World Economic Forum in Davos identifies the debt crisis as the biggest risk facing Kenya’s economy.
The Global Risk report released on Wednesday, January 11, noted that Kenya had defaulted on its debts leading to a public debt stock.
Debt crises, according to the report, happen when businesses or public budgets are unable to pay off debt accumulation.
Mass bankruptcies or insolvencies, liquidity crises, or widespread defaults are further effects of debt accumulation.
Kenyan scholars, however, claimed that there was no reason for concern because the nation was doing better than the report had indicated.
According to the World Economic Forum report, 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 were 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
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.
Addressing some of the crises mentioned in the report, President William Ruto 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.