Kenya is a stable and growing lower-middle-income country and the East African economic power.
To boost the country’s economic growth and transformation, the government has embarked on the ‘Big Four’ agenda, which is anchored on four pillars: Sustainable food security,
affordable housing,
bolstering manufacturing and
universal healthcare.
Under this bold and ambitious plan, the government plans to increase investments, such as securing $1 billion (Sh100 billion) worth of new investments in the iron and steel mining industry, and raising the health spend from Sh61 billion to Sh73 billion by 2022.
Positive spill-over effects will include employment creation across other economic sectors.
Although implementation is at an early stage, the plan presents great opportunities for financial institutions such as commercial banks.
AGRICULTURAL INSURANCE
During the Global Index Insurance Conference two years ago, governments were encouraged to support agricultural insurance markets through public-private partnerships. That followed the recognition of Kenya as one of Africa’s most promising insurance markets with an annual growth forecast of 6 per cent.Considering that banks can reach 75 per cent of Kenyan adults through digital technology, they can, certainly, support uptake of insurance via their infrastructure and scale.Product partnerships between insurers and banks within an enabling regulatory environment can, therefore, support the ‘Big Four’, notably in healthcare and food security.The same approach can be used in manufacturing and housing, where the government plans to build at least 500,000 affordable units.
PRODUCTIVITY
There is also a critical need to boost the productivity of the manufacturing sector as a driver of economic growth. The government expects that the sector will generate a million jobs in the next 10 years
The World Bank estimates that Kenya’s infrastructure has a deficit requiring annual expenditures of $4 billion (Sh403 billion), or 20 per cent of GDP, per annum. Demand for credit from the public and private sectors will, therefore, continue to increase over the medium term, particularly, at the county level.
FINANCIAL PRODUCTS
It is also important to align policy and financial products to attract investors to the manufacturing sector for it to grow to the targeted 15 per cent of GDP from 9 per cent to support Kenya’s economic growth and boost its regional competitiveness.
