NAIROBI, KENYA: The International Monetary Fund (IMF) has projected Kenya’s total investment to hit a nine-year low this year.
The global lender said total investment as a fraction of GDP is expected to touch a low of 18 per cent.
IMF in its latest regional outlook for Sub-Saharan Africa projects depressed investment as both the public and private sectors put off expenditure in light of headwinds, including heightened political temperatures in the wake of the disputed presidential election.
This will have the impact of slowing down the country’s economic growth, with the bank of last resort projecting a 5.3 per cent growth in real GDP this year, down from 5.8 per cent last year.
The projected growth rate would be the slowest since 2012 when the economy posted an unimpressive growth rate of 4.6 per cent.
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Some of the sources of investment domestically include residential and non-residential investment in housing that provides a flow of housing services over an extended time.
However, latest figures from the Kenya National Bureau of Statistics show that the value of buildings approved for construction by Nairobi County in the first seven months of this year declined by 18.4 per cent to Sh149.5 billion, down from Sh183.2 billion in the same period last year.
The subdued investment will deal a blow to the taxman as it means no additional taxes will be coming in from Kenyans who would have found jobs in these projects. The KNBS report paints a bleak picture of a struggling housing sector in which activities, both in residential and non-residential buildings, were subdued in what many analysts blame on the toxic political climate in the country.
The value of residential buildings approved, according to the report, declined by 17.4 per cent to Sh88.5 billion in 2017 from Sh107.2 billion last year. Commercial building approvals dipped by 15.1 per cent to Sh61 billion in 2017 compared to Sh76.1 billion last year. Total investment also includes things such as new machinery or factories, human capital investment and inventory investment, all of which seem to have declined as investors employ a wait-and-see attitude.
