Banking boosts Kenya’s economy
Most African countries have a positive economic outlook, largely due to their diverse economies, according to a new report.
The Institute of Chartered Accountants in England and Wales (ICAEW) says in the report, Economic Insight: Africa Q2 2019 that East Africa, which experienced the most rapid real gross domestic product growth in 2018, is forecast to continue doing so over the next two years, with a projected growth rate of 6.1 per cent.
East Africa’s growth is mainly driven by strong performances in the two major economies, Kenya and Ethiopia.
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ICAEW provides GDP growth forecasts for various regions.
Kenya, whose economy is estimated to be worth about Sh9 trillion, owes the resilience of its GDP growth to a dynamic banking sector, said the report.
The Kenyan banking sector has taken the lead in the region recently and its most successful banks are regional leaders. The growth of this sector has also facilitated the merger of big national brands as they compete for dominance within the local banking sector.
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ICAEW’s Regional Director for the Middle East, Africa and South Asia Michael Armstrong said the macroeconomic benefits of diversification are evident from a comparison of real GDP growth rates between the regions of Africa.
"As a global trade war rages, East African economies have minimal fears of contagion from lower commodity prices,” he said.
"Their diversified economies will be best placed to weather the storm caused by the instability of oil prices. This, in addition to a well-regulated, mainly private banking sector are key to financing the economies,” he added.
The report says East Africa’s growth has also been reinforced by the growth of Ethiopia’s economy which is forecast to expand by 7.9 per cent, while Rwanda’s is projected at 7.4 per cent for 2019.
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