Kenya among thriving economies despite external shocks, says report

Kenya is one of the few African countries with a stable economic growth even as Africa faces headwinds including a plunge in commodity prices, according to a new report.

The report by McKinsey and Company puts Kenya among the “stable growers” following an impressive 5.6 per cent Gross Domestic (GDP) growth in 2015, up from 5.3 per cent in 2014.

This growth was higher than the global average of 2.9 per cent in the same period under review.

According to the Economic Survey 2016, this growth was supported by a stable macroeconomic environment and improvement in outputs of agriculture, construction, finance, insurance and real estate.

Other stable growers, according to the report by the American management firm, include Botswana, Côte d’Ivoire, Ethiopia, Mauritius, Morocco, Rwanda, Senegal, Tanzania, and Uganda. Together, these countries averaged an economic growth of 5.8 per cent. “These countries, typically not dependent on resources for growth, are smaller economies that are progressing with economic reform and increasing their competitiveness,” reads part of the report.

The report, titled Lions on the Move II: Realising the Potential of Africa’s Economies, called on African governments to, among other things, diversify their economies to cushion themselves against such external shocks as the current drop in the global commodity prices.

The West-African commodity-dependent economies of Nigeria, Angola, Cameroun, Ghana were put in the cluster of “vulnerable growers” in a report that generally painted a bright future for a continent was once ravaged by wars, diseases, ignorance and greed. Other vulnerable growers include Zambia, Burkina Faso, Togo, Gabon, Mozambique and DR Congo.

Besides aggressively diversifying their economies, African governments were also asked to mobilise more domestic resources, accelerate infrastructure development, deepen regional integration, create tomorrow’s talent, and ensure healthy urbanisation. In the year 2015, Kenya also attracted the most foreign direct investment (FDI) in the East African region, according to Ernst and Young report.

However, Kenya’s growth has not done much as regards unemployment and underemployment rate among the youths, with most of the 800,000 jobs created in 2015 being informal ones. Even as Kenya and other countries continue with their impressive growth trajectory, the continent has stagnated with Africa’s largest economy, Nigeria, slumping into recession.

]The research focused on productivity and growth, natural resources, labor markets, the evolution of global financial markets, the economic impact of technology and innovation, and urbanization as its main themes.

It found that Africa’s recent growth has been divergent with some countries growing really fast even as others stagnated “as a result of lower resource prices and higher sociopolitical instability.”

The growth among the oil exporters in the North was also affected by the 2011 Arab Spring democracy movements. Nonetheless, the report found that the fundamentals of growth on the continent remained strong noting that governments and companies had work harder to exploit this potential.

Besides urbanising at a rapid pace, the continent is also poised to reap the demographic dividend, thanks to its young population.

“In an aging world, Africa has the advantage of a young and growing population and will soon have the fastest urbanisation rate in the world. By 2034, the region is expected to have a larger workforce than either China or India—and, so far, job creation is outpacing growth in the labor force,” reads the report.