NCBA Projects 5.0% Growth for Kenya: Kenyan Economy Holding Steady Amidst Global Headwinds
Posted by EDITORIAL
Kenya’s economy is projected to grow by 5.0% in 2025 and 5.1% in 2026, according to NCBA Group, supported by private sector lending, fiscal spending, and stable inflation, even as high debt costs limit fiscal space and policymakers push for efficiency
Nairobi Kenya
John Gachora, NCBA Group CEO, speaks during the NCBA Economic Forum
In Summary
- Kenya’s economy is projected to grow by 5.0% in 2025 and 5.1% in 2026, according to NCBA Group.
- Growth will be driven by private sector credit, stable inflation, and renewed fiscal spending.
- Public debt servicing consumed 92% of Q1 revenue, constraining development outlays.
- The shilling’s stability reflects improved investor confidence, though structural risks remain.
- NCBA and policymakers urge fiscal discipline, regional trade, and efficiency in public expenditure.
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Kenya’s economy is set to grow by 5.0% in 2025, supported by resilient domestic activity and improved investor confidence, according to NCBA Group’s latest outlook.
The projection, unveiled during the NCBA Economic Forum at an hotel in nairobi, comes amid a slowing global economy and rising fiscal pressures. NCBA forecasts a further expansion of 5.1% in 2026, underpinned by stable inflation, private sector lending, and government spending linked to the Bottom-Up Economic Transformation Agenda.
Economic Resilience and Fiscal Constraints
Speaking at the forum, NCBA Group Managing Director John Gachora said Kenya’s outlook remains positive despite global uncertainty, but emphasized the need for “pragmatic policy coordination and efficiency in public spending.”
Data presented at the forum showed that in the first quarter of the 2025/26 fiscal year, the government spent KES 509 billion on debt servicing out of KES 554 billion in tax revenue—leaving little room for new development projects.
Economists noted that while inflation has eased through 2025, it remains sensitive to food and fuel prices, especially after erratic rainfall disrupted agricultural output in parts of the country.
Shilling Stability and Policy Credibility
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The Treasury has defended the recent stability of the Kenyan shilling against the U.S. dollar, arguing that it signals “renewed confidence in the economy and improved external balances.”
Economic advisor Dr. David Ndii offered a nuanced view, suggesting that while the shilling’s stability partly reflects normalization of import demand and stronger remittance inflows, true resilience depends on “productivity and fiscal credibility, not exchange rate management alone.”
NCBA analysts concurred that maintaining liquidity in the forex market and expanding regional trade are essential to sustaining the shilling’s strength and investor confidence.
Exports, Investment, and Growth Drivers
Kenya’s exports are expected to perform well in 2025, boosted by strong global coffee prices averaging USD 7.00 per kilo, while horticulture benefits from the EU’s relaxed compliance deadlines for small exporters.
The services sector notably telecommunications, transport, and trade—continues to anchor GDP growth. Manufacturing remains mixed, with food processing showing resilience amid constrained energy and financing costs.
Outlook: Reforms and Efficiency Key to Sustained Growth
NCBA sees Kenya’s 2026 growth edging up to 5.1%, backed by fiscal reforms, export diversification, and improved investor sentiment. Gachora urged policymakers to adopt data-driven planning tools, such as a high-frequency consumer activity index, to better track household consumption, which makes up over 70% of GDP.
He reaffirmed NCBA’s commitment to supporting dialogue and innovation that promote sustainable economic growth, noting that platforms like the NCBA Economic Forum remain critical in shaping Kenya’s policy direction.
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