Jobs, terrorism, national debt, main business risks
- Kenya CEOs interviewed by the World Economic Forum cited jobs, the debt crisis, environmental damage, prolonged economic stagnation and terrorist attacks as the top five risks Kenya faces in 2022.
- The risks reflect the economic vulnerabilities exposed by the Covid-19 pandemic, which resulted in massive layoffs and stretched state resources, exposing the massive debt crisis facing the country.
Unemployment and the livelihoods crisis are the biggest risk for businesses in Kenya today, a new survey of executives has revealed, highlighting efforts to recover the economy after massive job losses during the Covid-19 pandemic.
Kenya CEOs interviewed by the World Economic Forum cited jobs, the debt crisis, environmental damage, prolonged economic stagnation and terrorist attacks as the top five risks Kenya faces in 2022.
The risks reflect the economic vulnerabilities exposed by the Covid-19 pandemic, which resulted in massive layoffs and stretched state resources, exposing the massive debt crisis facing the country.
It highlights what authorities, especially aspiring politicians considering the presidency, face as the economy recovers.
“National risk assessments and reviews of resilience strategies should be used to reveal where momentum is insufficient and where greater government intervention is needed,” the report said.
Business leaders warn that unemployment poses a big threat to the economy, especially with the exploding young population. The UN predicts that Africa’s working-age population will more than double to 1.6 billion by 2050 – a trend that could open up new economic opportunities for the continent, but only if jobs can be created by huge amounts.
Worsening unemployment and poverty have been a problem for more than a decade with a report from the Kenya National Bureau of Statistics (KNBS) showing that the number of Kenyans living in poverty jumped 15 percentage points since 2013 when the Jubilee Party seized power from former president Mwai Kibaki.
The 2021 Sustainable Development Goals fact sheet survey shows that Kenyans living in poverty fell from 38.9% to 53% of the population between 2014 and 2018. The situation was made worse by losses massive jobs in 2020 at the height of the pandemic which saw 737,500 workers lose their jobs.
Terrorism also remains a great threat as Kenya hopes to revive the tourism sector which has suffered greatly during the pandemic, including those in the informal sector.
In 2019, the economy created 847,100 additional jobs. But last year, formal jobs contracted for the first time in two decades, with 187,300 jobs lost as the economy contracted for the first time since 1992.
Despite an impressive economic recovery that saw GDP rebound 10.1 percent in the second quarter and 9.9 percent in the third quarter of last year, private consumption has not recovered so quickly at a time when there has also been an increase in the cost of goods due to new taxes, external currency and oil shocks as well as a collapse in agriculture due to below average rainfall in the first half of 2021.
The Covid-19 pandemic also exposed the underside of the debt-fueled infrastructure boom, as fiscal deficits and closing debt markets threatened Kenya’s ability to repay its debt.
Kenyan leaders ranked debt distress as the second biggest threat to businesses, even as the country looked to the International Monetary Fund (IMF) and the World Bank for concessional finance to help meet the allocation fiscal and debt restructuring.
Kenya also shared global concerns over environmental damage and climate change that dominate global concerns as the world enters year three of the pandemic.
Globally, the main long-term risks in the world in 2022 are related to climate, the main global short-term concerns include societal fractures, livelihood crises and deteriorating mental health.
Most experts believe that a global economic recovery will be volatile and uneven over the next three years.