Kenya’s Economic Outlook
The Kenyan economy is projected to grow at 6% this year with inflation levels expected to be at 5.9%. The shilling has significantly strengthened in the last few weeks, with further indications of stabilisation in the near future.
Importers have been adversely affected by the shilling depreciation as it has resulted in the cost of goods going up and a squeeze on sales. This coupled with the cost of borrowing from banks going up has slowed down business activities.
Where we had previously observed an Extended Import Credit Facility supporting businesses in the country, this has significantly slowed down due to uncertainty in the exchange rates following the collapse of the hedging market.
As a result, businesses have opted to pay for their goods upfront to avoid incurring substantial losses on deferred payment terms.
Recently the government has paid part of the due amount for the $2Bn Euro bond, which matures in June this year by raising another bond and currently the outstanding amount is $600M.
The World Bank and IMF have continued to support the Kenyan government to shore up its liquidity and meet its financial obligations and have committed to continued support for the government.
We expect this to increase investors’ confidence in Kenya, which in the long run will support the shilling through dollar inflows in the form of direct investments. This will in turn spur the economy to grow at the projected levels.
More information about Kenya economic situation is also available in Axendo – PangeaRisk report 2023.
If you’re keen on discovering more about other African countries, the Business Outlook is also accessible for Ghana and Nigeria.
References :
https://www.reuters.com/world/africa/kenyan-economic-growth-rises-59-year-on-year-q3-2023-12-29/
- Simon Mutinia
- Business Development Manager, East Africa