Foreign investors who ventured into Africa the past year did reap big, and analysis shows the business is getting bigger and better.
According to Bloomberg, the continent’s sovereign dollar debt has generated total returns of 20% since the start of 2019, more than any other region in emerging markets.
The Kenyan shilling, along with Egyptian pound and Nigerian Naira all performed strongly against the dollar.
This year alone, Kenya’s economy is expected to grow by 5.8%, making it one of Africa’s most buoyant nations. These projections are based on the fact that in November 2019, Kenya’s Parliament repealed its cap on the lending rate for banks. Removal of the cap is expected to free up capital for extensive high-risk entrepreneurship. The move directly translates into the private sector boom, as opposed to the banks diverting their investments into Kenyan government liabilities. That opening in November 2019 allowed Kenya’s government room to extend Kenya’s debt to IMF to the Shs 9 trillion ceiling.
It remains to be seen IMF’s push for recognition of government guarantees and parastatal debts as part of Kenya’s loan as that will see the debt smash beyond the 9 trillion cap endorsed by Parliament.
Kenya remains one of the key markets to watch out for alongside Africa’s second-biggest oil producers Angola, Ghana, Ethiopia, Ivory Coast, Mozambique, Nigeria, and South Africa.