Economy of Kenya vs Nigeria
Information on the Economy of Kenya vs Nigeria, the Federal Republic of Nigeria is located in West Africa bordering Cameroon, Chad, Niger and Benin. On the other and Kenya is located in East Africa. Nigerian’s economy relies on one sector (oil and Gas) while Kenyan economy is diversified. In 2016 Nigeria’s total national output was USD$405.1 billion while that of Kenya was USD$70.53 billion. So you can guess which country is bigger here. Nigeria’s GDP per capita was $2,177.99 (2016) while that of Kenya was 1,455.66 during the period under review.
Currently Nigeria is conducting experiments in the Forex Markets while Kenya is experimenting with bank interest rates. The country is closing on current account by importing less while Kenya is taking advantage of changes in oil prices.
In Kenya, banks have a huge exposure in Kenya Airways and other huge retail outlets. It’s important to look at the kind of assets which banks own. This is because the largest shareholders in Kenya Airways, Nakumatt and Uchumi Supermarkets are banks.
Let’s have a look at the number of banks and the population that they serve. In Kenya, there are 44 banks serving 44 million people. That means averagely each bank serves 1 million people. Is that the case? No. There are at least 10 huge banks and the rest have a smaller market share.
In the recent times we have witnessed bank failures in Kenya. What was the size of the banks which failed? This is an important question which we will answer shortly. Is bank failure a trigger of consolidation? Last year alone, two banks were acquired and two banks licensed.
Kenya is far ahead of many countries in Africa when it comes to financial inclusion. In Sub Saharan Africa countries, the Euro bond is a great issue. Kenya and Mozambique floated Euro-bonds in the international markets and once they received the money it’s expenditure was not as initially intended. This is one of the factors which has led to increase in debt servicing in domestic market. For instance, Kenya is currently repaying the loans in double digits.
Experience from around the world has shown us that it is important to switch domestic debt into foreign exchange nominated debt. It helps us make savings.
How did regulators react to bank failure?
In Nigeria regulators were very supportive to the banks while in Kenya the banks were left to deal with the crisis on their own. We did not see any buy-outs as it’s usually the case in the developed countries.
Innovation in the Banking Industry
It is no longer business as usual because banking industry is continuously receiving increased competition from technology companies. You remember equity’s thin SIM and war with Safaricom. Many people in Kenya are saving their money in MSHWARI as opposed to saving in a savings bank account. There is a great impact.
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