EAC economies projected to grow rapidly in 2015: report

Money Markets

Economic growth for the region is expected to rise to 6.8 per cent this year this year, driven by Kenya and Uganda. PHOTO | TEA GRAPHIC 

By CHRISTABEL LIGAMI

In Summary

• The report shows that Africa’s overall GDP growth increase is reflected by GDP rebasing primarily in Nigeria but also in Ghana, Kenya, Tanzania, Uganda and Zambia.
• Rebasing of GDP figures is long overdue as countries with outdated base years outnumber those that have updated it.

East Africa’s economies are poised for a rapid growth this year, according to a report by the Economic Commission for Africa.

The economic growth for the region is expected to increase from 6.5 per cent in 2014 to 6.8 per cent this year, driven by Kenya and Uganda.

The Africa Economic Report 2015 indicates that Kenya, the region’s largest economy, will benefit from rapid expansion of banking, telecommunications, urbanization, and investment in infrastructure, particularly rail.

Uganda’s growth will be supported by increasing activity in construction, financial services, transport and telecommunications.

The report states that in East and West Africa regions, inflation is forecast to increase from 5.9 per cent and 7.6 per cent, respectively, in 2014 to 6.1 per cent and 8.8 per cent in 2015.

Kenya’s inflation will be driven by the outcome of the rainy season, and in Tanzania by a weakening shilling and rising electricity prices. Kenya’s central bank has kept rates unchanged since 2012 but is expected to raise.

Rebasing

Titled “Towards a selective trade policy framework for industrializing Africa’’, the report shows that Africa’s overall GDP growth increase is reflected by GDP rebasing primarily in Nigeria but also in Ghana, Kenya, Tanzania, Uganda and Zambia.

"Rebasing in these countries reduced their debt-to-GDP ratios, which improved their capacity to borrow on domestic and international markets and helped to lift investment in their productive sectors,” said Carlos Lopes, the executive secretary for ECA.

"The rebasing of the GDP takes into account new transformations in the economy, such as the ongoing mobile phone revolution in the country," he added.

Kenya, revised up its GDP by 25 per cent to $53.4 billion in 2013 after rebasing, from $42.6 billion previously.

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Tanzania's GDP has expanded by 32 per cent after the state rebased its calculation to incorporate new sectors in the economy, including big discoveries of natural gas. The country's GDP stood at $41.33 billion in 2013 after the rebasing, up from a previous estimate of $28million.

On the other hand, Uganda’s GDP stood at $24.69 billion at the end of the 2013/14 financial year after the rebase.