KPMG 2017/2018 East Africa Budget analysis
On 8 June 2017, the Ministers of Finance for Tanzania, Uganda and Rwanda presented their country’s budgets for the fiscal year 2017/2018 to their respective parliaments. The budgets provide key insights on the expenditure priorities that the countries will focus on in the coming year as they look to strategically position themselves and seize their competitive advantage in the region and beyond.
The Kenyan capital was relatively quiet this regional budget day following the shifting of attention to the countryside as the country’s high-decibel election season reaches fever pitch. To accommodate the elections, Cabinet Secretary for the National Treasury presented Kenya’s budget to the National Assembly on 30 March 2017.
The 2017/18 budget submissions come at a challenging time for the region which is reeling from the effects of a prolonged drought that has decimated the all-important agricultural sector, pushing inflation to double digit levels. Despite the slow-down in agriculture, economic growth remained stable on account of increased government spending on infrastructure, which will continue to be a big driver of economic growth in the coming year as major projects in the transport and oil and gas sectors break ground in Kenya, Uganda and Tanzania.
After many years of subdued growth, the global economic growth rate is expected to rise from 3.1% in 2016 to 3.5% 2017 on account of increased confidence in global markets, spurring both investment and consumption. Even then, significant risks still remain. Key among them include threats to international trade protocols from the increasingly inward looking government in the United States, fall-outs from the decision of the United Kingdom to leave the European Union and ongoing military posturing in the Middle and the Far East.
In East Africa, fiscal constraints resulting from increasing government expenditure which is not supported by commensurate increases in revenue collections will continue to put pressure on macroeconomic stability. In turn, this will put in doubt the region’s ability to graduate from a common market to a monetary union, characterised by a common currency and a regional Central Bank by 2024.
Despite the likely challenges, the region remains one of the most exciting investment destinations in Africa and indeed the world.
You can access KPMG’s review of the Tanzania, Uganda and Rwanda budget proposals and tax measures on the following links:
You can also access our review of the Kenya Budget of 30 March 2017 on the following link.
Please get in touch with us for discussions on how the budget measures will affect your business.