- Our country is not immune from these challenges that other countries are facing.
- An effective strategy is to encourage investment in agriculture and local manufacturing.
Many countries around the globe are in an economic crisis, and for most, their public finance rescue mission has almost hit the bottom of the bag.
In many developing countries, this scenario is attributable to the high costs of interest on domestic and foreign debts, low economic activity, the Covid-19 pandemic, and adverse effects of climate change. Our country is not immune from these challenges that other countries are facing.
One sector which has been adversely affected by the climatic change is agriculture. The adverse effects have increased the country's susceptibility to the global food supply shortage leading to rising food and commodity prices.
This has resulted in food imports increasing from 10 to 17 per cent of goods imported over the last decade hence translating to a 2.5-fold increase from $1.2 billion to $3 billion.
Therefore, as a country, we will need to progressively focus on investing in agribusiness for food sufficiency and export, considering that feeding the 8 billion people in the globe is a multi-trillion business.
The climate of sub-Sahara Africa, with its 12 months of favorable weather, good arable soil, and plenty of water, whether in the sky or underground, provides the perfect environment for this business.
Another challenge we have to contend with is our level of debt. A large percentage of our revenue goes toward repaying infrastructure development debt.
Our domestic economic debt constitutes almost 80 percent of the total interest cost at Sh515 billion, while foreign debt interest stands at sh144 billion.
This overhead cost is the single expenditure item on the recurrent budget that exceeds the national government’s wage bill, which stands at Sh550 billion.
Our projected revenue target is Sh2.4 trillion, while the total debt servicing is slightly over Sh1 trillion, with the projected interest cost for the 2022/2023 financial year standing at Sh660 billion.
These, therefore, call for innovative strategies to ensure that the country's external creditworthiness is not adversely affected.
Domestic financing can easily congest the productive economy as it obtains credit facilities and other resources from within, which could have been utilized by other private businesses.
An effective strategy is to encourage investment in agriculture and local manufacturing.
We can achieve this through the improvement of investment sweeteners for both local and foreign investors, and this will not only cut down on the high imports that exhaust the country's foreign exchange reserves but also has the potential to create thousands of jobs and spur economic growth.
The government's focus on creating the right environment and incentives geared towards unlocking financial resources for Micro, Small, and Medium enterprises (MSMEs) is a step in the right direction, as this could open up the country's potential to leapfrog into a newly industrialised country within the next few years.
It is particularly so considering that Kenya has a highly educated, skilled, innovative, and competitive young population with high expectations.
Therefore, creating the right environment and upholding productivity against protectionism would be a more proactive approach to dealing with the current economic challenges.