NCBA forecasts steady GDP growth for Kenya, projecting 4.8% in 2024, with sustained levels anticipated through 2025. In an economic forecast forum themed “Navigating Uncertainty – Key Trends Influencing the Economic and Business Environment in 2025.” NCBA outlined both global and local factors shaping Kenya’s economy, covering inflation trends, fiscal policy, and sectoral performance.
NCBA Group Managing Director John Gachora reflected on challenges from the previous year. He cited a severe financial crisis due to concerns over a potential sovereign debt default tied to the June 2024 Eurobond maturity. He also highlighted a major currency crisis and an exceptionally tight external environment that limited Kenya’s access to international capital markets. “Kenya took proactive steps to address its financing needs well before the June 2024 Eurobond maturity, significantly reducing sovereign risk spreads.” Gachora remarked. “Since then, currency stability has improved, bringing much-needed calm to Kenya’s financial markets.”
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Key Highlights from the Forum
Global Economic Conditions
Inflation: Lower global inflation rates are contributing to a more stable external environment.
Global GDP Projections: The IMF expects global growth to reach 3.1% in 2024, rising to 3.3% in 2025.
Global PMI: The global composite PMI has stayed above 50 this year, indicating consistent economic activity worldwide.
Domestic Economic Insights
Agriculture and Agro-Processing: Favorable weather has bolstered agricultural exports, aiding food inflation control.
Service Sector: Resilient growth is expected, with most sub-sectors forecasted to align with long-term averages.
Fiscal Challenges
Public Debt: Debt servicing will consume 38% of tax revenue in 2024/25. Decreasing slightly to 35% in 2025/26, constraining development funding and limiting growth prospects.
Tax Burden: Unpredictable tax hikes and deductions are straining business cash flows.
Pending Bills: Outstanding national and county government bills, totalling KES 698 billion, are reducing private sector liquidity. This affected the overall economic stability.
David Ndii, Chairperson of the President’s Council of Economic Advisors, shared a positive outlook for 2025, driven by strong foreign reserves, robust export performance, and favorable capital flows as global interest rates decline. He highlighted affordable housing, domestic energy, electric vehicles, and agricultural productivity as critical areas for growth. Ndii stressed the importance of increasing national investment to 25% of GDP, fueled by greater savings, private partnerships, and financial deepening.
This year’s ninth NCBA Economic Forum drew over 700 attendees from diverse sectors, both in person and online. Key speakers included David Ndii, Chairperson of the President’s Council of Economic Advisors; Mary-Ann Musangi, Chairperson of the Women in Manufacturing Committee at KAM and Managing Director of HACO Industries Ltd; and Sandeep Main, Partner of Tax and Regulatory Services at KPMG.
Launched in January 2018, the NCBA Economic Forum provides a platform for government and industry leaders to engage in meaningful discussions aimed at fostering economic growth.
