Kenya Granted Standby Credit with IMF in Case of Economic Turbulence

Kenyan officials obtained a $1.5 billion credit line with the International Monetary Fund (IMF) as a safeguard against drastic economic downfall, according to Reuters. The International Monetary Fund notes that such factors as diminished security, inclement weather, and unfavorable international markets could destabilize Kenya’s stable economy. The Kenyan shilling gained steady ground in 2016, and the economy achieved solid expansion in 2015.

Kenyan officials obtained a $1.5 billion credit line with the International Monetary Fund (IMF) as a safeguard against drastic economic downfall, according to Reuters. The International Monetary Fund notes that such factors as diminished security, inclement weather, and unfavorable international markets could destabilize Kenya’s stable economy. The Kenyan shilling gained steady ground in 2016, and the economy achieved solid expansion in 2015.

Though the Kenyan economy is in a better position than other African economies, multiple long-term factors could place the economy in jeopardy. The East African country has succeeded in boosting the economy through infrastructure investments, and the IMF has suggested that the government cut its deficit while maintaining active infrastructure projects to sustain growth.

While infrastructure spending is a noteworthy pursuit, officials run the risk of draining state finances while worrying investors who are already uneasy over unstable market conditions. Kenya has thriving agriculture and manufacturing sectors that yield substantial tax and overseas income, but it is not enough to propel the African country to the next level of success. Even though Kenya has one of the most developed industrial bases in Africa, manufacturing output remains lackluster.

Security Concerns

In addition to lacking economic status, Somali terrorist group al-Shabaab has compromised Kenya’s security with numerous high-profile attacks plague the nation, and authorities face increasing radicalization among citizens.

Kenya has launched incursions against al-Shabaab in Somalia, but detractors charge that officials have failed to establish a safe atmosphere in the country. Furthermore, critics contend that the government fostered radicalism through systematic discrimination of Muslims and the alleged murder and torture of suspected terrorists at the hands of security agencies.

With that, one of the most glaring issues is the lack of opportunities for young males, which makes them susceptible to criminality and extremist propaganda.

Youth Employment Problem

Another long-term problem that holds back Kenya is a high unemployment rate, particularly among young people. Even though Kenyans rank high in terms of entrepreneurship and innovation, young people do not have access to viable opportunities, and the labor market needs significant reform. Kenyans below the age of 35 suffer from an 80% unemployment rate, including a youth unemployment level of 35% notes The Guardian.

Moreover, many young people in Kenya lack the necessary skills to compete in the world economy. The government aims to encourage innovation and job programs for young people, including efforts to educate more young girls, but authorities have tried these measures in the past with little success, and the jury is out on whether such campaigns will be successful in the future.