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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenyan official says economy will weather political activities

By David Musyoka NAIROBI (Xinhua) -- Kenya Vision 2030 Delivery Secretariat (VDS), which is implementing the country’s economic blueprint Vision 2030, said on Monday that economic growth will not be derailed by the current political activities.

VDS Director General Julius Muia said investment activities in Kenya will increase significantly after the Oct. 17 repeat presidential elections on the back of significant appetite by foreign investor for a piece of the mega infrastructure projects in the country.

“Increased confidence shown by investors following a historic Supreme Court ruling, resilience of the stocks market and stellar performance of the shilling against the U.S. dollar are key developments that give us confidence in the stability of economic performance,” Muia said in a statement issued in Nairobi.

This positive sentiment, Muia said, is anchored on the expected development dividend that will accrue as the country embarks on implementing the projects outlined in the Medium Term Plan (MTP III).

The MTP III, which lays emphasis on structural transformation and a strong growth in the manufacturing and industrial sectors, is expected to boost the country’s export and improve the performance of the economy.

Muia also singled out Lamu Port South Sudan Ethiopia Transport (LAPSSET) as one of many transformational projects where investors have expressed overwhelming interest, especially in high technology components that involve development of what will be the country’s biggest steel mill operation.

“A project of the LAPSSET magnitude is very important to the economy as it will open up two-thirds of the country’s investment space and will stir activities that will spark an uptick in economic growth,” Muia said.

Economists have predicted a slight drop in the growth of the economy to 4.9 percent, down from 5.5 percent last year, citing prolonged politicking in the country.

Compared to previous electoral cycles, this dip is relatively low and signals the divorce of the economy from politics.  

According to Muia, consistent implementation of large developmental projects and substantial investments in capital, technology and expertise in new sectors such as mining, oil and gas as well as the blue economy are expected to kickstart, once the repeat presidential election is held, bringing an end to a prolonged election season.

The aspirations of Kenyans still remain true: that the economy will enjoy a high economic growth rate to propel the country to upper middle income status and enable the citizens to enjoy decent lives.

On Friday, Cabinet Secretary in the National Treasury Henry Rotich said the prolonged electioneering period caused by nullification of the Aug. 8 presidential polls by the Supreme Court is negatively affecting the business climate.

Investors are adopting a wait-and-see approach toward new projects and this has forced the government to revise downwards its economic growth forecast for 2017 to 5.5 percent, Rotich said.

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EARLIER REPORTS:

Kenya’s central bank retains benchmark rate at 10 pct

NAIROBI, (Xinhua) -- The Central Bank of Kenya (CBK) on Monday maintained the benchmark lending rate at 10 percent in order to anchor inflation expectations.

CBK Governor Patrick Njoroge, who chaired the Monetary Policy Committee (MPC), said that an MPC Private Sector Market Perception Survey conducted in September shows that inflation was expected to decline due to lower food prices occasioned by the expected short rains and government subsidies on some food items.

“The committee has therefore concluded that the current policy stance remains appropriate,” Njoroge said in a statement. “However, the CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.”

The MPC met on Monday to review the outcome of its policy decisions and recent economic developments against a backdrop of general macroeconomic stability, a prolonged election period, and continued uncertainties in the global economy.

Month-on-month overall inflation rose to 8 percent in August, from 7.5 percent in July, reflecting limited supply of some food items, particularly tomatoes, following transport difficulties in the immediate period after the general elections.

The governor said that non-food-non-fuel (NFNF) inflation has remained stable below 5 percent, suggesting that demand pressures in the economy were muted.

The foreign exchange market has remained relatively stable, supported by resilient tea and horticultural exports, diaspora remittances, and a strong recovery in tourism, Njoroge said.

The 12-month current account deficit widened slightly to 6.4 percent of gross domestic product (GDP) in July 2017, from 6.2 percent in May, largely due to short-term import demand for cereals and sugar, and Standard Gauge Railway (SGR) related transport equipment, he said.

“However, the current account deficit is expected to narrow to 5.8 percent of GDP by December 2017 as the bulk of SGR-related imports are completed, while the expected favorable weather conditions will improve food production and reduce reliance on imports,” Njoroge said.

Kenya’s banks record declined profitability in 2017

by Ronald Njoroge NAIROBI (Xinhua) -- Kenya’s listed banks recorded a 13.8-percent decline in core Earnings Per Share (EPS) growth for the first six months of 2017, compared to 15.5 percent in a similar period last year, a report released on Monday shows.

The assessment by Nairobi-based investment firm Cytonn Investment noted that the poor performance of the banking sector was primarily on the back of an 8.1-percent decline in Net Interest Income (NII) following the capping of interest rates in 2016.

“The banking industry’s loan growth came in lower as private sector credit growth slowed to 2.1 percent in the first half of 2017, below the government’s set target of 18.3 percent, with banks adopting a more prudent credit risk assessment framework to ensure quality loan books,” said Cytonn’s 2017 Half year Banking Sector Report.

“Consequently, allocation to government securities by banks rose to 32.2 percent between January and June 2017, up from  the 29.4 percent experienced in a similar period in 2016,” noted Cytonn.

Deposits for the banking sector grew at 14.4 percent during the first half of the year, a faster rate than loans, which grew by 9.3 percent. The sector has remained resilient by adopting a disciplined banking approach.

The firm noted that consolidation is set to gather pace as key issues such as increased loan loss provisioning and the regulated loan and deposit pricing framework prevail in this challenging operating environment.

“This will in turn transit the industry into one with fewer but stable banks, leading to a more efficient and stable banking sector,” says the report.

             

 

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