The World Bank has forecast Kenya' s economy growth at 4.7 percent in 2014, down from its earlier forecast of 5.2 percent as a result of insecurity and severe drought experienced in food producing regions in the country.

The WB's latest Economic Update for June received on Friday indicated the East African nation has the potential to achieve a higher growth rate of 5.0 percent in the next two years.

The WB Country Director for Kenya Diarietou Gaye said the economic growth will be buoyed by collective demand, fueled by strong consumption and investment.

"Increasing investments in infrastructure and human capital will strengthen prospects for higher growth and regional competitiveness," Gaye said.

She said credit and macroeconomic stability policies have underpinned Kenya's growth in the past and the economy remains fairly resilient.

Kenya's National Treasury Cabinet Secretary Henry Rotich said the economy is forecast to grow by 5.8 percent in 2014 and 6.4 percent in 2015 buoyed by renewed investor confidence and regulatory reform measures.

Rotich who presented his budget and fiscal 2014/15 budget to Parliament on June 12 said strong economic fundamentals, together with the renewed investor confidence, following peaceful elections of early 2013, bode well for accelerated broad-based and shared- economic growth and creation of more decent jobs for the youth.

"As a demonstration of the resilience of our economy, overall economic activity expanded by 4.7 percent in 2013, despite the jitters and uncertainties of an election year and challenges related to insecurity and transition to devolved governance."

Rotich said the government projects to increase revenue collection by 15.5 percent to 13.5 billion U.S. dollars, equivalent to 25.5 percent of GDP.

The Bretton Wood institution said the economy grew by 2.7 percent in the first quarters and that the 4.7 percent projection would be possible only if a stable macroeconomic environment is maintained going forward.

The WB also noted that addressing the pressures emerging from fiscal expansion that have resulted in a huge public wage bill as well as devolution cost must be the government's priority.

The WB report urges on achieving efficiency gains that will improve access and equity in the health sector as the most cost- effective way to improve Kenya's health outcomes.

"The devolution has an opportunity to provide better healthcare to support Kenya's progression towards middle income status," KEU notes.

The study also calls on government to address the emerging pressure on Gross Domestic Product (GDP) growth especially from drought, insecurity, fiscal expansion and the implementation of devolution.

The report notes that dealing with these challenges will be important for the economy to remain resilient, strengthening medium term prospects for better growth and shared prosperity.

"Kenya continues to achieve a broad based growth, with all sectors making a contribution to the GDP," said John Randa, the Bank's Senior Economist for Kenya. Endi