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Kenya

NCBA projects economy to grow by 4.9pc in 2021

NAIROBI, Kenya, Feb 19- NCBA is projecting the economy to recover upwards of 4.9 percent in 2021 following the tactical reopening of the economy.

In its latest economic outlook, NCBA however warns that recovery will require bold, innovative and extraordinary actions on the part of policymakers.

NCBA Bank Group Managing Director, John Gachora said the economy is estimated to have contracted in 2020 following a hard and broad-based hit on output in the second and third quarters due to the pandemic.

“However, looking ahead, there is a reason to be optimistic…the phased reopening of the economy has seen a return of about 80percent of activity as consumer and labour mobility improves and supply chains are restored,” said Gachora.

Gachora said the Sh57 billion Post Covid Economic Stimulus has helped restore activity in some sectors especially construction and minimized the negative effects on others, with positive GDP spillovers.

“To further repair the damages from the pandemic and avert a prolonged economic descent, it is essential that the Economic Recovery Strategy as proposed tactfully addresses the “lives versus livelihoods” dilemma,” said Gachora.

The lender is recommending for more efficiency in domestic resource mobilization as well as debt management. Previous public investments have resulted in a marked surge in public debt estimated at about 70percent of GDP currently.

According to NCBA, Public-Private partnerships will be crucial for faster, inclusive and sustainable recovery and growth. It further notes that reducing the barriers to PPPs will unlock immense investments and in turn support stronger, more sustainable growth.

“This will require bold and accelerated reforms to create an enabling framework for private sector participation,” NCBA notes.

NCBA noted that the underlying policy framework for PPPs remains weak, discouraging potential investments. So far, the country has 37 PPP projects valued at about Sh500 billion presently.

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These are limited to infrastructure in transport and energy.

“The necessary buy in will not only require greater private sector involvement in the policy development processes but also in the attendant implementation of related projects,” NCBA concludes.

NCBA Economic Forum was launched in January 2018 with the aim of bringing together the government and industry stakeholders for candid conversations meant to spark economic growth.

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