2019 review: Surviving as an ordinary Kenyan now more expensive
In April, the Kenya National Bureau of Statistics (KNBS) released its 2019 Economic Survey placing economic growth by gross output at 6.3 percent over the past year.
The bounce back in Gross Domestic Product (GDP) growth from a rate of 4.9 percent across 2017 was attributed largely to recoveries in agriculture and agro-processing on the back of increased precipitation in 2018.
As such, the sectors of agriculture and manufacturing recorded significant improvements to grow by 6.4 and 4.2 percent respectively.
Meanwhile, electricity supply, transportation & storage, ICT, accommodation and food services registered double digit growth over the period to paint a picture of prosperity.
Ironically, Kenyans remained numb to the economic survey, telling different results ranging from impoverishment, lack of jobs and an even greater dependency.
Economists would in the aftermath hammer the statistics office for missing the mark on assessing growth for mwananchi even as some termed the reported growth as a mere correction to the 2017 economic slump.
Kenyans would resoundingly adopt the phrase ‘kwa ground vitu ni different’ (things differ on the ground) to tell of their economic realities as the cost of living remained on the growth curve while firms continued to bleed out jobs under a continued tough operating environment.
Kenya’s economic growth has as a result been a literal tale of two sides of a coin where a resultant rise in output has failed to hit home on the quality of life of the average Kenyan.
Economist Tony Watima traces the perverse outcomes to non-corresponding consumer demand in spite of heavy lifting by government on the supply side through grand public investments.
“This is a case of economic growth without development. While the government has done some heavy lifting, we are not seeing that matched by demand/consumption,” he said
“Surviving as an ordinary Kenyan has become more expensive as we witness a widened rich-poor gap,” he added.
Further, Watima points a finger to the non-impact of heavy capital expending infrastructure projects such as the expensive Standard Gauge Railway (SGR) which fail in their targeting of the poor in the country.
“Kenyans faced by drought/floods in North Eastern would care less about the SGR. The government must therefore seek to invest in projects with a greater impact to the masses. There has been lack of feasibility studies on impact as we see the State go into projects blindly,” he added.
“A project such as the proposed JKIA-James Gichuru Expressway serves less than one percent of the Nairobi population.”
April’s economic survey by KNBS continues to offer insights into the impoverishment of Kenyans with real earnings hardly moving in the past five years.
Gross earnings per head grew by 7.6 percent between 2017 and 2018 marking an overall improvement of 43.2 percent since 2013.
However real wages- the average take home per person has slacked to grow by a mere 1.9 percent between 2014 and 2018.
Today, the average Kenyan is taking home Ksh.31,218 per month, a bare move away from the Ksh.30,636 earned in 2014.
The depressed earnings have further taken a hit from a greater inflation rate which averaged 4.7 percent across 2018.
So far in 2019, inflation in 11 months to November has averaged at 5.2 percent to leave Kenyans with lesser earnings by account of monetary value.
Further, over 1700 Kenyans have lost their jobs in the year to date to encompass layoffs at firms including Stanbic, Sanlam and the East African Portland Cement (EAPC).
Growth in broad money in supply (M3) has in the year to September has slacked to 6.5 percent from 8.5 percent in 2018 to mirror the tough going to both individuals and private sector players from a decline in net foreign and domestic assets holdings.
Provisional data from the KNBS shows growth in the year to June at a lesser 5.6 percent following delays to the onset of the heavy rains season at the start of the year resulting in reduced output volumes.
Growth in the agriculture sector for instance shed off 2.4 percentage points in the second quarter from the contraction to point to a tougher economic out turn for the year.
On the capital markets front, the Nairobi Securities Exchange (NSE) 20 index fell to 2432 points in September from 2876 points in 2018 resulting in a lower capitalization of listed firms, an attribution to depressed global/domestic growth prospects.
Projected cuts to government expenditure over the medium term have meanwhile elevated risks for further economic deterioration as the government seeks to reverse trends in public debt accumulation.
The World Bank has however warned of dire consequences to the slashing of development expenditure to raise the alarm on greater inequalities from development expenditure based cuts.
“There remains a huge need for investments in addition to the better targeting of the same towards the poor. Even with a case for fiscal consolidation, cuts to development expenditure would be detrimental to economic growth. New investments will however be a trade off with debt,” said World Bank’s senior economist Utz Pape.