Weakened shilling leaves Kenya’s diplomatic missions struggling with operations, staff welfare
The most affected missions include Washington DC, Vienna, New Delhi, London, and Geneva, which operate in high-cost cities.
Kenya's diplomatic missions abroad have suffered a cumulative budget reduction of Sh3.26 billion over the past five financial years due to the weakening shilling, affecting their operations and staff welfare.
A report from the Foreign Affairs Ministry indicates that the highest loss occurred in the year leading to June 2023, amounting to Sh1.38 billion.
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The sharp depreciation of the shilling against major global currencies such as the dollar, euro, and pound has made it increasingly difficult for Kenyan embassies to cover essential expenses.
Many diplomatic staff members have struggled to pay for rent and school fees for their children, as their salaries and operational funds have lost value when converted into foreign currency.
"Several missions have dilapidated buildings due to the high cost of maintenance precipitated by foreign currency losses. Staff in most foreign missions cannot meet basic needs such as rent and school fees. Over the years, the forex losses have had a negative impact on the operations and reputation of the missions," reads the ministry's review.
Unlike in the past, when the National Treasury compensated foreign missions for exchange rate losses under the Forex Loss Assumption Facility, the government stopped the initiative in 2013, leaving the embassies to absorb the losses.
The shilling's decline has been severe, dropping from 101.8 units to the dollar in June 2019 to 161.53 at the start of last year.
Against the euro, it fell from 115.07 to 177.31 units, while against the pound, it slid from 128.24 to 185.96 units.
This depreciation of up to 58.6 per cent has significantly eroded the financial standing of Kenyan embassies abroad.
The most affected missions include Washington DC, Vienna, New Delhi, London, and Geneva, which operate in high-cost cities.
With rent and utilities priced in local currencies, these offices now require more Kenyan shillings to meet their obligations, straining their budgets further.
The situation has raised concerns about the ability of Kenya's foreign missions to function effectively and maintain the country's diplomatic presence globally.
Without intervention, embassies may continue to struggle, affecting both staff welfare and the country's international representation.
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