Moody's is betting against the young people of Kenya.

Moody's, an american credit rating agency upheld their negative outlook on Kenya; they've essentially bet against the Kenyan people without proper context. They downgraded Kenya's credit rating from a B3 to Caa1, according to their rating system Kenya is speculative, of poor standing and is subject to very high credit risk. This warns potential investors of the risks associated with lending to Kenya and will in turn make it more difficult for Kenya to access credit at good rates. Since way less creditors are willing to lend to Kenya, the ones who are will demand a premium return ie higher interest.

Now you'd ask yourself, who cares what an american company has to say about Kenya's creditworthiness? Well, a lot of the right people do; investors who aren't ready to dive too deep into the details rely on Moddy's and other such companies, to help them understand the kind of risk they take on when they decide to invest in foreign markets. Kenya's credit rating downgrade is bound to have an impact on the economy of the country, with the enormous debt on the Kenyan government's books and drying credit lines, the government is put in a tough spot; should they prioritize debt payments and maintain the country's creditworthiness at the expense of the populace, or prioritize its citizens at the expense of the nation's ability to borrow in the future. Kenya's leadership will have a hard time striking a balance and ensuring everyone's happy.

The country's rating was downgraded after the government was unable to raise taxes through a proposed finance bill that was fought by the people through nationwide protests. The tax hikes, recommended by the IMF and other stakeholders, would've raised an estimated extra $2.7 billion which was meant to pay off some debt and reduce borrowing. However, the people of Kenya, led by the youth, took to the streets in protest of the proposed hikes; after nearly 2 weeks of protesting, the president heeded to the people's cry by not signing it into law. According to Moody's this was not the right call, the president was supposed to forge ahead in total disregard for his people. Not sure whether that's how they'd want America run. Their leadership, with experience running corporate organizations might be missing the nuances required to lead a nation. Unlike a corporation where the chief executive's word is final, when leading a republic, the elected 'chief executive' is obligated to listen to the people he leads.

After deciding to cut costs, which is always a good thing for any business or even a country in this case; you'd expect the rating to be upgraded since the debtor is choosing to live within his means. But Moody's seems to disagree or might it be that living within our means might not be good for business; they are a financial services company after all. I am yet to meet a lender who would like a debtor to live within his means.

Conclusion

The future looks bright. Recent events have shown that the youth of Kenya want a better future for themselves, a better Kenya, and they're ready to fight for it. The ingenuity and resilience of the Kenyan people will see them through the possible tough times ahead. The president is making the right choices when it matters most and is gaining the peoples confidence, with the right team around him I believe he can lead the nation through this difficult time.

Resources

About Moody's rating , Virtual event for more information