Kenyan Economy Remains Upbeat Despite Global Slowdown

The Kenyan economy has maintained steady growth over the last eight years, and its forecast remains upbeat with the World Bank projecting a 6 percent progression in 2017.

In a report dubbed “Beyond Resilience – Increasing Public Investment Efficiency,” which was published Monday, the World Bank notes that Kenya experienced strong economic performance in the year 2015/2016, consistently exceeding the average growth for sub-Saharan Africa countries since 2009.

“I am happy to see Kenya’s economy demonstrate resilience in the face of regional and global economic slowdown,” Kenya’s World Bank Country Director Diarietou Gaye said in a statement.

Bright Investment Spot in Africa

In the report, the World Bank ranks Kenya as one of the best countries for investment across sub-Saharan Africa, adding that the country’s economy has outpaced the regional average for eight consecutive years.

This projection was further reinforced by the bank’s recent report, entitled “Ease of Doing Business,” which placed Kenya in the 92nd position of the best places to invest in the world, a significant improvement from position 113 in 2015.

The report attributes this positive trend to Kenya’s vibrant services sector, enhanced construction, currency stability, low inflation, low fuel prices, growth in remittances, and a growing middle class credited to rising incomes.

However, the report notes that Kenya’s economy remains vulnerable to a number of risks, including adverse weather that is likely to affect agricultural production, political uncertainties as the 2017 elections dampen investor confidence, and weak global demand, which could subdue the country’s exports.

More To Be Done

While Kenya’s economy remains promising, the World Bank notes major faults in the country’s Public Investment Management (PIM) system, which the bank says is characterized by low execution and cost escalation.

“There is also urgent need to streamline the process of land acquisition, compensation, and resettlement, which leads to significant delays and cost escalation in the design and execution of public infrastructure projects,” said the co-author of the report and World Bank Urban Specialist Sheila Kamunyori.

The report also recommends the establishment of minimum criteria for project preparation, appraisal and inclusion of a project in the budget, and gradual strengthening of the National Treasury role to include providing an independent review of project proposals and enhancing capacity to undertake this role.

Kenya needs to improve transparency and accountability for the management of its public investment projects portfolio, the report recommends.