World Bank economist Kevin Carey has revealed two major challenges the next Kenyan president will face after October election.
Speaking during a half-day Spotlight on Kenya conference held in Washington, Mr Carey stated that it will be hard for the next Kenyan government to lift interest rate caps.
An interest rate cap is a type of interest rate where payments received at the end of each period have a larger interest rate than the agreed strike price.
Mr Carey noted that interest rate caps were a major drag on the economy.
He pointed to the urgent need for fiscal consolidation (policies undertaken by governments to reduce their deficits and accumulation of debt stock) saying that the budget deficit in Kenya was at an “extremely high number”.
"The government may have reached a limit on raising revenues as a means of reducing the deficit and may now have to implement spending cuts,” Mr Carey stated.
"Putting such limits in place curtails the ability to charge interest rates they might need to compensate for risks,” he added.
Mr Carey also pointed out the unresolved food crisis affecting millions of Kenyans.
He noted that an estimated one-third of the country's population today lives in absolute poverty, defined by the World Bank as amounting to less than a $1.90 daily income.
Carey, however, offered a generally positive appraisal of the country's economic record in recent years describing Kenya’s economy as “incredibly resilient” because it is broadly diversified.
The Economist is also is an American higher education writer and policy analyst. He serves as Director of the Education Policy Program at New America, a non-profit, non-partisan research organization based in Washington.
