Country Report Kenya November 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 remain intact but will be 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.
• Real GDP growth, forecast at 2.5% in 2009 (compared with 3.2% in 2008), will be constrained by the slowdown in rich-country markets. Growth is forecast to rebound to 5.5% in 2010 as the global economy improves.
• Inflation is expected to subside from a high 25.5% 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 6% of GDP in 2009, owing to weaker export growth and a sharp fall in tourism receipts, before easing to 4.6% of GDP in 2010.

Monthly review

• The Waki report into post-election violence has blamed both main parties for orchestrating attacks, and was sharply critical of electoral practices, laws and institutions.
• Political reaction to the report is being watched closely because of the risk that it may spark recriminations. Both parties' interpretations of the findings of the inquiry vary widely.
• Government revenue is under pressure owing to below-target tax collection in the first quarter of 2008/09 and the decision to suspend a planned sovereign bond. The government instead plans to offer local infrastructure bonds.
• A special energy summit has acknowledged that Kenya faces a potential power crisis as the margin of spare capacity shrinks and tariffs rise. The state plans to push ahead with geothermal generation and cut VAT on electricity.
• The EAC, Comesa and SADC trade blocs have agreed to form a single entity, which will potentially overcome the problem of overlapping membership.
• Currency and equity markets continued to fall in October, reflecting local and global concerns, but levelled out in early November.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52