Bright prospects for EA economy in 2014
THE ECONOMY of east Africa grew by about 5.9 per cent in 2013.And this year, it is projected to grow by 6.2 per cent, say experts. The region has largely enjoyed a robust growth in the upwards of 5 per cent over the last decade. All countries in the region have been growing robustly except Kenya, the giant economy in the region. However, since Kenya is also joining in the club, growth in the block this year could even be higher than projected. Tanzania is still the high flyer with a projected growth of 7.2 this year.
Economists have always said that the average growth rate would be higher if Kenya was growing at its potential. Perhaps the time has finally arrived for Kenya to drive growth in the region. Kenya’s economy is well diversified and resilient. What it lacked was the robustness of Tanzania and Rwanda. However, her sluggish growth is a temporary matter arising from economic shocks since 2008. Before then, the economy had shrugged off the lethargy of Moi’s era, growing robustly over a four year period to a 7.1 per cent in 2007.
The post- election Violence of 2008, coupled with the oil crisis then and the financial meltdown in the west, pushed growth to a miniscule 1.5 per cent in 2008. Since then growth has been on an upward trajectory reaching 5.0 per cent last year. Following new confidence generated by a peaceful election and transition of power, Kenya is expected to hit 6.0 per cent or higher in 2014.
Uganda the other drag to east African prosperity is also said to have turned north. For nearly a decade, Uganda posted robust growth averaging 9.8 per cent between 2001 and 2008. The spike came in 2009 when growth eased to 7.2 per cent and continued the retreat to a paltry 3.4 per cent in 2012.
However, say experts , the bottom has been reached and now the only way is up. In 2013, the economy is said to have posted a 5.5 per cent growth which will surge to 6.5 per cent in 2014.
The drivers of growth in east Africa are more or less similar, Agriculture, Tourism, services, manufacturing, hotels and retail trade and transport and communications. The communications sector is, to varying degrees, the fastest growing sector in the region of nearly 120 million people.
Inflation in the region is down is in single digit region compared to 2012 when it was in double digits. At the end of December inflation in Kenya stood at 7.15 while in Tanzania it stood at 5.6 per cent while it stood at 6.5 per cent in Uganda. The rates show a declining trend in the region which is a pointer that the economies of the region have responded positively to stabilization measures.
There is one major headache though, there seems to be a looming grain shortage in the region due to poor rains. Grains, especially maize form a stable food in the region. Grain shortages could mean higher imports of grain and the consequent higher prices in the region. However, there is a shift from rain fed agriculture to irrigation. This could ameliorate grain shortages mid this year. But for now food security is a potential risk to economic growth. Even then, growth prospects are positive throughout this year.