A few factors have contributed to Sri Lanka’s crisis:
A big trade deficit: Kenya has a big trade deficit)
Low food production: We can’t feed ourselves without over-relying on exports to feed our country. There is a looming global food crisis, and countries are banning food exports.
Sri Lanka ran out of USD reserve: There is an ongoing dollar shortage in Kenya right now. Manufacturers are closing factories because they can’t access enough dollars to import raw materials.
Sri Lanka overvalued its currency: This is what is happening in Kenya right now. CBK says the dollar is at 116, but companies are exchanging USD at over 120. The actual market rate for dollar to KES is around 125. This is exactly what happened in Sri Lanka before everything turned to shit!
Excess inflation: You bought an item at 80 bob last week, but this week that same commodity is 120 kes. Prices of basic commodities are increasing drastically overnight. I know all of you can relate.
Rising Interest Rates: Kenya’s CBK raised the interest rate by 0.5 percentage after the U.S Federal Reserve raised its interest rate by 0.5 percentage. Like that’s enough, the U.S Federal Reserve is gearing up to further increase its interest rates in the next few months. In summary, this makes it harder for Kenya to pay its debt.
Foreign investors are cashing out on Stock Exchange: This is exactly what’s happened in Kenya in the past few weeks.
I know some of you will say “but Kenya’s economy has grown”.
I got news for you: Sri Lanka’s economy was also growing exponentially before it spiralled out of control.
All those factors I have mentioned made Sri Lanka default its debts.
I’m not a prophet of doom, but the writing is on the wall.
Some people will also argue that the current inflation is a global crisis caused by COVID-19. Yes, you’re right! But developed countries are cushioned against the impact of the global crisis. Kenya is a developing country, just like Sri Lanka.
Something needs to be done to prevent an impending economic crisis in Kenya.
What do you think can be done at this point in time? I think that only borrowing more plus discipline in how the funds are spent can defer the problem, though that is a long shot given the way they have mismanaged this country. Can economy experts in this kijiji give their opinion?
The only solution is a move from FIAT money to digital money…where farmer in sri lanka na broker Kenya wanatrade sawa bila kusumbuliwa na mabroker watapeli…
sijui benk sijui gova sijui shillingi sijui Sri Lanka sijui dolla sijui oil shenanigans…digital money backed by Bitcoin…it’s the digital gold…after hyper inflation and war…
only digital money will remain…get satoshis elders before the storm hits…hamukuona karatasi za old notes bcome karatas just by declaration…noti ni karatas
With digital money…tutalipana kwa inbox na biashara ihapen bila mawaowao…we already there
As CBK governor I would base the Kenyan shilling on digitized assets kama titanium et al …sio ndorra…that is just printed…
Digitizing Africa’s wealth and trading backed on it… would revolutionalize tingz
Eg. EA has 10 zillions of x…valued at y…so…we give you so much % of x * y in terms of what your currency is worth…which is your x * y / by percentage of that in return…
Digitalize dat …we have real economic trade
Si hii upuzi inaitwa forex…biggest market In The world for brokers…digital money wanaenda retire…money is already digital…in your bank ac/ Mesa et al…digital coin is Bitcoin…rest will build on top(later few sentences I can’t vouch)
Kenyas tea, coffee, flowers, avocados are doing very well. Tourism is rebounding. Lots of forex expected into the country and increase in GDP. Remittances from diaspora also at an all time high. The future looks bright for kenya. Amefanya kazi.
[SIZE=7]Russia’s ruble is the strongest currency in the world this year[/SIZE]
The Russian ruble is the best-performing currency in the world this year.
Two months after the ruble’s value fell to less than a U.S. penny amid the swiftest, toughest economic sanctions in modern history, Russia’s currency has mounted a stunning turnaround. The ruble has jumped 40% against the dollar since January.
“It’s an unusual situation,” said Jeffrey Frankel, professor of capital formation and growth at the Harvard Kennedy School.
Great analysis but hii ni uwongo. Apparently Kenya’s dollar reserves is at an all-time high. Ubaya ni CBK iko strict sana, wako na only 2b usd kila month ya kuimport etc. So hiyo ikiisha huwa hawaingii reserves…
This is because of strong intervention by their government and oil being bought using rouble. Their currency is pretty much useless outside Russia though.