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ESTHER WAITHERA NYAGA
ESTHERWAITHERANYAGA AKA ESTHER WAITHERA NYAGA
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REVIEWING THE KENYAN ECONOMY
The economy expanded by 4.1 per cent in the first 3 months of 2014 down from 5.2 per cent in the same quarter in 2013. The 4.1 per cent growth was catapulted mainly by growth in the transport, communication and manufacturing sectors. Agriculture performed so badly due to inadequate rainfall in many parts of the country which might trigger inflationary pressures on food and electricity prices above the target levels. The other poor performer was tourism due to the ongoing terrorist attacks and skirmishes in the County of Lamu which triggered travel advisories discouraging foreigners from visiting Kenya. The current situation may further be aggravated by the Coalition for Reforms and Democracy (CORD) heightened agitation for drastic changes which may compromise the much needed peace and political stability.

Against this backdrop and on the possibility that the fundamentals responsible for reduced growth in the first quarter will persist, the government was forced to review its projected GDP growth rate of 5.8 per cent for this year to 4.7 per cent. This notwithstanding, on 12 June, National Treasury Cabinet Secretary delivered a 1.8 trillion shillings budget with special focus on insecurity, high cost of living, unemployment, improving the competitiveness of the country and strengthening economic growth. However, in analysing revenues and spending, the budget leaves a deficit of 190.8 billion shillings equivalent to 4.1 per cent of GDP which will be financed by net borrowing from the domestic market. External borrowing includes the Sh176 billion ($2 billion) Eurobond issue which was oversubscribed, a demonstration that Kenya’s credit rating in America and Europe is still good despite the current insecurity and political uncertainty.

Reduced domestic borrowing is expected to spur growth by availing cheaper credit facilities for investments. Investors will also enjoy additional cheaper credit facilities following the introduction of the Kenya Banks Reference Rate (KBRR) and Annual Percentage Rate (APR).

The recent signing of 17 agreements by China and Kenya is also expected to foster growth and development. The deals include the multi-billion-shilling Standard Gauge Railway (SGR), China-Africa Research Centre, continental development bank and others meant to boost agriculture and wildlife conservation. The China-Kenya relations will remain strong as long as there is complete transparency and accountability. Both states must also endeavor to promote balance of trade by removing some unnecessary trade barriers and avoid dumping of sub-standard goods at the detriment of local industries.




Latest Blogs by ESTHERWAITHERANYAGA

REVIEWING THE KENYAN ECONOMY
Posted On 02/09/2014
The economy expanded by 4.1 per cent in the first 3 months of 2014 down from 5.2 per cent in the same quarter in 2013. The 4.1 per cent growth was catapulted mainly by growth in the transport, communication and manufacturing sectors. Agriculture performed so badly due to inadequate rainfall in many parts of the country which might trigger inflationary pressures on food and electricity prices above the target levels. The other poor performer was tourism due to the ongoing terrorist attacks and...

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