Drought and law capping interest rates on loans have taken a toll on the economy, according to latest figures from the national statistician.
Kenya National Bureau of Statistics (KNBS) in its latest Quarterly Gross Domestic Report indicates that the economy slowed to 4.7 per cent in the first three months in 2017. This is compared to a growth of 5.3 per cent over the same period last year.
This comes at a time when political temperatures have reached boiling point with the country headed for the general elections in August, a fact that might have contributed to investors adopting a wait-and-see approach.
Agriculture was hard-hit in the first quarter by a debilitating drought, which depressed harvest of key crops, including coffee, tea and maize.
“Agriculture recorded the first contraction in gross value added since 2009 which was attributable to unfavourable weather conditions during the last quarter of 2016 and the first quarter of 2017,” read the report in part. The sector grew by 1.1 per cent, a significant drop compared to a growth of 4 per cent during the same quarter in 2016.
Production of tea dropped significantly by 35 per cent in the same period to 90,100 tonnes in the first quarter of 2017 from 139,600 tonnes in the corresponding quarter of 2016. Growth in the financial sector also decelerated as commercial banks reduced lending to the private sector.
However, manufacturing and construction sectors posted improved performance, with the latter riding high on the construction of the Standard Gauge Railway (SGR).
Meanwhile, the country’s inflation fell to 9.21 per cent year-on-year in June, from 11.70 per cent a month earlier as food priced started to drop, KNBS data indicated. Month-on-month inflation was negative 1.2 percent, it said.