East Africa is the fastest growing region on the continent and its development prospects remain positive, a UK-based accountant’s body says.
The Institute of Chartered Accountants in England and Wales (ICAEW) say in its latest report that the more diversified East African economies are faring better than those of southern, central and western Africa.
“Growth prospects remain divergent by region, with Central and West African economies struggling with weak commodity demand,” the Economic Insight: Africa Q4 2016 report says.
The report produced in partnership with Oxford Economics provides a snapshot of the continent’s economic performance. ICAEW notes that the Central Bank of Kenya has been able to ease monetary policy in recent months through legal changes that could help fuel further economic growth.
It says Kenya’s growth outlook has improved in recent months, with the tourism sector recovering from the effects of previous terror attacks and travel advisory warnings.
It also notes the progress made in the business environment. The World Bank’s Doing Business 2017 report ranked Kenya 92nd globally for being one of the top 10 reformers in the world over the past year.
The country has set itself the target of 50th in the world by 2020.
Kenya’s economic growth is projected to reach 5.9 per cent this year, before trending towards seven per cent over the medium term.
But the report says that as 2017 approaches, businesses across Africa are focused on a range of domestic and external risks to economic stability.
“A prolonged drought over the past year resulted in a surge in food prices, especially in East and southern Africa. The Famine Early Warning System Network (FEWS) has warned of an irregular recovery in harvests in East Africa, and price pressures of food staples are seen as remaining high in Southern Africa after consecutive years of below-average regional production,” the report says.
On Wednesday, UN’s Food and Agricultural Organisation (FAO) warned that persistence of severe drought is likely to push the number of hungry Kenyans beyond the 1.3 million already considered “food insecure”.
The ICAEW report warns that higher food prices will be a significant driver of inflation across East and South Africa in 2017.