THE World Bank has rated Kenya as Africa's best country in terms of policies and institutional reforms that support growth and reduce poverty.
This is a big boost to the country coming just a day after the National Treasury kicked off the process of borrowing some Sh85 billion from the international markets through a sovereign bond.
The latest World Bank ranking also comes as a slap in the face to an annual 'failed-state index' published two days ago by a controversial Washington groups Fund for Peace and Foreign Policy magazine which ranked Kenya among the world's 20 most unstable countries.
In the World Bank's Country Policy and Institutional Assessment (CPIA) which rates the performance of poor countries, Kenya was ranked top together with Cape Verde in Sub-Saharan Africa. Kenya’s overall score of 3.9 in 2012 is the highest among 40 countries in Africa, and reflects an improvement over a score of 3.8 in 2011.
Treasury's economic secretary Geoffrey Mwau welcomed the favorable ranking saying it is a reflection of the reforms that the country has been undertaking.
Mwau said key rating agencies such as Fitch and Moody's have rated the country with a B+ with positive outlook while the International Monetary Fund has conducted five success reviews of Kenya's economic performance and had been satisfied.
The CPIA examines 16 key development indicators covering economic management, structural reforms, policies for social inclusion and equity and public sector management and institutions.
Countries are rated on a scale of 1 (low) to 6 (high) for each indicator. The overall CPIA score reflects the average of the 16 indicators.
The key gains for Kenya included strong monetary response in 2012 which enabled it to reduce inflation to 9.6 per cent, from 14 per cent in 2011, and also to stabilise the exchange rate.
"Moreover, the government has maintained fiscal discipline even in the face of recent economic shocks and budgetary pressures including spending on elections and security operations in Somalia. As a result, public debt as a share of Gross Domestic Product has declined to below 45 per cent," the World Bank noted.
Kenya is however lagging behind in the areas of business regulatory reforms and governance which are essential for private-sector led growth and job creation.
Since 2008, Kenya has gradually declined from a top performer in the Doing Business indicators, dropping from a global rank of 78 then to 121 in the 2013 rank. The 2013 Doing Business noted that Kenya dropped in eight out of 10 indicators assessed, including in issuance of construction permits and enforcing contracts, leading to missed opportunities for implementing relatively minor improvements in the business regulatory environment.
The general outlook for all countries in Sub-Saharan Africa shows an overall stable environment for growth and poverty reduction despite divergence in key policy indicators across countries. In the East African Community, Rwanda and Tanzania are also ranked highly, with CPIA score of 3.8, while Uganda scores 3.7.
Since 1980, CPIA ratings have been used to determine countries’ allocation of zero-interest financing under the International Development Association, the World Bank Group’s fund for the world’s poorest countries.
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