Gloomy outlook for Kenya in new report
Kenya’s economic growth prospects may be dampened by the by the unpredictable duration of Eurozone crisis, a new report shows. According to the recently published African Economic Outlook 2012, a deeper eurozone crisis which has led to lower earnings from exports and tourism, lower inflows of official development assistance, foreign direct investment and worker´s remittances could also affect African markets which are Kenya's secondary market after Europe.
It has been estimated that a one-percentage point decline of Gross Domestic Product in European States member countries causes African GDP to decline by about 0.5% and Africa´s export earnings drop by about 10%. The report states that deeper crisis in Europe would lead to direct impact on Kenyan goods especially flowers and horticultural products which rely on the European market, as the primary destination.
The report predicts that if the crisis in Europe hits other advanced and emerging countries, it would deal a second blow to Africa´s exports to these countries which are expected to serve as alternative markets. “The importance of foreign investment, development assistance and remittances are difficult to assess,” the report states. "The overall impact on Africa of a deeper financial crisis in Europe would depend on the depth and duration of this crisis and its contagion to other parts of the globe".
While launching the report, the minister for planning Wycliffe Oparanya said the world’s view of Kenya and its growth is changing due to high prospects of oil discoveries. Oparanya said this is expected to attract high value foreign direct investments and boost Kenya’s efforts remain the trade hub of choice for multinational companies venturing into the region.
However according to Kwame Owino of the Institute of Economic affairs, Kenya’s gross Domestic Product does not translate to wealth for the population because most of them are not in a position to reap from the new opportunities. The growth rate for the first nine months is expected to rise to 5.2% in 2012, and to 5.5% in in 2013.
He said Kenya needs to find alternative ways of creating gainful of employment for people who are neither in the youth bracket or retirement age, who currently remain a neglected group of jobless people. “These people need attention not because of fears of upraising like it happened in North Africa or class war, but because they form a critical group of skilled people who just happened to be out of school when opportunities were scarce, meaning they have no working experience in their chosen professions although they are above 35 years old,” Owino said.