Kenya's economic growth projected to slow down to 5% in 2024

Kenya's GDP growth is projected to slow down to 5 per cent in 2024 from 5.3 per cent in 2023, according to recent projections by the IMF. This slight decline in growth has raised concerns about the economic outlook for Eastern African countries like Kenya and Uganda. Carol Nampurira, a Corporate Sales Manager for Energy, Infrastructure, and Global Markets at Stanbic Bank in Uganda, shared insights on the factors contributing to the slowdown in economic growth and the proposed tax measures in Uganda aimed at generating more revenue. Nampurira highlighted the vulnerability of sub-Saharan markets to climate shocks, weaker external demand, and elevated geopolitical risks. She emphasized that recent headwinds in key markets like Cote d'Ivoire, Benin, and Kenya, including bond restructurings, have contributed to the expected slowdown in growth. In Kenya specifically, factors such as heavy rains affecting the agricultural sector and a high-interest rate environment impacting the services industry are seen as potential constraints to growth. One of the key measures being considered to address revenue pressures is an increase in taxes, including a new housing levy tax introduced in Kenya. Nampurira pointed out the importance of discretionary government spending and fiscal consolidation to manage liabilities effectively. Despite the challenges, Kenya's strong currency has the potential to boost business activity and drive economic growth. Regarding Uganda, Nampurira discussed the government's proposal of new tax measures to broaden the tax base and increase revenue. The amendments include capital gains tax on non-business assets and exemptions for income on private equity and venture capital funds. She highlighted the importance of removing counterfeits from the market using the dictostamp tax and continuing to engage with multilateral lenders for funding. In conclusion, both Kenya and Uganda face challenges in sustaining economic growth in 2024. However, proactive measures such as effective fiscal management, tax reforms, and engagement with international partners can help navigate the current economic landscape. The cautious optimism remains as these countries strive to strike a balance between funding their budgets and promoting sustainable growth.