Foodstuff on sale in a market/FILE
This is hinged on the anticipated drop in inflation to 12 percent in the coming months, thanks to improved rainfall, a drop in international oil prices and the stability of the local currency.
Managing Director Edwin Dande said that despite the ongoing problems in the global economy, six of the top 12 fastest growing economies in the world in 2012 are in Sub Saharan Africa.
“The projected GDP growth for this region over the next 10 to 15 years is five to seven percent and there’s no other place in the world today where you can get that kind of development. It’s still a young population with a growing middle class and business and politics continues to improve in the region making it an attractive place for international investors.”
Global brands such as Google, Coca-Cola, and General Electric have already set up offices in Nairobi because the capital is a gateway to the rest of East Africa, he said.
The global economy is forecasted to grow at two percent, down from 2.6 percent in 2011 and this is attributed to high unemployment in developed markets, which hurts consumption and contributes to the Eurozone crisis and deteriorating public sector balance sheets in advanced economies, he said.
However, Dande said that the fundamental attractiveness of the economy in Kenya remains intact to investors looking for profitable returns on their investments.
“If you look at Kenya’s economy, we can always use more of almost everything,” he said. “We need more roads, more water, more infrastructure and more hospitals. The constraint is not that there’s a lack of demand, rather there is not sufficient supply making the economy and the region very attractive from an investor’s perspective.”
The political environment may also influence the growth of the economy especially with the ICC trials and the upcoming elections, but Dande expressed confidence that the strengthening of institutions such as the Independent Electoral and Boundaries Commission and the Judiciary will help the market.
The company said they are projecting the Nairobi Securities Exchange to trade sideways for most of the year, but a more durable rally could develop late in 2012 depending on global economic performance.
“We expect to see volatility on local equity markets over the next six to eight months. Some sectors are attractive especially in this environment that has a bias towards more defensive stocks that are less exposed to cyclical factors such as inflation, currency fluctuations and interest rates.”
