East Africa Economic Report

Rift Valley Railways: Frustrated by IFC's last minute withdrawal THE WORLD BANK's star in Africa is waning. And if the Bank does not re-discover and reinvent itself soon, it will fade into oblivion. Its place is being assumed by a number of players such as the domestic capital markets, the African development Bank, Chinese and Japanese DFIs.    The World Bank, as a development Finance institution, is conspicuously absent in the high profile sectors in east Africa such as transport and energy infrastructure. And where it is present, there are loud complaints that its drags progress. Africa’s major development bottlenecks include transport and energy infrastructure. Given their multiplier effect on economic progress, Africa has prioritized investment in infrastructure which has been wanting for years. Now there is a backlog that has to be produced before we even begin to talk of meeting future demand. Bujjagali:Funded by WB after Uganda threatened to go it alone...

An oil Rig: Drilling to cost more   JUST HOW MUCH oil deposits could there be in Kenya ?  According to an analysis by the prospecting companies- Tullow oil and Africa oil of Canada- perhaps enough to run the country for 300 years. Or enough to run the US for 18 months. Bloomberg reported that the two oil drillers, who first discovered oil in Kenya's rift valley basin only last year, now say the 450 KM long basin could hold 10 billion barrels- enough to run Kenya for 300 years! Consequently, the oil drillers are planning to drill 11 test wells in Kenya this year. And remember they are also drilling wells in Ethiopia. Like Kenya, Ethiopia was deemed a barren land as far oil production is concerned. However, now that outlook is changing with discovery of oil in Kenya’s rift valley. We are running out of metaphors. Now try to figure out where the oil production in Uganda; South Sudan and Ethiopia would place Kenya. According to analysts, right in the centre of the...

Kenya shilling: Gaining some muscle AFTER A SLIGHT interruption by election petitions, the bulls are back and snorting. The rapid barometers of economic sentiment i.e. the NSE index and the shilling's exchange rate are galloping upwards.  And analysts are reviewing Kenya's GDP growth year upwards to 7-8 per cent from the projected 6 per cent ceteris paribus . The NSE index has hit a 57 month high of 5030  and has held above 5000 points. The shilling has also pushed past Kshs/USD rate of 85. It is now trading at Kshs 84.50 to the USD and is expected to make further gains going forward. Analysts predict that the bulls will still be snorting for another few days before they find their level. One thing is certain though, all analysts say, the bullish sentiment is likely to be around for a while.  The bulls did not begin yesterday. No. The country was bullish for much of last year. However, the uncertainties associated with the just concluded elections, put a dam...