By BUSINESS DAILY

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Kenya has been ranked 112 globally on macroeconomic stability, institutional strength, openness and human capital and remains behind 11 other African countries.

Mauritius, Botswana and Rwanda are the top-most in Africa in terms of future growth promise on account of the measured indicators, according to a newly released report by audit and financial advisory firm KPMG titled Growth Promise 2018.

By macroeconomic issues the report refers to government deficit and public debt while openness refers to the stock of foreign direct investment and total trade.

Other metrics used are infrastructure which refers to availability of financial services, the quality of transport and technology readiness.

Institutional strength

Rwanda is put ahead of most other African countries mainly because of its institutional strength that refers to the quality of regulation, judicial independence, transparency of government policymaking, control of corruption and business and property rights.

“Unpicking trends in the sub-indicators suggests that the real strides have been made via improvements in infrastructure, and in particular in tech-readiness,” said the report that uses Growth Promise Index (GPI) to rank countries with sub-indicators that also include human resources aspects such as education and life expectancy.

But it says that, across the globe, GPI scoring in macroeconomic stability has fallen due to the Great Recession (2008-to date) resulting from the financial meltdown in the US and its turbulent aftermath as well as the decline in commodity prices.

“Most regions fared poorly in this category, cancelling out possible gains in areas such as human development and infrastructure,” said KPMG.

Macroeconomic stability

Although the report does not reveal the details about Kenya, it shows that the country’s macroeconomic stability is still not as good as that of Egypt, Morocco, Cabo Verde, Ghana, Algeria and Tunisia.

Although Rwanda, Mauritius and Botswana have a higher overall GPI ranking than Kenya, they are behind on macroeconomic stability ranking.

Kenya’s budget deficit, for example, has hit a high of above eight per cent but is expected to fall to just above six per cent under the 2018/19 Budget Strategy Paper.

Public debt is currently at above 50 per cent of the gross domestic product, thanks to borrowing related to the standard gauge railway in the past few years. However, the debt is projected to fall below 50 per cent in the coming fiscal years.

The KPMG report adds that many countries still have a chance to improve on their finances.