We’ve seen Kenya playing host to a number of refugees from Somalia. We’ve also seen many from South Sudan, and to some extent the DRC. What does this represent for the economy moving forward knowing that we’ve been seeing a rise in the numbers?
My second question is about falling commodity prices. What will be the potential impact of this knowing that Kenya has recently announced discoveries of commercially viable oil? What will this impact have on the domestic economy?
Final question is about the cash crunch in Kenya right now. The counties have yet to receive money from the central government when it comes to paying the wages for the staff. As IMF demands, Kenya has been trying to ensure that it has a robust policy and that there’s efficient fiscal discipline. What would be your remarks around this? Thank you.
MS. SAYEH: Regarding your first question on the impact of increased refugees on the Kenyan economy, it is certainly, an additional pressure on the economic situation in Kenya.
Of course, Kenya is not the only country that is trying to deal with influx of refugees. We see the same situation in a country like Chad as well, as more refugees from conflict are entering that country.
Of course, additional refugees do have an impact on the fiscal conditions in these countries as there are more spending pressures there to accommodate refugees. Of course, the international community helps often with refugees, but there is more wear and tear on infrastructure and also accommodations that country authorities sometimes have to finance.
Refugees do add to pressures on budgets. We’ve not done, I should say, any major new work on looking at the impact of refugees on Kenya, but that’s certainly an issue that needs to be watched and looked at in the months ahead.
On falling commodity prices, of course, Kenya currently is a beneficiary of falling petroleum and oil prices as it’s currently still a net importer of oil. But as you say, there have been discussions about investments in a new oil potential in Kenya.
Your question is whether the falling oil prices will adversely affect those plans. I think investors in things like oil have often a long term vision on the prices they’re looking at to determine whether making those investments make sense or not.
When we look across the region as a whole there’s certainly a couple of places, not on the oil front, but maybe in iron ore in a place like Sierra Leone where we’ve seen some stepping back of some investors already in response to declining commodity prices. We’ve not seen that across the board overall so far.
I think investors are still trying to look at a long term perspective about whether it still makes sense to have those investments. We’ve not seen a pullback overall. I’ve not heard that investors in Kenya or possible investors are having second thoughts yet. But, again, that’s also an issue to keep watching.
You talked about a cash crunch at the county level and the fact that counties are having difficulty receiving the revenues from this federal government level. That may be some of the hiccups in the very still new process of decentralization in Kenya. Our sense is that the Kenyan authorities so far have been doing a reasonably good job on the fiscal and macro front.
That’s reflected in the review of our precautionary instrument that we currently have for Kenya that we deem to be on track. We think Kenya has done a reasonable good job managing the pressures that it’s also facing.
It is a work in progress with devolution and decentralization there, and maybe there will be at times delays in resource flows that need to be looked at and issues on the public financial management architecture that needs to be strengthened to be sure that resource flows are smoother than you’re saying they are currently.