New government needs to reign in government expenditure. The leaders who take office in Kenya after the October 26 presidential poll will need to reign in expenditure to improve the economy’s prospects according to ICAEW’s (the Institute of Chartered Accountants in England and Wales) latest report. In Economic Insight: Africa Q3 2017 launched today, the accountancy and finance body states that currently, the budget deficit as a proportion of GDP is forecast to widen again from this year before it narrows, mostly thanks to economic growth.
The report, commissioned by ICAEW and produced by partner and forecaster Oxford Economics, provides a snapshot of the region’s economic performance. The report focusses specifically on Kenya, Tanzania, Ethiopia, Nigeria, Ghana, Ivory Coast, South Africa and Angola.
According to the report, the new government will need to take a number of steps to revive the economy following the October 26th vote. A start would be to rethink the regulatory cap on commercial interest rates, which has starved small and medium enterprises of funding. Reining in expenditure, in order to ensure government debt does not get out of hand, would improve the economy’s future prospects. Furthermore, the newly elected government will need to lead the charge against corruption.
Voter turnout is likely to be higher than on August 8 as supporters from both Jubilee and the National Super Alliance (NASA) endeavour to cement their candidate as the legitimate winner. Should Mr Raila Odinga come to power, policy making and implementation will be affected by the fact that the Jubilee party has majorities in both the National Assembly and Senate and will more than likely use their advantage to stifle any policies that run contrary to their own goals.
Michael Armstrong, Regional Director, ICAEW Middle East, Africa and South Asia said: “Although the opposition party succeeded at the Supreme Court leading to the nullification of the August 8 result, they still have a challenging time ahead. Should they succeed in the upcoming poll, the National Super Alliance will have challenges in implementing their manifesto due to the majority Jubilee holds in Parliament.”
Looking at the rest of the region, Rwanda’s President Kagame’s re-election is expected to result in the continuation of business-friendly policies while the operating environment in Tanzania is becoming increasingly complicated due to President Magafuli’s economic nationalism. Ethiopia’s real GDP growth is forecast to come in at an impressive rate of 7.1% despite the risk of social unrest that may be disrupting the state led development that has produced the country’s economic boom in the past.
The full Economic Insight: Africa report can be found here: http://www.icaew.com/en/technical/economy/economic-insight/economic-insight-africa