NAIROBI, Kenya, Jan 5 – Kenya’s economic growth prospects in 2012 are still strong despite the challenges that the upcoming General Election and the implementation of the new Constitution portend, a top business leader has said.
Vision 2030 Delivery Board Chairman James Mwangi said that although the macro-economic environment looks gloomy with every parameter showing signs of distress, he was optimistic that positive growth will be registered this year.
“The economy has managed to sustain a growth rate of about four percent. That is a very decent growth anywhere in the world; it is one of the fastest growing economies,” Mwangi declared.
In early 2011, both the government and other financial analysts had projected that the Kenyan economy would build on the 2010 success when the Gross Domestic Product (GDP) expanded by 5.6 percent and reach above six percent.
The prediction was however clouded by an economic storm characterised by numerous internal and external shocks throughout the year.
In the third quarter of 2011, the country only managed a growth rate of 3.6 percent, thinning hopes of the economy growing by the projected rate of five percent for the year.
Although he acknowledged the shocks have beset the economy not just in 2011 but in the last few years, Mwangi, who’s also the Chief Executive Officer of Equity Bank, forecasted that the continued investments by the government in areas such as infrastructure would sustain its momentum.
Further, he hailed the several efforts such as tightening of the monetary policy and the various austerity measures that the government has taken to address these shocks such as spikes in commodity prices, a devaluing currency and rising interest rates saying their impact is likely to be felt in coming months.
For instance, good progress has been made in addressing the twin problem of soaring inflation and interest rates and whose impact he anticipated could be felt by March and June this year respectively.
Consumers can also expect a reprieve from a decline in energy prices – owing to the appreciation of the shilling against the dollar in the last one month – as well as a dip in food inflation to reflect the good harvest in the last quarter of last year.
“Economies take between three and four months to adjust and so by March, inflation will be fairly well managed and as soon as that happens, we will start seeing good signals on interest rates,” he stressed.
Mwangi who spoke to Capital Business after being hosted on the breakfast show Capital In The Morning however admitted that the success on the economic front was hinged on what will happen on the political scene during this electioneering period.
But given that the country has a new Constitution that places emphasis on strong institutions, the CEO was hopeful that the political outlook would be bright with the public and the contenders for top political offices expected to play by the books.
“What has been holding us back is our politics and not our economy. We are very well located geographically; we have great entrepreneurial people; well trained workforce; a big market within which we play but our politics and our leadership has been letting us down,” he regretted.
Should the country get its politics right, he was certain that the economy would take off.
Kenya can then hope to achieve its development objectives as envisaged in its economic blue print, Vision 2030.
The implementation of some of the flagships projects as outlined in the first phase of the Medium Term Plan, are ahead of schedule he said despite the current challenges facing the country.
This, he added, raised optimism that the country was on its way to attaining its dream of becoming a middle income and industrialised state ahead of the planned year 2030.