(Bloomberg) -- Low power consumption and a high fertility rate are undermining Kenya's economic growth potential, according to Renaissance Capital Ltd.'s Global Chief Economist Charles Robertson.
For nations to industrialize, electricity use has to be at a minimum 300 kilowatt hours per person for manufacturing to contribute 20% of gross domestic product. In Kenya, it's at 173 kilowatt hours per person, Robertson said in an interview in the East African nation's capital, Nairobi.
“Part of the problem is high cost of investment,” he said. “If the government borrows at 10%-15% to build a power station, while in China you can borrow at 3% to build a power station, you are going to get more power stations in China than in Kenya.”
READ: Kenya Plans to Double Power Generation by 2022 as Economy Grows
Based on current trends Kenya's fertility rate is expected to drop to below three children per woman in the next decade, from just above four currently, Robertson said. This will boost household savings in banks, which will lead to lower interest rates and growth in lending, he said.
A drop in the fertility rate could help double the banking system's size relative to the economy to 60%, availing more cash for industry, electricity and infrastructure, he said. It will also reduce the “dependence on borrowing dollars from fund managers in London and New York,” he said.
To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net
To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Helen Nyambura, Vernon Wessels
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