There is no island of the Kenyan economy looking robust right now. Banks are setting aside record sums for loan defaults, bond issuers are converting loans into property assets rather than repaying cash, whole clusters of listed companies are issuing profit warnings, and Kenya has even been dropped from an equity index for frontier markets.
Yet, there was a time when the Nairobi Stock Exchange was definitely a significant market in Sub-Saharan Africa.
Indeed, perhaps, it is this change that should be flagged as particularly meaningful. It speaks to Kenya moving into a worse position than other frontier markets, which is a matter that goes beyond the global economic pressure now at play.
For sure, it hasn’t helped that our tourists often come from Western markets that are now struggling to deal with the damage and debt caused by the Covid-19 closedowns. Holiday money is in short supply in both Europe and America.
We were also drawing significant aid funds, from micro-projects to large international programmes, such as those aiming to eradicate neglected tropical diseases, that have been axed or pared back now. Such aid payments previously provided expenses and salaries for many thousands of workers, as mass vaccinations proceeded, or community programmes got delivered.
Surging grain prices, set against our own ongoing low yields, rising oil prices as our hydropower stutters: all these factors are hurting us.
But exacerbating our own current economic decline, at every level, is the state of our public finances, now playing out through taxes so egregious that we are even seeing the courts overturn extra tax moves.
Indeed, it has become like a game of cat and mouse as the exchequer works everywhere to find extra funds. It may have been blocked from doubling the excise duty stamps, but, no sooner does one door close, than it moves to open a window elsewhere, by imposing a new levy on online foreign exchange transactions: where (public-debt-fuelled) currency woes are already hurting every single economic activity in the country through lower export earnings and higher import prices.
Creeping as it has been, the splurge of borrowing that tripled Kenya’s public debt in just a couple of years has moved inexorably to a struggle to prop up our public purse that is, inevitably, hurting every economic activity.
And that is then denying us the kind of takeoff in taxes that would get us out of this hole, borne of vigorous job growth and rising profits.
It’s a vicious and downward spiral, making the real deal, now, whether we will cut public spending early enough, or reschedule our public debt early enough, or, instead, go the whole way back to decades more of poverty.
The writer is a development communication specialist.
