Kenya will feel Brexit impact but we are prepared, says Treausry CS Henry Rotich
By Patrick Alushula | June 26th 2016
National Treasury Cabinet Secretary Henry Rotich has assured that Kenyan economy is prepared to handle ripple effects of Britain's exit from the European Union (EU).
Addressing journalists immediately after the UK voted to exit the EU, Mr Rotich said Britain has been a long standing traditional partner and its decision will have both short and long-term impact on Kenya.
He said since Kenya participates in the international capital markets and Britain is a financial hub, Treasury is monitoring what is happening on the financial markets.
"Obviously any development which will affect the flow of finance from UK because the exit may have an impact on financial flows to African countries and also to Kenya in particular," he said.
As UK's sterling pound lost ground against the US dollar, Rotich said that there is likely to be a flow of funds to the US and eventually lead to a stronger greenback.
On the weakening sterling pound against the shilling, Rotich reckoned that it will have an impact on flow of exports and imports to and from UK.
A strong shilling is an advantage to importers since they will spend less. But Briton exporters to Kenya will lose out since they will receive reduced revenue from Kenya. Rotich is bullish that government is well prepared to cool any shock that may hit the country. He said that Treasury is banking on an improved balance of payment to quell the shocks.
"Government has sufficient foreign exchange resources that it can use to stabilise any impact that the financial flows may create. We already have a buildup of reserves together with an insurance package from IMF (International Monetary Fund)," he said.
With the exit having happened yesterday, Rotich said it was still early to assess the full impact but "we are monitoring very closely the development." He said appropriate action will be taken should there be any major impact.
However, he added that it may be too early to make full assessment since some effects may not be immediate. "It is immature to take action now unless we see impact---The exit is still a process that has to be done under the EU treaty which may take a while before a full impact comes into place," explained Rotich.
Part of the long term effect, he said, will be for Kenya and Britain to re-negotiate trade agreements since until the Brexit, the Kenya-EU trade agreement was covering Britain.
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