This archive report was first published on 11 November 2019.
Published on November 11, 2019, by BANKELELE
Kenya's economy is a paradox - foreign investors are flocking in, but locals are struggling to find jobs. The Business Daily and Daily Nation recently featured an advertisement from a seasoned multinational executive seeking a director of finance or administration position, sparking confusion about the state of the economy.
Economist David Ndii warned that the country was in a free fall until the next election, unable to change its political course. However, global banks have reported positive trends, with Kenya ranking third in the Absa Africa Financial Markets Index and improving its position in the World Bank's 'Doing Business' report.
Despite these reports, locals are pessimistic about the economy. A top manager at Kenya Airways shared a shocking experience on a recent flight to Amsterdam, where not a single black Kenyan passenger was on board. This contrast between foreign investors' optimism and locals' pessimism is perplexing.
So, what do foreign investors see that locals don't? Is it that Kenya's problems are not as severe as those in other emerging markets? Or is it a lack of positive news about the country's economy? The answer lies in deciphering local wealth trends, which are often secretive and difficult to track.
Could it be that if every local business person says there is no money in circulation, and that the economy is bad, then it becomes bad? The government has launched initiatives like Stawi for informal traders, but the gap remains in providing vital working capital for businesses with fewer collateral restrictions.
What else can the government do to enable people 'kwa ground' to feel the goodness of the economy that foreigners are seeing? Removing interest rate caps, as suggested by Treasury Cabinet Secretary Ukur Yatani, could be a step in the right direction.
