Men surrounded by a swarm of desert locusts in Kenya |
The Kenya Treasury has
termed the invasion by desert locusts as a “systemic risk” that might prevent
the economy from attaining its medium-term growth target of seven percent.
Systemic
risk is the possibility that an event at an industry level could severely hurt
the entire economy.
While
estimates of the economic damage caused by the migratory pests on pasture and
farmlands are yet to be quantified, the Treasury said potential disruption of
agriculture poses systemic risks to Kenya’s economy.
“Locust
invasion witnessed in the country in late 2019 and early 2020 poses a risk to
agricultural production and food security,” says the Treasury in its recently
released Budget Policy Statement.
“(The
locust invasion) could have a negative impact on agricultural output, leading
to higher inflation that could slow down economic growth.”
Elevating
the locusts invasion as a fiscal risk places the invading insects among other
potential threats to the economy that are watched keenly by policy wonks.
Desert
locusts are considered by scientists the most dangerous of all migratory pests
because they can eventually develop wings and form a cohesive swarm, which can
cross continents and seas.
They
can devour crops from entire farm fields in a single morning.
Treasury Cabinet Secretary Ukur Yatani |
On
Monday, Agriculture Secretary Peter Munya said it would take up to six months
to bring the locusts under control.
Other
risks to the economy, the Treasury said, include public spending pressures,
particularly related to wage-related recurrent expenditures as well as climate
change and variability which it notes “has enhanced the frequency of disaster
such as landslides, droughts and destruction of physical infrastructure”.
“The
government continually monitors these risks to inform appropriate mitigating
monetary and fiscal policy measures to preserve macroeconomic stability and
strengthen resilience in the economy,” said the Treasury.
The
Kenyan economy grew 5.1 percent year-on-year in the third quarter of 2019, compared
with 6.4 percent in the same period in 2018, the Kenya National Bureau of
Statistics said in December.
In
the absence of these risks, the economy should be growing at a higher pace
averaging seven percent annually within the next three years, “due to ongoing
investments in strategic priority areas including the Big Four,” said Treasury
Cabinet Secretary Ukur Yatani.
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