A Global Risk report from the World Economic Forum in Davos stated that the debt crisis was the biggest risk Kenya was facing.
The report released on Wednesday, January 11, noted that Kenya had defaulted on its debts leading to a public debt stock.
According to the report, debt crises occur when corporate or public finances struggle to service debt accumulation.
Debt accumulation further results in mass bankruptcies or insolvencies, liquidity crises, or widespread defaults.
However, researchers in Kenya stated that there was no need for alarm as the country was doing better than stated in the report.
Speaking to the media on Wednesday, January 18, Judd Murigi, the head of research at ICEA Lion stated that Kenya’s debt metrics were better than that of other countries that had defaulted such as Ghana and Zambia.
“As long as the government continues its focus on cutting costs and controlling additional debt, then the risk of Kenya is lower at this time,” Murigi stated.
According to the report seen by Kenyans.co.ke, the top five risks identified by the Executive Opinion Survey(EOS), the cost of living was indicated as the second biggest risk Kenya was facing.
The report explained that the cost of living as a risk meant that a high population of Kenyans were unable to maintain their lifestyle.
“This occurs due to an increase in the cost of essential goods which are not matched with a rise in real household income,” the report read in part.
Employment and livelihood was indicated as the third crisis, owed to a rise in unemployment and underemployment and an industry mismatch between labour and supply demand.
Geopolitical contestation of resources which the report stated resulted from the demand for and competition over natural resources was noted as the fourth crisis that needs to be addressed.
The fifth crisis the report stated that Kenya was facing was the failure of climate change adaptation.
“This results from the failure of governments, businesses, and individuals to enforce, enact or invest in effective climate-change measures to adapt to climate change,’ the report read in part
Addressing some of the crises mentioned in the report, President William Ruto in his Jamhuri Day Speech in December 2022, stated that the government had put in place plans to ensure debt repayment and an increase in tax collected annually.
“The Kenya Revenue Authority is now implementing our new tax administration policy that will inject much-needed revenue into the economy.
“We have commenced our plan to grow 15 billion trees on 11 million hectares in every part of Kenya by 2030,” Ruto stated.
Additionally, the Head of State added that the government would make housing more affordable to create employment opportunities and enable Kenyans to live in a safe environment.
“The cost of housing is a heavy burden to the majority of Kenyans and is the major factor driving the proliferation of slums.
“ We are committed to making housing more affordable, enabling more Kenyans to live in safe and dignified homes, and creating entrepreneurial opportunities,” Ruto added.