NAIROBI, Aug 18 (Reuters) – Kenya is aiming to boost its economic growth rate in the next four years, the finance ministry said on Friday, with plans to invest in the farming sector and small businesses to help create jobs and cut poverty.

The authorities in the East African country are trying to boost growth to reduce unemployment, which affects millions of people, while making the economy more inclusive.

“It is a deliberate agenda to lift those at the bottom of the pyramid,” Finance Minister Njuguna Ndung’u told reporters.

But the government faces a host of challenges, including a surge in living costs, rising debt repayments, a weakening currency and widespread corruption.

Under the finance ministry’s medium-term development plan, launched on Friday, the economy is expected to grow by a minimum of 7.2% by 2027.

Last year, growth slowed to 4.8% due to a severe drought, and the government expects it to rebound to 5.5% this year.

The country’s budget deficit fell to 4.4% of gross domestic product in this fiscal year, and the plan is to cut it further to 3.9% in the 2024/25 financial year, the finance ministry said.

The deficit reduction is expected to provide scope for the government to fund projects in priority sectors like farming and small businesses, Ndung’u said.

It has also been substituting local borrowing with cheaper loans from multilateral institutions like the World Bank and African Export & Import Bank (Afreximbank), the minister said, to free up credit to the private sector.

“Credit is the grease that oils the wheels of the private sector,” he said.

(Reporting by Duncan Miriri; Editing by Jane Merriman)