Kenya’s economy is projected to record a growth expanding by 6.2 per cent this year from 5.7 per cent posted in 2019.
Central Bank of Kenya (CBK) governor Patrick Njoroge said that despite a gloomy outlook for the global economy, Kenya’s growth will be robust driven by revitalization of the agricultural sector, small and medium enterprises and growth in credit to the private sector following the repeal of the interest rates cap.
“Inside these numbers are concerns which if dealt with could lead to much higher growth,” said Njoroge who was speaking to the media after the Monetary Policy Committee (MPC) meeting on Monday.
He added that if the government implements measures outlined by President Uhuru Kenyatta specifically focusing on the agricultural sector, the economy would expand more significantly.
In mid-January, President Uhuru announced a stimulus package for the economy that targeted key agriculture sub-sectors like dairy, coffee and tea.
On Monday, CBK lowed the benchmark lending rate by 25 percentage points to 8.25 per cent from 8.50 per cent signalling cheaper credit to the economy.
This was the second time MPC cut the rate in a row, having reduced it from 9.0 per cent when it met in November.
“The November reduction is still working through in the economy. It takes a minimum of four months for transmission,” Njorogre noted.
He added that policy measures and the repealing of the interest rates capping is having a positive impact on the credit market with lending to the private sector growing by 7.1 per cent last year. This year, it is projected to expand by 11.8 per cent.
Despite the positive outlooks for the Kenyan economy, disruptions on the global arena including Brexit, trade wars and the outbreak of the coronavirus in China could send shockwaves into Kenya.