Kenya Lays Foundation for Strong Growth in a Challenging Environment

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Kenya’s economy is expected to grow at 5.4 percent in 2015, recording an improvement over the 2014 growth rate of 5.3 percent, says a new World Bank Group economic report released today. The growth rate in 2016 is projected to be 5.7 percent.

The Kenya Economic Update (KEU) attributes the growth to government investment in infrastructure and strong consumer demand.

“Kenya has the potential to become one of the best performing economies in Sub Sahara Africa and also among middle income countries,” says Diarietou Gaye, the Bank’s Country Director for Kenya. “Managing the challenges emerging from the current global economic environment will enable the government to deliver on the promise of a more prosperous future for Kenyans.”

Economic performance remains solid, though the uncertainty facing global currencies is causing volatility in the domestic money and foreign exchange markets. This has moderated Kenya’s growth prospects, says the 12th KEU edition. In addition, the current fiscal deficit as a share of GDP presents a risk to growth unless fiscal consolidation is undertaken.

“The current expansionary fiscal path presents a risk to growth,” says John Randa, Senior Economist and the Lead Author of the KEU. “Although heavy infrastructure spending is a boon for Kenya’s production space and future growth, the short- to medium-term macro-fiscal framework is vulnerable to macroeconomic shocks.”

The KEU also focuses on the considerable progress that county governments, with the support of the central authorities, are making in engaging citizens to strengthen public service delivery at local levels. Constitutional and legal provisions for transparency, accountability, and public participation are key elements of devolution.

The World Bank Group is supporting programs to improve the capacity of county service providers in public financial management, planning, public participation, monitoring and evaluation.

“County governments have prioritized the setting up of structures and systems to facilitate public participation,” says Christopher Finch, Senior Social Development Specialist, also one of the authors of the report. “Strengthening citizens’ participation through participatory and inclusive processes is critical to the success of devolution.”

The KEU was prepared by the World Bank Group in partnership with the National Treasury and members of the Economic Roundtable, who include the Ministry of Devolution and Planning, Central Bank of Kenya, Kenya Revenue Authority, Kenya Vision 2030, Kenya Institute for Public Policy Research and Analysis, International Monetary Fund, Kenya National Bureau of Statistics, National Economic and Social Council, Office of the Controller of Budget, Council of Governors, Commission for the Implementation of the Constitution, Kenya School of Government and the Center for Parliamentary Studies and Training.

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