AllianceBernstein’s Vice President Christine Phillpotts attributes this to investments in infrastructure and power as well as Kenya’s location as a regional hub neighboring growing countries like Tanzania and Ethiopia.
“There has been a lot of investment in the geothermal sector which has helped reduce the cost of power generation in Kenya and over time should help reduce the cost of doing business,” Phillports told Bloomberg News.
She says the current ongoing investments in the railway will over time improve efficiency across the economy and help make the East African region much more of a manufacturing hub instead currently being more reliant on sectors like agribusiness.
For Ivory Coast, Phillpotts says the government has continued to implement key investments and reforms to help in diversifying the economy as well as making the economy more investment ready.
“More specifically, investment in infrastructure, power and other segments that are lowering costs of production and helping Ivory coast become more than just raw materials, cocoa exporter,” she emphasized, adding that there is a paradigm shift from public driven growth led by government investment towards more private sector engagement and private sector driven growth.
“We have seen an increase in foreign direct investment as well as higher loan growth of the banking system,” she observed.
In spite of the growth opportunities, Phillpotts sees potential headwinds in the form of growing deficits.
“Although we are starting to see improvement in the current account deficit narrowing, the fiscal deficit has widened, that not only has implications on debt stability but it also has ramifications in terms of the currency because if there were to be any shocks, like weather shocks, which Kenya is very sensitive to, that could put pressure on the currency,” she explained.
Kenya’s third quarter 2015 Gross Domestic Product (GDP) expanded by 5.8 percent compared to 5.2 percent in same period last year and 5.6 percent in the second quarter of 2015 according to the Kenya National Bureau of Statistics (KNBS).
This marks the highest quarterly growth in 2015, however the period’s growth lagged 2010-2014 average third quarter growth of 6.2 percent.
The growth was mainly driven by 14.1 percent in construction, 12.5 percent growth in mining and quarrying and 11 percent and 10.1 percent expansion in electricity supply and financial and insurance, respectively.
Supported by increased production of most major crops, the dairy sub-sector and rise in tea and coffee prices, agriculture, the single largest sector, expanded 7.1 percent up from 6.8 percent in the third quarter of 2014 and 5.6 percent in the second quarter of 2015.
Standard Charted Bank forecasts Kenya’s economy to grow by 5.8 percent in 2016 buoyed by heavy infrastructure investment by the government.