Kenyans will head to the polls on August 9 amid signs that East Africa’s biggest economy could be heading for tough times.
The country’s currency, the shilling, has depreciated sharply. This means Kenya’s treasury will struggle to repay its huge dollar-denominated debt.
The country’s debt has risen from $16 billion in 2013 to $71 billion in 2021. As a result, Kenya spends nearly 30% of its income on interest payments.
The World Bank and Eurobond holders account for nearly half of Kenya’s external debt at 28% and 20% respectively, according to Treasury data. China, whose loans have gone to infrastructure including the standard gauge railway, is responsible for 19% of Kenya’s external debt.
The coronavirus pandemic has hurt tourism, one of Kenya’s main sources of foreign exchange, while soaring energy prices threaten to scuttle the recovery that began in 2021.
With global interest rates soaring, it will become costly for Kenya to borrow or repay its lenders.
Charlie Robertson is Global Chief Economist at Renaissance Capital. He joins the show to discuss the tough decisions ahead of Kenya’s new government.
Tanzania agrees to IMF credit facility
The International Monetary Fund will extend more than $1 billion in credit to Tanzania to help the East African country recover from the pandemic and the effects of war in Ukraine.
The facility, subject to IMF Executive Board approval, will be disbursed over 40 months.
Growth slowed to 4.8% in 2020, falling to just 4.9% the following year as Covid-19 travel restrictions hit the tourism sector, a key source of revenue for Dar es Hello.
Nigeria: the public oil giant NNPC becomes a private entity
The move means that the Nigerian National Petroleum Company (NNPC), which has existed for more than 50 years as a state monopoly, will open its capital to private investment. It is also in line with a new oil bill passed by parliament last year, which aims to create efficiency in the country’s oil sector plagued by a lack of investment and corruption.
Abuja hopes letting the company go private will reduce the government’s fiscal responsibilities to it, freeing up funds for other projects.
Last year, the company said it would consider an IPO as early as 2024.