Genghis Capital cuts Kenya's economic growth projection to 4.75%

Kenya's economy is set to slow down to between 4.75% and 5.25% according to a 2017 economic projection by Genghis Capital. The drop is attributed to prolonged drought and a slowdown in private sector growth, exacerbated by uncertainties surrounding the upcoming election in August. Faith Mwangi, a Senior Research Analyst at Genghis Capital, discussed the economic forecast and key sectors expected to sustain the economy in the face of challenges. The first half of 2017 is anticipated to be weaker due to drought, sluggish private sector growth, and constraints in the banking sector related to interest rate capping. The latter half of the year, post-election, is expected to demonstrate a stronger economy. The cautious outlook factors in the unique challenges of 2017, including the impact of the election year alongside other risks like the new interest rate-capping system in place. Sectors like agriculture, manufacturing, and transport are seen as sources of growth and opportunity for Kenya, with government spending aimed at supporting these areas and stimulating economic activity. Despite the budget focus on these sectors, the guarantee of anticipated growth remains dependent on various factors. Tourism, a historically significant sector for the Kenyan economy, is showing signs of improvement with the lifting of travel bans globally and increased domestic tourism. A peaceful election could further boost the tourism industry. However, the equities market in Kenya faces challenges, with the NSC20 struggling and blue-chip companies recording poor performances. The banking sector, a key player in the market, continues to navigate challenges related to the interest rate environment and liquidity concerns. The debate around the Banking Act of 2016 and its impact on banks' profitability continues, with discussions likely to emerge this year. Faith emphasized the need for financial inclusivity, highlighting the role of mobile platforms in making financial products accessible and cost-effective. The launch of M-Akiba, a mobile-based platform for fixed income investments, aims to increase participation and reach previously untapped investors. Looking ahead, post-election, opportunities for increased investor confidence, stronger private sector credit, and market inclusivity present positive prospects for 2017. Faith Mwangi reiterated the potential for growth and investment post-election, urging investors to consider positioning themselves strategically for future gains.