Browsing: Depreciation of the Kenyan Shilling

• Developers targeting Kenya’s wealthy are now pricing the units in foreign currencies such as the US dollar.
• The continued upward trend in prime residential rents can be partly attributed to the appreciation of the dollar against the Kenyan shilling.
• Real estate investors are mitigating the emerging risks by deploying their capital in projects that have dollar-denominated returns where possible and in green-rated building.

High-end real estate developers targeting Kenya’s wealthy are now pricing the units in foreign currencies such as the US dollar to cushion them from losses that the devaluation of the Kenyan shilling may occasion.

New revelations contained in a report by property tracker and real estate management firm Knight Frank show that the trend gained traction in the second half of 2023 as foreigners residing and working in Kenya continued playing a pivotal role in driving the country’s upscale real estate market.

Despite economic headwinds, the prime …

• Kenya’s debt distress has escalated, with loan repayments falling due amid a depreciating shilling against the dollar.
• Other impediments include Kenya’s vulnerability to climate shocks such as drought and floods, which may derail growth over the long term.
• On the expenditure side, fiscal consolidation in the past two years has led to a real per capita spending decline.

Experts have warned that Kenya risks missing its economic growth targets in the medium term as it grapples with high debt distress and a deteriorating macroeconomic operating environment.

The country finds itself in a tight spot following years of successive borrowing, coupled with the inability of the private sector to create sufficient jobs for millions of young people entering the job market annually.

The latest finding by an economic think tank, the Institute of Public Finance (IPF), shows that since 2014, persistent high fiscal deficits have resulted in a swift escalation of …

• Kenya’s debt repayment in 2023 was majorly from the Consolidated Fund. 
• The country has faced liquidity challenges due to uncertainty in accessing funding from global financial markets.
• Analysts, however, maintain that the practice of taking on debt to pay debt is unsustainable.

The National Treasury has revealed that Kenya’s debt repayment surged to $3.69 billion (KSh600.73 billion) by December 2023. Despite an increase in revenue collection, Kenyans found little reason to rejoice as debt consumed 57 per cent of the government’s tax revenues, amounting to $6.14 billion (about KSh1.05 trillion).

Only 43 per cent of the generated revenue remained for development, salaries, and the state’s recurrent expenditure such as paying salaries.

The disclosure, titled “Kenya’s statement of actual revenues & net exchequer issues as of 31st Dec 2023,” signals a need for Kenyans to tighten their belts this year. President William Ruto’s administration anticipates higher repayments due to the devaluation …