Business & Money
Angola to Surpass Kenya’s Economy in IMF 2024 Forecast
Angola’s economic surge is fueled by a mix of factors, primarily the recovery of its oil sector and significant strides toward diversifying its economy. After a period of decline, the country’s oil production saw a sharp rebound in 2023, with rising global oil prices boosting revenues. However, the Angolan government has also prioritized reducing its reliance on oil by making substantial investments in agriculture, mining, and manufacturing, aiming to build a more balanced and resilient economy.
The IMF forecasts Angola’s economy to surpass Kenya’s in 2024, signaling a shift in Africa’s economic landscape. Discover the factors driving Angola’s rapid growth.
By Charles Wachira
In a surprising shift in Africa’s economic landscape, Angola is expected to overtake Kenya as the third-largest economy in Sub-Saharan Africa, according to the latest forecast from the International Monetary Fund (IMF), released on october 23.The IMF projects Angola’s economy to reach $122 billion in 2024, edging past Kenya, which is forecasted to maintain a GDP of around $119 billion. This marks a significant turnaround for Angola, a country whose economy has long been dependent on oil exports but has recently diversified into other sectors.
Angola’s Economic Surge: Oil and Beyond
Angola’s rise is being driven by a combination of factors, most notably the recovery of its oil sector and major efforts to diversify its economy. The country’s oil production rebounded sharply in 2023 after a period of decline, with higher global oil prices boosting revenues. However, the Angolan government has also focused on reducing its dependency on oil, investing heavily in agriculture, mining, and manufacturing to create a more balanced and resilient economy.
“The oil industry has always been central to Angola’s economy, but we realized the need for diversification,” said Angola’s Minister of Finance, Vera Daves. “In the past five years, we’ve made deliberate efforts to invest in infrastructure, education, and agriculture. We believe this has laid a strong foundation for sustainable growth.”
Kenya’s Slower Growth Amidst Economic Reforms
Meanwhile, Kenya’s economic growth has slowed in recent years due to a mix of domestic and external challenges. Rising public debt, coupled with high inflation and a weakening Kenyan shilling, have tempered the country’s ability to maintain its previously robust growth. Additionally, the country has faced disruptions in key sectors such as agriculture, which has been affected by erratic weather patterns and global supply chain issues.
Kenya’s Treasury Secretary, John Mbadi, acknowledged the challenges in a recent address to parliament: “While Kenya remains a strong economic hub in East Africa, we are dealing with a series of structural reforms aimed at addressing our debt levels and creating a more conducive environment for private investment. These reforms take time, but they are necessary for long-term stability.”
Despite this, Kenya’s service sector, particularly in telecommunications and financial services, continues to thrive. Safaricom, the country’s largest telecom company, has expanded its operations into Ethiopia, and the banking sector remains resilient. However, these gains have not been enough to offset challenges in other sectors like manufacturing and agriculture.
A Shift in Regional Economic Power
Angola’s projected overtaking of Kenya underscores a broader shift in Africa’s economic dynamics. Traditionally, Kenya has been seen as a leading economic power in East Africa, boasting a diverse economy with a strong service sector, robust financial institutions, and a burgeoning technology scene. However, Angola’s rapid recovery and diversification efforts reflect how resource-rich countries can quickly catch up when they invest in non-oil sectors.
Economic analysts note that this development is a sign of the growing competitiveness across the African continent. “Angola’s rise shows how African economies are becoming more dynamic and adaptable,” said David Ndung’u, an economist at the University of Nairobi. “Countries that were once heavily dependent on one sector are realizing the benefits of diversification and are seeing faster economic growth as a result.”
What This Means for Africa’s Economic Landscape
The shift could alter the balance of regional influence, especially in East and Southern Africa. While Kenya remains a key player in the East African Community (EAC), Angola’s growing economic clout will likely enhance its role within the Southern African Development Community (SADC). Furthermore, with both countries being part of the African Continental Free Trade Area (AfCFTA), this change could impact trade relations across the continent.
