Stratlink Africa Research Analyst Julians Amboko says the growth is impressive considering the challenges the country has faced in the period under review.
“The Kenyan economy exhibits some good level of resilience, if you look at first quarter 2014 statistics with all the insecurity in the country has negatively impacted tourism which is one of the biggest exchange earners in the economy. We have also seen agriculture having a bit of a slowdown, however growing at 4.1 percent with all these difficulties is a very good performance,” Amboko told Capital FM Business.
Amboko said budget allocations to security will help mitigate the insecurity challenges.
“Budget absorption tends to be a challenge in the Kenyan Economy, the 2012/2013 the budget absorption for development spending were about 66 percent that tells you the absorption rate is a bit low, we expect the uptake will be quite high because there is need to beef up surveillance and security across the country,” he said.
He projects the country to grow between 4.5-5 percent in the 2014/2015 financial year driven by financial services, transport and communication.
The transport and communication sector expanded by 6.0 percent compared to a growth of 5.6 percent in 2013 while the manufacturing sector recorded the highest growth of 5.0 percent during the period under review compared to a 2.5 percent growth during the first quarter of 2013.
The expansion of the manufacturing sector was mainly driven by a 6.2 percent growth in non-food manufacturing, notably the production of cement production and assembly of motor vehicles.
The communications sub-sector grew by 5.1 percent during the first quarter of 2014, slowing from a growth of 11 percent in the same quarter of 2013. The sector’s growth was mainly on account of continued uptake of new services provided through the mobile telephone networks.
“There is still a big number of the unbanked population and with the new technologies and measures to curb interest rates, we will see a huge population getting banked, a lot of reforms is going to the transport sector, that will see huge growth in that sector, communication has been on an upward trajectory, these will be the main drivers,” he said.
He urged the government to work at implementing the budget which if implemented will transform the economy.
“The budget focus in the budget was security spending and infrastructure which are very important. Infrastructure deficit will be cut down and insecurity will be dealt with, this will go a long way in transforming the economy,” he said.