Kenya to be spared from economic turmoil as Africa’s economic growth dips to two-decade low

Kenya is set to be spared from a bout of economic turmoil despite the fact that economic growth in sub-Saharan Africa is likely to slip to 1.6 per cent this year, its lowest level in two decades.

The dip is due to continuing woes in South Africa and Nigeria, the continent’s largest economies, a World Bank report has said.

Meanwhile, an analysis, dubbed the October 2015 Kenya Economic Update indicates that Kenya is poised to be among the fastest growing economies in Eastern Africa. Another report titled the 2016 Country Economic Memorandum says that Kenya’s growth prospects will depend a lot on Innovation, Oil, and Urbanization on the long term.

Africa has been one of the world’s fastest growing region’s over the past decade, but a commodities slump has hit its oil and mineral exporters hard, bringing growth down to 3 per cent in 2015.

On the other hand, Kenya’s growth is projected to rise to 5.9 per cent in 2016 and 6.1 per cent in 2017.

Other countries, including Ethiopia, Rwanda, and Tanzania, have continued to record GDP growth above 6 per cent, according to “Africa’s Pulse”, the Bank’s twice-yearly analysis of economic trends.

The report, which was unveiled in Abidjan, Ivory Coast’s commercial capital, also singled out Ivory Coast and Senegal as top performers.

“Our analysis shows that the more resilient growth performers tend to have stronger macroeconomic policy frameworks, better business regulatory environment, more diverse structure of exports, and more effective institutions,” said World Bank Chief Economist for Africa, Albert Zeufack.

Established and improved performers made up around a quarter of sub-Saharan Africa’s countries, are home to 42 percent of its people, but account for just 21 percent of economic output.

Meanwhile, it has emerged that 4 out of every 10 of African economies are struggling. They contain 36 per cent of the continent’s population but contribute 62 percent of economic activity. Nigeria and South Africa alone account for half of output.

Against this backdrop, a modest rebound is forecast for Sub-Saharan Africa in 2017. Economic activity is expected to rise to 2.9 per cent. The uneven growth performance we currently see should continue, with the region’s largest economies and other commodity exporters experiencing modest growth, as commodity prices strengthen slowly, while other countries continue to expand at a robust pace, supported in part by infrastructure investments.

Looking ahead, increasing agricultural productivity on the continent is central to transforming Sub-Saharan Africa. A World Bank analysis shows that addressing the quality of spending and the efficiency of resource use is even more critical than addressing the level of agriculture spending.  Rebalancing the composition of public agricultural spending could reap massive payoffs. The findings conclude that among other policy reviews, increasing agricultural productivity is central to transforming Sub-Saharan African economies. Addressing the quality of public spending and the efficiency of resource use is even more critical than addressing the level of spending.

 

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