Treasury sees no short-term impact of Brexit on Kenyan economy
Treasury Secretary Henry Rotich. He said Kenya already has a build-up of reserves and a caution facility from the IMF to safeguard against any possible shocks should there be any. PHOTO | FILE
What you need to know:
CS Rotich says Kenya already has a build-up of reserves and a caution facility from the IMF to safeguard against any possible shocks should there be any.
Some analysts say Kenya’s Tourism could be hit hard as it would become costlier for British travellers to tour Kenya.
Kenya's Treasury projects no immediate impact on the country's economy following a landmark decision by British citizens to quit the European Union (EU) in a hugely divisive vote.
Treasury Secretary Henry Rotich said Friday that while Kenyan officials are keenly monitoring the unfolding events in Britain, which is Kenya’s former colonial master and once biggest trading partner, Kenya is adequately buffered against any possible immediate external shocks arising from the decision.
“We do not anticipate any adverse impact on the economy in the short term. We are however monitoring,” said Mr Rotich.
“The government and the country has sufficient resources that we can use to stabilise the economy in case of any impact we could have. We already have a build-up of reserves and a caution facility from the IMF to safeguard against any possible shocks should there be any,” he added.
He said it is too early to make an assessment at the moment of the potential impacts to the Kenyan economy.
“Of course the weakening of the sterling pound means the strengthening of the Kenya shilling and there are impacts from our exports to Kenya and imports to the UK and this will impact the flow of goods. We expect positive and both negatives and our jobs is monitor and take appropriate action to the direct and indirect impact,” he said.
His comments were echoed by economist and University of Nairobi lecturer Prof Michael Chege who said Kenyans should not panic about an adverse economic impact of the UK's vote to leave the European bloc.
Prof Chege said trade tariffs under the aegis of the European and non-EU countries would be renegotiated over a two year period, hence giving Kenya adequate time to monitor and adapt.
The don said most of Kenya's international trade had shifted from the UK to her regional neighbours like Uganda and Rwanda.
He however said Kenya’s Tourism could be hit hard as it would become costlier for British travellers to tour Kenya.
Imports from the UK are also bound to be cheaper following the weakening of the sterling pound, he said.
"Our exporters to the UK will suffer a loss due to the weaker pound sterling. Our imports from the UK (including used cars, machinery, medicine) will be cheaper relative to China, Japan etc. paying for university education in UK by Kenyans will be cheaper. Tariffs facing Kenyan exports to the UK to known over the two years of exit negotiations between UK and Europeans", said Prof Chege.
CEO of Rich Management and Nairobi based analysts Aly Khan Satchu termed the decision by the UK to leave a “seismic vote whose spill-over effect is going to be felt world-wide.”
“It might well portend the demise of the European Union as other unhappy citizens decide to throw in the towel with regard to the European project. We have seen the Pound slump to a 31 Year Low and incredible once in a life time volatility in the financial markets. I have to believe this volatility will be imported into our Trading Relationship which is long and deep. Our fresh vegetables can be found in all the supermarkets in the United Kingdom and I believe the trade is worth a billion pounds a year,” he told the Business Daily in an interview.
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