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Kenya: World Bank Urges Govt to Focus on Competitiveness, Inclusivity to Drive Growth

by kenya-tribune

Nairobi — The remodeling of Kenya’s growth model to boost productivity and job creation will require interventions that focus on competitiveness and inclusivity, the World bank has said.

According to the multilateral lender, Kenya’s recent growth which resulted from consumption and government spending has narrowed the country’s fiscal space, increased debt vulnerabilities and has not generated the necessary jobs.

“As such, Kenya must transition to a growth model that boosts performance in under-performing drivers: private investment, exports, and productivity growth, which are all important for enhancing long-run potential GDP and ramping up creation of better-quality jobs for new labor market entrants,” World bank said.

In doing so, the country will require reforms at the macroeconomic level such as fiscal, trade, and investment reforms as well as microeconomic interventions such as contestability of markets to help ensure that growth is inclusive, not subject to elite capture and that the benefits extend to marginalized groups.

World bank said that at the macroeconomic level, Kenya should persevere with fiscal consolidation to avert macroeconomic instability and strengthen the climate for private investment.

“Maintaining Kenya’s multi-year fiscal consolidation effort with step changes in debt transparency, fiscal sustainability and public expenditure efficiency will be essential while continuing to implement reforms under the Sustainable Development Finance Policy,” it said.

Further, the lender noted that global economic headwinds and increasing climate variability also highlight the need to gradually rebuild fiscal buffers and establish more robust risk financing mechanisms.