The Debt Crisis in Kenya and Across Africa

The immediate trigger for the recent protests in Kenya’s capital was a series of tax hikes, adding financial burdens on ordinary citizens. However, beneath the surface, lies a deeper issue – the staggering debt that the Kenyan government owes. With a booming economy, Kenya is facing a looming crisis as it struggles to avoid default. The country’s total debt, reaching $80 billion in domestic and foreign obligations, accounts for nearly three-quarters of its economic output, as reported by the United Nations Conference on Trade and Development. A significant portion of the revenue collected is being devoured by interest payments, amounting to 27%.

The repayment of this debt seems distant, casting a shadow over the country’s future. Kenya is not alone in this predicament; across Africa, over half of the population lives in countries where interest payments surpass investments in crucial sectors such as health and education. The consequences are dire, as the lack of proper education today will have long-lasting effects on future generations. Renowned economist Joseph Stiglitz emphasizes that countries experiencing financial crises struggle to fully recover, impacting their growth potential indefinitely.

Termed as the global debt crisis, this vicious cycle of unsustainable borrowing and bailouts has plagued developing nations for decades. The recent wave, considered the most severe on record, was triggered by external forces beyond any single country’s control. The COVID-19 pandemic exacerbated existing economic vulnerabilities, forcing governments to divert resources towards healthcare, vaccines, and essential subsidies. This unprecedented strain on public finances has further deepened the debt crisis, posing a significant challenge to Africa’s economic stability.