Mega projects fail to lift Kenya growth forecast above Uganda, TZ

Kenya is expected to post the slowest economic growth this year in East Africa at 6.0 per cent, the World Bank says, as the country embarks on mega infrastructure projects.

This will be an improvement from last year’s estimate of 5.4 per cent, but lower than the forecast for Tanzania of 7.2 per cent, Uganda (6.6 per cent) and Rwanda (6.3 per cent). The bank did not provide data for Burundi.

The World Bank expects Kenya’s growth to be driven by mega-infrastructure projects planned for this year, like the construction of the new Mombasa-Nairobi rail line, tarmacking of 10,000 kilometres of road and building of new runaway at the Jomo Kenyatta International Airport.

Hundreds of billions of shilling are expected to be spent in the projects, injecting new cash into the economy and generating thousands of jobs.

READ: IMF chief salutes Kenya for mega rail and road projects

The World Bank also expects a recovery of the tourism sector, which contracted 14.6 per cent in quarter three after a string of deadly terror attacks.

“Among frontier market countries, growth is expected to increase in Kenya, boosted by higher public investment and the recovery of tourism,” said the Bretton Woods institution.

But it warned that the push for higher wages remains a risk to the economy.

“The fiscal position deteriorated in many countries. In some, it was due to increases in the wage bill, for example, in Kenya and Mozambique,” said the World Bank.

Lecturers, teachers and doctors were given pay increases in recent months, with the tutors currently on strike.