Kenya’s position as a gateway for international investors into East Africa may be slightly diminished, though analysts suggest that Nairobi will still maintain its status as a business hub. However, as Angola continues to grow, it may attract more foreign investment, particularly in sectors like mining, infrastructure, and energy.
Looking Forward: The Road Ahead
Despite the challenges, both Angola and Kenya are poised for future growth, albeit on different trajectories. Angola’s emphasis on diversification and Kenya’s focus on reforms will shape their economic paths in the coming years.
Vera Daves remains optimistic about Angola’s future: “This is just the beginning. We believe that with continued investment in non-oil sectors, Angola can sustain this growth and become a major player on the global stage.”
John Mbadi, on the other hand, is focused on ensuring Kenya remains competitive. “We are taking the necessary steps to stabilize our economy and restore investor confidence. Kenya’s potential is undeniable, and we are confident that our economy will rebound stronger.”
As Angola prepares to take the lead over Kenya in the IMF’s forecast, the race for economic dominance in Sub-Saharan Africa is far from over. Both countries will continue to play significant roles in shaping the continent’s economic future, but for now, Angola has the upper hand in this high-stakes competition.
Conclusion
The IMF’s latest projections for 2024 mark a notable moment for both Angola and Kenya. While Angola is poised for a remarkable recovery, Kenya remains focused on overcoming its economic hurdles. This new ranking is a reminder that Africa’s economic landscape is evolving, with resource-rich countries like Angola embracing diversification and rising to the forefront. Whether Kenya can regain its position as a regional powerhouse will depend on its ability to navigate its current challenges and leverage its strengths in key sectors.
As the continent’s economies grow and adapt, both Angola and Kenya will be key players in defining Africa’s future on the global economic stage.
Keywords:Angola economy growth: Kenya economic forecast: IMF 2024 report: African economic power: Angola surpasses Kenya
Business & Money
Safaricom Lowers Earnings Forecast Amid Ethiopian Currency Woes
Safaricom, partly owned by Vodacom and Vodafone, saw group service revenue rise 14% to 181.4 billion shillings by September. However, net income dropped 17.7% year-on-year, impacted by a 106% depreciation of Ethiopia’s birr after the government allowed the currency to float freely, said CEO Dr. Peter Ndegwa.
:Safaricom adjusts full-year earnings outlook due to Ethiopian birr depreciation, impacting revenue despite strong growth in Africa’s second-largest telecom market.
Kenya’s largest telecom operator, Safaricom, revised down its full-year earnings forecast on November 7 2024, citing a sharp drop in net income driven by the depreciation of Ethiopia’s birr.
Safaricom, which won the first telecom license in Ethiopia in 2022 after sector liberalisation, is expanding in Africa’s second-most populous nation, with approximately 120 million people. However, despite strong customer growth, it has faced hurdles, including security concerns, inflation, and currency volatility.
The company reported that group earnings before interest and taxes (EBIT) rose 31.9% year-on-year for the half-year period, but it now expects full-year earnings to reach between 94 billion and 100 billion Kenyan shillings ($731 million to $778 million), down from its previous estimate of 103 billion to 109 billion shillings.
Safaricom, partly owned by Vodacom of South Africa and Vodafone of the UK, recorded a 14.0% increase in group service revenue, reaching 181.4 billion shillings by the end of September. Nonetheless, net income fell 17.7% year-on-year, impacted by the Ethiopian birr’s 106% depreciation, following the government’s decision to let the currency float freely, said Peter Ndegwa, Safaricom’s CEO.
“Despite the short-term challenges, we are optimistic about the long-term success of our Ethiopian venture and encouraged by the accelerating commercial performance,” Ndegwa said. Ethiopia adopted a market-driven foreign exchange rate in July as part of reforms to liberalise its financial sector, aiming for a new IMF lending program and a long-delayed debt restructuring.
Safaricom’s Ethiopian business launched two years ago, is now expected to break even in 2027 due to the foreign exchange reforms, according to Ndegwa. “Given the uncertainty around the exchange rate by year-end, a 10% currency depreciation would impact our balance sheet by around eight billion shillings,” he added.
