Kenya’s economy is set to grow from the current 4.9% to 5.5% and 5.9% in 2018 and 2019 respectively, a World Bank report has shown.
Its economic update indicates a 0.6 percentage Gross Domestic Product (GDP) drop from an earlier 5.5% to the current 4.9%, attributed to three major challenges that include drought which hindered agricultural output, decline in the private sector access to credits and the election uncertainty that discouraged investors in the private sector.
However, the report notes that the impact of these challenges was partially moderated by a recovering tourism sector, strong public investment and relatively low oil prices.
World Bank Country Director for Kenya, Diarietou Gaye, while presenting the report, said that despite the drop, Kenya’s economy can rebound and strengthen through specific measures that safeguard macroeconomic stability, enable the recovery of private sector credit growth and mitigate the impact of future adverse weather conditions on the agriculture sector.
Central Bank Governor, Patrick Njoroge said if the country improves efficiency of public investments, reforms state-owned enterprises and encourages private sector development projects, “we are set for a huge boost.”
“Fiscal consolidation could be supported through policies to improve the efficiency of public investment, incentivize the private sector to participate in capital projects to reduce the burden on the public sector and enhance domestic revenue mobilization and streamline recurrent expenditures,” said Allen Dennis, Senior Economist and lead author of the Kenya Economic Update.
The report further stated that for the economy to rebound robustly, it’s important for credit to be given to small and medium-sized businesses to help them recover.