Infrastructure to spur economic growth, says expert

Kenya: An investment group predicts that Kenya’s economic growth in 2015 will increase to 6.2 per cent compared to 6.9 per cent announced by the Government.

A chief Investment Officer at PineBridge Investment East Africa Nicholas Malaki believes the said economic growth will be driven by the Government’s continued investment in infrastructure.

“Currently, there are huge infrastructure projects going on in the country, for example, the Standard Gauge Railway line, major roads connecting the country with its neighbours, water projects, electricity projects, Konza city and modernisation of the Mombasa port, among other capital projects,” he said.

The Government early this month launched the Sh40 billion road annuity programme targeting construction of 10,000 kilometres in the country as well as the ongoing 5000+ megawatts energy production programme.

The ambitious infrastructure projects, he added, are expected to increase the value of imports which may lead to increased current account deficits.

Kenyan neighbours Tanzania and Uganda are equally expected to register high economic growth of 7 per cent and 6.3 per cent respectively owing to huge investment in infrastructure. Kenya like her peers is a net importer of oil and thus stands to benefit from the recent plunge of oil prices.

Consumer spending

“We expect there will be a transitory increase in consumer spending – arising from household savings on lower cost fuel prices and a reduction in business costs,” Malaki added.

Increase in oil price in the local market has been part of the contributing factors to the high cost of doing business and thus leading to the high cost of products to consumers.

The decrease in oil prices, Malaki noted, will help in keeping inflation under control in the current period.

Kenya recorded an inflation rate of 6.02 in 2014 compared to 1.8 per cent and 4.7 per cent and 0.70 in Uganda, Tanzania and Rwanda respectively.

PineBridge Investment East Africa Chief Executive Officer Jonathan Stichbury noted that as a result of improved economic fundamentals in the United States, the US dollar strengthened against most international currencies in 2014, including the East African nations.