When the shylock comes for his pound of flesh…

Photo of African Children Holding the Chinese Flags

Kenyans of average income continue to dig deep into their pockets in order to buy essential commodities that have recently doubled prices owing to the perceived addition of VAT on petroleum.

My association of the term ‘perceived’ with the 16% or 8% VAT implies that President Uhuru Kenyatta did not sign into law the bill presented before him. Suffice it to say, there is no law yet, operationalizing the 16% VAT or 8% VAT.

The economic situation we find ourselves in did not creep overnight while we were asleep, to the contrary, we watched comfortably as the government took debt after debt. Did we know that the shylock would come for his pound of flesh? – Well, our creditors have come collecting.

Kenya is 5 trillion shillings into debt, money borrowed from international lending institutions like the International Monetary Fund (IMF) and foreign nations including China.

Word on the streets is that a number of African countries have fallen for what is now turning to be the Chinese Debt Trap. It is in record that most African countries borrowed heavily from China in the years beginning 2008 hence China remained consecutively Africa’s largest trading partner until the year 2011.

During this period, economists argue that global interest rates were low. This was due to the financial crisis of 2008 in which many African countries, including a majority of sub-Saharan states, resorted to borrowing huge loans to fund mega infrastructural projects.

It is sad that ten years down the line, the very countries that borrowed ambitiously then, are either overcome by debts or their GDP is debt ridden to a tune of 50%. 

It is not a secret any more that African countries are now ‘paying China, in kind’. 

Photo of Kenneth Kaunda International Airport also known as Lusaka International Airport, fenced off by banners written in Chinese language

In Zambia for instance, Kenneth Kaunda international Airport is set for a Chinese take over, the Zambian Broadcasting Corporation is allegedly owned 60% by the Chinese, this situation is made worse by the fact that work that would otherwise be done by the locals is taken also by the expats.

Photo of Hambantota port in Sri Lanka, now owned by the Chinese

In Sri Lanka, the citizens can only watch from the sides as their port is owned and run entirely (for 99 years according to the lease statement)  by the Chinese after their government could not payback what they owed China. 

Arguments being floated as to why China is offering mouthwatering deals to African countries tend to point out a neocolonial agenda, but that is neither here nor there. 

It would be unfair to heap blame on the creditor, when African countries committed to the terms of the economic engagement set before them by the Chinese. 

President Uhuru Kenyatta signing a bill into law. Courtesy: Nation Media

A closer look home, President Uhuru Kenyatta, has called for a tightening of belts as he introduced austerity measures including the call to raise tax on petroleum by 8% which is set for debate on Thursday 20^th September.

The president’s call is a welcome move by political players NASA and Jubilee party who after serious consultation with their supremo, agreed to support the 8% VAT raise on petroleum. 

What Kenyans have not payed attention to however is that the bill proposes to have 16% on internet data and sim airtime, a move that could see Kenyans pay dearly for their time on cyberspace. 

The hope Kenyans can hold dearly on is that somehow the proposed bill does not pass though in parliament and that the debts are payed back somehow.

Frankly though, we cannot eat our cake and have it; the 8% petroleum bill would either pass and Kenyans suffer the high cost of living or Kenya defaults China debts and suffer when the Shylock comes for his pound of flesh.