Kenya’s economic growth as we see it has been tumbling but according to the World Bank, the country is on the right track.
According to the World Bank forecasts, Kenya’s economic growth will hit 5.8 percent by 2019 with a possibility of increasing to 6 percent or more by 2020.
The forecast attributes the growth to the support provided by rising household income from agricultural produces, decreased food prices, and strong remittance flows.
Some would beg to differ but reports further show that although 2017 was filled with several bottlenecks that nearly strangled the economy, the recovery is impressive.
World bank states that the manufacturing hasn’t fully recovered from the shock yet and is still struggling to keep the head high. The manufacturing industry’s growth currently stands at 2.7 percent up from 0.5 percent in 2017. However, the sector is still feeble especially is contrasted with the 2013 to 2016 economic growth that stood at an average of 3.6 percent.
The country has seen a fair share of improvements in various industries, but it is worth noting that some decisions weren’t conclusively weighed logically.
Whereas increased rains have lowered drought in several parts of the country and improved the business environment, farming sector to be precise, issues like corruption have negatively impacted growth.
Coffee, maize, sugarcane, and other farmers have somehow lost trust in the government to address their issues. From delayed payments to an inadequate market for their products due to the importation of cheap items from other countries, it hasn’t been easy for them.
Roads and other transport networks have significantly improved; however, there is much that needs to be done the address some quibbles. The standard gauge railway, for instance, which was supposed to improve the country’s economy started off with a loss during the first financial year. Moreover, it hasn’t reached across the country yet, something which has forced the government to continue borrowing funds for the project added to the already abnormal external debt.
The tax changes in the country and the current 8 percent VAT on petroleum products continues to affect Kenyan citizens across the 47 counties. Coupled with elevated global oil prices, all is not rosy for the common Mwananchi.
It is even disheartening that for a country with a law that isn’t favoring the movement of interest rates, credit growth may not grow significantly as is expected, especially with banks leaning towards government securities. This translates to trouble for small and medium-sized enterprises in Kenya.
Credit access will be minimal and growth in the private sector is at risk. It will limit the expansion of businesses with regards to funding some sectors of the economy. Admittedly, the recent policy rate by the government is likely to worsen the situation considering banks profit margins will be low.
The Big Four Agenda was supposed to be the savior for Kenya’s economic growth but what the government is doing is starving other sectors and its citizens to fund a project that will supposedly benefit them.
The statistics are there, plain to see, but the projections may not come to pass in the end unless different approaches even in the government’s initiative of wanting to boost the manufacturing industry, achieve universal health coverage, enhance food and nutrition security and support the construction of affordable houses.