Current policies cannot grow economy by double digit, says government agency

A farmer harvest Immature Millet after Diverted Drying River Thiba loses capacity to channel water downstream for domestic and farm use in Embu County as drought continues to bite the country. Jan 23, 2017. [PHOTO: JONAH ONYANGO/STANDARD] Selected

Kenya is unlikely to achieve double-digit economic growth unless it undertakes drastic reform in policy, a new report says.

The Kenya Institute for Public Policy Research and Analysis (Kippra) says in its latest economic report that growing the economy by at least 10 per cent will require a complete policy change.

Kippra’s projections show that if the Government continues to implement economic policies in their current form, the economy can only manage 6.7 per cent growth by 2020.

This will, therefore, mean that actualising the growth projected in the Vision 2030 economic blueprint is unlikely.

“The projections show that economic growth in the medium-term will be gradual and is likely to reach 6.7 per cent by 2030,” says the Kippra report.

“Private and government investments are both expected to continue growing at higher economic growth rates. However, the long-term growth envisaged in Vision 2030 will not be achieved.”

This is based on a best case scenario that also assumes that structural reforms and public investment in infrastructure will continue as planned, the 2017 General Election will be peaceful, and that the Government will support a stable devolved system.

It also assumes that there will be favourable weather to sustain increased output in agriculture and that the regional and global economic environment will remain stable.

However, Kippra, which has since 2009 released the economic reports each year, says in the event that the macroeconomic conditions do not hold, growth prospects would dim further. For instance, the study notes, the 2017 drought may have extended impact on food prices and pushed up inflation, which is currently outside Government’s desired range.

“The General Election in August 2017 may also have an impact on the economy, particularly if private investments adopt a wait-and-see attitude. In addition, budgetary expenditure on security may increase to maintain law and order,” says the report.