Kenya is set to become one of the fastest growing economies in Sub-Saharan Africa with growth projected at 6 per cent in 2015.
According to the World Bank’s latest report, Kenya’s Economic Update, the country is emerging as one of East Africa’s fastest developing hubs mainly because of its firm growth largely due to its infrastructure investments.
“Kenya is emerging as one of Africa’s key growth centres with sound economic policies in place for future improvement. To sustain momentum, Kenya needs to continue investing in infrastructure and jobs, improve its business climate, and boost it exports,” Diarietou Gaye, the World Bank’s Country Director for Kenya said.
The country has been driving to improve its rail and road infrastructure, a vital key to unlock its growth and economic development. During the country’s 2014/2015 Budget, the government set aside a huge chunk in its national funds to infrastructure.
The government allocated 22.9 billion Kenyan shillings to fund its portion of the Standard Gauge Railway project which is scheduled for completion and commissioning in 2017 and more than 110 billion Kenya shillings for roads as well as upgrading and construction of airports.
Nonetheless, the World Bank notes that the East African economy needs to increase the competitiveness of its manufacturing sector which currently contributes around 11 per cent to the country’s Gross Domestic Product (GDP)
“A strong manufacturing sector will create more employment, especially for young people in Kenya. The report suggests that this will also increase exports and reduce the country’s external vulnerability from a widening account deficit,” read a press release by the financier.
According to reports, Kenya’s manufacturing sector directly employs over 250,000 people while 1.4 million people are employed through the manufacturing supply and distribution chain, a representation of 13 per cent of the country’s total employment.
Moreover, to increase the contribution of the manufacturing sector to the economy, the bank recommends that Kenya should adopt certain cross-sectorial policies that will address inefficiencies in the capacity of the economy.
The reports also notes that the improved outlook for the shilling, the government still needs to preserve and rebuild fiscal policy cushions.
“Kenya’s accommodative monetary policy stance has supported economic activities without triggering inflation or putting pressure on the exchange rate,” John Randa, World Bank lead author of the report noted.
Nevertheless, the bank still notes that security plays a major determinant as to whether the country will achieve higher economic growth rates.