Insecurity, poor infrastructure dampens growth

Poor infrastructure and rise in insecurity are expected to dampen economic growth this year, with the economy sustaining a trend that analysts term as "a steady but unspectacular recovery." The economy was expected to grow at a faster rate after last year's elections.

It was expected to make a full recovery this year but this has not been the case. While the most of the economic sectors have recovered fully, analysts at Citibank note that the economy is yet to pick up as expected.

David Cowan Citbank's chief economist for Africa said the challenges of insecurity and poor infrastructure might play part in dampening the growth prospects. The institution has projected a 5.5 per cent growth for Kenya this year, a much better growth rate than 4.7 per cent seen last year.

"The problem of insecurity... will continue to have a negative impact on tourism, but probably less so on wider corporate investment unless it becomes a more serious issue. The infrastructure constraint is still very much an issue holding back a growth pick-up," he pointed out.

Citibank expects Kenya's economy to further sustain the growth momentum and grow to 6.1 per cent in 2015. The economy grew 4.7 in 2013, which was generally due to a sluggish election year.

Economic growth has, however, failed to gather momentum as had been previously expected after the elections. Citbank noted that the recovery of the economy has been steady, but unspectacular.

"There was a broad consensus that there would be a relatively quick rebound after the successful holding of the March 2013 elections under the new constitution, but the rebound to date has been weaker than expected," said Cowan. The 5.5 per cent growth for 2014 projected by Citi is below government projections.