internally. Yo yag GDP na sasa tu meanza kwipatiya na ngambo. So tziti tu tabaki na nini. So at the end of the day we have nothing. Finally for the share of total loans by sectors. This one we have from the energy infrastructure. We have environment protection. We have agriculture. This is the share of total loans by sectors. And I see these are some, what will I say? Kuna sectors na zimebaki tu, they don't get much and they don't get little. They are still at the same point. From 2015-2016, 2017-2020 a sector like the energy infrastructure has got 80% from the money that comes with it. Still 80% and until last year 2019 it had 65% which was the share that it got. Jona sorry, in your sector because most of the money that comes in goes to the constructions, infrastructure. From the policies made by the government and the parliament like we were saying. Do you see any positive future from the policies that are made to protect the money that comes in? Because we have contractors like job mentioned of tenderpreneurs. What will be the future? I think it will be the future of books. The future is not very bright based on the borrowings. For example, on average the amount of money in terms of percentage that goes to energy infrastructure and ICT is 72%. When we invest in infrastructure and ICT and energy in terms of profitability, how much it will give at the end of it all. If the benefits are not coming in the short run after like 10 or 15 years that is in the wrong run. Are we going to benefit if not all of years? Assuming last year we borrowed at 100 shareings per dollar. Do you know that we are servicing the loan at extra? If we are paying at a rate of 10 shareings per dollar, current rate. That means apart from the interest rate we are paying extra 10 shareings more because our currency is not going well. And that is where my concern is. Allow me to say something on this table here. You know, sometimes we have a problem with our money. We have a problem with our money. Energy infrastructure is 72% of the money we borrowed. 72% of the money we borrowed is 5% of the money we borrowed. That is the question I wanted to ask. In distribution of the funds, are they going to the sectors that can repay the loans? No, no. So if we are paying $3 billion, then you don't empower the Mira farmer somewhere. You don't empower the tea farmer and the maize farmer somewhere. We are paying $3 billion. We are cooking billion marathons and such things. So I think what we should do here is a balance. So of course we understand that the public debt is meant for infrastructural project. But why can't we have the internal debt now improving other sectors like agriculture? Why should we build a road for the sake of building a road? Education should also contribute to paying that loan. But look at the share of education. 2% security, I think 1% social and culture, something recreation. Like the arts that we are saying talent will bring a lot of taxes for us to be able to service these loans. 1% and it's all because these capital projects are giving money to tender prenuas. And I think housing should be here because it is one of the big four agendas. Exactly. Project we should be seeing it here. And let's thank you so much gentlemen for finding your time and coming here. If I could get your final thoughts very fast. I'll begin with you Jonah. Final recommendations, your final words on this. My final combination, this is what I would say. Let government restructure its loans. The advisors, the economists, the fiscal policy planners. And advise the president to restructure the loans. If we have, if the current government has been borrowing more from the commercial banks. All the external market through commercial banks like the Bank of China and the others. Advise the government also if it is possible to resell this loan to bodies like IMF and Wall Bank. Why it is cheaper and then again for some grace period. Yes, that way because we are not in a very good place economically. We will be able to recover. Okay, job, your final words. My final words, debt is not bad. Neither is it very good. But with good management, debt is good. So let Kenyans contribute to management of our manis. By ensuring the right leadership is in place. Alright Feinaf. Thank you so much for coming and finding time for Raz and for our audience. To try to demystify the kind of state we are in in terms of debt or public debt. And Bakum thank you so much for your comments and staying with us. Continue keeping it why in the morning I'll be back in a bit with another discussion. We get to know someone and remember it's related to what we began last week. Matters, career path, keep it why 254. My name is Adereva Hilawee. Good morning.