NAIROBI - Kenya must improve urban infrastructure for rapid economic growth, the World Bank said Thursday in its June 2011 Kenya Economic Update.
"Kenya is at the beginning of a major transformation that will shape its development prospects for decades to come," Johannes Zutt, World Bank Country Director for Kenya is quoted as saying. "Every year, Kenya's population grows by about one million people, who are healthier, better educated and moving to cities. With improved urban infrastructure and connectivity, particularly through the port of Mombasa, Kenya's new entrepreneurs will increasingly find new paths to prosperity."
The report focuses on the need for Kenya to expand and modernize the port of Mombasa as well as to strengthen the competitiveness of its coastal cities, which are Kenya's gateway to the thriving markets on the Indian Ocean. It should also improve the infrastructure within and between Mombasa and Nairobi, Kenya's gateway port.
Kenya could become a middle income country in the next decade if its economy grows at 6% a year, the report said.
In the short-term, the Kenyan economy will need to navigate through another economic storm and manage rising inflation caused by higher food and fuel prices,” said Ms Jane Kiringai, the bank’s senior economist.
She was speaking in Nairobi during the launch of the institution’s 4th edition Kenyan economic update, ‘Turning the Tide in Turbulent Times: Making the most of Kenya’s demographic change and rapid urbanisation.’
The projection comes a few days after fellow Bretton Woods Institution, International Monetary Fund (IMF), revised its projection from 5.7 per cent to 5.4 per cent.
Analysts at PineBridge Investments revised their growth projections to 4.5 per cent from 5 per cent, while their CfC Stanbic Bank counterparts have cut it to 4.3 per cent from 5.4 per cent.
The revised growth estimates by the WB and other analysts are, however, faster than the government’s 3.5 per cent and 4.5 per cent projection announced by Planning Minister Wycliffe Oparanya last month.
They are understandable, since the country is grappling with an inflation that has been rising for the last seven months to stand at 12.95 per cent in May, fuelled by high international oil prices in the face of a weak shilling and food shortage.
This has forced the Central Bank of Kenya to try supporting the shilling and tame inflation by withdrawing Sh3.2 billion from the economy.
The minister of planning and Vision 2030 Wycliffe Oparanya had earlier projected a lower GDP growth of between 3.5 and 4.5 per cent for this year, citing similar factors but said proposals such as higher strategic oil and food reserves could be used to stabilise long-term growth.
Finance minister Uhuru Kenyatta, however, has differed with his planning counterpart and projected a 6.1 percent economic growth rate for the year.