UN report sees 6pc economic growth for East Africa

Apr 01, 2013 12:00 AM

Economic growth in East Africa, including Kenya, is expected to remain among the fastest in Africa this year aided by natural resource discoveries, improved agricultural performance, and economic diversification, a new report showed.

The United Nations Economic Commission for Africa (Uneca) said the region is expected to realise a six per cent growth this year compared to 5.6 per cent in 2012—the second highest for the continent this year.

The West Africa region is expected to post the fastest growth for 2013 at 6.6 per cent, buoyed by commodities—especially oil and minerals exploitation in countries such as Ghana, Niger and Sierra Leone and peace and stability in Côte d’Ivoire.

“Increasing economic diversity, rising agricultural output and exports, as well as new natural-resource discoveries are expected to boost growth in East Africa, which has remained one of the top performing sub regions,” the agency said in its report titled Africa Economic Report 2013.

“Consolidating peace and ensuring political stability in the Democratic Republic of Congo and Somalia will help to improve prospects in the sub region,”

East Africa, as well as the Horn of the continent, has become a hot spot for oil and gas exploration in recent years, spurred by new finds in countries such as Kenya, Uganda, Tanzania and Mozambique.

Exploration interest in Kenya has particularly surged since the country announced a year ago its first oil strike by British explorer Tullow Oil in the country’s north, followed by a second find in the same region.

The discoveries of oil in Kenya triggered a rush which saw international oil and gas companies take up what remained of Kenya’s 46 exploration licences. Kenya has since demarcated eight new blocks for onshore and offshore oil and gas exploration to cater for the increased demand.


The country has also struck substantial reserves on valuable minerals such as gold, niobium and rare earth which are expected to earn the country foreign income.

Improved output of agricultural export commodities such horticulture, tea and coffee also remains an option for Kenya to grow its earnings in 2013 going by the forecast is for good weather. Exports of the three commodities earned the country Sh218.71billion in 2012.

The UN agency said earnings from minerals and mineral resources would help countries such as Kenya to improve spending on programmes such as infrastructure which are key to spurring economic growth.

“Recent discoveries of minerals in several African countries are expected to further expand fiscal space as well as public spending in countries such as Ghana, Kenya, Mauritania and Uganda,” Uneca said.

Additional returns from commodities could bring some relief to the new government which is expected to walk a tight rope as it juggles with options of sustaining economic growth through development spending without hurting consumers through higher taxes.

Although the country has taken bold steps towards fiscal consolidation in the recent years, the implementation of the devolved system of governance will exert additional pressure on public spending, leaving the government with a challenge of financing its overall budget.

Revenue collection figures in Kenya have not been impressive since the start of the current fiscal year, partly due to the effects of slowed economic performance.

The gravity of the situation is captured by the fact that the Kenya Revenue Authority (KRA) has a difficult task to collect Sh365 billion within four months if the government is to meet the fiscal year’s revenue target.


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