Economy projected to grow at 5pc

Kenya’s economy is projected to grow at 5 per cent next year backed by a strong performance in agriculture, mining and energy sectors.

According to the African Economic Outlook report 2013 released by the African Development Bank yesterday, banking on the recent smooth political transition, the country is expected to post a 4.5 per cent growth this year, compared to 3.9 per cent recorded last year.

“The country’s economic outlook for 2013 and 2014 is promising. There has been healthy resilience to internal and external shocks and this is a positive step towards Kenya’s growth and Africa’s as a continent,” said Mr Gabriel Negatu, African Development Bank (AfDB) regional director for Eastern Africa Resource Centre.

“Africa’s economy on the other hand will grow by 4.8 per cent in 2013 and accelerate to 5.3 per cent in 2014.”

AfDB’s projection, however, falls below the government’s earlier estimate of between 5.5 and 6 per cent this year. Its 2014 projection is also short of the 6.1 per cent growth rate the International Monetary Fund had envisioned.

Prepared annually by the AfDB, OECD Development Centre, Economic Commission for Africa and the UN Development Programme, the report also lists foreign investment and remittances as key contributors to growth.

Kenya’s diaspora remittances for 2012, for instance, hit an average of Sh7.5 billion ($89 million) monthly, making it a key source of foreign exchange alongside tea, horticulture and tourism sectors. The remittances are projected to rise steadily in the coming years.

“This has helped push up Africa’s foreign investment and remittances that hit a record level in 2012, standing at Sh16 trillion ($186.3 billion) in the same year,” the report said, adding that foreign investment and remittances drove this recovery.

The study lists Kenya among African countries that need to step up economic transformation by tapping into their vast natural resources such as minerals and oil.

“Poverty eradication, persisting unemployment, increased income inequalities and deteriorating levels of health and education are some factors that, if well looked at, will help increase the economy greatly,” Mr Negatu said.

Speaking during the launch of the report, Devolution and Planning Cabinet Secretary Anne Waiguru said the ministry is working on policies that will shield the economy from sudden shocks.

“The management of each country’s natural resource is closely intertwined with its economic development. We are laying down strict and informed management policies that will be key in economic growth in each county,” Ms Waiguru said.

According to the report, three key elements are needed to drive economic growth.

These are infrastructure, education and the creation of larger and more competitive markets.

It urges the government and investors to ensure that a fair share of the proceeds from natural resources and extractive industries accrue to society. It says part of the proceeds should be used to train people to take up new jobs in promising sectors.