ECONOMY

New oil finds to enhance Kenya's economic diversity-ICAEW

Kenya's economic diversity playing a key role in cushioning the country from shocks, ICAEW says.

In Summary
  • The new development in the country's oil sector gives Kenya a chance to enhance its economic diversity
  • ICAEW’s regional director of the Middle East, Africa and South Asia-Michael Armstrong says the strength of Kenya’s diverse economy plays a major role in keeping it safe from global economic fluctuations
President Uhuru Kenyatta opens a valve while flagging off Kenya's first crude oil from the Turkana oil fields on Sunday, June 3, 2018. /PSCU
President Uhuru Kenyatta opens a valve while flagging off Kenya's first crude oil from the Turkana oil fields on Sunday, June 3, 2018. /PSCU

Kenya's diversified economy has cushioned the country from external shocks and low global commodity prices, a survey by the Institute of Chartered Accountants in England and Wales ( ICAEW) indicates.

This comes as the country anticipates to become a net oil exporter, which according to ICAEW, will further enhance economic diversity.

While most African countries are bearing the brunt of the US-China trade war, as well as a slump in commodity prices which is greatly affecting exporters, East Africa’s economic diversity is still playing a key role in cushioning the region from shocks, ICAEW-Economic Update: Africa Q3 2019 reads in part.

Speaking during the launch of the quarterly report, Michael Armstrong, ICAEW’s regional director of the Middle East, Africa and South Asia, said the strength of Kenya’s diverse economy plays a major role in keeping it safe from global economic fluctuations.

A strong service sector keeps Kenya’s economy shielded from the trade war currently raging between the United States and China, while also protecting it from global commodity price slumps,” Armstrong said.

This diversity has played a key role in helping Kenya to weather the storm caused by the instability of oil prices. This, in addition to a well-regulated, mainly private services sector is key to the survival of the economy,” he added.

The report, commissioned by ICAEW and produced by partner and forecaster Oxford Economics, outlines how East Africa’s growth is mainly driven by strong performances in the two major economies, Kenya and Ethiopia.

President Uhuru Kenyatta in March signed into law a long-awaited petroleum bill that regulates oil exploration and production, with the country recently joining the league of oil exporting nations after a cargo of 200,000 barrels of oil from Turkana was shipped from Mombasa.

Despite the fact that commercial production is still years away, the new development gives Kenya a chance to enhance its economic diversity and include oil exportation as a foreign exchange earner,” the survey notes.

Meanwhile, East Africa’s growth will be boosted by the entry of Uganda and Tanzania into the league of petrochemical exporters within the next few years, according to ICAEW.

While still expected to remain the strongest growing region on the continent, East Africa is projected to record a slightly lower real GDP growth rate of 6.3 per cent this year compared to 2018.