Increased private consumption and a normalisation of the weather are expected to lift Kenya’s economic growth to 5.5 per cent this year, the World Bank says in a newly released report. The World Bank says economic growth could hit 6.1 per cent by 2020 when the potential but unrealised production levels is likely to have been achieved. “Economic activity is poised to rebound over the medium term. GDP growth is projected to recover to 5.5 per cent in 2018, and steadily rise to 6.1 per cent by 2020 when output gaps in the economy would have closed,” the bank says in the latest edition of its six-month publication, the Kenya Economic Update. The report says that the dissipation of political tension and the strengthening of the global economy are also expected to work in Kenya’s favour. The projection is further predicated on the repeal of the one-year-old law that restricts movement of interest rates, and which has constrained small and medium-sized enterprises access to credit. “The baseline [of the projection] assumes that the ongoing discourse to repeal the interest rate cap will be successful in 2018, thereby supporting a robust recovery in private sector credit growth in 2019 and beyond,” the report says. Private consumption Recovery of private consumption is expected to occur in the medium term, driven by pocket-friendly food prices unlike last year when drought hit household consumption hard. “With the ongoing broad-based recovery in the global economy, remittances to the economy is projected to be robust, thereby...

Arusha. The East African Community (EAC) is expected to lay the carpet for its investment needs during a forum slated for Berlin next week. "There will be a high level discussions in which investment proposals will be laid bare", said the secretary general Liberat Mfumukeko. Speaking here on Friday after hosting the German Foreign minister Haiko Mass, the SG said EAC has ample opportunities for private sector investment from the European economic power house. Major German companies and potential investors with foothold in Africa will be at the May 15th forum in Berlin, the capital city. The event will be coordinated by the German-African Business Association (Verein der Deutschen Wirtschaft) and the East African Business Council (EABC). "The forum will define new areas of cooperation between Germany and EAC, specifically to enhance private sector investment in our region", he said. According to Amb. Mfumukeko, Germany had supported the EAC to the tune of 290 million Euros in the last two decades. The support include the construction of the EAC headquarters in Arusha and capacity building for EABC, the apex body of the private sector associations in the region. The forum will be taking place as the EAC and German were finalizing an agreement of 5m Euros to support the small and micro enterprises sector in EA. "The aim of the project is to improve opportunities for growth for SMEs in the region", the Community boss explained as he met the German delegation. On April 9th this year, the two sides...

The UK’s Minister for International Trade, Greg Hands, signed the Memorandum of Understanding on day one of a two day trip to Kenya. Hands says the MoU will play an important role in promoting further investment between the UK and Kenya, and vice versa. Areas of collaboration covered by the MoU include Exchange of Information; Promotion of Services; Showcasing of Investment Opportunities; Servicing Investors; Informing Policy and Partnering on Investment Promotion and Networking activities. “Britain and Kenya share a uniquely strong commercial bond. The UK is the largest foreign investor in Kenya and together British invested companies constitute 70% of the Nairobi securities exchanges,” he said. On her part, the Principal Secretary for Industrialization and Investment, Betty Maina, lauded the role the UK has played in Kenya’s economy and invited UK investors to consider the immense business opportunities presented by the ‘Big 4’ Agenda. There are over 250 British companies operating in Kenya, seven of which are among the top 10 corporate taxpayers. “Kenya Investment Authority has been working in close collaboration with the British High Commission for a while now and formalization of this working relationship will strengthen our economic ties with the UK,” said Moses Ikiara, MD, Kenya Investment Authority. During his visit Hands will also: launch the UK-Kenya Economic Development Forum alongside Kenyan Cabinet Ministers; visit British businesses already operating in Kenya, and meet with Kenyan business women ahead of discussions on female entrepreneurship at the Commonwealth Heads of Government meeting in London next week. Source: Capital...

