Nairobi — Kenya's economic recovery speed will largely depend on the next general elections scheduled for March 4th 2013.
A World Bank Report unveiled Wednesday in Nairobi revealed that the success of the elections will boost economic growth whereas any incidents of uncertainty or violence will seriously dent the economy that was steadily healing from the ravages of the 2007/8 post-election violence.
Dubbed the Kenya Economic Update, the report reiterated the importance of free, fair and peaceful elections, seamless transfer of power and private sector goodwill as the main areas to watch in the electioneering period.
Currently, Kenya has one of the lowest economic growth levels in East Africa with Uganda, Rwanda and Tanzania all witnessing growth levels upwards of five per cent.
according to World Bank economist for Kenya, Mr John Randa, the 2012 performance of the Kenyan economy had been positively impacted by the move by Central Bank to lower interest rates and the fast declining inflation levels in the country.
"We expect this to continue having a positive impact on the general performance of the economy moving into 2013," said Randa.
Kenya's inflation stood at 19.7 per cent in November last year but has since come down to 4.4 as of the close of October this year.
As at the onset of the 2007/8 post-election violence, Kenya was enjoying a buoyant economic growth estimated at 7.1 per cent. The month-long violence however saw this growth plummet to 1.5 per cent by February 2008.
"The Kenyan economy has shown potential and every sign of surpassing the five per cent mark but only if the elections are held in a tranquil environment and the transfer of power if free of incidents," read a section of the report.
Regionally, the report said poor performance of western economies especially in Europe and the US could negatively impact of East African economies given the closer international trade ties between the partners.
According to the report, the Kenyan economy will close the year at 4.3 per cent a slight difference from the government's target of 4.5 per cent announced by the Ministry of Planning and National Development in February this year.
In 2010, the economy grew by 5.8 per cent, the highest since the post-poll violence. however, a huge import bill mainly driven by machinery and oil and a seriously weakening local currency against major world currencies drove the growth down to 4.4 per cent last year.
This was also the period that saw serious inflationary levels and sustained high interest rates.
Kenya is currently facing a charged political environment with the end of the reign of current president Mwai Kibaki in sight. Current frontrunners to replace him include incumbent Prime Minister Raila Odinga who was his main protagonist in the 2007/8 power struggle that almost drove the country to the precipice.
A key area to watch in the country's e economic development will be the transition to a devolved form of government where over 60 per cent of the national budget will be allocated to the counties with the dream driving development to the rural areas.
The report advices the Kenyan government to diversify its exports and avoid overreliance on horticultural crops which cannot resist the adversaries and vagaries of weather. The government has also been advised to invest in local manufacturing to reduce its import bill especially in machineries.