2015年-世界发展银行全球_Kenya_Economic_Update_June_2005_No_12___Storm_Clouds_Gathering_94页_7mb

Kenya Economic Update Summary

Core Content

This document provides an overview of Kenya's economic situation in 2014 and its outlook for 2015-2017, with a special focus on public participation in the devolved system of governance.

Main Messages

• Economic Performance in 2014:

  • Growth remained solid, estimated at 5.3 percent, driven by strong infrastructure spending and consumer demand.
  • The economy faced strong headwinds in the foreign exchange market, which impacted growth.
  • The fiscal deficit increased from 4.5 percent of GDP in 2011/12 to 8.3 percent in 2014/15.
  • The Central Bank of Kenya (CBK) raised its benchmark rate to stabilize the shilling and manage inflation expectations.
  • The external sector remains vulnerable due to a high current account deficit and weak export performance.
  • The banking sector experienced strong growth, while nonperforming loans increased in most sectors.

• Growth Outlook for 2015-2017:

  • Growth prospects remain favorable, but risks are significant in the near term.
  • The impact of global oil price declines was muted due to the depreciation of the shilling and weak transmission.
  • The economy is expected to grow at 5.4 percent in 2015 and 5.7 percent in 2016, supported by ongoing infrastructure projects.
  • A weak business environment and security issues are key risks to growth.

• Public Participation and Devolution:

  • Devolution to counties has the potential to improve service delivery and transparency.
  • County governments have made progress in setting up systems for public participation, including communication frameworks and participatory forums.
  • However, challenges remain, such as the high cost of participation, lack of administrative capacity, and tokenistic forms of engagement.
  • Most county budgets are not readily available to the public, despite legal requirements.

Key Recommendations

To Maintain Growth

• Address External Account Imbalances:

  • Focus on improving Kenya's competitiveness and increasing the production of traded goods and services.
  • Enhance the investment climate, particularly through infrastructure development and trade liberalization.

• Consolidate Fiscal Position:

  • Urgent fiscal consolidation is needed to avoid risks of sudden reversal and macroeconomic instability.
  • The fiscal deficit is expected to rise to 8.7 percent of GDP in 2015/16, which is unsustainable.

To Strengthen Local Participation

• Build Capacity for County Service Providers:

  • Train civil servants on public financial management (PFM), planning, and monitoring.
  • Provide on-the-job technical assistance to improve local service delivery.

• Develop Participatory Government Systems:

  • Integrate participatory processes into county governance systems.
  • Support the operationalization of County Budget and Economic Forums (CBEF) and design effective participation forums at the sub-county and ward levels.

• Create Incentives for Transparency and Inclusion:

  • Systematically measure and compare county performance and citizen satisfaction.
  • Make this information public annually to improve service delivery and accountability.

• Encourage Partnerships with Non-State Actors:

  • NGOs, civil society organizations, and other non-state actors can help counties build systems for transparency and public participation.

Key Information

• Tourism Decline:

  • The number of tourists declined, reducing travel credits in the balance of payments.
  • Security threats, particularly from al Shabaab, have adversely affected the tourism sector.

• Oil Prices and Inflation:

  • Lower global oil prices had a poor transmission to the domestic economy.
  • Inflation remained below the CBK target, but food price rises were a major driver.

• Foreign Exchange and Debt:

  • Kenya's current account deficit remained high at 9.8 percent of GDP in June 2015.
  • Public debt to GDP ratio exceeded the 50 percent threshold in FY2015/16.
  • International reserves stood at US$7.2 billion, equivalent to 4.6 months of import cover.
  • Remittances are the most important source of foreign exchange inflows, reaching $1.5 billion in 2015.

• Infrastructure and Investment:

  • Infrastructure spending continued to be a key driver of growth.
  • Investment recovered in 2014, with a focus on major projects such as the standard gauge railway, roads, and geothermal power.

• Public Participation and Devolution:

  • Kenyans believe devolution provides more opportunities than risks.
  • Most Kenyans now have a high or medium understanding of county responsibilities.
  • Public participation in budget processes has increased, but mechanisms for transparency and accountability are still inadequate.

Conclusion

Despite ongoing challenges, Kenya's economic fundamentals remain strong, and the devolution process has the potential to improve governance and service delivery. However, fiscal sustainability, external vulnerability, and effective public participation require urgent attention. The government must address these issues to ensure long-term growth and shared prosperity.