The rate at which the government has been borrowing amounts to defrauding future generations. The government should set up a sovereign wealth fund to protect future generations. The initial fund target amount should be KShs 500 billion. This can be raised as follows;
1. Setting aside 5% of government revenues for the next five years would yield at least KShs 350 Billion
2. Selling 20% of government's shareholding in Safaricom would yield KShs 230 Billion at the current share price.
The above would amount to KShs 580 Billion shillings.
Other ways of funding the kitty would include the following
1. Income from revenue on Unclaimed Financial Assets
2. Dividends from government investment in private firms
3. Privatization of entities such as Kenya Pipeline, Kenya Ports Authority, Kenya Airports Authority, National Oil Corporation etc
4. Royalties from petroleum and minerals
5. Revenue from special purpose funds such as Railway Development Levy etc
The Sovereign fund should then be invested in government securities such as T-Bills and bonds. This would ensure that part of interest paid on debts is earned by current and future generations.
It would also reduce the government's borrowing from commercial banks hence paving way for lower interest rates. Besides it would help stem the tide of predatory lending by foreign financiers.
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