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Election fever, insecurity pose threats to region’s economy

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World Bank projects that East Africa’s economy will grow by 5.8 per cent even though individual countries expect higher growth. TEA GRAPHIC | FELIX MIRING'U 

By CHRISTABEL LIGAMI

Posted  Sunday, January 17   2016 at  09:41

In Summary

  • Politics and security issues stand in the way of economic growth for East African countries this year in the absence of further integration to allow for free movement of goods, services, people and capital.
  • According to Scholastica Odhiambo, a senior lecturer at the School of Business and Economics at Maseno University, security concerns and uncertainties over elections in Tanzania last year, Uganda next month; and Rwanda and Kenya in 2017 have dampened prospects for growth this year.

Politics and security issues stand in the way of economic growth for East African countries this year in the absence of further integration to allow for free movement of goods, services, people and capital.

The World Bank’s 2016 Global Economic Prospects show that the EAC economies will grow by an average of 5.8 per cent this year.

According to Scholastica Odhiambo, a senior lecturer at the School of Business and Economics at Maseno University, security concerns and uncertainties over elections in Tanzania last year, Uganda next month; and Rwanda and Kenya in 2017 have dampened prospects for growth this year.

In addition, the transitions can send mixed signals to investors especially if new administrations prefer policy tweaks that could sent investors back. 

She said the economies of the five East African countries would grow faster if they fully opened up their borders to allow free movement of goods, services and people.

“The only way that say, Tanzania will improve its education sector by allowing more qualified teachers from Uganda to come into the country and offer their services without any limitations. This will not only improve the education sector but the entire economy of the country,” said Dr Odhiambo.

Economy forecast

Country wise, the World Bank forecasts faster growth for Kenya, Rwanda and Burundi and constant growth for Uganda and Tanzania.

The World Banks’s report shows that Burundi will grow at 3.5 per cent, up from 2.3 per cent last year, while Kenya’s GDP is projected to be 5.7 this year, up from 5.4 per cent last year.

The report sees Rwanda growing at 7.6 per cent this year, from 7.4 per cent in 2015 and Tanzania and Uganda growing at unchanged rate 7.2 per cent and 5.0 per cent, respectively.

The World Bank projections are modest compared with projections by the national governments.

The Uganda Treasury has forecast the country’s growth at 5.8 per cent in 2016/2017, which it had projected for last year, while Kenya officials expect the economy to grow at 6.9 per cent. Last year, Kenya revised its growth to 6 per cent from the initial 6.5 per cent. Rwanda has projected an economic growth target of 8 per cent and Burundi’s official target is 4.7 per cent.

Security

For Kenya, Dr Odhiambo said the economic growth may be higher than the World Banks's projection if the security situation improves. Last year many travel advisories were issued hence affecting the tourism sector that is a large contributor to the economy.

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