KISUMU, Kenya, Mar 28- Finance Assistant Minister Dr. Oburu Odinga has admitted that the second wave of the global financial crisis will have negative impact on Kenya\’s economy.
He said the country was bound to be affected through decline on demand for exports, weaker tourism receipts and decline in private capital inflows.
"These factors could weaken growth, business performance and confidence and that may lead to a decline in the quality of the credit portfolio in the banking system," Odinga cautioned.
Speaking during the official opening of NIC Bank branch in Kisumu, Oburu however said the first round of the crisis in the country has not been extensive.
He explained that this was because Kenya\’s economy is not largely integrated to the global financial system.
He said internal and external factors have greatly impacted on the country\’s economy resulting in downward projections of this year\’s GDP growth to 5.8 percent to between 2 to 3 percent.
His Trade counterpart Amos Kimunya has however impressed upon the need for leaders to come up with policies that will help the nation get back to its economic growth.
Last week, Kimunya said the policy makers must be adequately prepared to make decisions that can help mitigate the financial crisis facing the world and especially the African Countries.
He therefore called on the policy makers to brace for negative effects of the global crisis.
The former Finance minister lamented that many companies in Europe, Asia and other parts of the world, are laying out their workforce while others are closing down due to poor markets.
"Major exports of tea, coffee, horticulture, cut flowers, tourism and others are on a downward trend. As a result most of European and American companies are reducing their staffs to enable them cope up with the emerging trend," he said of the massive lay offs that have been witnessed in the developed world.
However, the former Finance Minister said this was not an option for Kenya which can hardly afford to cut its ambitious development spending programs such as the road infrastructure, water, agriculture and the Information and Communications.
To address the challenge, Kimunya therefore challenged his colleagues to look for ways to improve the living standards of their electorate instead of engaging in political bickering and 2012 elections campaigns.
He argued that supporting small-scale enterprises especially in rural areas could help the country to withstand similar crises.
"Young people should be encouraged to access financial support from institutions to enhance their own recoveries and be self reliance," he added.