The success of the African Continental Free Trade Area (AfCFTA) agreement will significantly rest on the ability of Africa’s private sector to produce goods for the market, the President of the African Export-Import Bank (Afreximbank), has said. Dr Benedict Oramah said there is need for the private sector to take advantage of the opportunities that the AfCFTA presents, including through developing viable manufacturing hubs. He noted that there is also an opportunity whereby countries can access raw materials and other intermediate goods from fellow African countries for further processing and export at competitive rates. Afreximbank is working actively with the African Union Commission to ensure the realisation of the goals of the AfCFTA, he said, adding that the Bank was willing to help African businesses with “information, market intelligence and financing”, which would enable them to take advantage of the opportunities that AfCFTA presents. The AfCFTA has potential to increase a country’s trade with the rest of Africa by at least fivefold. The agreement was signed by 44 countries in March this year and nations are expected to ratify the deal in their respective parliaments. The agreement could drive up intra-Africa trade by about 52 per cent, according to estimates by United Nations Economic Commission for Africa. Intra-Africa trade is currently at about 14 per cent. AfCFTA implementation is also expected to lead to the creation of more jobs for the continent’s growing population by enabling growth of manufacturing sector and reducing reliance on extractive exports. Extractive exports on which...

Nairobi. Kenya’s exports to the East African region fell to $1.14b last year from $1.21b in 2016, largely due to a slowdown in the performance of manufacturing sector and persistent trade disputes with Tanzania. The Kenya National Bureau of Statistics (KNBS) Economic Survey 2018 shows that Kenya’s trade with East Africa member states dropped from $1.26b in 2015. Uganda, Kenya’s biggest regional market, sliced its imports from Kenya to $618m from $622m the previous year. Exports to Rwanda also dropped to $171m, from $175m in 2016. Tanzania recorded the biggest cut in imports, from $348m in 2016 to $285m last year. The manufacturing sector output volume declined by 1.1 per cent mainly on account of reduced production of food products, beverages and tobacco, leather and related products, rubber and plastics and non-metallic minerals. Comesa imports Cement exports to Uganda fell by 21.7 per cent. Other commodity exports to Uganda that recorded a decline in earnings were alcohol, phenols and their derivatives, salt, medicinal and pharmaceutical products and iron and steel products. Nonetheless, East Africa remained the leading destination of Kenya’s exports, despite a 4.6 per cent decline in the value of total exports during the year. “The decline in total export earnings from the East African Community is partly attributed to a reduction in the value of exports to Africa, since the region accounts for more than half of total exports to the continent,” KNBS said. Kenya also registered the highest increase in imports from the continent — a 43...

The National Assembly has approved the ratification of the African Continental Free Trade Area agreement that was signed by at least 44 countries in Kigali, Rwanda in March this year. The Continental Free-Trade Area pact seeks to make Africa the largest free-trade area in the world. The legislators also approved the ratification of the COMESA-EAC-SADC Tripartite Free Trade Area Agreement. Africa has been pushing for more regional integration by means of its Regional Economic Communities. In March, forty-four African heads of state and government, including Kenya, met in Rwanda, to sign the African Continental Free Trade Area agreement, a long-standing ambition of the African Union. The landmark agreement targets to increase intra African trade to 52 percent by 2022. After Kenya’s cabinet approved the ratification of the agreement late March, the National Assembly has also approved the same. The ACFTA pact is expected to establish a single market with duty-free access among traders, in turn spurring industrialization, infrastructure growth and economic diversification across the African continent. The creation of the ACFTA will consolidate a market of over 1.2 billion people with a combined gross domestic product of more than 3 trillion dollars. The House also approved the ratification of the Common Markets for East and Central Africa (COMESA), East Africa Community (EAC), and Southern Africa Development Community (SADC) Tripartite Free Trade Area agreement which consists of 26 countries. This deal seeks to provide a wider market for both manufactured and primary goods for Kenyan products within a single economic space...

China-led Asian Infrastructure Investment Bank (AIIB) has accepted Kenya’s application for membership in a move that is expected to open a new channel for cheaper financing of Nairobi’s huge spending needs. AIIB said on Wednesday that it had accepted Kenya and Papua New Guinea as new members to the 86 member mega bank. “We’re very happy to welcome Papua New Guinea and Kenya as prospective members of AIIB,” said AIIB vice president and corporate secretary Sir Danny Alexander in a statement. “This shows a strong commitment to promoting infrastructure development through rules-based multilateral cooperation with high standards of governance.” Kenya, which is battling a shortage of infrastructure financing, partly due to rising cost of loans, has been on the lookout for cheaper financing options that will help reduce the burden on the Exchequer. The AIIB, a multilateral development bank first proposed by Chinese President Xi Jinping in 2013, opened for business on January 16, 2016. Kenya is expected to officially join AIIB once it completes the required domestic processes and deposits the first instalment of capital with the bank. AIIB said the undisclosed shares allocated to Kenya will come from its existing pool of unallocated shares. The bank focuses on funding the construction of roads, railway lines, ports and energy as well as rural infrastructure, mainly in Asia. Beijing has effective veto power in the bank’s major decisions, which require at least 75 per cent support. India is the second largest shareholder, with 7.7 per cent of the votes, followed...

