NCBA is projecting Kenya’s economy to recover upwards of 4.9 per cent this year following the easing of Covid-19 restrictions.
The lender’s forecast is however below that of the National Treasury and World Bank.
The two have projected the economic growth to rebound from 0.6 per cent last year to 6.4 and 6.9 per cent respectively.
According to World Bank, Kenya’s GDP rebound will be the fastest in the East African Community where Rwanda is forecast to expand by 5.7 per cent, Tanzania 5.5 per cent, Uganda 2.8 per cent, Burundi two per cent while South Sudan is projected to contract 3 per cent.
In its latest economic outlook, NCBA warns that recovery will require bold, innovative and extraordinary actions on the government.
NCBA Bank Group MD John Gachora said the economy contracted last year 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 per cent of activity as consumer and labour mobility improve and supply chains are restored,” Gachora said.
He added that said Sh57 billion post-Covid-19 economic stimulus has helped restore activity in some sectors especially construction and minimised 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,” Gachora said.
The lender is recommending 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 per cent of GDP currently.
The country’s public debt at end of last year stood at Sh7.28 trillion amid low domestic revenue collection.
Covid-19 debts are likely to push the figure to over Sh7.5 trillion by end of the present financial year.
The International Monetary Fund (IMF) staff has approved a $2.4 billion (Sh262 billion) facility to help Kenya in post-Covid-19 economic recovery.
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.
The lender added that the underlying policy framework for PPPs remains weak, discouraging potential investments.
So far, the country has 37 PPP projects valued at about Sh500 billion ($5.0 billion).
“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,” the NCBA report says.
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.