Tough times ahead as World Bank reveals Uhuru lied on economic outlook

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According to the just released World Bank economic update, Kenya’s economic growth is expected to marginally ease in 2019 owing largely to jitters in agricultural productivity from the delayed onset of long-rains.

This contradicts the government projection of 6.3 percent economic growth estimate announced by President Uhuru Kenyatta during his State of the Nation address on Thursday April 4, 2019.

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Agriculture, which makes up Kenya’s mainstay in propping up the economy, had in 2018 picked up by an estimated 3.7 percent to aid in the rebound of GDP from a downcast 4.9 percent in 2017.

As uncertainty rocks the country’s economic backbone, the World Bank Group expects private sector involvement to anchor growth across the year.

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“Reflecting on the emerging drought challenges, GDP growth is projected to slowdown before recovering to 5.9% and 6% respectively in 2020 and 2021 supported by ongoing investments by government in its development agenda and an improved business sentiment,”  reads the report.

To rally in the private sector, the World Bank backs the repeal of interest capping and the fast tracking of reforms to embolden the sector’s contribution to economic development.

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“Our base line for growth in 2019 takes into account the fact that private sector investment is likely to remain subdued and hence our policy message, emphasizing on the need to support private sector investment recovery especially under ongoing fiscal adjustment by government,” World Bank senior economist Peter Chacha said.

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In spite of elevated concerns on low credit spread, Kenya’s economy has continued to express resilience characterised by the credit-less recovery of key economic segments.

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Domestic revenue mobilization by government as a share of GDP has for instance retracted below 16 percent in recent years from a all-time high of between 19-20 percent.

This as the Kenya Revenue Authority (KRA) continues to miss out on set collection target by government constrained by a number of factors which include depressed tax-compliance.

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