Daniel Mwangi’s construction company in Nairobi is battling to stay afloat and has fired about 1,000 workers in the past year as Kenya’s government struggles to pay contractors.

The 36-year-old Nyoro Construction Co., where Mwangi serves as director, is just one of many Kenyan firms that have fallen victim to a funding crisis exacerbated by a weak tax take, rising debt and a public wage bill that eats up more than a third of government revenue.

“We’re not operating at full throttle,” said Mwangi, who says he’s owed bills dating back five years. Letters to state departments and meetings with government officials haven’t yielded payments, he said.

Along with many African nations, Kenya has struggled to collect and grow revenue while raising spending. The current payments crisis hasn’t been helped by seemingly contradictory policies.

Government takes on Debt

While attempting to plug the widening hole in its budget, East Africa’s largest economy has also splurged on debt to fund President Uhuru Kenyatta’s flagship Big Four Agenda — aimed at boosting manufacturing, health care, housing and farming in a bid to create one million jobs annually.

First Posted Bloomberg.com