Kenya Ranked 5th in List of Most Indebted African Countries

  • Kenya's Sh4.7 Trillion debt portfolio is the fifth highest in Africa according to a new report by the Institute of Chartered Accountants in England and Wales (ICAEW).

    According to the Economic Insight Report for Africa, Kenya's debt to GDP ratio is currently at 60 percent, falling only behind Gabon (70 percent), Ghana (70), Egypt (96) and Mozambique (115).

    The analysts warned that the debt burden posed a serious threat to the country's economy that could result in stalled growth.

    They further questioned the government's failure to clearly communicate their position on huge deficits.

    “The pace of public debt accumulation and the lack of a clear communication strategy regarding the government’s plan to address deficits have raised concerns about the sustainability of Kenya’s public finances,” the report read in part.

    In the last five years, Kenya's debt has more than doubled with major infrastructure projects such as the Standard Gauge Railway (SGR) taking up a huge chunk of the funds.

    As of May 2018, China controlled 66 percent of Kenya's bilateral debt.

    The figure is expected to rise as the construction of the SGR enters its second phase meant to link Nairobi and Naivasha.

    By the time the railway terminates in Malaba, Kenya is expected to have used at least Sh1 Trillion on the project.

    [caption caption="A section of the Standard Gauge Railway (SGR)"][/caption]

    Other multinational institutions like the World Bank and United Nations have a combined debt stock standing at Ksh526.6 billion as of last year. 

    “The affordability of external loans will be determined by the yield demanded by investors, which in turn will be determined by perceptions of whether Kenya is able to keep its fiscal house in order,” ICAEW noted in their report.

    [caption caption="President Uhuru Kenyatta"][/caption]