Economic situation in Kenya

Eco Chart

Written by ChrisK

March 11, 2019

Kenyan Economic Growth has seen quiet an interesting pattern especially in the past 15 years. This attributes to political pressures, Foreign Direct Investment,
Part of Kenya’s vision 2030 goal is to accelerate the country into not only a middle-income nation, but a knowledge-based society.
According to the plan created by the Kenyan government, it was noted that to steer the country into being a middle-income country by the year 2030, It’s economy statistics insist that the country’s GDP ought to grow by more than seven per cent annually for two decades.
So, how’s the country growing these numbers?

A look at Kenya’s Economic Prospects
The World Bank Group has projected Kenya’s economy to hit 6.01 per cent this year (2019) from 5.475 per cent recorded in 2018, and the Kenyan Government is upbeat about the oncoming economic prospects.
These numbers translate to fair stability on the country’s economy and other sectors like inflation, interest rates, and the currency exchange rates.
But with all that positive outlook, the Kenyan shilling might experience moderate pressure against the dollar as from march 2019, due to anticipated increase in oil prices, materialisation of Brexit, and concerns of a global recession – on the positive note though, credit to the private sector is expected to increase in 2019 compared to 2018 supported by increasing economic activity and a stable macroeconomic environment.
On a press report early this year, The government’s Treasury; shared that “they are preparing to take appropriate actions to mitigate any negative consequences to the projected economic growth”

Factors that might contribute to better economic growth in Kenya

  • strong remittance inflows – 2019 growth could be supported by strong remittance inflows and rising household income from agriculture and lower food prices.
  • The Kenyan government’s investment in the Big Four Agenda (Housing, Manufacturing, Universal Healthcare & Food Security) will create new opportunities for businesses to grow.
  • Easing of the political climate, strong agricultural output (should the weather be favorable), good performance by the service sector and overall an improved business environment.
  • Opening up the rural parts of the country by making available supportive infrastructure.

Progress on Supportive Infrastructure
Rural regions lack supportive infrastructure needed to provide internet services. As a result, the areas do not reap the benefits of internet connection such as; job opportunities, improved productivity, easy access to information, and reduced transaction costs.
But this is about to change, with the proposal of having USP (Universal Service Fund) introduced on March, 2019. Should it materialize, then all telecommunication providers in Kenya will share infrastructure built using the fund scheme. This will include builing of new base Transreceiver Stations accessible to network operators in the remote and rural areas of North and North-eastern part of the country.
The USP fund is meant to help with network deployment and service provision in rural, outlying and economically unattractive areas, where it’s challenging to invest as a telcos company.
This investment will lead to better purchase power and improved lives for rural communities. Subsequently, improved internet connectivity will translate to a better economy.
On other infrastructure projects to these rural areas include; construction of a highway linking the country’s south coast port region to its neighboring countries: Ethiopian, and South Sudan, through North and Norther-eastern parts of the country.
The highway is the first section of the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor that seeks to link Kenya to the landlocked countries in East Africa.
The LAPSSET poject will see the country have a send major seaport at Lamu besides the current one, in Mombasa. According the the Vision 2030 Pla, the entire project, once fully operational, it’s expected to contribute 8-10% per annum the GDP growth of Kenya.

Retail Industry
The retail sector in Kenya, in the past, it’s experienced one of the worst times, leading to the downfall of two key retail giants in the country. But as of 2019, this sector has started showing signs of rebounding.
In terms of lettable retail space, Nairobi still holds the crown as the most dominant destination with shopping space in the African continent outside of South Africa.
Additionally, entry of Shoprite – the Africa’s largest retail chain on March 2019, shows that Kenya is still a sweet spot for retail investment in Kenya. Other international chain stores include Carrefour (2nd largest supermarket chain the world, after Wallmart)

Kenya’s business climate has stabilised, though still struggling in some sectors such as mining which remains on the growth path.
There’s a great future in Kenya’s Economy.

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