Experts: Growth prospects slim

Kenya may not achieve its annual economic growth target of four per cent, experts have warned.

The country would not recover soon especially from the effects of post-election violence, said Kenya National Bureau of Statistics director general Antony Kilele.

His statement came only a day after KNBS released growth estimates for the third quarter of this year.

On Tuesday, Mr Kilele told Nation that with the world moving into a recession resulting from the global financial crunch, Kenyans can only pray that things get fixed.

“We might not achieve even the projected four per cent annual growth given the dismal performance of the last three quarters. We only hope the global mechanisms being put in place work.”

The first quarter growth for Kenya had been revised upwards to negative 1.0 per cent as the economy seems to have rebounded in the second quarter of 2008, during which it is estimated to have expanded by 3.2 per cent.

In the third quarter statistics released on Monday, the economy was estimated to have expanded by 2.1 per cent. A similar period last year had registered a 6.3 per cent growth.

Mr Kilele’s sentiments had earlier been echoed by the director of the School of Law at the University of Nairobi, Prof Frias Mwega.

“Efforts being done to revert the global crisis in terms of monetary policy and bailing out firms are welcome. And I am optimistic that things will work out,” Prof Mwega told the Nation.

Mr Kilele in particular cited the poorest performing sector, agriculture, and told the Nation that most farmers did not plant in January-March when post-election violence threatened to tear the country apart.

“A lot of cereals were also destroyed during the violence that swept across the country’s bread-basket - Rift Valley - which has contributed to the current food shortage the country is facing,” he said.

And Mr Omam Imbuye, a research manager at Co-op Trust Investment Services, cited the period between July and September as the most difficult for the country, coming at a time when Kenyans were trying to heal from post-election violence effects.

He predicted a 2.3 per cent growth in the fourth quarter, a 0.2 per cent increase over the third quarter figures.

“I do not believe that there will be an unusually huge growth in the economy in the fourth quarter going by the levels of inflation we have been witnessing.”

Apart from the post-election violence, Mr Imbuye attributes the slump to other factors like poor infrastructure and high production costs occasioned by high fuel prices, electricity and farm inputs.

“The tourism sector is obviously on its knees, the agricultural sector is definitely on its graveside. These constitute part of the country’s economic mainstay,” he said..

Central Bank governor Njuguna Ndung’u is convinced that the political crisis impact will ease.

“The current crisis is likely to delay investment decisions by adopting a waiting option. In this case, policy intervention will be required to dislodge the waiting option from the potential investors,” Prof Ndung’u has said.