CFO Dilip Pal noted that while the birr’s depreciation weighed heavily on half-year results, its effect on full-year earnings should be less significant.
Safaricom’s shares on the Nairobi Securities Exchange, where it is the largest-listed company, fell 2.75% by 0744 GMT.
Business & Money
David Ngata Appointed I&M CFO
David Ngata’s move to I&M Group comes at a crucial time as the bank aims to enhance its footprint in the competitive East African banking sector, where digital transformation and evolving customer needs are reshaping the industry.
: Former Equity Bank CFO David Ngata joins I&M Group as CFO, enhancing leadership with over 25 years of experience in global banking and finance.
By Charles Wachira
In a significant leadership shakeup, I&M Group has appointed David Ngata as its new Chief Financial Officer, effective October 16, 2024, in a move aimed at bolstering its executive team.
Ngata, the former CFO of Equity Bank, brings over 25 years of financial expertise and global experience that promises to drive I&M’s growth in Kenya and across East Africa.
Known for its customer-focused financial solutions in corporate banking, retail services, and asset financing, I&M Group is set to benefit greatly from Ngata’s deep understanding of both regional and international finance.
An Impressive Global Career
Ngata’s career spans an impressive roster of roles in top-tier financial institutions. David Ngata Joins I&M Group as CFO.
Before joining Equity Bank in 2018, he worked at American Express in New York, where he sharpened his insights into global financial management.
He also served as an Audit Senior Manager with KPMG, working in both Kenya and the United States.
This wealth of experience has equipped Ngata with a keen eye for operational efficiencies, regulatory compliance, and strategic finance management, all of which he brings to his new role at I&M.
A Transformative Role at Equity Bank
At Equity, Ngata’s role as Group Finance Director saw him overseeing finance teams across six countries: Kenya, Uganda, Tanzania, South Sudan, Rwanda, and the Democratic Republic of Congo.
His leadership was instrumental in Equity’s remarkable growth across East Africa, as he developed cross-border financial strategies, implemented risk management frameworks, and introduced cost-efficiency measures that helped the bank navigate through challenging economic periods.
In 2022, he was promoted to CFO, where he continued to guide Equity’s financial direction, reinforcing its position as one of East Africa’s top financial institutions.
Academic Excellence and Professional Credentials
Ngata’s academic credentials complement his extensive professional background.
He holds a Master of Science in Business Analytics from Carnegie Mellon University and a Bachelor of Commerce in Marketing from the University of Nairobi.
His Certified Public Accountant (CPA-K) qualification, along with memberships in both ICPAK (Kenya) and AICPA (USA), highlights his commitment to high standards in finance and professional excellence.
Positioning I&M Group for Growth
Ngata’s move to I&M Group comes at a crucial time as the bank aims to enhance its footprint in the competitive East African banking sector, where digital transformation and evolving customer needs are reshaping the industry.
David Ngata Joins I&M Group as CFO, filling the gap left by former CFO Amit Budhdev, who exited in December 2023.
Ngata’s strategic mindset and vast experience are expected to play a pivotal role in shaping I&M’s financial strategies, optimizing risk management, and seizing new growth opportunities.
A Future of Resilience and Innovation
Industry analysts are optimistic about Ngata’s impact on I&M Group, noting that his leadership could help the bank strengthen its market position and continue innovating to meet customer needs.
David Ngata Joins I&M Group as CFO. As Ngata steps into this key role, he is set to lead I&M’s financial team toward new heights, positioning the bank for a future defined by resilience, growth, and transformative finance solutions in East Africa.
Business & Money
Diamond Trust Bank Kenya Named Murali M Natarajan As CEO
Murali Natarajan’s appointment underscores DTB’s commitment to expanding its impact in Kenya and East Africa. With a track record in mobile banking, loan digitization, and customer-focused services, Natarajan is well-positioned to drive DTB’s transformation into a fully digital, customer-first institution. His leadership promises to shape the bank’s long-term strategy and resilience in an ever-evolving market.
