By Douglas Muriithi
NCBA is projecting Kenyan economy to recover upwards of 4.9 percent in
2021 following the tactical reopening of the economy.
In its latest economic outlook, NCBA however warns that recovery will
require bold, innovative and extraordinary actions on the part of
NCBA Bank Group Managing Director, Mr. John Gachora said the economy is
estimated to have contracted in 2020 following a hard and broad-based
hit on output in the second and third quarters due to the pandemic.
“However, looking ahead, there is a reason to be optimistic…the
phased reopening of the economy has seen a return of about 80% of
activity as consumer and labour mobility improves and supply chains are
restored,” said Gachora.
Gachora said the KES 57 billion Post Covid Economic Stimulus has helped
restore activity in some sectors especially construction and minimized
the negative effects on others, with positive GDP spillovers.
“To further repair the damages from the pandemic and avert a prolonged
economic descent, it is essential that the Economic Recovery Strategy
as proposed tactfully addresses the “lives versus livelihoods”
dilemma,” said Gachora.
The lender is recommending for more efficiency in domestic resource
mobilization as well as debt management. Previous public investments
have resulted in a marked surge in public debt estimated at about 70%
of GDP currently.
According to NCBA, Public-Private partnerships will be crucial for
faster, inclusive and sustainable recovery and growth. It further notes
that reducing the barriers to PPPs will unlock immense investments and
in turn support stronger, more sustainable growth.
“This will require bold and accelerated reforms to create an enabling
framework for private sector participation,” NCBA notes.
NCBA noted that the underlying policy framework for PPPs remains weak,
discouraging potential investments. So far, the country has 37 PPP
projects valued at about KShs 500 billion ($5.0Bn) presently. These are
limited to infrastructure in transport and energy.
“The necessary buy in will not only require greater private sector
involvement in the policy development processes but also in the
attendant implementation of related projects,” NCBA concludes.
NCBA Economic Forum was launched in January 2018 with the aim of
bringing together the government and industry stakeholders for candid
conversations meant to spark economic growth.