Improved rainfall promises better outturn for economy

Kenya’s economy could double the pace of growth this year helped by adequate rainfall that the weatherman expects in the country’s most productive provinces.

Economists said heavy rains should improve output in the key agriculture sector that constitutes the largest segment of the Kenyan economy and employs three in every five workers.

Its performance, however, remains tightly linked to the increasingly erratic rainfall pattern making it the most critical determinant of the country’s economic fortunes.

Official data shows that agricultural output declined by 3.5 per cent in the third quarter of last year, marking the ninth consecutive quarterly contraction that saw the economy post zero growth.

Adequate rainfall is expected to increase agricultural activity, creating new jobs and smoothening out the acute supply shortage in the foods market where a price rally has become one of the major drivers of inflation in the country.

It also points to stability in the national budget on reduced commitment towards food imports and is a sure bet to put money in peoples’ pockets to get them spending again and shore up the sagging demand in corporate Kenya.

This outlook is egging policy makers and economists to say that the country’s soft economy is on the brink of take off and that the government growth target of 4.5 per cent will be attained.

The economy is estimated to have grown by two per cent in 2009.  

“A strong agriculture not only puts money in the pockets of a vast majority of Kenyans, but also eases inflation and stimulates other sectors,”  Dr Joseph Kieyah, a senior policy analyst at the Kenya Institute for Public Policy Research and Analysis (Kippra) said in an earlier interview.

At least four analysts interviewed by the Business Daily expressed similar views.

“The 4.5 per cent target is possible; the Met update provides a foundation to anticipate economic recovery,” said Robert Bunyi, a financial analyst at Mavuno Capital.

John Omiti of KIPPRA reckons that with adequate rainfall, Kenyan farmers can produce more than 70 per cent of the country’s annual food requirements.

Many small scale farmers, who are fully dependent on rain, have however recently become weary of the weatherman’s inaccurate predictions posing the risk of the latest announcement failing to trigger the level of farm activity required to achieve full food production potential.