NAIROBI, Kenya, Mar 7 – Kenya’s Gross Domestic Product (GDP) will expand by 6.5 per cent in the 2019/20 financial year largely due to mega Big Four government projects and a stable political environment.
A report by Metropol Cooperation sees the economy benefiting from favorable weather throughout the year.
The major projects under the Big Four Agenda of Food security, Universal Health Care, affordable housing and manufacturing includes construction of 10 dams, irrigation potential of 50,000 hectares and the expected commissioning of Olkaria 5 and 6 by July 2019.
Sam Omukoko, Group Managing Director Metropol said the growth will greatly be determined through fixed assets where the country is seen to invest more and attract investors.
“There’s has so far been political stability which is an added advantage to the country’s economy,” said Omukoko.
2019 is also projected to be a busy year for the oil and gas sub-sector despite projection to slow down from 3.7 percent to 3.5 percent. However, there is likelihood of an increased oversupply expected to last in 2019 due to increased shale oil production in USA.
According to Metropol, the fiscal deficit is likely to remain elevated contributed by demand on the completion in the large water projects roads and communication under the big four agenda.
The Government’s increased appetite for lending will lead to restricted credit flow to the private sector however when the mobile platforms continue to expand then the cash flow to the private sector will rise.
Currently, 40 percent of Kenyans borrow from multiple lenders with Safaricom’s newest entrant, Fuliza, projected to rise above 100 billion shilling this year.
“The financial inclusion has risen to 85 percent. This means many Kenyans now access credit leading to increased debt in different lending platformers however the defaulters are currently below 2 percent,” said Omukoko.
Pressure is now on the government to grow the economy by at least 8 per cent as projected by the finding once it completes specific projects under the big four driving the economy.
Corruption in Kenya still proves as a dominant challenge affecting the country’s economy while the country’s political stability will attract investors.