Rotich: Infrastructure, agriculture to grow economy by 6pc this year

The Government expects the economy to expand by 6 per cent this year, up from 5.6 per cent last year.

Speaking over the weekend at an investment forum in Nairobi, Treasury Cabinet Secretary Henry Rotich said the projected growth would largely be driven by stable weather conditions that would boost agriculture. The economy is also relying on the completion of key infrastructure projects to rejuvenate industrialisation.

Standard Gauge Railway (SGR) workers go about their duty along Mombasa-Nairobi at Mutito Andei, Makueni county. The railway which is supposed to go from Nairobi to Naivasha and designated to cut through the Nairobi National Park, Karen and Dagoretti is opposed by residents that it will kill the Nairobi national park and take up a lot of houses and businesses in Karen and Dagoretti. (Photo: Denish Ochieng/ Standard)

“Due to the numerous infrastructure projects, construction has grown by 14 per cent, and this has generally driven growth upwards,” said Mr Rotich at the monthly Mind Speak forum hosted by investment analyst Aly Khan Satchu.

Rotich explained Kenya has displayed more resilience than other countries in sub-Saharan Africa because of its reliance on several sectors.

“We have a diverse economy, where if one sector falls, say agriculture, others like manufacturing rise to support general growth. That is unlike our peers in sub-Saharan Africa, like Angola or Nigeria, who depend on oil and minerals. So if oil prices fall, their economies come tumbling down,” the CS said.

In its latest Global Economic Prospects report released last month, the World Bank listed Kenya among the continent’s best-performing 12 economies this year.

The country’s infrastructure projects — including an expanded railway system and new port — are expected to boost domestic trade.

“The standard gauge railway is now over 65 per cent complete. By mid next year, it will take us only three hours to get to Mombasa by train,” Rotich said.

The drop in oil prices is also expected to lower inflation, which should boost consumer spending.

Rotich added that unlike countries like Zambia, Ghana and Tanzania that have benefited from debt relief, Kenya has never had to ask for such assistance, and continues to service its debts. He said this is why the country’s Eurobond issue attracted a lot of investor interest.

Rotich further credited the country’s economic success to stabilised interest rates and a narrowing of the current account deficit after a reduction in the costs of consumer imports — especially a low oil bill.

He said a robust foreign exchange reserve and more geothermal energy being added into the national grid to power industrialisation have also worked in the country’s favour.

The challenges

But the future is not all rosy, with Rotich saying the economy has to jump over major hurdles.

“We need to reduce poverty and inequality by creating more jobs. This can only be achieved if the economy grows at a rate of 10 per cent, since at that rate, one million jobs can be created,” the CS said.

“Rising demand for food due to climate change is a major challenge. So is eliminating wastage to maintain a sustainable fiscal deficit ratio. We also need to raise the tax to GDP ratio by at least 25 per cent, and position exports as key drivers of growth.”

He added that Kenyans have to learn to save more and consume less for the economy to develop.

“Kenyans save as little as 12 per cent of their income, which is small compared to Asian counties like India that save as much as 40 per cent. Increasing savings to finance investment will be one of our keys to economic growth.”