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Tanzania could eclipse Kenya to become the dominant economy in the East Africa region going by the latest findings by a US-based consultancy firm Invesco.
Tanzania ranks at position six with Kenya coming at position 13 in the ranking of African nations most endowed with the potential to succeed.
This kicks out Kenya from the top 10 watchlist, despite being the 6th largest economy in the continent, and a premier frontier markets economy.
Dubbed Africa 2021, a Continent of Opportunity, the report ranks African nations in terms of potential for growth based on various factors such as working population size, mineral resources, surface area, arable land, electricity production, forestry and fisheries.
“The cross-country comparisons show a ranking of countries for size, demographic dividend, economic structure, industrialisation, urbanisation, stability, business environment, economic potential, adoption of technology, openness to investment, external financing and climate change,” says the report.
Domestic demand
Kenya’s growth is supported by agriculture, while weaknesses in services and industry have had a dampening effect on the economy during the period of Covid-19 pandemic.
African Development Bank says domestic demand has been subdued while external demand has neither helped nor hurt growth during that period.
Expansionary fiscal, monetary, and financial policy measures have been introduced to mitigate the impact of the pandemic on businesses and households.
Kenya has lost footing in its main export market in Uganda, losing out to Tanzania in the wake of long-drawn trade feuds between the two nations.
Tanzania’s exports to Uganda has even surpassed Kenya’s since April, a possible reflection of the negative impact of the trade fights.
Government data shows that the value of Kenya’s exports to Uganda was Sh9.05 billion ($83.25 million) in April but dropped to Sh7.2 billion ($66.85 million) in June indicating a period when Tanzania toppled Kenya as Uganda’s main export market in the region.
As per Invesco’s top 10 watchlist, South Africa, Egypt, Botswana, Zambia, Ghana, Tanzania, Algeria, Morocco and Cote De ivoire emerged tops.
Africa will be the economic and investment story of this century. However, it is a continent of 54 countries, each with its own potential, pitfalls and capacity to absorb different forms of investment, according to Invesco research team.
“The aim of this document is to examine each country in turn and to reach conclusions about the possibility and desirability of investments,” they add.
Key factors that weigh down Kenya’s ranking is lack of natural resources, but scores well in openness to external investors and size of the country.
Kenya’s population growth rate has dropped from 5 per cent in the 90s to about 2 per cent currently, while its dependency ratio is declining at a faster pace.
Kenya’s gross domestic product (GDP) has been growing at about 5 per cent in the last decade with neighbours such as Tanzania and Rwanda rising at about 7 per cent.
Another key challenge for Kenya is high cost of electricity which has kept power consumption at 2000MW per year compared to 40,000 in South Africa, 12,000 in Nigeria and Ethiopia’s 10,000MW.
Kenya, however, boasts a high intellectual horsepower due to a well-educated workforce that provides the necessary traction for economic development, a feature that is not captured in the survey.
Falling productivity
The report also indicates that Kenya’s GDP has grown rapidly since 2011 like assuming the graph of a hockey stick to hit over 70 per cent of GDP while placing the countries in top 50 most indebted nations.
Kenya’s exchange rate relative to the US dollar has also fallen sharply in the previous decades indicating falling productivity and over dependence on foreign manufactured goods while exporting cheap raw materials.
www.pd.co.ke
MY TAKE: Majirani jifunzeni kuishi na majirani zenu vizuri, hasa wale mnaofanya nao biashara vizuri.
Tanzania ranks at position six with Kenya coming at position 13 in the ranking of African nations most endowed with the potential to succeed.
This kicks out Kenya from the top 10 watchlist, despite being the 6th largest economy in the continent, and a premier frontier markets economy.
Dubbed Africa 2021, a Continent of Opportunity, the report ranks African nations in terms of potential for growth based on various factors such as working population size, mineral resources, surface area, arable land, electricity production, forestry and fisheries.
“The cross-country comparisons show a ranking of countries for size, demographic dividend, economic structure, industrialisation, urbanisation, stability, business environment, economic potential, adoption of technology, openness to investment, external financing and climate change,” says the report.
Domestic demand
Kenya’s growth is supported by agriculture, while weaknesses in services and industry have had a dampening effect on the economy during the period of Covid-19 pandemic.
African Development Bank says domestic demand has been subdued while external demand has neither helped nor hurt growth during that period.
Expansionary fiscal, monetary, and financial policy measures have been introduced to mitigate the impact of the pandemic on businesses and households.
Kenya has lost footing in its main export market in Uganda, losing out to Tanzania in the wake of long-drawn trade feuds between the two nations.
Tanzania’s exports to Uganda has even surpassed Kenya’s since April, a possible reflection of the negative impact of the trade fights.
Government data shows that the value of Kenya’s exports to Uganda was Sh9.05 billion ($83.25 million) in April but dropped to Sh7.2 billion ($66.85 million) in June indicating a period when Tanzania toppled Kenya as Uganda’s main export market in the region.
As per Invesco’s top 10 watchlist, South Africa, Egypt, Botswana, Zambia, Ghana, Tanzania, Algeria, Morocco and Cote De ivoire emerged tops.
Africa will be the economic and investment story of this century. However, it is a continent of 54 countries, each with its own potential, pitfalls and capacity to absorb different forms of investment, according to Invesco research team.
“The aim of this document is to examine each country in turn and to reach conclusions about the possibility and desirability of investments,” they add.
Key factors that weigh down Kenya’s ranking is lack of natural resources, but scores well in openness to external investors and size of the country.
Kenya’s population growth rate has dropped from 5 per cent in the 90s to about 2 per cent currently, while its dependency ratio is declining at a faster pace.
Kenya’s gross domestic product (GDP) has been growing at about 5 per cent in the last decade with neighbours such as Tanzania and Rwanda rising at about 7 per cent.
Another key challenge for Kenya is high cost of electricity which has kept power consumption at 2000MW per year compared to 40,000 in South Africa, 12,000 in Nigeria and Ethiopia’s 10,000MW.
Kenya, however, boasts a high intellectual horsepower due to a well-educated workforce that provides the necessary traction for economic development, a feature that is not captured in the survey.
Falling productivity
The report also indicates that Kenya’s GDP has grown rapidly since 2011 like assuming the graph of a hockey stick to hit over 70 per cent of GDP while placing the countries in top 50 most indebted nations.
Kenya’s exchange rate relative to the US dollar has also fallen sharply in the previous decades indicating falling productivity and over dependence on foreign manufactured goods while exporting cheap raw materials.
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www.pd.co.ke
MY TAKE: Majirani jifunzeni kuishi na majirani zenu vizuri, hasa wale mnaofanya nao biashara vizuri.
