- Kenya’s investment accounted for 20.3 per cent of its Nominal GDP in 2021 compared with a ratio of 19.7 per cent the previous year.
- The country has recorded subsequent increase in investment of GDP since 2018, with further upward projections, amid push by the government to attract more investment.
The investment growth rate in Sub-Saharan Africa this year is expected to rise close to 2000-2021 highs, but still not enough to meet the nations’ investment needs according to World Bank.
In its latest growth prospects report dubbed ‘Falling long-term growth prospects’, the lender calls for substantial acceleration in investment not only in infrastructure but across several sectors.
“Countries should further investment in agriculture, health and education to ensure the needs for growth investments are realised,” World Bank says.
Between 2011 and 2021, SSA accounted for about three per cent of Emerging Markets and Developing Economies investment with an annual investment growth of 3.3 per cent.
However, the region suffered the sharpest investment growth slowdown among emerging economies between 2014 and 2016, from an average of 5.9 per cent a year in 2011-14, to a decline of 0.3 per cent a year in 2015-17, following the commodity price collapse.
This was well below the long-term (2000-21) average annual growth rate of 4.6 per cent.
It picked up to 6.3 per cent a year during 2018-19, before being halted by Covid-19 pandemic which triggered a 5.8 per cent drop in investment in the region.
This was much larger than the 1.5 per cent decline in emerging markets as a whole.
Since then, subsequent recovery has been slow with public investment being considered by a rapid build-up of government debt.
“This on the back of the Covid-19 shocks, renewed fiscal pressures arising from weaker revenue growth, repercussions of Russia’s invasion of Ukraine and the tightening of global financing conditions,” the lender says.
Data by the global research database, CEIC shows Kenya’s investment accounted for 20.3 per cent of its Nominal GDP in 2021, compared with a ratio of 19.7 per cent the previous year.
The country has recorded a subsequent increase in investment of GDP since 2018, with further upward projections, amid a push by the current government to attract more investment, foreign and local, through the public-private partnership model.
The global lender, however, reiterates that at the current pace, the investment needs will still not be met.
It notes that acceleration and diversification of investment paths could be a sufficient remedy noting the move could also be essential in reinvigorating economic growth in poor states and reversing pandemic-induced increases in poverty and inequality.
It further advises that given the prevailing fiscal constraints, it has become urgent to mobilise alternative sources of funding, including from the domestic private sector and the international community.
Private sector participation in infrastructure projects in the region is growing but remains limited.
To boost both public and private investment, the lender says emerging economies need to take action on a wide range of policies including efforts to improve tax collection to generate revenue for public investment.
“The countries also need to improve spending efficiency, enhance private-public partnership (PPP) frameworks to encourage more private sector involvement in infrastructure projects, and strengthen the governance and efficiency of state-owned enterprises,” WB says.