According to Kenya’s Cabinet Secretary of the National Treasury, Henry Rotich, the country’s weak tourism performance and meagre performance in the agricultural sector has led to the nation’s weak economic performance in the first quarter.
Kenya’s economy expanded by 4.1 per cent in the first half of this year, lower than 5.2 per cent growth in first quarter of 2013. The government had anticipated for the country to grow by 5.2 per cent in the first quarter of 2014.
The Kenyan government had put the country’s growth at 5.8 per cent this year and 6.4 per cent in 2015.
Last year, the agricultural sector recorded improved performance mainly due to favourable weather conditions. However, this year, the weather conditions have been unpredictable.
According to the share price score card of the Nairobi Securities Exchange (NSE), some agriculture stocks have fallen for the last three months. Most of the agricultural firms listed on the Nairobi bourse among them Sasini Tea and Kapchorua Tea have already issued profit warnings on the back of the drop of international tea and coffee prices. Tea prices have been plummeting since 2013 reaching a record low of 2 US dollars per kilogramme in June.
Meanwhile, the East African nation has been experiencing a slump in the countries second highest foreign exchange earner, tourism.
In July, the tourism sector chronicled a four per cent decline in international arrivals between January and May to 381,000 arrivals compared to 398, 000 posted over a similar period in 2013.
According to industry players, Kenya is staring at loosing 40 billion Kenyan shillings in its second highest foreign income earner, tourism.
Kenya has experienced a spate of grenades, bombs and armed attacks since 2012. The main threat is from extremists linked to Al-Shabaab, a militant group in Somalia angered by Kenya’s military intervention in the war torn country.
In June, the World Bank cut Kenya’s growth forecast by 0.5 per cent to 4.7 per cent expected in 2014. The bank attributed the forecast cut to drought, insecurity, weak budget execution and tighter global credit.