Kenya is making major strides in efforts to become a regional financial hub following its recent removal from the Financial Action Task Force’s watch list.
According to the International Monetary Fund (IMF), Kenya boasts of one of the most vibrant financial sector in East and Central Africa, something that makes it well placed to be a regional financial hub.
“Kenya’s financial sector remains robust, the process of financial inclusion is ongoing, and efforts to develop Nairobi into a regional hub have advanced with Kenya’s recent removal from the Financial Action Task Force’s watch list,” said the IMF in a statement following the conclusion of Article IV consultations.
The statement added that Kenya’s economy, which has continued to expand in a stable economic environment in recent times, is projected to maintain the positive growth momentum driven by a resurgent manufacturing sector and foreign investors particularly in the mining sector.
The economy, which recorded a growth rate to five per cent in 2013/14, is expected to record further growth 2014/15.
Although inflation is projected to remain moderate, rising food prices and rapid credit growth may fuel inflationary pressures. The relatively high external current account deficit that stands at around eight per cent of the gross domestic product (GDP) reflects strong capital imports and a decline in agricultural exports.
Following a successful first-time Eurobond issue that raised $2 billion in June 2014, international reserves reached some four and a half months of prospective import coverage.
“Kenya’s medium-term growth prospects are favourable supported by rising infrastructure investment in energy and transportation, the expansion of the East African Community market, deepening financial inclusion and the positive impact of large-size irrigation projects on agricultural productivity,” noted the statement.
Despite enjoying a stable economic environment, Kenya is facing threats of runaway wage bill, rising insecurity, weather-related shocks and challenges of implementing devolution that could complicate public financial management.
International Monetary Fund (IMF)