NAIROBI, Kenya, Jun 3- Kenya’s economy has remained under recession since the outbreak of the coronavirus pandemic in March 2020.
The country’s GDP was down by 1.1 percent in the year, according to data released by the Kenya National Bureau of Statistics.
However, National Treasury Cabinet Secretary Ukur Yatani forecast the economy to grow by 6.4 percent in 2021 pegged on a stable economic environment, turn around in trade as the economy continues to recover from the economic shocks occasioned by the outbreak of the disease.
Even as the pandemic continues to throw the economy recovery to uncertainty, experts say President Uhuru Kenyatta, should consider exploring into other impactful measures in the 2021/2022 budget that would sustain the economy.
According to financial analyst Reginald Kadzutu, one of the country’s economic problems failure to create a long-term sustainable employment for its population.
“As a President what you would want to look at in your last one year is putting funding in high growth areas that can employ a number of people such as low-cost manufacturing or labor-intensive industries,” said Kadzutu.
In 2020, the Kenya National Bureau of Statistics revealed that 1.72 million workers lost their jobs which reflected a hardship period for many laborer’s and businesses during the peak Of COVID-19.
Tax Director BDO East Africa Steve Okoth however suggested a review of policies that increase cash flow to the private sector to be a big drive in reviving the economy through releasing 50percent of Treasury Bills bought by Banks and Financial institutions, placing a moratorium on borrowing from local banks and financial institutions for a year.
“This will help banks’ lending because they now have an effective rate to lend to the business and to the market so that there is availability of credit since now businesses are suffering from credit since banks are not lending for working capital or for co-capital,” said Okoth.
In CBK’s latest edition of the MPC statement, private sector credit had declined to 6.8 percent in 12 months to April, the lowest since October 2019.
At the same time, the ratio of banks non-performing loans however improved to 14.2 per cent from a higher 14.5 per cent in February.
“ The government also needs to consider how do we increase our exports which have been flat at about $6 million for the last 10-12 years but our imports has been growing so we have a huge dollar funding gap where to avoid borrowing externally and direct funding in high growth areas and thus increasing cash flow in export-oriented sectors,” Kadzutu added.
“ The government can also settle all the pending bills, claims, which will have the effect of releasing cash into the economy which will improve rate of cash flow and transactions in the market,” Okoth added.
Statement by the parliamentary Budget Officer however revealed that the roll out of the vaccine will however sustain the economy going forward.
“Going forward, widespread administration of the COVID vaccines and improved management of the COVID pandemic cases will improve the outlook. However, this is dependent on vaccine procurement and uptake as well as critical investment in health infrastructure,” reads the statement.
The overall budget for the financial year 2021/2022 has been estimated at Sh3.66 trillion.
The proposed budget estimates for FY 2021/2022 increased Sh14.11 billion from the approved 2021/2022 BPS ceiling where the ceiling was primarily attributed to an increase in the Consolidated Fund Services expenditures which increased by Sh 20.83 billion and the Parliament budget which is higher by Sh8.7 billion from the BPS ceiling.