Sanlam insurance sector performance highlights

In the ever-evolving landscape of the global economy, projections and predictions play a crucial role in guiding investors and policymakers. As 2024 unfolds, the spotlight is on the regional and global economic performance, with a focus on factors such as interest rates and currency movements. CNBC Africa recently sat down with Dan Gathogo, Deputy Chief Investment Officer at Sanlam Investment E.A Limited, to discuss the key elements that will shape Kenya's economy in the coming year. Gathogo provided a detailed analysis, highlighting the impact of interest rates, currency depreciation, global monetary policy, and external funding on the country's economic outlook. One of the key themes that emerged from the interview was the projection that interest rates in Kenya would remain elevated in 2024. Gathogo pointed out that the Central Bank of Kenya had increased interest rates to 12.75% in December 2023, signaling a continuation of high interest rates in the year ahead. This, he emphasized, would have a significant influence on the overall performance of the economy. As interest rates play a crucial role in shaping investment decisions and consumer spending, the expectation of sustained high rates suggests a challenging economic environment in the near term. Another critical factor highlighted by Gathogo was the movement of the Kenyan Shilling against the US Dollar. In 2023, the currency experienced significant depreciation, particularly in the first half of the year. However, government interventions, such as reviving the interbank market and securing credit agreements for fuel imports, helped stabilize the Shilling to some extent. Looking ahead to 2024, Gathogo projected continued depreciation due to pending oil repayments, but noted that the depreciation might be less severe compared to the previous year. The balancing act between currency stability and external debt obligations will be a key challenge for Kenya in the coming months. A significant shift in the global economic landscape is expected to impact Kenya's economy in 2024. Gathogo highlighted the anticipated lowering of interest rates by the US Federal Reserve as a positive development for developing economies. This move is projected to ease the pressure on outflows of capital from countries like Kenya and potentially contribute to a more stable currency environment. The interplay between global monetary policy and local economic conditions will be a crucial factor to monitor as the year progresses. In addition to these macroeconomic factors, Gathogo also delved into the implications of upcoming elections on investment and economic growth. With an unprecedented number of countries heading to the polls in 2024, including the US, geopolitical uncertainties loom large. The outcomes of elections and subsequent policy decisions could have far-reaching consequences for market access and external funding for developing economies like Kenya. As investors and economists closely monitor political developments, the impact on consumer spending and economic growth projections remains a key area of concern. As the discussion turned to debt management and currency performance, Gathogo offered insights into Kenya's debt repayment strategies and external funding sources. With a looming maturity of a $2 billion Eurobond in June 2024, the country's ability to service its debts has come under scrutiny. However, recent funds secured from multilateral partners like the IMF and World Bank have provided a lifeline for the government. These injections of capital are expected to bolster Kenya's ability to meet its debt obligations and potentially stabilize the Shilling in the face of external pressures. In conclusion, the outlook for Kenya's economy in 2024 is a complex tapestry of domestic and global dynamics. With high interest rates, currency fluctuations, global monetary policy shifts, and electoral uncertainties in the mix, navigating the economic landscape will require agility and strategic planning. As Sanlam Investment E.A Limited's analysis suggests, while challenges lie ahead, proactive measures and external support could pave the way for a more stable and sustainable economic trajectory for Kenya in the year to come.