Kenya under heavy debt, but millionaires rising

Kenya under heavy debt, but millionaires rising

In 2020, the number of Kenyans with a net worth of at least $30 million, including their primary residence, stood at 90. PHOTO | FILE | NMG Kenya is churning out millionaires despite being the most heavily indebted country in East Africa. Every adult in the country is carrying a debt load of about $523. This is according to the latest Global Wealth Report by Swiss investment bank Credit Suisse.

The country has also recorded high profile government scandals including misappropriation of borrowed funds, which has created overnight millionaires while costing taxpayers about 30 percent of the national budget — translating into Ksh2 billion ($18.34 million) per day. Last year, the number of Kenyans with a net worth of at least $30 million, including their primary residence, stood at 90, having declined from 106 in 2019 largely due to the effects of the Covid-19 pandemic, according to Knight Frank Wealth report.

In Africa, Kenya has the fourth highest concentration of wealthy persons after Nigeria, South Africa and Egypt.

The study by Swiss investment Bank’s Research Institute, which was released recently, shows that while Kenya is weighed down by debts estimated at over Ksh7 trillion ($64.22 billion), the country is the richest in the region with total wealth estimated at $338 billion (both financial and non-financial wealth) as of last year. This translates into wealth per adult of $12,313 and an average wealth per adult of $3,683.

Kenya is followed by Rwanda whose wealth per adult stands at $4,188; Tanzania ($3,647), Uganda ($1,994); Democratic Republic of Congo ($1,240) and Burundi ($728).

However, a joint Debt Sustainability Analysis report by the World Bank and the International Monetary Fund shows that Kenya’s reliance on commercial financing (Eurobonds and syndicated loans) has increased and its risk of debt distress has moved to high from moderate due to the impact of the Covid-19 crisis, which exacerbated existing vulnerabilities. Kenya raised a total of $7.85 billion through Eurobond issues in the past seven years, with the latest being $1 billion issued in June this year priced at 6.3 percent with a tenor of 12 years.

According to the researchers at Credit Suisse the region’s wealth increased significantly over the past 10 years, rising to a high of $560 billion in 2020 from a low of $24 billion in 2000.

The study shows that every adult in Tanzania carries a debt load of $137, followed by Rwanda ($135), Uganda ($107), Burundi ($37) and […]

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