Kenya’s economy is forecast to expand between 6.5% and 7% during the 2019/2020 fiscal year, according to Metropol Corporation. This growth is attributed to ongoing megaprojects, early impacts of the Big 4 agenda, and favorable weather conditions for the long rains in March, April, and May.
Energy and Infrastructure Developments ¶
The report highlights increased mobile lending as a potential growth driver, surpassing 2018’s performance. For 2020/21, economic expansion is projected to reach 8-9%, fueled by the oil and gas sector nearing full commercial production. A crude oil pipeline to Lamu, spanning 850 kilometers, is under construction, with a final investment decision expected by Q2 2019.
Water Infrastructure and Food Security ¶
Metropol notes that 15 water dams will be under construction by 2020, costing Kshs 300 billion. However, food security remains vulnerable to weather patterns until the Galana-Kulalu 1 million-acre irrigation scheme is implemented, a process estimated to take 5-6 years.
Energy Sector Progress ¶
Energy infrastructure continues to advance, with the Suswa-Isinya 220 KV line commissioned in 2018 and Olkaria 5 and 6 (280 MW) set for completion by July 2019. Additional 40-50 MW solar plants are planned for 2019, including a 55 MW facility in Garissa, operational since November 2018.
Oil Market Dynamics ¶
International oil prices, currently at $60 per barrel, are expected to remain subdued in 2019 due to oversupply. Tullow Oil plans to invest Kshs 293 billion from 2019-2020 for the Lokichar basin, including a 850 km pipeline to Lamu port at an estimated cost of Kshs 210 billion.
Fiscal Challenges and Trade Balances ¶
The fiscal deficit is projected at 6.5% for 2019-2020, with Metropol questioning the effectiveness of austerity measures amid low inflation and rising public service demands. A positive balance of payments in 2018 was driven by foreign direct investment and diaspora remittances, while tourism and tea/coffee exports showed resilience.
