Poll jitters dampen Kenya growth prospects

Kenya's economy to slow down after elections. (Photo: Courtesy)

Kenyans should brace themselves for tough times as the effects of the General Election, compounded with a severe drought in the region, is set to reduce the country’s economic growth.

The latest economic forecast indicates that Kenya’s gross domestic product growth is set to decelerate in the coming months, with analysts revising earlier projections downwards.

“While markets reacted positively to Kenyatta’s re-election, and assertions by the Opposition of foul play failed to garner any substantial support, there is little cause for celebration as the Kenyan economy faces intensifying economic woes,” says Focus Economics in this month’s forecast report for sub-Saharan Africa.

“An ongoing drought, which has ravaged the country since the beginning of the year, and social unrest around the election have adversely affected economic activity.”

Investment decisions

The elections earlier this month, like the rest before it, saw a reduction in Kenya’s growth prospects as investors held back key investment decisions.

A report by analysts from Bloomberg Intelligence released last week said Kenya’s GDP growth fell to 4.7 per cent year-on-year in the first quarter of this year, down from 6.1 per cent in the preceding quarter, largely owing to a 1.1 percentage point drop in agricultural output, the sharpest fall in eight years.

In December last year, the World Food Programme warned that the long rains were depressed and 1.3 million Kenyans were in need of food aid, with the distress peaking over the months of April and May.

“While Kenyatta has proposed ambitious economic plans to stimulate growth, which rely primarily on an investment-led development model, the effects of such measures will take time to come into play.

“Thus, growth will remain subdued as agricultural output continues to be negatively impacted by the drought, and private activity takes time to recover,” the report says.