Kenya's economy is stable and poised for growth - S&P ratings

Kenya’s economy remains stable and is even poised for growth despite harsh economic conditions.

Global credit rating agency, Standard & Poor’s has affirmed Kenya’s short and long term foreign and local currency sovereign credit ratings at “B+/B” with a stable outlook on strong external position and monetary policy flexibility.

“The ratings on Kenya are supported by its monetary flexibility, liquid domestic financial markets and per capita GDP growth as well as an increasingly diversified economic base,” said S&P in new outlook on Kenya.

The rating serves to boosts the country investor's confidence and also assures the market and the public alike that the cost of doing business as well as borrowing is likely to remain in check.

The latest rating is good news for the country, especially in the wake of increased public criticism over increasing public debt.

It also depicts Kenya favorably as an ideal investment destination and therefore attracts foreign investors.

S&P recently downgraded South Africa's economy to junk status citing political and institutional uncertainty.

Threats to economy

However despite the positive rating, S&P cautioned that there still remain risks which may likely clip Kenya’s growth.

The August general elections is one such risk S&P highlighted because Kenyan economy ordinarily takes a dip every five years as businesses hold back investments to await the outcome of elections.

“Our ratings on Kenya are constrained by the country's history of ethnic tensions” part of the report read.

Drought and decelerating credit growth also pose short-term risks to the country’s 2017 economic growth and budgetary performance.

Agriculture, which is the main backbone of the economy, is expected to perform below bar this year as a result of food producing regions in Rift Valley having been severely affected by the ongoing drought.

Early this year the Central Bank of Kenya downgraded the country’s economy from 5.9 per cent to 5.7 per cent, citing uncertainties in the global economy amid a ravaging drought.