Mastercard Economics Institute 2025 economic outlook

Kenya's economy is poised to grow at 4.7 per cent in 2025, according to the latest Mastercard Economic Outlook. Despite facing global shocks, sectors such as financial services, tourism, agriculture, and digital adoptions are expected to be the driving forces behind this growth. CNBC Africa's Aby Agina recently sat down with Shehryar Ali, the Mastercard Country Manager for East Africa, to discuss the economic outlook for Kenya. Ali highlighted several key points that shed light on the positive trends and challenges facing the country's economy. While the growth rate of 4.7 per cent may seem lower than previous years, it still surpasses the global average of 3.2 per cent, providing promising prospects for Kenya's economic development. Additionally, consumer spending has seen a 4 per cent growth, indicating increasing digital adoption and economic activity. Remittances, which account for about 4 per cent of Kenya's GDP, are also on the rise, offering further support to the economy. Despite these positive indicators, Ali acknowledged that certain sectors, such as manufacturing, mining, and construction, are facing challenges. However, efforts are underway to unlock access to credit and stimulate growth in these areas through partnerships with the public and private sectors. One significant development in the financial sector is the reduction of interest rates by major banks, including Equity and DTBs, signaling a positive shift that could invigorate the economy. Collaboration between stakeholders will be crucial in addressing key issues and driving sustainable growth in Kenya's economy. Looking ahead, Ali emphasized the importance of leveraging digital transformation and engaging in bilateral trade to open up new markets for local producers and SMEs. He identified the need to streamline tariffs and enhance digital data capture to facilitate credit access for businesses. Additionally, Ali highlighted the role of remittances as a vital pillar of the economy, emphasizing the importance of making money transfers more accessible and efficient through digital platforms such as Safaricom's M-Pesa. The prospects for 2025 point towards continued growth in sectors like financial services, tourism, agriculture, and digital payments. Challenges remain in manufacturing and construction, but government initiatives aim to address these issues and stimulate growth. Amidst the evolving global landscape, cybersecurity and regulatory frameworks pose risks to the financial services sector. Ali underscored the importance of evaluating and enhancing cybersecurity measures and fostering regulatory cooperation to promote digitization and economic growth. Notably, Kenya boasts a high female economic participation rate of 72.5%, reflecting the country's progressive stance and future readiness. Private sector innovations, such as multi-currency prepaid cards and wearable payment solutions, are driving digital transformation in the market. These advancements cater to the tech-savvy younger demographic in Kenya, ensuring secure and convenient financial transactions. Collaborative efforts among stakeholders will be essential in advancing digital innovation and ensuring a safe and resilient financial ecosystem for Kenya's economy.