timbosho wrote:why is it not shameful for us to go to china and other countries for grants and aid after 50 years of independence? do we not have brains/skills equal to the ones the donor countries have? when will we stand up and make something worthwhile for ourselves? you end up with nothing urself when you are always asking asking and never doing anything for yourself.
Getting loans and grants from a foreign country, nothing untoward.
It is actually the norm in financing public projects. The Govt does not have a job and does not engage in enterprise. The Gov will therefore raise money by taxing business or by borrowing internally or externally.
In the case of Kenya KShs 500B is alot of money to borrow at once from the local economy. It will cause disruption in the local banking sector. There will be left with no money to lend to private sector leading to higher interest rates.
Local credit is also expensive. Bond rates are >10% whereas overseas the rates are <1% in some countries.
Lender bears the risk of default. It is not easy to get a loan of KShs 500B payable in 20 or more years from a private bank. A state backed development bank like EXIM can easily assume the risk esp where the loan is sovereign secured.
For the reasons above it is makes sense to borrow from overseas to finance huge capital expenses. The loans will be repaid with revenue from the railway, port, pipeline etc.
Did you know that the Chinese are the financiers of the US Treasury?
Life is short. Live passionately.