The Governor of the Central Bank, Kamau Thugge, expressed optimism that inflation would ease in the next two months due to an expected abundant maize harvest in the North Rift and Western regions, known as the country’s maize basket. Speaking at the launch of Equity Bank’s Kenya and DRC Investors’ Roadshow, Thugge emphasized the Central Bank’s proactive approach to tackling inflationary pressures by increasing the Central Bank Rate (CBR) by 100 basis points. He assured the public that challenging times would soon come to an end, with the economy projected to grow robustly by at least 5.5 percent in 2023, driven by the recovery of the agricultural sector, which showed signs of improvement in the first quarter.
Read more: Reasons Why Inflation Sticks Around for Longer
Thugge attributed the high inflation experienced since July of last year to disruptions in supply chains and an extended period of drought. The high cost of living has been exacerbated by increased fuel costs resulting from a doubling of Value Added Tax (VAT) and the implementation of the disputed Finance Act, 2023, which includes raising the VAT on petroleum products from 8 percent to 16 percent. However, the bill has been halted by a court ruling, but the government has already accounted for the increased VAT in current fuel prices, leading to higher costs for Super Petrol, Diesel, and Kerosene.
Read more: Tougher Times Ahead, With the Central Bank Rate Raised to 10.5%
Regarding exchange rates, Thugge stated that the Central Bank follows a flexible exchange rate system and intervenes only in cases of excessive volatility, allowing supply and demand forces to determine the exchange rate’s level. The country’s currency has experienced a significant depreciation against major international currencies, contributing to the high cost of living. Thugge commended Equity Bank for organizing the investor roadshow and encouraged closer collaboration between the private sector and the government to restore the country’s economic prosperity. He reassured investors of the stability of Kenya’s economy and highlighted its attractiveness as an investment destination.
Read more: Lower Vegetable Prices Pulls Down Inflation to 7.9% In April
The Kenya and DRC Investors’ Roadshow organized by Equity Group builds on the success of previous trade missions, including those between Kenya and the DRC, as well as those between the US, Tanzania, and Kenya. The roadshow aims to facilitate business networks, foster trade, and create investment opportunities between the two countries.
Email your news TIPS to editor@thesharpdaily.com
