NAIROBI, Kenya, Jan 25-The Private Equity Support Group has projected the country’s economy to grow at 5.7 percent in 2021.
Regional Economist for East Africa, Standard Bank Kuria Kamau says that the growth will be influenced by the manufacturing, trade, education, and transport recording the highest level of growth.
He added that there is also an increase in business activities with the lifting of the restrictions as companies can operate for longer hours thus increasing productivity.
Head of Africa Research, Standard Bank Group Jibran Qureishi added that the debt service suspension in Kenya would likely support the external account in 2021.
Kenya successfully applied for the debt service suspension initiative from the Paris club earlier this month.
The Private Equity Support (PES) held its annual 2021 SME Outlook Forum on Friday the 22nd of January, which was facilitated by economists from Standard Bank of Africa.
The Standard Bank Africa Research team equally revealed that most African economies are poised to have positive GDP growth in 2021 with exception of Angola.
“The key thing is how we interpret this growth because GDP growth is probably not the best indicator for underlying consumption growth as we have seen for the last few years on the continent. Governments need to formulate policies that promote inclusive growth and promote the much-needed multipliers associated with this,” said Managing Partner of PES Diana Gichaga.
According to the report, the Africa Continental Free Trade Agreement (AfCFTA) had created optism of SME growth in the region bringing together about 1.2 billion people and a combined GDP of over USD 2.5 trillion.
“Though the benefits of trade agreements are sound in the long term, their operationalization historically shows that economies that are more industrialized tend to benefit more initially,” stated Head of Africa Research at Standard Bank Jibran Qureishi.
“The key aspects that will assist SME growth under the AfCFTA is ensuring that non-tariff barriers are eliminated, and better infrastructure connectivity exists between trading countries,” noted Head of Africa Research at Standard Bank,” he added.
The report comes at the backdrop of the latest report released by the World Bank where it forecast Kenya’s economy to rebound at 6.9 percent in 2021, the highest growth in the continent.
Kenya’s rebound is expected to be slightly stronger, although below historical averages, among agricultural commodity exporters.