The World Bank has reported a possibility that the Kenyan economy would expand by next year.
The World Bank based its insights on the current weather conditions in Kenya, stating that it would bring a boost to the country’s economy come 2020.
World Bank projects that Kenya’s economy would expand to 6.0 percent in 2020 up from 5.8 percent in 2019 if the weather conditions remain favorable.
“The growth outlook is predicated on normal weather conditions, authorities’ staying the course in planned fiscal consolidation, and limited spillover effects from the anticipated global slowdown.” World Bank said in their biannual report.
“Favourable weather conditions should support the growth of agriculture and industry (at an average of 4.5 and 5.6 percent, respectively for 2020-21).”
The government’s plan to cut fiscal deficits will also help to boost East Africa’s largest economy.
Kenya’s economy has grown on an average of 5 percent in the last five years but investors have their worries on the growing public debt which rose from 59.1 percent the previous years to 62.1 percent of Gross Domestic Product last year.
The national treasury had announced that it plans to review the current budget to reduce government expenditures and set more realistic targets on revenue collection, something deemed significant in the expansion of the country’s economy.
Revenue collection in the previous financial year dropped which prompted the National Treasury to set a revenue collection target for the 2019 /2020 to 1.3 trillion shillings.
The world bank report shows that in 2018, approximately 9,482 Kenyans were among the world’s high net-worth individuals but personal income tax (PIT) is far from being a stable revenue contributor.
“In FY2018/19, revenue from income tax was below target by approximately 16.3 percent, representing a decline to 7.4 percent in FY2018/19 from 8.9 percent in FY2013/14. This reflects lower revenue yields from both corporate income tax (CIT), withholding tax and personal income tax (PIT).”
In order to boost its revenue collection, the taxman decided to crack the whip on over 600 individuals who were not taxed compliant or were involved in tax evasion crimes.
The tax compliance issue affected most businesses in Kenya, and some like sportpesa and Betin were forced to exit the Kenyan marketing citing unfavorable business environment.
Unemployment also remains a problem as several Kenyans continue to question the current growth rates despite low employment rates. The rate at which companies are laying off employees is also alarming.
Kenya’s economy is growing despite an increase in the unemployment rate.