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. (Nation Media Group)


By James Anyanzwa

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 the Democratic Republic of Congo ($36). According to the report, DR Congo has an estimated 39.74 million adults, followed by Tanzania (27.74 million), Kenya (27.47 million), Uganda (19.83 million), Rwanda (6.58 million) and Burundi (5.38 million).


In Africa, the continent’s estimated wealth per adult stood at $7,922 last year, with debt per adult at $552 in the same period. Total wealth barely changed in Africa, with exchange rate appreciation accounting for the slight change in wealth in the continent.


According to Credit Suisse’s 12th edition of the Global Wealth Report the total global wealth grew by 7.4 percent last year and wealth per adult rose by six percent to $79,952. The countries most affected by the pandemic did not fare badly in terms of wealth creation.


“Wealth creation in 2020 was largely immune to the challenges facing the world due to the actions taken by governments and central banks to mitigate the economic impact of Covid-19,” said report.


This article was published by The East African.