Economy
From The Report: Kenya 2018
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After the costly drought and political uncertainty of 2017, the Kenyan economy appears to have stabilised on an upward trajectory in 2018, with most forecasts seeing a more robust expansion of economic activity. Indeed, Kenya’s diverse economy forms a solid platform from which the government can generate economic growth over the coming years. The resolution of the electoral process, improving business confidence and strong private consumption are likely to support GDP expansion over 2018 and into 2019. However, a structural fiscal deficit and an increasing public debt continue to pose significant challenges. Consequently, a sense of urgency surrounds the process of economic reform by which Kenya hopes to establish itself as a globally competitive, prosperous nation by 2030. This chapter contains interviews with Anne Kirima-Muchoki, Chairperson, Kenya Investment Authority; Carole Kariuki, CEO, Kenya Private Sector Alliance; and Ray W Washburne, President and CEO, Overseas Private Investment Corporation.

Articles from this Chapter

Overview

Next level: Conditions for growth have improved, though challenges remain to reduce the deficit and support the private sector
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After the costly drought and political uncertainty of 2017, in 2018 the Kenyan economy appears to have stabilised on an upward trajectory, with most forecasts seeing a more robust expansion of economic activity. However, a structural fiscal deficit and ballooning public debt continue to pose significant challenges. Consequently, an increased sense of urgency surrounds the process of economic reform by which Kenya hopes to establish itself as a globally competitive, prosperous nation by 2030. The…

Interview

Cause for optimism: Anne Kirima-Muchoki, Chairperson, Kenya Investment Authority, on harnessing new technologies and reforming regulations
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Interview:Anne Kirima-Muchoki How would you assess the current business environment, and which sectors are driving investment? ANNE KIRIMA-MUCHOKI: With the post-election turbulence now resolved, investment is resuming. The country is once again working together and the government’s Big Four agenda is helping to drive investment. Affordable housing is one of the main four pillars of the strategy, with a plan under way to establish one- to three-bedroom units at a cost of between KSh600,000…

Analysis

Duty calls: Efforts to boost revenue growth focus on the tax framework
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Averaging 5% per year over the past decade, according to the most recent figures from the IMF, Kenya’s economic growth has been impressive. Revenue growth, however, has followed a more volatile trajectory and has often failed to meet government projections. The Kenya Revenue Authority (KRA) collected some KSh656.9bn ($6.4bn) in tax revenue in the second half of 2017, a figure which was nearly 7% under target, according to the National Treasury’s economic and fiscal report. In terms of tax revenue…

Interview

Lodestar for growth: Carole Kariuki, CEO, Kenya Private Sector Alliance, on the Big Four agenda getting state and business working in tandem
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Interview:Carole Kariuki, CEO How is business optimism in Kenya evolving? CAROLE KARIUKI: Increased business activity stemming from greater investor confidence is pegged to a surge in private sector output and employment. According to CfC Stanbic Bank’s Purchasing Managers’ Index, business activity is up from a low of 34.4 points in October 2017 to 57.7 as of April 2018. This renewed confidence comes from the political stability ensuing from the end of 2017’s prolonged electioneering,…

Interview

Inclusive infrastructure: Ray W Washburne, President and CEO, Overseas Private Investment Corporation (OPIC), on the importance of comprehensive infrastructure development in Africa
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Interview:Ray W Washburne How can sub-Saharan Africa attract more foreign direct investment (FDI) across all sectors? RAY W WASHBURNE: FDI inflows into Africa are increasing sharply and are playing an important role in fostering economic growth and development in a number of sectors across the continent. While it once accounted for a small share of available capital for projects, there has been a dramatic reversal in recent decades. Both FDI and aid flows to Africa have increased in recent…

Analysis

Trading up: National trade policy aims to facilitate market access for a wider range of value-added products and services
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Kenya has followed an export-oriented trade policy since the mid-1980s, when it shifted from its previous strategy of import substitution. While the efforts of successive governments have met with some success, the trading data for 2017 makes for uncomfortable reading for planners at the Ministry of Industry, Trade and Cooperatives. According to the Kenya National Bureau of Statistics, the trade deficit stood at KSh1.1trn ($6.2bn) at the close of 2017 – up 33% over 2016. The growing trade imbalance…

Overview

Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economies – Kenya 2018
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Recent decades have seen a downward trend in corporate taxation, with headline corporate tax rates falling by 20 percentage points since the early 1980s. The average for advanced economies dipped to 22% in 2015, and investment incentives have further reduced effective rates for transnational corporations. After the 2007-08 global financial crisis, many countries had to slash spending and raise revenue to rein in deficits, but lower corporate taxes persisted. In the face of post-crisis austerity, however, public tolerance of corporate tax avoidance has dissipated, thus increasing political momentum to improve transparency and limit loopholes. The…