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Here’s how Big 4 agenda is expected to grow Kenya’s GDP by 6%
The African Development Bank (AfDB) Group predicted Kenya's 2020 GDP to grow at 6 per cent this year, boosted by favourable weather conditions and big-ticket investments around the Big 4 agenda on health, housing, manufacturing and agriculture. Also, Kenya’s private sector activity fell for the first time in nine months to January, largely due to weak consumer demand, pointing to poor cash flow in the country. Rodney Omukhulu, Assistant Investments Analyst at Cytonn joins CNBC Africa for more.
Thu, 06 Feb 2020 15:08:23 GMT
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AI Generated Summary
- Kenya's private sector growth slowed in January due to weak consumer demand post-festive season, with expectations for improvement as the year progresses.
- Anticipated 6% GDP growth in 2020 driven by agricultural sector, despite challenges like the locust invasion affecting production.
- Government's investments in the Big 4 agenda aim to boost growth and address key development areas, while debt concerns and refinancing risks pose challenges to economic stability.
Kenya's economy has faced challenges in the private sector with a slowdown in growth in January, attributed to weak consumer demand following the festive season. Rodney Omukhulu, Assistant Investments Analyst at Cytonn, highlighted that the decline in spending by households in January led to the sluggish performance, but he expects an improvement as the year progresses. The government's efforts to clear private sector arrears and recent monetary policy cuts are anticipated to support a recovery in demand. While the domestic market felt the brunt of the slowdown, the international market was less affected as focus remained on local consumers. Small and medium enterprises have been particularly impacted by outstanding payments, prompting the government to issue directives for debt clearance to alleviate the strain on businesses. Experts anticipate a 6% GDP growth in 2020, primarily driven by the agricultural sector. Improved agricultural production due to favorable weather conditions in late 2018 is expected to boost economic expansion, although challenges like the locust invasion pose potential threats. The government's investments in the Big 4 agenda, focusing on health, housing, manufacturing, and agriculture, aim to stimulate growth and address key development areas in the country. Efforts towards affordable housing initiatives and support for low-income citizens demonstrate the government's commitment to enhancing living standards. Despite previous Euro bond issuances, Kenya's Treasury has denied plans for further borrowing in 2020, emphasizing a shift towards more affordable loan options to manage the country's public debt. The International Monetary Fund's upgraded debt stress rating for Kenya highlights concerns regarding refinancing risks, cost escalation, and foreign exchange challenges. To address these issues, the government has raised the debt ceiling to accommodate refinancing needs. However, the country's growth trajectory remains unequal, with significant poverty levels and disparities that need to be addressed for a more inclusive economic development.
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