When a government is acting in the interests of its people foreign debts are usually on concessional terms. A majority of Kenya’s Sh1 trillion multilateral external debt is lent at less than one per cent. The alarming portion is the commercial bank debt, which formed 34 per cent of total external debt. Most of these debts exceed seven per cent interest rate and Sh288 billion (or 29 per cent of commercial external debt) attracts an interest rate of 9.4 per cent or a simple figure of Sh27 billion a year in interest. This is more than twice what would have been chargeable on a loan of Sh600 billion at two per cent!

Source: The Star November 16, 2019 05:48 UTC