Economist sees a swift rebound after elections

BY NBM WRITER A globally acclaimed investment economist is optimistic that Kenya’s economy will rebound soon after the elections. Sanlam Group Investment economist, Mr Arthur Kamp, in an analytical presentation noted that the Kenyan and regional economies are exhibiting resilience ahead of the general elections with clear signs of a swift take-off post August. “Assuming certain conditions, this should hopefully be a good time to make your capital markets and related structured investments as the market is seemingly on an artificial lull, ahead of the General Election,” Kamp said. According to the Kenya National Bureau of Statistics Economic Survey 2017, Kenya’s Gross Domestic Product (GDP) is estimated to have expanded by 5.8% in 2016 compared to a revised growth of 5.7% in 2015. Mr Kamp said that the local economy would grow as good as last year in the coming year based on economic and governance reforms proposed by the respective presidential candidates and a  solid foundation already set. “In my estimation, GDP growth should remain amongst the light of SSA (Sub-Saharan Africa) economies in the next three years if ongoing reforms as outlined in the Vision 2030 national development plan are maintained with zero tolerance for corruption and other investment limiting barriers,” he said. The local economy will continue to enjoy moderate growth in the medium term if East African economies pursue productivity enhancing measures such as the Standard Gauge Railway projects in Kenya, Uganda and Tanzania. Based on external macro-economic factors, Kamp outlined the need to exercise caution to avoid raising the national investment ratios to unsustainable levels as such developments lead to “tears”. He said, though, that developing countries will keep walking a tight rope seeking to reduce their debt burden on one end while experiencing weak growth. Fundamentally, he stressed the need to progressively reduce the rate of external borrowing for non-productive economic programmes while raising domestic investment ratios. He said the economy will need to be anchored on a growth model that is focused on sound economic governance and human capital. The execution of economic production enhancing strategies ahead and after the general elections, he said, is likely to raise the return on investment for foreign and local investors, in an environment where the capital stock does not appear excessive relative to the size of GDP. “We are positive and optimistic that the regional economies will continue to enjoy moderate fixed investment ratios against a backdrop of moderate capital stock levels,” Mr Kamp said,  “The East Africa economies will enjoy significant foreign investment inflows if they continue pursuing productivity enhancing measures.” The Kenyan market, he added will particularly provide the growth impetus for the regional economy with positive strides already made on the financial inclusion front. Countries that have managed to actively bridge the financial access gap such as Kenya, South Africa and Namibia will continue to enjoy significant economic growth. While proposing the need to adopt a long-term economic structure to accelerate growth, Kamp stressed the need for a manufacturing economy as envisaged in Kenya’s Vision 2030 national development plan. A transition from a primarily agriculture oriented economic production to a manufacturing economy, he said, will provide significant gains. “Productivity gains as countries shift from primarily agricultural production to manufacturing where productivity gains are higher,” he said. “Such a manufacturing economy also promotes urbanisation, which encourages development of manufacturing and services sectors with ICT imports adding to the overall productivity gains.”

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