Uganda’s inflation rate likely to be highest in EA
Posted Wednesday, October 2 2013 at 01:00
Expansion plan. Kenya remains vulnerable due to the unfavourable business environment and a financial sector dominated by a few players.
Uganda’s inflation is projected to have the highest average by the end of the year according to a new African Development Bank (AfDB)report.
The Central Bank’s target for inflation stands at 5 per cent. The report says overall inflation in Eritrea, Sudan, Burundi, Uganda and Tanzania is projected to be an average of 12.3, 22, 8.6, 10.2 and 8.4 per cent, respectively. Kenya is forecast to register an annual average inflation of 6.3 per cent this year compared to 9.6 per cent last year, relieving banks and employers of higher savings and wage compensation demands.
The lower price rise compared to last year is a result of prudent monetary and fiscal policies, the AfDB said Monday in a new report titled African Economic Outlook 2013.
Kenya is also expected to continue reducing inflation even in 2014 to just 6.0 per cent – ahead of eastern African countries such as Uganda, Tanzania, Sudan and Eritrea, among whom it is ranked in the new AfDB report.
In the 2013/14 fiscal year, the government’s target for overall inflation is five per cent with a deviation of plus or minus 2.5 percentage points. Despite Kenya’s achievements in inflation and macroeconomic outlook, the country remains vulnerable due to unfavourable business environment and a financial sector dominated by a few players, said AfDB’s country economist for Kenya John Baffoe.
The AfDB economist was making reference to the fact that bank assets, deposits and profitability are concentrated among a few institutions. In Kenya, the top five banks hold 61 per cent of the assets. AfDB economist Abebe Shimeles said Kenya is among the African countries that have undertaken some transformation in recent years.