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Moody’s paints rosy picture of Kenya’s import-dependent economy

Trucks wait to carry cargo from the port of Mombasa. FILE PHOTO | NMG
Trucks wait to carry cargo from the port of Mombasa. FILE PHOTO | NMG 

Economic growth in sub-Saharan Africa (SSA) is shifting to import-dependent countries such as Kenya and Ethiopia from commodity-exporting ones, credit rating agency Moody’s says.

Moody’s says in Kenya, the shift is underpinned by the diversified economy with the services and agricultural sectors contributing a big proportion of the gross domestic product (GDP).

Other factors are reforms in the business environment as well as improving infrastructure.

“SSA’s centre of growth has shifted from commodity exporters to importers, including the relatively diversified and regionally integrated economies in West Africa such as Senegal and Côte d’Ivoire and in East Africa’s Ethiopia and Kenya,” said Moody’s.

The agency said “these countries have implemented reforms to their business environments, possess large services and agricultural sectors, and have been improving their infrastructure.”

Kenya has spent hundreds of billions of shillings in developing infrastructure. However, the potential growth in SSA has slowed down at below three per cent since 2015.

Kenya saw its GDP growth slow down in 2017, though it remains higher than in commodity exporting countries that have been adversely affected by low global prices.

Among the factors that Moody’s sees as contributing to the reduced economic growth is low investment and credit expansion in the case of Kenya.