DTB Kenya appoints Murali Natarajan as CEO, aiming for growth, digital expansion, and SME support in Kenya’s competitive banking landscape.
In a strategic move poised to deepen Diamond Trust Bank’s (DTB) leadership in Kenya’s banking sector, Murali Natarajan, a veteran banker from India, has taken the helm as the new Managing Director and Chief Executive Officer.
Natarajan’s appointment is not only a significant leadership change for DTB but also marks a crucial step in the bank’s continued evolution and resilience in a competitive landscape.
Murali M Natarajan a Veteran Banker with a Vision
With over three decades in banking, Murali Natarajan has built a reputation for steering banking institutions toward growth, especially in challenging economic environments.
Known for his customer-centric approach and operational acumen, Natarajan brings a wealth of experience from his previous roles in top-tier financial institutions, notably in India, where he played a key role in transforming banks through innovation, efficiency, and prudent risk management.
DTB’s Regional Expansion and Digital Push
Under Natarajan’s leadership, DTB is expected to sharpen its strategic focus on regional expansion and digital banking transformation.
The bank, already a key player in Kenya and the East African region, has seen steady growth in its network and asset base, expanding its footprint in Uganda, Tanzania, and Burundi.
Natarajan’s extensive background in digital banking and microfinance offers DTB a unique opportunity to capitalize on the growing demand for digital financial services in East Africa.
Given the increasing competition in Kenya’s banking sector, where over 40 banks are vying for a share of a rapidly digitalising market, Natarajan’s digital-first approach could provide DTB with a competitive edge. In India, Natarajan was recognized for rolling out digital solutions that improved customer engagement and broadened financial inclusion.
For DTB, which is looking to increase its digital footprint and integrate more accessible banking solutions, this experience could prove invaluable.
Addressing Challenges in Kenya’s Banking Sector
Natarajan’s appointment comes at a time when Kenya’s banking industry is navigating a mix of regulatory pressures, evolving consumer expectations, and economic headwinds.
The sector has faced increased scrutiny from the Central Bank of Kenya, which is pushing for more transparency, stronger governance, and digital inclusivity.
Furthermore, with Kenya’s inflation and interest rates creating volatility, Natarajan’s strong background in risk management could be instrumental in steering DTB through economic uncertainties.
The veteran banker’s experience will likely play a crucial role in addressing the rising demands for loan restructuring and risk mitigation, especially as more customers and businesses seek financing in a post-pandemic economy.
His tenure at various financial institutions has shown his adeptness at balancing growth with caution, a skill set that will be essential as DTB positions itself as a key partner in Kenya’s economic recovery efforts.
Expected Impact on DTB’s Performance and Strategy
Industry insiders are optimistic that Natarajan’s experience will catalyze DTB’s growth trajectory.
His focus on operational efficiency and digital innovation could lead to improved financial performance, while his understanding of micro and SME financing aligns with DTB’s mission to empower Kenya’s small and medium enterprises.
His approach is expected to bolster DTB’s role as a supportive financial partner for SMEs, which form the backbone of Kenya’s economy.
By bringing in a seasoned executive with a global perspective, DTB signals its ambition to evolve beyond traditional banking.
Natarajan’s previous success in pioneering initiatives like mobile banking, loan digitization, and customer-centric financial services could play a transformative role in DTB’s journey toward becoming a fully digitized, customer-first institution. His leadership will be instrumental in shaping DTB’s long-term strategy and resilience in a fast-evolving market.
Looking Ahead
Murali Natarajan’s appointment is a clear indicator of DTB’s commitment to scaling its impact within Kenya and the East African region.
As he steps into his role, all eyes will be on how he leverages his international experience to drive DTB’s growth, strengthen its digital capabilities, and deepen its regional reach.
For Kenya’s banking sector, his tenure promises to introduce new innovations and operational practices that could set a benchmark for other financial institutions in the region.
In a highly competitive sector, DTB’s choice to bring in a leader with Natarajan’s pedigree reflects a vision for growth, transformation, and resilience—qualities that could shape the bank’s future for years to come.
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