NAIROBI, March 30 (Xinhua) -- The Kenyan economy is projected to grow at 5.9 percent in 2017, the same rate of growth achieved in 2016 but might fall slightly further down due to a slowdown in economic activity within the private sector because of the prevailing drought, a Treasury official said Thursday.
Cabinet Secretary for National Treasury, Henry Rotich, said the economy was likely to suffer a growth slowdown in 2017 unless the drastic drop in the level of private sector borrowing was reversed.
"Our economy is growing at twice the pace of global growth and more than twice the rate of the Sub-Saharan growth. We are growing faster than both Nigeria and South Africa whose growth is projected at 0.8 percent for both countries," Rotich said when he presented the 2017/2018 budget in Parliament.
He attributed the 5.9 growth projection to the stable environment surrounding the key economic indicators such as the rate of inflation and interest rates.
The CS also cited a stable import bill, investment in infrastructure and the recovery in the tourism sector after years of a slowdown caused by a series of terror attacks in the country's tourism hotspots.
"Our vibrant and dynamic private sector has contributed to this resilience," Rotich told Parliament when he presented the fifth budget statement under Jubilee government.
The government attributed the economic growth it achieved in the middle of a worldwide economic slump to the growing rate of foreign direct investments which hit 2.6 billion U.S. dollars in 2016.
According to Rotich, investments in the security sector, through the employment of more police officers and other security personnel, enabled the country to enhance security.
In the new fiscal budget, the Kenyan authorities outlined measures to improve the investment environment, create more jobs in 2017 and to attract more investors into the country.
Rotich allocated 1.35 billion dollars in infrastructure projects in the 2017/2018 financial year. He said 640 million dollars will go towards the ongoing road construction while 443 million dollars will be directed to foreign co-financed roads.
The CS said 756 million dollars has been committed to the Standard Gauge Railway from which 155 million dollars will go to the completion of the first phase and 597 million dollars towards the construction of second phase from Nairobi to Naivasha.
"Once completed, SGR will help to integrate domestic markets, link special industrial zones and bring global export markets closer home. The construction of the first phase is nearing completion and we expect Kenyans to enjoy a decent ride from Mombasa to Nairobi starting June 1," Rotich said.
"At the same time, we are glad to announce that the construction of the second phase has already begun," he told the lawmakers. Rotich told parliament that 4 million dollars will be used to relocate the people along the railway line.
He announced plans to build a national pipeline from Lodwar in Northern Kenya to Lamu in the South, to enhance the country's oil energy infrastructure.
Kenya is preparing to begin advance oil exportation this year through the rail.
The government also addressed the increasing cost of maize flour by introducing tax interventions meant to reduce the cost of maize flour.
These include introducing duty-free importation of maize in the next four months and the removal of Value Added Tax on both bread and maize flour in a move meant to lower the costs of the basic food for Kenyans.
Rotich said the two commodities were expected to be cheaper after the exemptions and warned millers and bread manufacturers of a reversal should they fail to pass the benefits to the consumers.
"In order to make these commodities affordable to the common citizens. I propose to zero rate bread and maize flour to remove VAT all together," Rotich said.
He asked companies involved in the chain of production and distribution of such commodities to implement the measure directed at reducing the cost of basic commodities.
"Manufacturers, wholesalers and retailers who sell such goods will be expected to reduce the price of these basic commodities failure to which I will reverse the policy," he warned.
Rotich highlighted how the government has made progress in improving security, infrastructure, education, health care and access to electricity.
The budget is also full of incentives to attract foreign investments and protect locally manufactured goods.
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