Govt must spend more to achieve economic growth, advises new report

Britam Asset Managers CEO, Kenneth Kaniu speaking during the release of Kenya’s Economic growth report at the Stanley Hotel. PHOTO: COURTESY.

Nairobi, KENYA: Findings of a new report released on Thursday by Britam Asset Managers is advising the government to increase its expenditure in order to achieve sustainable economic growth.

The report themed “Sustaining Growth in a Resilient Economy” said that the government should increase spending by 16.4 per cent in order to increase revenues by 17.4 per cent.

“The government must therefore spend to sustain GDP growth above 5.0% in 2017, as private sector credit growth remains subdued. Kenya’s economy is expected to grow between 5 and 5.6 percent in 2017, supported by increased government spending and resilient performance in transport, trade and tourism, “ the economic report stated.

This being an election year economic activities are projected to decrease according to the new findings.

More influencers of the projected slow growth found in the findings were high inflation, drought, and increased global oil prices.

Food inflation is expected to be the main driver of overall inflation with cost of transport and household items also going up.

Significant drivers of inflation in 2017 would include increase in food prices, household items and cost of transport rocketing.

Speaking during the release of the report in Nairobi Britam Asset Managers CEO Kenneth Kaniu concluded that the drought situation will affect the agricultural productivity.

“Unfavourable climatic conditions and drought are expected to affect agricultural productivity, increase electricity costs and reduce the availability of water.” Said Kaniu.