Global Economic Slowdown Presents an Opportunity for Kenya to diversify

The Nairobi Declaration, announced at the end of the two days Sixth Tokyo International Conference on African Development (TICAD VI) summit in Kenya, outlined new emerging challenges for Africa such as the falling of commodity prices, outbreak of Ebola virus disease and the rising wave of radicalization, acts of terrorism and armed conflict.

The declaration called for the need to diversify and industrialize the continent’s economy, develop human resources and strengthen health-care systems.

Bloomberg has already reported that Africa’s two largest economies (Nigeria and South Africa are stalling amid slumping commodity prices and political infighting that’s hampering decision making.

Inflation in Nigeria hit its highest level in almost a decade, surging to 16.5% in June highlighting a deepening crisis for Africa’s biggest economy.

On the other hand, South Africa’s economy contracted the first quarter due to a slump in farming and mining output, manufacturing, which accounts for about 13 percent of GDP, expanded in the three months through June, retail sales grew and business confidence improved.

Kenya, East Africa’s largest economy’s growth is projected to rise to 5.9 percent in 2016 and 6.1 percent in 2017.

The MPC has said they expect it to remain within the Government target range in the short term despite temporary upward pressures on consumer prices due to recent increases in fuel tax.

“We are comfortable that the war against inflation has been won. When I came in, there was a cocktail of problems: rising interest rates, foreign exchange market, inflation and poor Government spending something that was ‘horrendous’, but towards the end of 2015, we had stabilized the economy,” the Central Bank of Kenya Governor Dr. Patrick Njoroge had said in a past event in May.

This is similar to his MPC statement in July, “The foreign exchange market has remained stable, reflecting a narrower current account deficit due to a lower import bill, improved tea and horticulture exports and stronger diaspora remittances.

“The stability was also supported by the CBK’s closer monitoring of the market before and after the UK vote to leave the European Union (Brexit),” he added.

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For the rest of Africa, the Nairobi Declaration resolved to contribute in sustainable manner to economic diversification and industrialization by helping to accelerate the growth of industries including agriculture, livestock, minerals, blue/ocean economy, innovation and ICT-led economy, manufacturing and tourism.

Kenya continues to increase its budget allocations towards infrastructure investment, security and irrigation projects aimed at improving the business environment and lower food prices in the medium term. Kenya has braved the storms that arise due to global economic factors from its diversified economy.

The economy posted growth of 5.9 percent in the first quarter of 2016, compared with 5.0 percent in a similar period 2015 with all sectors positing positive growt