I spent the last week in Zam­bia where I met one of the world’s most renown econ­o­mists and a for­mer World Bank team mem­ber. While she did not allow me to quote her on record, our engage­ment left my mind in a spin as I sought to under­stand why our country’s eco­nom­ic sit­u­a­tion seems to deep­en despite var­i­ous efforts and promis­es by our lead­ers to ease the high cost of liv­ing. She con­firmed what is now obvi­ous to many, that Kenya stands at a cru­cial eco­nom­ic cross­roads, grap­pling with sig­nif­i­cant chal­lenges that have far-reach­ing impacts on the dai­ly lives of its cit­i­zens. She gave me an exam­ple of two recent devel­op­ments — the loans from the Trade and Devel­op­ment Bank (TDB) and the Inter­na­tion­al Mon­e­tary Fund (IMF), and the impend­ing Eurobond repay­ment — that cast a spot­light on the nation’s eco­nom­ic vul­ner­a­bil­i­ties and the very urgent need for strate­gic pol­i­cy interventions.

Pri­mar­i­ly, she made me appre­ci­ate that the $210 mil­lion loan from the TDB and the addi­tion­al $683.2 mil­lion from the IMF are not mere fis­cal trans­ac­tions, they are huge alarm bells sig­nal­ing deep­er eco­nom­ic under­cur­rents. These loans, sought to sup­port for­eign exchange reserves and man­age the loom­ing $2 bil­lion Eurobond repay­ment due in June, under­score a frag­ile eco­nom­ic land­scape bur­dened by high lev­els of debt.

I got to real­ize that for the com­mon Mwananchi, these macro­eco­nom­ic maneu­vers trans­late to imme­di­ate real­i­ties of high cost of liv­ing, fluc­tu­at­ing cur­ren­cy val­ues, and the uncer­tain­ty of future finan­cial sta­bil­i­ty. Infla­tion rates, a direct barom­e­ter of liv­ing costs, have been on an upward trend, affect­ing the price of basic com­modi­ties. She gave me an exam­ple of the country’s infla­tion rate which cur­rent­ly hov­ers around 8%, marked­ly high­er than the Cen­tral Bank’s tar­get range. This uptick impacts every­thing from the cost of maize flour to fuel prices, stretch­ing house­hold bud­gets to their limits.

The great­ly endowed econ­o­mist pas­sion­ate­ly explained that gov­ern­ment bor­row­ing often leads to increased pub­lic debt, which neces­si­tates high­er tax­es (this rang a bell) and reduced pub­lic spend­ing to man­age. This, in turn, can lead to reduced sub­si­dies on essen­tial goods and ser­vices, there­by increas­ing their costs. Addi­tion­al­ly, ser­vic­ing for­eign debt can strain our for­eign cur­ren­cy reserves, impact­ing the Kenyan Shilling’s strength and influ­enc­ing import costs. At this point I was won­der­ing if she had turned to be a Kenyan eco­nom­ic prophet.

As we spoke, I absorbed that the call to action is dual, first­ly, there is an urgent need for trans­paren­cy and account­abil­i­ty in how loans are man­aged and uti­lized. The Kenyan gov­ern­ment must ensure that bor­rowed funds are invest­ed in pro­duc­tive sec­tors that can stim­u­late eco­nom­ic growth and gen­er­ate rev­enue, rather than being lost to inef­fi­cien­cies, cor­rup­tion, or confusion.

Sec­ond­ly, there is a crit­i­cal need to diver­si­fy the econ­o­my to reduce over-reliance on exter­nal debt. Sub­stan­tial invest­ments in agri­cul­ture, tech­nol­o­gy, and man­u­fac­tur­ing can cre­ate jobs, boost exports, and pro­vide a more sta­ble rev­enue base. For exam­ple, har­ness­ing the poten­tial of the agri­cul­tur­al sec­tor, which employs about 75% of the Kenyan work­force, through val­ue addi­tion and improved mar­ket access can sig­nif­i­cant­ly enhance income lev­els and food security.

Fur­ther, a thriv­ing SME sec­tor can be a pow­er­ful engine for job cre­ation and pover­ty reduc­tion. I have always cel­e­brat­ed the fact that these enter­pris­es con­tribute approx­i­mate­ly 33% to Kenya’s GDP. We must sup­port them through favor­able cred­it facil­i­ties and busi­ness envi­ron­ments to ignite grass­roots eco­nom­ic growth.

Ulti­mate­ly, we must nur­ture a cul­ture of finan­cial lit­er­a­cy and pru­dent per­son­al finan­cial man­age­ment. Under­stand­ing bud­get­ing, sav­ings, and the impacts of infla­tion can empow­er indi­vid­u­als to make informed deci­sions. The path ahead demands a strate­gic blend of eco­nom­ic far­sight­ed­ness, invest­ment in growth sec­tors, and an unwa­ver­ing com­mit­ment to the wel­fare of the Kenyan peo­ple. The time for deci­sive action is now and our col­lec­tive future depends on it. Think Green, act green!