Kenya's new president has named senior finance ministry economist Henry Rotich as finance minister. President Kenyatta pledged to Kenyans to deliver double-digit growth.
Newly-elected President Uhuru Kenyatta on Tuesday (23.04.2013) made a partial nomination of his cabinet. Among the four nominees was the Harvard-educated Henry Rotich who was appointed finance minister. Rotich is a technocrat who previously worked at the finance ministry and the central bank. To discuss his appointment, DW spoke to Fred Mweni, economist at Tsavo Securities, an investment and finance firm in Kenya.
DW: President Kenyatta has promised Kenyans double digit growth. How will his finance minister help him achieve this goal?
Fred Mweni: First of all, it was a very good selection to get an insider and make him a cabinet secretary. The first thing that he must do is to be able to slowly bring the interest rate to single digit. Our inflation target is five percent and we are doing 4.41, so we are doing very well. Secondly, I think the new finance minister must very quickly restore some order in the financial sector. In the last three years, we have seen that lending to the private sector has really shrunk. We can talk of banks which have never increased lending to the private sector. They only buy government securities, treasury bills, treasury bonds. And that kind of thing can't take a country anywhere. The new minister of finance will also have to work on agriculture production, seed subsidies, so that someone can be able to help those farmers to proceed and grow their produce. I think there are a couple of things that the finance minister may have to do drastically for the economy to be able to start going. I don't see double digit this year, I don't see double digit next year, I don't even see double digit in 2015. May be we are talking from 2016 and above, when you can see eight percent, nine percent and going toward double digit.
Unemployment in Kenya is high, around 40 percent. What sort of policies, programs are going to create jobs in Kenya?
First of all, the new finance minister and the government, they must target the wide SME sector, that's small and medium enterprises. In the last regime, we saw a stifling of growth in the SME sector, in terms of the government or the bank, the one giving support, the other giving loans. I think this government, if they are to come in and increase employment, they will have to work on the SME sector.
Oil has been discovered in Kenya, how difficult is it going to be to ensure that the revenue is used prudently?
For us to reach a commercial usability of the oil that has been discovered, we are talking about five, six years, it is going to go beyond President Kenyatta's term. To answer your question, to make a proper use of that, I think proper legislation must be put in place. There have to be some clear marketing strategies, both local and internationally because of export, and a clearer strategy for the government on subsidies, otherwise, we are going to see private interest fighting for that same resource.
How much interest have foreign investors been showing in Kenya since the election of President Kenyatta?
It has been unprecedented. The proof of that comes from the stock market. We have seen an increase of interest from about 23 -24 percent prior to this year, now we are talking about between 40 to 45 percent. Most of the trade happening and the turnover on the stock exchange are foreign-driven.
What sort of questions have foreign investors been asking about Kenya over the last few days?
One is the legislation. Number two has been concern over the cost of energy. We are the only country here where our hydroelectric source of power is so minimal. And therefore our costs and liability of the power supply has been very weak.
Fred Mweni is an economist and the founder of Tsavo Securities
Interview: Mark Caldwell