Why 2018 is the Year for Kenya’s Economy to Rebound

Kenyans wanted 2017 gone and forgotten. For many Kenyans, the year was the source of most of their financial troubles and for it to come to an end, it was like lifting a heavy load off their backs.

But why did Kenyans hate 2017 that much? According to available records, 2017 was a tough year for most Kenyans especially those in the business sector. Here are some of the reasons why Kenyans wanted 2017 gone:

1. In 2017, the country had two elections in one single year. The elections plunged the country into a series of political uncertainties that in turn hurt the economy. According to KEPSA, the private sector alone lost more than 700 billion shillings in a period of four months.
2. In 2017, most people in the banking sector lost their jobs. According to records from the Kenya Bankers Association, more than 2080 bankers lost their jobs as the sector scaled down on their spending and consolidated their operations to mobile.
3. In 2017, the general economy lost more than 1.4 trillion shillings as a result of the political uncertainty that ruled the better part of the year.
4. The shilling was also on the receiving end during 2017 and it received blows from the US Dollar, the Sterling Pound, and the Euro.

2017 is now over and 2018 just begun. Although the month of January seems to be moving at the pace of a snail, the year already looks promising for many Kenyans. According to most economic analysts, 2018 is the year that the economy of Kenya should be rebound and reclaim its initial glory.

First, the Kenyan shilling is already showing resilience as 2018 kicks off. Since the beginning of the year, the shilling has been on a positive trajectory signaling hope for its future. The continued weakening of the USD Dollar on the global market is working to the advantage of the shilling. Economic analysts are hopeful that the shilling will remain resilient for the coming months till the end of the year.

“While the path of recovery for the economy of Kenya, meaningful policies that can facilitate the process may be more necessary than before,” said Stephanie Kimani, the Research Economist at Commercial Bank of Africa.

Second, the World Bank had cut the growth of Kenya to 4.9 percent due to the weak credit extension and the political uncertainty that had ruled the country as a result of the prolonged political situation. The findings by the World Bank were based on the scenarios of 2017 but in 2018, things are prone to change. According to World Bank, “there is need to consolidate the fiscal stance in order not to jeopardize Kenya’s hard-earned macroeconomic stability.”

Third, according to the Central Bank of Kenya, the economy of the country is expected to expand by 6 percent in 2018. In 2017, it had been projected to grow at 5.1 percent after an initial of 5.7 percent. “Kenya’s economy has been surprisingly resilient in 2017. There is a very strong macro framework such as the inflation is firmly anchored with the lowest of 4.5 percent on 13 months having been recorded in December, there is also an organized and stable forex market as well as the good yielding curve.”

Fourth, the Small Medium Enterprises are set to have a smooth year with the government promising to support most of them. Already, the government has released 250 million shillings to various Sacco’s in the country so that they can be given to various SMEs at a low rate to enhance their businesses. The SME sector is important for the economy of Kenya. The sector employs more than 80 percent of Kenyans. In a country where the unemployment rate stands at 39.1 percent, the SME sector is the only way to go.

To make 2018 effective, the government of Kenya is being urged by economic players such as the World Bank to improve its revenue collection and review the capping of interest rates which has denied credit to most of the private sector.

According to stats from the World Bank, the economy of Kenya will grow and reach 5.5 percent in 2018 and rise further to 5.9 percent in 2019. “The more diversified economic base such as manufacturing and agriculture, will keep sovereign risks at bay in 2018,” said Lucy James, an Associate Consultant at Control Risks Kenya.

Also, 2018 has started on a calmer note than 2017 as far as the political situation in the country is concerned. Politics have slightly cooled down and things are slowly turning back to normal. Investors who had adopted the wait-and-see attitude have started rolling out the investment programs that they had kept back in 2017.