East Africa economic outlook bright: report
Dar es Salaam. Tanzania’s economy will grow faster than its regional peers Kenya and Uganda this and next year, according to a new report.
South Africa-based Absa Group Research says in an economic update for the three East African Community (EAC) member states that Tanzania’s economic growth will be in excess of six per cent this year, with Kenya and Uganda growing between three and six per cent.
Tanzania’s economy grew by 7.2 per cent in the second quarter of this year, driven by construction and mining, according to the National Bureau of Statistics (NBS). The government has projected growth of more than seven per cent.
The three countries’ economic growth will be largely driven by investment and agriculture, South Africa-based Absa Group Research said in an economic update for Tanzania, Kenya and Uganda.
While growth in Tanzania and Uganda is expected be spurred on by public and private sector investment, agriculture should play a pivotal role in Kenya’s economic expansion.
The report adds that future growth in Uganda will hinge on further oil discoveries and the laying of a pipeline to the Tanzania port city of Tanga.
It says Ugandan economic growth will be moderate in 2019, but will accelerate in 2020, driven by increased investment.
In Kenya, impetus will also be provided by investment in President Uhuru Kenyatta’s Big Four agenda (manufacturing, housing, healthcare and food security).
“Agricultural performance in Kenya has deteriorated in recent quarters owing to poor weather conditions, and if this is prolonged, there could be further downside risks to growth,” the report says.
Adverse weather will remain a major challenge across the region as it is likely to impinge on agricultural production, which is an important driver of growth.
“Drought conditions in parts of Tanzania have had limited impact on inflation but remain a long-term risk.”
Apart from having the fastest growth, Tanzania has the lowest level of debt distress as debt servicing against tax revenue was nearly 14 per cent, lower than Uganda with nearly 18 and Kenya with more than 20 per cent.
However, further delay of an investment decision on liquefied natural gas continues to be a significant setback for the monetisation of offshore gas resources in Tanzania, the report says.
In Kenya, fiscal consolidation has been slow and the country’s debt burden and interest costs have been rising, according to the report.
Meanwhile, the report shows that the Tanzanian and Ugandan shilling have been more resilient than they Kenyan currency.
