These three economic threats may hinder Kenya's prosperity in 2018

Among the biggest economic threats facing Kenya according to ControlRisks is the tension between counties and the national government.

In a new report, global consultancy ControlRisks says that while there are already signs of recovery after a tough political season, Kenya still face persistent risks that could affect decision-making by investors coming into Kenya next year.

Among the biggest economic threats facing Kenya according to ControlRisks is the tension between counties and the national government put off investors.

“The government will need to consolidate stability and focus on building effective working relationships with county governments to keep political risks at bay,” says ControlRisks in a statement.

After a bruising election in which opposition chief, Raila Odinga boycotted the elections citing electoral malpractices more than ten counties have announced they don’t recognized the presidency of Uhuru Kenyatta and have passed laws establishing people assemblies in line with National Resistance Movement wishes opening a war path between them and the national government.

Until this is resolved investors are likely to be skeptical to invest in Kenya due to this precarious situation.

High Public debt

It is an open secret that Kenya has an insatiable appetite for loans to fund mega projects.

Kenya’s public debt has been ballooning over the last few years, growing to Sh4.4 trillion at the end of September in comparison to less than Sh2.5 trillion in December 2014.

The Treasury has further hinted at borrowing more money in 2018 to offset some of the loans that are reaching maturity.

China is the country top lender and in 2017 advanced bilateral loans to Kenya amounting to Sh487 billion ($4,733.94 million).

This is worrisome and financial institutions such as World Bank, IMF and Kenya Institute for Public Policy Research and Analysis (Kippra) have warned Kenya to go slow on its borrowing spree lest it risks crossing the tipping point and start borrowing from Paul to pay peter.

Goodwill of multiple governments within East Africa

Apart from, political threats to businesses Kenya prosperity will also depends on the good relations between Kenya and its neighbors in East Africa due to the increasingly cross-border nature of infrastructure projects such as Standard Gauge Railway which rely on the goodwill of multiple governments within East Africa.

Kenya and Tanzania have had trade squabbles for a while now which is showing no signs of ending anytime soon.

Tanzania has imposed trade tariffs on products from Kenya despite East Africa having an open door policy.

Last mount Tanzania went a step further and confiscated  and auctioned more than 1,300 cows from Kenya which had crossed over to Tanzanian border.

Tanzanian President, John Magufuli once a a darling of foreign investors later released a terse statement warning Kenya that his country was not a grazing field for Kenyan animals.

This is after the Kenyan government had written a protest letter complaining about the auction,arguing it had been done without the its knowledge or consultation which was against the spirit of cooperation between the two friendly nations.

A few days earlier, the country burnt to death 6,400 one-day-old chicks from Kenya, on suspicion they could spread bird flu.


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