Unemployment and the livelihood crisis is the biggest risk to business in Kenya today, a new survey among executives revealed, shifting focus on economic recovery efforts after massive job losses during the Covid-19 pandemic.
The CEOs in Kenya interviewed by the World Economic Forum cited jobs, debt crisis, environmental damage, prolonged economic stagnation, and terrorist attacks as the top five risks facing Kenya in 2022.
The risks are reflective of the economic vulnerabilities exposed by the Covid-19 pandemic, which led to massive layoffs and stretched State resources, exposing the huge debt crisis that faced the country.
It highlights what authorities, especially the political aspirants eyeing the presidency must address as the economy recovers.
“National risk assessments and resilience strategy reviews should be used to reveal where momentum is insufficient and greater government intervention is needed,” the report read.
Business leaders warn that joblessness poses a big threat to the economy, especially with the bulging youthful population. The UN projects that the working-age population of Africa will more than double to 1.6 billion by 2050 — a trend that could open new economic opportunities for the continent, but only if jobs can be created in huge quantities.
Worsening unemployment and poverty have been a problem for over a decade with a report by the Kenya National Bureau of Statistics (KNBS) showing that the number of Kenyans living in poverty has jumped by 15 percentage points since 2013 when the Jubilee Party took over power from former President Mwai Kibaki.
The Sustainable Development Goals Fact Sheet 2021 survey shows Kenyans living in poverty rose from 38.9 percent to 53 percent of the population between 2014-2018. The situation has been worsened by massive job losses in 2020 at the height of the pandemic that saw 737,500 workers lose jobs.
Terrorism also remains a big threat as Kenya hopes to jumpstart the tourism sector that has suffered heavily during the pandemic, including those in the informal sector.
In 2019, the economy created 847,100 extra jobs. But formal jobs last year contracted for the first time in two decades, with 187,300 positions lost as the economy shrank for the first time since 1992.
Despite 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 picked up as fast at a time when there has also been a rise in the cost of goods due to new taxes, external shocks on currency and oil as well as a slump in agriculture due to lower than average rainfall in the first half of 2021.
The Covid-19 pandemic also exposed the underbelly of the debt-fueled infrastructure boom as tax shortfalls and closure of debt markets threatened Kenya’s ability to meet its debt repayments.
Executives in Kenya listed debt distress as the second biggest threat to business even as the country turned to the International Monetary Fund (IMF) and the World Bank for concessional financing to help meet budgetary allocation and restructure debt.
Kenya also shared global concerns on environmental damage and climate change which dominates global concerns as the world enters the third year of the pandemic.
Globally, the top-ranked risk long-term risks across the world in 2022 relate to climate, the top shorter-term global concerns include societal divides, livelihood crises, and mental health deterioration.
Most experts believe a global economic recovery will be volatile and uneven over the next three years.