KENYA

RISK RATING
High
Default High Risk Score 7.50
Normal Average 4.90
Weighted Average 4.38
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The prospect of constitutional reform is growing which would clear the way for the government to seek new debt-financed funding for infrastructure and industrialisation projects. With debt servicing at almost half of government revenues and the borrowing ceiling fast approaching, Kenya is struggling to secure debt relief from commercial creditors. Kenya’s loans will come under growing stress into 2021 as tax revenues fall due to slowing economic growth. Lower export and tourism earnings and growing debt-servicing needs have driven US dollar scarcity, while the Kenyan shilling local currency hit a record low against the US dollar. The economic legacy that President Uhuru Kenyatta was seeking to build, and which underpins his deal with the opposition, has now been undermined. As a result, political infighting continues within the governing Jubilee Party between factions loyal to President Kenyatta and Deputy President William Ruto who seeks to succeed as president in 2022.

  • Kenya’s main political alliances are likely to fracture causing a perhaps irreparable rift within the governing coalition. Deputy President Ruto is building up a formidable ethno-political alliance in his bid for the presidency two years from now by reaching out to ruling Jubilee party and opposition partners who were disappointed by Kenyatta and opposition leader Raila Odinga’s own alliance that was forged in March 2018 in the aftermath of a bitterly disputed election contest. At a time of national crisis, the presidency is fractious and highly unstable, which bodes ominously for the government’s ability to manage the coronavirus epidemic.
  • A new generation of Islamist militants poses heightened risk of high-profile attacks on commercial targets. Al-Shabaab militants pose the greatest risk in Kenya’s northeastern counties of Mandera, Wajir, and Garissa, where they are likely to attack military convoys, land cargo, and public transport, police stations, and schools. The agriculture, construction, and mining sectors and NGOs staffed by non-locals are also targets. Al Shabaab’s local affiliates aspire to carry out attacks in Mombasa and Nairobi. Transnational criminal networks are increasingly coordinating kidnap and ransom of high-value targets, such as businesspersons and county officials, for financial gain. The risk of political and ethnic unrest will rise again ahead of a 2021 referendum and the 2022 elections.
  • The Big Four Agenda envisages massive spending on infrastructure projects, healthcare, manufacturing industries, and food security. The government remains obstinately opposed to the interventions by the IMF and the World Bank, including DSSI debt relief. It believes that the conditions of debt relief will block Kenya from access to commercial sources of sovereign debt, and the government needs that money to implement the Big Four projects in the next two years. Although about 47 percent of tax revenue goes on debt service, Finance Minister Ukur Yatani has confirmed more loans. Yatani is also proceeding with negotiations to restructure some of Kenya’s debt on a case-by-case basis. Yatani now plans on securing more concessional credit to finance the Big Four agenda, although key development partners are becoming increasingly concerned by Kenya’s economic mismanagement and debt accumulation.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
4.5
Expropriation, Nationalisation, Confiscation & Deprivation
2.5
Contract Frustration & Breach
4.0
Taxation
3.0
Bribery & Corruption
6.5
Regulatory Burden
6.0
Strikes, Riots & Civil Commotion
3.5
Security
5.0
Sovereign Default
7.5
Economic Volatiliy
6.5

Risk Rating Scale (small)

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