Destination Point Kenya

In the short term, Kenya’s growth prospects appear good in light of recovery efforts being carried out by the government. Global economic growth is projected to pick up in the year 2010 and slow down in 2011. Consequently, the demand for the country’s commodities might improve.

On the domestic scene, erratic and insufficient long rains in key food growing areas, delayed land preparation and lack of pasture for the livestock will constrain production in the food and livestock sectors. Additionally, the prevailing low prices of coffee and tea in the international market might persist but are uncertain. However, the ongoing restructuring in the processing and marketing of agricultural produce, weak Shilling, efforts in containing the spread of anny wonns and reduced wrangles in the coffee industry will boost productive activities in the sector. Horticultural production is expected to continue benefiting from the cheaper sea transport.

In the financial sector, growth prospects will continue to depend on favourable environment for private sector borrowing. In particular, the expected lower interest rates should foster investor confidence. The continuance of the existing tight monetary stance will result in reduced growth in money supply. This should deter any significant increases in inflation rates, which is expected to be contained within the single digit bracket. Restructuring within the sector is expected to continue as is the efforts at recovery of bad and doubtful debts. Consequently, the sector is poised to register higher growth.

The government is expected to continue its tight spending controls, thus reducing domestic borrowing. This is expected to increase funds available to the private sector for investment and reduce interest rates that are currently high. These developments are expected in turn to reduce the fiscal deficit. Inflationary pressures are expected to be maintained within the single digit level on account of tight spending controls by government.

In addition, other measures such as the continued improvement in security and marketing of key tourist attraction areas, improvement of the road and telecommunications network, restructuring and privatization in the communication sub-sectors will boost activities across a wide spectrum of sectors in the economy.

It is hoped that the resumption of both bilateral and multilateral donor funding will not only boost the country’ s balance of payment position but also act as a positive signal for investors. In view of the above developments, the economy is poised to start on a slow recovery path. A real growth of around 2.1 per cent in 2010 and 2.6 per cent in 2011 may be achieved. Higher rates of economic growth may be achieved if both the business and macroeconomic epvironments can be altered radically. The above measures should lead to increasing per capita incomes, employment generation, increased government revenues, and reduced deficits and debts. In the circumstances, the high incidence of poverty prevailing will be reduced.