Analyst predicts 5.4pc growth

Investment firm, Old Mutual expects Kenya’s economy to record a 5.4 per cent growth in 2014 on account of increased lending to businesses and government spending on infrastructure.

The firm said better of absorption of funds by the counties and new wealth from the mining sector will also boost the economy.

The firm expects the country to achieve a growth of 4.7 per cent by end of this financial year in July.

Old Mutual chief investment officer, Mr Peter Anderson said the impact of increased lending to the private sector in the third quarter of 2013, release of county funds by the central government, reduced inflation risks and the deepening of the mining sector points to a higher growth.

Mr Anderson said increased lending would continue to drive growth, adding that loan advances in 2013 are set to double those of 2012. He said the country’s economy would also benefit from an improving global outlook due to a good performance by advanced economies.

Kenya, he added, will attract more foreign capital in the year.

“Opportunities versus the risks for domestic and foreign investors continued to be attractive and the issue of Eurobond would enhance Kenya’s position on the radar for international flows into the capital markets and for long term private sector investment,” he said.

Drop in tea and coffee commodity prices in 2013 however saw the incomes of the farmers reduce.

“The significant deterioration in tea prices through out the year has negated the large gains in output to leave tea earnings only marginally better than 2012. Coffee prices at multi-year lows due to global over-supply impacting commodity earnings,” Mr Anderson said.