Economy projected to grow by 5.4pc in 2014

By WINSLEY MASESE

Kenya’s economic growth rate might hit about 5.4 per cent in 2014, according to the latest projections by Old Mutual Ltd.

The improved performance will largely be driven by the mining sector, credit consumption and county government spending.

Peter Anderson, the company’s chief investment officer, said the economic growth projections are buoyed by major shipments of minerals expected to take place in 2014.

“We expect to have large shipments of minerals this year and this will have significant growth since the resources are a significant contributor to improved performance,” he noted.

Base Titanium is expected to ship large consignments of ilmenite early this year. It has started transporting the minerals to Likoni for shipment. Besides, Kenyans took a lot of credit during the third quarter of 2013 that was invested in the economy and is expected to have a profound effect in the course of this year.

 “The lending rates reduced, which in turn saw the amounts of credit invested in the economy rise and this will propel improved growth projections in 2014,” Anderson said.

He noted that the past year was not strong enough in the execution of the development budget as much of the funds were held by the central government and not released to the county governments.

“Once the funds are released, they will give a lot of impetus to the economic activity of the counties and this would improve the growth prospects,” he argued.

He noted that minerals and oil are significant contributors to any economy’s development. Anderson, however, warned that the economy is likely to see increased inflation as a result of huge chunks of money in circulation.

 “Inflation might pick up as the supply of money will see the currency grow strong,” he noted. Anderson, however, stated that weather patterns and international oil prices remain the two variables that would largely shape the country’s economic projections.

He said the country expects the multinational oil and gas exploration company, Tullow Oil, and its partners’ confirmations of the commercial amounts of oil finds in Turkana to spur greater economic activity.

Tullow Oil said mid last year that one of Kenya’s six oil wells had been releasing 281 barrels of oil a day. It said the drill test at the Ngamia-1 well proved the commercial potential of oil reserves in the northern part of the country.