Kenya and other East African nations are seen benefiting from the economic slump being experienced in two of the continent’s biggest economies.
Analysts at CfC-Stanbic Bank, owned by South Africa’s Standard Bank, has tipped Kenya to benefit from the economic slowdown that is being experienced in Nigeria and South Africa, Standard reported.
“South Africa may witness sovereign credit downgrade yet is seen by global financial players as the barometer that is used to measure the continent’s liquidity ability. There has been talk of devaluing Nigeria Naira. I expect many rating agencies to continue to rank Kenya better,” said Jibran Qureishi, the bank’s economist for East Africa region.
The sovereign credit downgrade in South Africa has put the nation on the brink of recession. This will put the nation at a sub-investment grade that will push away investors.
A devastating drought that hit the agriculture sector last year, 25 percent rate of unemployment and widespread poverty are the biggest hurdles facing Africa’s second biggest economy.
According to BBC, South Africa is expected to grow at only 0.9 percent, down from 1.7 percent in 2014.
In Nigeria, the central bank may devalue the national currency by as much as 21 percent. This has been caused by the plunge in global oil prices to its lowest since 2004, according to Bloomberg.
Oil is the West African nation’s biggest source of foreign exchange.
East Africa’s leading economy has not been affected by the drastic fall in commodity prices that has hit West and South African nations.
According to Moneyweb World Bank’s Doing Business Index 2016 showed that Kenya is the most improved country in the region and third globally, in ease of doing business.
It rose from 129 to 108, in the global ranking of how easy or difficult it is do business in a country.