Country Report Kenya December 2008

Outlook for 2009-10

• Kenya's new, broad-based coalition government between the president, Mwai Kibaki, and his main rival, the prime minister, Raila Odinga, is likely to re-main intact, although vulnerable to in-fighting and competition for influence.
• The unity government will focus increasingly on reforms to improve the business climate and investment in infrastructure. However, political feuding may hamper policy implementation, and corruption will remain a challenge.
• After slowing sharply in 2008 to an estimated 3.2%, GDP growth will weaken further in 2009, to 2%, as the global recession bites. Growth is expected to reach 3.5% in 2010 as the global economy improves.
• Inflation is expected to subside from a high 26% in 2008 to 7.6% in 2009 and 6.5% in 2010, assuming no new oil- or food-price shocks and the maintenance of political normality.
• The current-account deficit is expected to widen from 5.5% of GDP in 2008 to 5.7% of GDP in 2009, owing to weaker export growth and a sharp fall in tourism receipts, before easing to 3.7% of GDP in 2010.

Monthly review

• The cabinet has decided to implement the recommendations of the Waki report into post-election violence after ODM rebels dropped their opposition, but the government's commitment to full implementation remains uncertain.
• The cabinet also agreed to implement the recommendations of the Kriegler report into the electoral system, and plans to form a new, independent, interim electoral authority to replace the ECK, among other changes.
• The acting finance minister, John Michuki secured passage of the budget through parliament in November, but was obliged to withdraw proposals to tax legislators' allowances and raise banks' minimum capital requirements.
• Food prices jumped sharply in November owing to a shortage of maize after this year's planting season was disrupted by post-election violence. The government plans to rely on imports to fill the gap.
• The Co-operative Bank's initial public offering was undersubscribed, although by a smaller margin than expected. The bank secured an 81% take-up, raising KSh5.4bn (US68m), despite the overall weakness of the stock market.
• Econet started mobile-phone services in November, becoming Kenya's fourth operator, five years after initially securing a licence. Rising competition in the sector is driving down tariffs and denting operator profitability.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;1;60
NAICS Code: 22;11;52