East Africa needs strong financial institutions to support fast growth

A KCB banking hall: The bank's recent top rating by Standard & Poor's and Moody's affirms its headroom to fund bigger projects. PHOTO | FILE 

Once thought of as a backwater investment destination, East Africa is emerging as an economic hub with promising growth prospects.

The African Economic Outlook report by the African Development Bank released early this year indicated East Africa will record the fastest growth on the continent in 2015 and 2016.

With the region boasting of much greater political stability and peace in most of the member countries, the positive growth trajectory predicted over the medium term is an indicator that the East African Community has a good chance of reaching a developmental tipping point and making it the most attractive investment destination on the African continent.

Kenya's status of a middle-income country, its ranking as the ninth largest economy in Africa and sub-Saharan Africa's fourth largest, has cast a sharper focus on key sectors that will drive the economy through decades.

The rest of East African countries—Uganda, Rwanda, Burundi and Tanzania—too are continually deepening their development agenda, putting the region on track of a major economic expansion.

To sustain the momentum, significant investments are still needed in anchor sectors such as agriculture, energy, education, and manufacturing. Deliberate policy actions that will improve the ease of doing business and raising the competitiveness of Kenyan exports will also be critical if Kenya is to cement its stature as the go-to investment destination in Africa.

Yet equally important is a financial services industry that has the capacity to support the growth ambitions of the Kenyan and East African economies.

For homegrown East African companies seeking to expand globally and multinational corporations looking into the East African opportunity, getting stable and credible financial partners remain vital. I believe in African institutions and that the continent will be built by Africans.

Increasingly, Kenyan financial institutions are receiving global recognition to the benefit of the regional economy as a whole. The need for the economy to have strong and stable lenders is what forms the basis for the ratings by Global Credit Ratings agencies.

Earlier this month, KCB Group was assigned top ratings by two of the major global ratings agencies, Standard & Poor's (S&P) and Moody's.

The ratings gave the bank a stable outlook, affirming it has a headroom to fund bigger projects in the East African region on the back of high capital and liquidity buffers.

The banking sector is primed to play a bigger role in the financing of the on-going mega infrastructural projects that are.

The ability to extend facilities to companies seeking investment in anchor industries such as energy, construction and horticulture presents new avenues to stimulate growth.

There has been a lot of talk about Africa's rising economic prosperity and whether it is sustainable and deeply rooted in reducing extreme poverty across the continent. It is one of the regions in Africa that is poised to enable the continent to rise.

Source: East Africa needs strong financial institutions to support fast growth