UN Report Cites Growth Hurdles

Source: The Nation (Nairobi)

http://allafrica.com/stories/200207190026.html

Poor governance is to blame for Kenya's economic stagnation, a United Nations report says.

The UN Economic Commission for Africa said in its annual report - Economic Report for Africa 2002 - that private sector activities had been undermined by bad leadership.

The report, released on Wednesday, says massive corruption, a weak rule of law, escalating insecurity and poor infrastructure are indicators of weak governance.

Even though macro-economic management has been relatively strong in recent years, the report adds, translating these achievements into growth is the major challenge.

The report, however, says the Kenyan economy could recover this year, with stronger growth expected in agriculture.

Manufacturing is also expected to grow twice as fast as in 2001, partly as a result of better power supplies and elimination of some tariffs.

"Reflecting these developments, real GDP is projected to grow by 2.5 per cent," the report says.

With the domestic economy recovering, exports and imports will expand, causing the current account deficit to increase slightly from 2.6 per cent of the GDP in 2001 to 2.8 per cent this year.

Inflation will also edge upwards, reaching 3.8 per cent.

The report says Africa's economy grew by 4.3 per cent last year, fuelled by strong agricultural production, more exports and peace in several countries.

The growth comes despite a global economic slowdown after the September 11 attacks on New York and Washington, which were expected to lower commodity prices and reduce the amount of foreign investment in Africa.

The report cautioned that despite the continent's overall economic growth last year, economic performance varied greatly in parts of Africa, with Equatorial Guinea's economy growing 65 per cent, while Zimbabwe's shrank by 7.5 per cent.