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How does the energy crisis affect the economy of Kenya?

Describe ways in which energy crisis affects economy of Kenya.

Answers

Maurice
(i) Oil crisis leads to scarcity of by-products of oil leading to shortage of raw material for certain industries.

(ii) Increase in fuel prices leads to increased transport costs which trigger price increases in almost all the sectors of the economy.

(iii) The increase in the prices of crude oil makes Kenya to spend a lot of foreign exchange in importation. This lowers the foreign currency reserve which brings about unfavourable balance of trade which slows down the rate of economic growth.

(iv) Increase in oil prices triggers the increase in the prices of commodities leading to low standards.

(v) Increase in oil prices leads to increase in the prices of farm inputs which in turn leads to reduced agricultural production.

(vi) The high cost of fuels increases the cost of production slowing down industrial growth.
maurice.mutuku answered the question on June 21, 2017 at 06:53

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