Key facts and fig­ures in Eco­nomic Sur­vey

Although Kenya faces up­hill task in poverty ight, job cre­ation, fun­da­men­tal en­gines of econ­omy are ro­bust

Business Daily (Kenya) - - MARKET OUTLOOK - Ms Were is a de­vel­op­ment econ­o­mist. [email protected]

Last week the Kenya Na­tional Bureau of Sta­tis­tics (KNBS) re­leased the Eco­nomic Sur­vey

2018 pro­vid­ing data on the econ­omy for 2017. There are sev­eral data sets that should be noted and in­form eco­nomic strat­egy go­ing for­ward.

Firstly, the econ­omy is es­ti­mated to have ex­panded by 4.9 per cent in 2017 com­pared to a re­vised growth of 5.9 per cent in 2016; that is a re­duc­tion of one per­cent­age point year-onyear. This is un­sur­pris­ing and in fact good news be­cause pre­vi­ous analysis in­di­cates that the econ­omy tends to slow down in an elec­tion year by about 1.2-1.4 per cent. Thus, a re­duc­tion by a point, par­tic­u­larly in a drought and elec­tion year, in­di­cates the fun­da­men­tal en­gines of the econ­omy are ro­bust. Se­condly, GDP per capita in­creased from Sh158,575.5 in 2016 to Sh166,314.4 2017. In­fla­tion aside, the in­crease in per capita is good news and in­di­cates that on the whole, eco­nomic growth is ris­ing faster than the pop­u­la­tion thereby lead­ing to net growth in in­come. How­ever, poverty re­mains preva­lent thereby im­ply­ing the in­equal­ity re­mains a core prob­lem in the coun­try.

The sur­vey shared in­sights for the 2015/16 House­hold Sur­vey which in­di­cated that food poverty stood at 32.0 per cent of the pop­u­la­tion (14.5 mil­lion peo­ple), over­all poverty at 36.1 per cent (16.4 mil­lion peo­ple) and hard-core poverty at 8.6 per cent in 2015/16 (3.9 mil­lion peo­ple); in all cases poverty is higher in ru­ral than ur­ban ar­eas. This in­di­cates that the ru­ralur­ban wealth di­vide is real and will likely con­tinue to catal­yse ru­ral-ur­ban mi­gra­tion as Kenyans move to towns and ci­ties in search of higher in­comes.

Thirdly, the in­for­mal sec­tor con­tin­ues to em­ploy most Kenyans and ac­counted for 83.4 per cent of to­tal em­ploy­ment; this is down from about 89 per cent last year.

In­for­mal em­ploy­ment tends to be of lower qual­ity than for­mal em­ploy­ment in terms of wages, job se­cu­rity, and work­ing con­di­tions. Thus, the bulk of Kenyans con­tinue to work in a sec­tor that is pre­car­i­ous and may very well neg­a­tively in­form the qual­ity of their lives.

Fourthly, data of ex­ports paints an in­ter­est­ing pic­ture in that top ex­port earn­ers were tea, hor­ti­cul­ture, ar­ti­cles of ap­parel and cloth­ing ac­ces­sories, cof­fee and ti­ta­nium ores and con­cen­trates. Thus Kenya’s ex­ports con­tinue to be dom­i­nated by agri­cul­tural prod­ucts and prod­ucts with limited value ad­di­tion.

Fur­ther, Africa re­mained the lead­ing des­ti­na­tion of Kenya’s ex­ports, ac­count­ing for 37.7 per cent of to­tal ex­ports in 2017, with East African Com­mu­nity (EAC) ac­count­ing for more than half of to­tal ex­ports to Africa. What this means is that Kenya’s ex­ports mainly go to coun­tries with low GDP per capita that in­forms spend­ing power and ag­gre­gate de­mand. It is im­por­tant that the coun­try re­struc­tures ex­ports such that they are more so­phis­ti­cated and tar­get coun­tries with higher in­comes so that ex­ports be­come a stronger en­gine for job cre­ation and in­come growth.

Fi­nally, the man­u­fac­tur­ing sec­tor real value added rose by 0.2 per cent in 2017 com­pared to a growth of 2.7 per cent in 2016. The sec­tor’s for­mal em­ploy­ment rose to 303,300 per­sons in 2017 and ac­counted for 11.4 per cent of the to­tal for­mal em­ploy­ment.

Africa re­mained the lead­ing des­ti­na­tion of Kenya’s ex­ports 83% PER­CENT­AGE of Kenyans em­ployed in in­for­mal sec­tor. Ru­ral-ur­ban wealth di­vide is real and will likely con­tinue to catal­yse mi­gra­tion to towns” AU­THOR


OUT­PUT A farmer picks tea in Othaya, Ny­eri. Kenya’s top ex­port earn­ers last year in­cluded tea and, hor­ti­cul­ture prod­ucts.

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