By Kenya’s Economy: Navigating Debt, Tight Credit, and Global Risks
Kenya is facing a tough economic period. High public debt, restricted credit, and rising borrowing costs are weighing on growth.
Shifting global supply chains and external financing pressures add to the challenges, raising concerns about long-term economic stability.
Raphael Agung, Group Director for Global Markets and Chief Economist at NCBA Group, says Kenya’s economic resilience will depend on three areas: fiscal discipline, export competitiveness, and access to stable financing.
Risks and Openings in the Global Market
Globally, post-pandemic supply chain changes are reshaping trade patterns, pushing up input costs, and affecting competitiveness. The pending expiry of the U.S. African Growth and Opportunity Act (AGOA) adds uncertainty.
While Kenya’s reliance on AGOA is moderate, losing it could still disrupt certain exports.
Kenya’s Economy: Navigating Debt, Tight Credit, and Global Risks
In response, the government is shifting its financing approach. It is reducing dependence on expensive external loans and prioritizing concessional and domestic debt.
High interest rates continue to crowd out private investment. The World Bank recently cut Kenya’s 2025 growth forecast to 4.5%, citing elevated debt levels, tight credit, and sluggish private sector lending.
Government debt remains a pressing concern. Balancing fiscal consolidation with public goodwill is proving difficult, especially after protests over last year’s tax hikes.
However, there are signs of optimism. The economy is projected to grow by 5.3% in 2025, driven by agriculture, tourism, and digital innovation.
Agung believes Kenya’s outlook will improve if it delivers budget discipline, pushes structural reforms, and secures reliable financing, possibly through renewed engagement with the IMF.
Kenya’s success will rely on turning policy intentions into action. With clear strategy, coordinated policy, and firm fiscal discipline, the country could navigate the current risks and build a stronger foundation for sustainable growth.
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