According to the new report by the Central Bank of Kenya (CBK), financial commitments and debts to foreign countries went up by Sh. 1 billion between 2020 and 2022.

The indebtedness of foreign liabilities has been on a continuous uptrend, being as low as Sh. 1.75 trillion by the close of 2020 and moving to Sh. 2.07 trillion by the end of 2022.

Foreign liabilities represent the net financial obligations of the country toward entities outside the country.

Indeed, it shows the financial exposure of the country to the different entities outside it and even indicates the foreign investment and borrowing of the country.

High foreign liability levels may be indicative of large foreign investment; however, they might go on to indicate potential monetary weaknesses where the country relies greatly on external financing.

Data from the CBK depicted that European countries command the highest share of the said liabilities at 38.8%, 35.5%, and 37.1% for the years 2020, 2021, and 2022, respectively.

“The United Kingdom was the primary contributor, making up 47.2%, 49.1%, and 47.2 % of the European liabilities during these years,” CBK indicated in its 2023 Foreign Investment Report.

Other key European contributors were the Netherlands, France, Switzerland, and Jersey, whose collective liabilities increased from Sh. 297.8 billion last year to Sh. 336.3 billion in 2022.

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The African continent retained the second-largest source of foreign liabilities in the period and commanded a 29.1% share in the summarized year of 2022.

South Africa remained the largest investor in Africa, with liabilities accounting for 37.5 % of all on the continent increasing from Sh. 199.0 billion in 2020 to Sh. 233.8 billion in 2022.

Major contributions also came from Mauritius and the Democratic Republic of Congo, with the entry into the latter market—the East African Community—happening towards the end of 2022, significantly improving liabilities from the EAC bloc to Sh. 163.2 billion in 2022 from Sh. 32.9 billion in 2021.

Asian investments also grew to Sh. 265.7 billion, making a 17.6% rise from the Sh. 225.9 billion of the previous period.

Of these, India held 43.0% of the liabilities in 2020/2021 and 42.9% in 2022.

“Africa’s dominance was significantly boosted by the inflows from South Africa, Mauritius and Morocco, generating Sh. 91.6 billion, Sh. 32.7 billion, and Sh. 26.8 billion in 2022, respectively. The foreign liability inflows from International Financial Institutions/Organizations recorded a 3.5 per cent increase from Sh. 41.8 billion in 2020 to Sh. 43.3 billion in 2022,” CBK stated.