Mega projects to spur Kenya's growth as prospects increase

Workers proceed with the construction of a high bridge where the Standard Gauge Railway will pass through in Voi Town, on May 27, 2015. The Oxford Business Group says the standard gauge railway (SGR) and the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) corridor are expected to spur development as they near completion. PHOTO | DPPS

What you need to know:

  • The Oxford Business Group (OBG) has high expectations for the country, placing its expansion above forecasts by the World Bank Group at 5.7 per cent.
  • Further, the report says that global economic headwinds, such as slow growth in Europe, and domestic hurdles, including weaker tourism receipts and a depreciating currency will not hinder growth in the country.
  • The first phase of the Sh427 billion SGR is nearing completion with 60 per cent of the civil works having been done so far.

Kenya’s economic growth could rise to 6 per cent this year, backed by government infrastructure projects amid global economic headwinds.

The Oxford Business Group (OBG) has high expectations for the country, placing its expansion above forecasts by the World Bank Group at 5.7 per cent.

It says the standard gauge railway (SGR) and the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) corridor are expected to spur development as they near completion.

“According to OBG, economic growth in Kenya is expected to accelerate slightly in 2016 to 6 per cent, driven primarily by continued infrastructure expenditures for projects such as the $25 billion Lapsset corridor,” said the OBG statement released Monday.

Further, the report says that global economic headwinds, such as slow growth in Europe, and domestic hurdles, including weaker tourism receipts and a depreciating currency will not hinder growth in the country.

Despite major setbacks last year, the economy expanded by 5.4 per cent.

As the challenges ease, it is expected to do better. Low oil prices and mega projects are a positive outlook to push forward the economy.

The first phase of the Sh427 billion SGR is nearing completion with 60 per cent of the civil works having been done so far.

There are plans to extend the railway to Malaba, on the border with Uganda, opening up trade for the wider East African region.

The first three berths of the Lamu Port as well as the new container terminal at the Mombasa port will be complete this year, further spurring growth.

Agriculture is expected to show better results this year, following strong year-end rains.

The sector is a top export earner for Kenya.

Tourism is on a recovery path after strong marketing campaigns last year.

The sector has in the past three years been depressed by a spate of insecurity that led to travel advisories.