, NAIROBI, Kenya, Apr 23 – Kenya’s economy is likely to grow by more than 5.5 percent this year driven by favourable inflation levels, lower trending interest rates and the peaceful transition, according to savings and investment company Old Mutual.
Old Mutual Kenya CEO Peter Anderson argues that the gradual drop in lending rates should start to see a continued uptake in credit advances and hence economic rise as the year progresses.
Central Bank of Kenya (CBK) is likely to give the lead for the banks to lower the lending rates in the near future which are currently high due to what he termed as high cost of deposits for the banks.
“Improving income levels being expressed through greater consumer purchasing power will also contribute to the growth,” he said.
Reflecting on the tremendous opportunity set available to investors as the economy transactions to high growth path with improved macroeconomic stability, he noted that investors should be encouraged by electoral process and the manner in which the election was conducted.
Specific sectors expected to benefit from the growth include financial services, telecommunications, information and technology and extractive industries.
He says significant emphasis should however be placed on investment in agriculture to secure food security and alleviate the persistently negative impact of rising food prices on the economy and population.
“With the appointment of professionals to various ministries driving the policy implementation, we look forward to much improvement,” he said.
On a cautionary note, Anderson emphasised that the growth in government recurrent expenditure would put considerable strain on the availability of resources dedicated to capital infrastructure development.
“However it is worth noting the encouraging statement from President Uhuru Kenyatta the other day on the need for fiscal discipline and spending restraint.”
The move for devolution was also mentioned as a key challenge as various frameworks for devolved county governments continue to be established and understood.
In 2014 they predict the economy to grow by 6.2 percent.