Analysts tip Kenya to grow by 6pc in 2015

Analysts predict that Kenya’s economy will grow by six per cent this year helped by lower oil prices. Research analysts at Citigroup, however, raise concern over growing fiscal deficit, where the Government’s total expenditure exceeds revenue generated and rising debt levels. This twin problem may remain a source of concern.

“The current account deficit after stabilising in 2011/13 seems to have risen again in 2014,” said David Cowan, Africa Economist with Citi Research while releasing the report at Serena Hotel.

“The saving rate for the nation is still low with importance of short-term capital flows remaining an issue, hence uncertainty in growth,” said Cowan. “Deficits and debt levels have started to look a bit more worrying and the shilling has come under pressure.”

On a positive note, Cowan acknowledged that the country’s inflation has started to show signs of easing, with Central Bank of Kenya (CBK) targeting the rate at five per cent.

He reckons the economy has seen more robust growth since 2011, after bigger fallout from the 2007 election crisis. He added that the planned fiscal and current account consolidation has proved elusive with the plans agreed on with International Monetary Fund (IMF) not coming to pass. Kenya’s revenue performance now seems less impressive above the East Africa Community (EAC), but only average compared to Sub Saharan Africa (SSA).

The low oil prices, he says, is a positive development for East African countries, which are net importers. The report forecasts Kenyan growth at six per cent in 2015, Uganda at 6.5 per cent and Tanzania at 7.2 per cent, with inflation on downward trend in the region and lower oil prices will mean this trend will be re-enforced.