Kenya wants to become the permanent seat of the East Africa Court of Justice, which currently holds its sittings in Arusha, Tanzania. Attorney General Kihara Kariuki said on Thursday the move was part of the integration process for the mutual benefit of all citizens and the development of the region. Currently, only the President and Registrar are based at the court with the judges serving only on a needs basis. The judges are also serving within their different member state jurisdictions, a move that is expensive and not sustainable. SUPPORT Mr Kariuki made the revelations when he received the President of the East Africa Court of Justice Emmanuel Ugirashebuja. Supporting the sentiments, Justice Ugirashebuja time has come for the Court to have a permanent home since all its operations are now fully on course. Justice Ugirashebuja said Nairobi is ideal for the court since it is the regional hub. Justice Ugirashebuja, from Rwanda, is the fourth President of the Court. He was appointed Judge of Appeal by the Summit of the EAC Heads of State in November 2013 and the President the following year. The court has eleven judges, five of the Appellate Division and six judges of the First Instance. Justice Ugirashebuja is in the country to seek Kenya’s support in amending two sections of the Treaty for the Establishment of the East African Community. The treaties will enable the establishment of the permanent seat of the EACJ and securing the security of tenure for judges. The Treaty established...

The East African Community on Wednesday launched a simple guide for cross-border traders in Busia. The guide, launched in partnership with the Kenyan government, is aimed at improving cross-border trade especially among women from the member states. It provides information on existing policies, procedures, tariffs, exemptions and facilities available to cross-border traders. Mr Samwel Mwangi, senior assistant director for regional integration, said the guide was created to fill information gaps and numerous challenges faced by women that deny them opportunities to trade freely. “Most of them do not know the privileges they have and some of the laws that usually favour them. This has made them not thrive in the business,” said Mr Mwangi. GAP Mrs Florence Atieno, chairperson of Busia Women Cross-border Traders Association urged partners working at the border points to conduct several campaigns to inform the traders on the new guide. She also asked for establishment of a central market and storage facilities at the Busia border. Dr Kirsten Focken, GIZ Cluster Coordinator, said the guides for small-scale women traders are an important initiative to bridge the gender income inequality gap. “We need to jointly investigate further where laws and regulatory environments facilitate or hinder gender equality and women’s economic participation and develop specific activities and interventions to remove the barriers,” said Dr Focken. The GIZ coordinator pointed out that if women had the same access to productive resources as men, they could increase export and import income by 20 to 30 per cent and expand their business distribution channels...

Tanzanian President, Dr. John Pombe Joseph Magufuli has advocated for industrialisation, infrastructural development and revitalisation of the energy sector in the region. He cited infrastructural developments and the revitalisation of the energy sector as key ingredients to speeding transformation.  He expressed concern about the high cost of transport and energy, saying it results in situations where the costs of travel had scaled up almost four times in comparison to other regions. Magufuli was addressing the East African Legislative Assembly in Dodoma, Tanzania on Tuesday, a press release said. According to findings by Power Africa in 2015 results show the region only has 6500MW which cannot entirely support the region’s development. In that regard, the President called for other alternatives to be sought. “We must reverse the trend and assist the region.  I challenge you Mr Speaker and Members to see what you can do,” he said. He revealed that natural gas and the rare helium gas were available in Tanzania and said such benefits should for example be spread across the entire region. The President said the alternative energy initiatives would assist boost the national grid adding an additional 2100 MW which would be sold in the region.  “As Tanzania, we shall do our part,” he said. The President rallied for the industrialisation and infrastructural development of the region, saying it held the key for the transformation of the United Republic of Tanzania and the entire region. The President said time had come for the region to “think big and...