GDP review will not benefit workers, says Vision 2030

Politics and policy

Vision 2030 Delivery acting director-general Gituro Wainaina during the interview in his Nairobi office last Friday. Photo/Diana Ngila 

By David Herbling, hdavid@ke.nationmedia.com

In Summary

• Vision 2030 Delivery Secretariat says the review of national economic data will have no impact on households.

The Vision 2030 Delivery Secretariat says a statistical review that will turn Kenya into a middle-income nation by September will have no impact on the welfare of households.

The review of national economic data—commonly known as rebasing —is expected to increase the size of Kenya’s GDP by a fifth, earning the country a middle-income status

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Prof Wainaina Gituro, acting director general at Vision 2030 Delivery Secretariat (VDS), says Kenya must focus on flagship infrastructure projects like the Lamu Port and South Sudan Ethiopia Transport (LAPSSET) Corridor, standard gauge railway and Konza technopolis to deliver growth.

This, he says, is the only way the country can boost household’s disposable incomes and lift workers purchasing power through faster income rises.

“It (rebasing) doesn’t make sense. What matters is if Kenyans have more disposable income and higher purchasing power,” said Prof Gituro told the Business Daily in an interview on Friday.

READ: Kenya to become middle-income state in September

The Secretariat is betting on the mega infrastructure projects to deliver double-digit growth that will turn Kenya into a middle-income country by 2020.

“These are the projects that will move the economy by providing jobs, attracting investment and make us competitive,” said Prof Gituro.

Other projects under vision 2030 are generation of 23,000 megawatts of power, expansion of Jomo Kenyatta International Airport (JKIA), developing SME parks and large-scale irrigation schemes. But the bulk of them have been delayed due to lack of financing and procurement woes.

Kenya’s GDP —the market value of all goods and services the country produces in a year —is expected to grow to Sh4.3 trillion ($50 billion) from Sh3.6 trillion in 2013 – raising the defining per capita income to Sh97,696 ($1,136) up from a current estimate of $943 (Sh81,758), and above the benchmark of $1,036 (Sh89,821) set by the World Bank for middle-income nations.

The Kenya National Bureau of Statistics (KNBS) has said it will complete the exercise to update national accounts next month and announce the outcome in September, earning Kenya a middle-income status 16 years ahead of the 2030 date set in the country’s Vision 2030 development blueprint.

The new economic data is expected to cement Kenya’s position as East Africa’s biggest market and Africa’s fourth-largest economy after Nigeria, South Africa and Angola.

Analysts said although becoming a middle-income country is good for Kenya’s standing as an investment destination, it was bound to come with its own challenges.

As a middle-income economy, Kenya will no longer qualify for the many trade concessions it currently enjoys as a low-income country.

The country will also lose its eligibility for grants, concessional loans and debt write-offs when its GDP per capita rises above the $1,036 threshold that the World Bank has set for middle-income nations.