By Allan Olingo

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East Africa’s two leading economies, Kenya and Tanzania, recorded a drop in growth in the first quarter of this year, due to a slowdown in manufacturing, agriculture and construction sectors.

Tanzania

The Tanzanian economy slowed down to 5.7 per cent between January and April, compared with 6.8 per cent over the same period last year. Kenya recorded 4.7 per cent growth in Quarter 1, down from 5.9 per cent in the same period of 2016.

Data from the Tanzania National Bureau of Statistics shows that the country’s construction sector slowed down to 8.4 per cent from 8.9 per cent a year ago, while growth in the transport sector almost halved — to 4.1 per cent from 7.9 per cent.

“During the period under review, mining and quarrying registered the highest growth rates of 35.3 per cent, followed by information and communications at 13.8 per cent. The surge in growth of the mining sector was as a result of increased production of gold, tanzanite, copper and coal,” the statistics agency said last week.

Tanzania is Africa’s fourth-largest gold producer and also has vast deposits of coal, uranium and gemstones.

But in recent months, it has clamped down on what it termed as exploitation of its minerals by mining firms, which saw the country’s largest gold miner Acacia slapped with a $190 billion tax bill.

The country also saw its agriculture sector slow down to 2.6 per cent, a 0.1 per cent drop from last year’s figures, due to poor weather.

Tanzania is hoping that its economy will grow by 0.1 per cent to 7.1 per cent this year from 7.0 per cent in 2016, still making it one of the fastest-growing in the region.

READ: Tanzania slaps Acacia Mining with $190b tax bill

Kenya

Kenya on the other hand recorded its slowest growth in five years, blamed on poor weather and reduced lending by commercial banks.

“The quarter’s growth was negatively impacted by drought after the 2016 short rains failed and a delay in the onset of the 2017 long rain,” said the Kenya National Bureau of Statistics.

Data released by KNBS showed the country’s cement sub-sector is headed to record its first annual decline in 10 years. Cement consumption stood at 2.5 million tonnes in the five months to May compared with 2.56 million in the same period last year.

Cement manufactures also cut back on production to 3.18 million tonnes from 3.31 million tonnes.

“A fall in cement consumption is an indicator of a slow down in the construction sector, one of those affected by the decline in private sector credit growth,” said NIC Securities in its latest cement sector report.

The country’s agricultural sector shrunk by 1.1 per cent to $2.86 billion — the first in eight years. The country has experienced food shortage for the better part of the year forcing the government to look outside the country to replenish its food stocks.

READ: Kenya turns to Uganda for maize to plug domestic shortage

The data also showed that the country’s private sector credit growth has shrank to 3.3 per cent from 17 per cent at the end of 2015, this coming after the October 2016 interest rate gap introduced, also amidst a tightening of regulation by the central bank.

The country’s manufacturing sector expanded faster in the first quarter compared with the corresponding period of 2016, recording a growth of 2.9 per cent compared with 1.7 per cent in 2016.

Uganda

In Uganda, the economy expanded 3.9 per cent in the fiscal year to the end of June, but it is below the forecast of 5.5 per cent as drought and a diminished private-sector credit curbed growth.

The Central Bank projects growth will climb to five per cent in 2017/18, supported by better implementation of public investment, higher foreign direct investment and a pick-up in private sector credit.

“We expect that the activity in the manufacturing and retail will rebound as access to credit improves over the course of the year. We also expect the government expenditure on public infrastructure projects to likely to support economic activity over the near to medium term,” said Jibran Qureishi, an economist with Stanbic Bank East Africa.