Mirroring The Kenyan Economy In 2023

Mirroring The Kenyan Economy In 2023

By Soko Directory Team / Published January 30, 2023 | 9:26 am

A mother selling fruits in Kenya

According to the Kenya National Bureau of Statistics (KNBS) Q3’2022 Gross Domestic Product Report, the Kenyan economy recorded a 4.7 percent growth in Q3’2022, significantly lower than the 9.3 percent contraction recorded in a similar period in 2021.

The average GDP growth rate for the 3 quarters in 2022 is a growth of 5.6 percent, a decline from the 6.9 percent expansion recorded during a similar period of review in 2021.

The average GDP growth rate for 2022 is expected to be 5.1 percent, a decline from the 7.5 percent improvement witnessed in 2021.

“In 2023, we expect the economy to continue its recovery trajectory though at a slower pace with the projected GDP growth to come in at a range of 4.8 – 5.2 percent,” says economic experts.

The key factors that shall support growth include: 

Expected Rebound in Transport, Agricultural, and the majority of the economic sectors- The country’s agricultural sector is expected to rebound in 2023 as a result of the subsidy programs introduced by the government on major farm inputs and reduced drought severity which shall mitigate the soaring food prices.

Gradual Increase in Access to Credit: As of November 2022, the private sector credit growth rate increased by 4.7 percentage points to 12.5 percent, from 7.7 percent recorded in the same period last year.

Growth of credit to the private sector is expected to remain strong on the back of existing policy measures, including the MSMEs Credit Guarantee Scheme, and continued economic recovery.

The Hustler Fund, a government scheme is expected to offer cheaper credit to the citizens at the bottom of the economic ladder to scale up, targeting more than 15 mn people with the amount disbursed as of 23^rd January 2023 standing at Kshs 15.7 bn with total repayments of Kshs 7.5 bn.

Despite the elevated Gross Non-Performing Loans Ratio in Q3’2022, which increased to 13.7%, as compared to 12.0% in Q3’2021, the banks continued to advance credit to the private sector albeit cautiously.

Notably, the risk-based pricing models, already adopted by the majority of commercial banks will see banks offer different rates to clients depending on their risk category to mitigate default risk exposure.

Related Content: Kenya’s Housing Agenda Strengthens The Economy Through Opportunities For SMEs

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