Metropol Kenya is likely to register a 6.5 percent growth in 2019

Metropol is projecting that the country is likely to achieve a 6.5 percent growth in 2019 support by capital investment in affordable housing, affordable healthcare, food security and  manufacturing as envisioned in the Big 4.

Metropol Managing Director Sam Omukoko added that the growth momentum will further be supported by a rapidly growing mobile banking lending as food inflation is expected to ease on the backdrop of favourable rainfall this year.

Economic forecasts now show that traditional sub-sectors like horticulture exports will be joined by the aggressive movement in the mobile lending sector.

Banks continue to innovate and a new M-Pesa enabled credit channel dubbed Fuliza (funded by KCB and CBA) will hit the market and is expected to move up to Kshs 100 billion over the year.

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Omukoko added that mobile lending had its negative connotations to the public saying that it could be unsustainable in the long run if borrowers do not monitor their credit bases.

Metropol further expects a narrowing current account deficit as a result of diaspora remittances, reduced imports, increased Foreign Direct Investments and subdued petroleum prices in international markets.

He said FDI and diaspora remittances maintained strong momentum which is expected to continue in 2019 with diaspora remittances particularly strong, rising to Kshs 274 billion from Kshs 198 billion in 2017, backed up by strong economic recovery in North America and the European Union.

A $2 billion (Ksh 199 billion) Eurobond is planned for in the 1st half of 2019, as government continues to borrow heavily in the domestic market through increased issue of treasury bills and infrastructure bonds.

2019 forecast

Interest rates will remain under the controlled regime through 2019 at 13 percent. The 70 percent deposit rate has been deleted under the Finance Act 2019.

Metropol is further projecting current account deficit to marginally narrow due to subdued petroleum prices in international markets (now at $60 per barrel from $85 per barrel in October 2018). The oversupply is expected to last over 2019 due to increased shale oil production in USA.

Inflation is likely to remain within CBK limit of 2.5-7.5percent as the government efforts to cut expenditure continues with a moderate budget increase of 7.6percent for financial year 2019/2020

Metropol estimates that nominal growth will be marginally better than 2018 at 6.5percent due to increased mobile banking lending and good weather forecast for the long rains in March, April and May.

The economy however, is still most likely to be enriched due to the scale of the government’s ambitious big 4 agenda projects.