Today, Barclays Bank, Kenya launched the Macro Economic report at the Intercontinental hotel. The event was graced by the Barclays Bank MD, Jeremy Awori, Jeff Gable, Chief Economist, Barclays Bank Group and CBK senior representatives, clients and the media.
The Barclays Bank research department produces a macro economic report that covers key issues affecting –both prospective and retrospective-the economy from a country, regional and global level each year. The report covered issues that affected our growth as well as the forecast for 2018.
In his opening remarks, the Barclays Bank Kenya MD noted that in 2017, Kenya’s economy was resilient even with slower growth. He further noted that there were three things that slowed down Kenya’s economy in 2017 which are drought, weakening of the shilling , long electioneering period which also brought with it a tough business environment.
He however noted that with the political calm and improved weather conditions, we are about to see a change in 2018. ‘ We are optimistic, we are growing and we are investing in our business in Kenya. In the next five years, we will work with the Government to ensure the economy grows, businesses thrive and create jobs’ he said
Presenting the report was Mr. Jedd Gable, the Group’s Chief Economist. Among the things he shared was the global economic growth which was narrowed down to how the Sub Saharan Africa faired down to Kenya. For this article, we will share more on what Kenya is looking at in 2018.
Risk to Kenya Growth
Even though he they predicted Kenya’s growth to be over 5% this years, there are some risks that threaten the economy.
The last five years has seen Kenya’s debt burden increase sharply, and the Government has made debt servicing its main focus. Did you know that for every Ksh 3 you pay to the Government as tax, Ksh 1 goes to debt payments?
We saw the effects of this in 2017, where businesses adopted the ‘wait and see’ strategy and many stopped trading which led to loss of jobs, loss of investments and slow growth towards the end of the year. For the economy to thrive, Kenya has to be calm
Credit growth stall
The last year also saw the Central Bank put a cap on the interest rate at 14% which weighed heavily on small borrowers, who could not access credit anymore. It also reduced competition and innovation in the financial sector, while increasing informal lending which was and is still costly.
He also noted that the Credit rating agencies are watching. Like In October Moody’s placed Kenya’s B1 long-term issuer rating on review for downgrade.
Few reasons are the persistent large primary deficits and high borrowing costs, Government liquidity pressure risk due to increasingly large financing needs, Uncertainty over the direction of fiscal and economic policy, in part due to evolving political dynamics.
With all this, we are still hopeful that we will see economic growth in 2018.