Brexit Is a Bigger Risk Than China for Kenya, Central Bank Says

  • No insurance against fallout of Britain leaving European Union
  • Chinese growth slowdown `overplayed' for Kenya, Njoroge Says

The possibility of Britain exiting the European Union is a much bigger risk for Kenya than the slowdown in the world’s second-largest economy, China, central bank Governor Patrick Njoroge said. 

“China is nothing. China is a bit like the U.S. interest rate, that’s not a problem, we can handle that, we have enough insurance for it,” Njoroge said in an interview on Thursday at the World Economic Forum on Africa in the Rwandan capital, Kigali. “But there’s no insurance that you can buy for Brexit.”

U.K. voters will decide in a referendum on June 23 whether or not to remain in the EU. Leaving the economic bloc could lead to tighter financial conditions, weaker confidence, higher trade barriers and restrictions on labor mobility for the U.K., according to the Organization for Economic Co-operation and Development. Economic growth in China will probably slow to 6.5 percent this year from more than 10 percent in 2010, according to the International Monetary Fund. That will contribute to sub-Saharan Africa’s economic growth rate falling to a projected 3 percent in 2016 from 3.4 percent last year.

While the decline in the price of raw materials that many African countries export to China hasn’t had a big impact on Kenya, Britain leaving the EU could lead to market volatility and divestment from the continent, Njoroge, a former economist at the International Monetary Fund, said.

“Brexit, in our view is the most serious threat that we could face,” he said. “It would affect everybody in the world, there won’t be any safe haven.”

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