Kenya’s economy will grow at the rate of 6.5% in 2019 attributable to increased mobile banking lending and good weather forecast. This is according to business Information and Credit management company, Metropol, which projects that Kenya is likely to experience robust growth this year against a global slowdown from 3.7% to 3.5% in 2019.
The report indicates that banks have continued to innovate and with the new M-Pesa enabled credit channel dubbed Fuliza(Funded by KCB and CBA) the credit market is likely to move up to Kshs 100 Billion over the year. The Fuliza service which was launched on 5th February reported that Safaricom customers had borrowed Ksh 6.2 Billion in just one month, indicating the high demand for instant micro-loans in the economy.
Metropol further projects that interest rates will remain under the controlled regime of 13% through 2019 with Government continuing to borrow heavily in the domestic market through increased issue of treasury bills and infrastructure bonds, restricting credit issuance to the private sector.
Kenya’s current account deficit will be marginally narrow due to subdued petroleum prices in international markets which currently stand at 60 dollars per barrel down from 85 dollars in October 2018. An oversupplied oil market is forecast for 2019.
The cost of living is likely to remain within the Central Bank of Kenya’s limit of 2.5-7.5% as the government efforts to cut expenditure continues with a moderate budget increase of 7.6% for the 2019/2020 fiscal year.
The report further predicts a Nominal growth of 6.5-7% in 2019-2020, owing to an increase in number of mega projects under execution and the early impact of the government’s Big Four Agenda in 2020 which will provide the economic growth momentum. Nominal growth is projected at 8-9% in 2020/2021.
By Ivy Vuguza