Kenya’s GDP growth expected to slow 3% or less in 2020

Kenya’s economic growth will slow to 3% or less this year from an earlier forecast of 6.1% due to the effects of the novel coronavirus, its finance minister said on Tuesday.

“This (growth) will drastically drop to about 3% or even less, but we are going to give a firm figure when we will have taken on board the impact of this, maybe in the next one month,” Ukur Yatani said in comments broadcast on Citizen Television.

Two weeks ago Kenya downgraded its economic growth prospects for 2020 from 6.2 percent to a conservative 3.4 percent.

The crisis hit Kenya at a turbulent time, further exposing an economy already weighed down by rising public debt – standing at $60bn as of September 2019 – years of missed revenue collection targets and a budget deficit hovering at more than six percent of GDP.

Patrick Njoroge, the governor of the Central Bank of Kenya, downgraded economic growth prospects for 2020 from 6.2 percent to a conservative 3.4 percent due to the pandemic, which has disrupted domestic production and supply chains as well as demand from the country’s main trading partners.

Njoroge also said Kenya would seek more than $1bn in emergency funding from the International Monetary Fund (IMF) and the World Bank to prop up its slowing economy in the face of the crisis.

Kenya’s economy tops African Countries with the highest risk exposure to the deadly Corona Virus ahead of other destinations where this illness has been diagnosed.

According to a report by South Africa’s Rand Merchant Bank, Kenya’s economy has the highest overall Covid-19 risk score of 27 points, followed by Ghana on 24 and Egypt at 23. African countries with the least risk are Nigeria with a score of 11, Botswana on 13 and Mozambique on 17.

Those counties that are likely to be hardest hit are those whose GDP growth rates are below the Sub-Saharan Africa average, the report notes. The likely impact of coronavirus on African economies can be gauged through tourism, trade and transport sectors.

The World Bank Group Board of Directors early this month (April) approved today $50 million in immediate funding to support Kenya’s response to the global COVID-19 (coronavirus) pandemic under a new operation – the Kenya COVID -19 Emergency Response Project.

The project will provide emergency funding for medical diagnostic services, surveillance and response, capacity building, quarantine, isolation and treatment centers, medical waste disposal, risk communications and community engagement as well as for strengthening of the country’s capacity to provide safe blood services.

The project will be implemented in all 47 counties. The primary beneficiaries will be the infected persons, at-risk populations, medical and emergency personnel, medical and testing facilities, and national health agencies.

$10 million of this funding will go towards strengthening the capacity of the Kenya National Blood Transfusion Service to provide safe blood and blood products.

This funding is the first in a series of support the World Bank is providing to Kenya in response to the unprecedented challenge of COVID-19. In addition, $10 million was triggered under the Contingency Emergency Response Component of the Transforming Health Systems for Universal Care Project to fund the National COVID-19 Contingency Plan.

The World Bank Group is rolling out a $14 billion fast-track package to strengthen the COVID-19 response in developing countries and shorten the time to recovery. The immediate response includes financing, policy advice and technical assistance to help countries cope with the health and economic impacts of the pandemic.