We are still a poor country despite statistics that tell a different story

An investor at the NSE trading floor during the opening of the Exchange Building in Westlands. FILE PHOTO | DIANA NGILA |  NATION MEDIA GROUP

In Summary

• In the past two decades, several institutions and academic researchers have offered other indicators of progress that go beyond GDP statistics.
• What do you say of an economy where manufacturers of mass consumer products are every now and then forced to move their operations to Egypt?

By JAINDI KISERO
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So, we are richer than we thought. That is according to the new GDP figures published by the Kenya National Bureau of Statistics on Tuesday.

But where is the wealth these statisticians are talking about? The truth is, we are only richer on paper.

If you speak to any citizen on the street, they will dismiss it all as a myth. They will tell you that what the statisticians are saying does not reflect the reality.

Statistics is supposed to be an exact science. Yet it has long been associated with Mark Twain’s famous comment: Lies damned lies, and statistics.

GDP is the best recognised measure of economic performance. Yet if you read contemporary literature on measurement of wellbeing, you will realise that opinion has more or less converged that GDP is  not an accurate measure of progress and prosperity.

In the past two decades, several institutions and academic researchers have offered other indicators of progress that go beyond GDP statistics, including the OECD, the UNDP and the European Union.

A few years ago, the French government appointed the Nobel laureate Joseph Stiglitz to head a commission to develop suggestions on how to improve the quality and adequacy of statistical information.

So, if you think that we have become richer merely because we have rebased our GDP numbers, you are suffering from delusion.

GDP numbers will not give you other determinants of wellbeing — insecurity, longevity of life, rising crime, pollution, women’s emancipation and inequality.

They will not capture quality of life issues — the birds chirping in the city, traffic jams, and the human rights situation.

PROPERTY AND HOUSING

What I find interesting is what the statistics reveal in terms of the changes in the sectoral make-up of the new economy.

According to the numbers, we have been under-reporting the contribution of the property and housing sectors to national income.

Property is bigger than we thought. It got me thinking about the news that the manufacturing Nakuru-based company, Eveready Ltd, had just closed shop prompting the death of what has been a household brand in Kenya for decades — the “Chapa Paka brand”.

Formerly known as Union Carbide Ltd, Eveready says that it wants to move its manufacturing operations to Egypt and other countries.

In the past, Colgate Palmolive used to manufacture toothpaste here. They moved to Egypt several years ago.

What do you say of an economy where manufacturers of mass consumer products — sanitary towels, textiles, toothpaste, shoe polish, shoes, and breakfast cereals, are every now and then forced to move their operations to Egypt?

History teaches us that a developed mass consumer goods manufacturing sector is a critical factor in the transition to an industrialised economy.

What must we do so that this economy can experience a genuine manufacturing renaissance?

REBALANCE THE ECPNOMY

Eveready’s second reason for closing down manufacturing operations in Nakuru is that it wants to utilise the land on which the factory was located for a property project.

We need to discuss what to do to rebalance the economy and restructure it away from one that is increasingly dependent on growth from the speculative and over–inflated property market and financial sectors, to one anchored on a dynamic and job-creating manufacturing sector.

Today, hundreds of acres of coffee farms are being cleared to give way to property projects. Yes, property is earning speculators tonnes of money.

But the booming sector will neither give the economy the productivity levels nor the genuine and broad-based economic renewal this country badly needs.

How do you explain the fact that although the property market is booming, the whole banking sector only has 20,000 mortgages?

Where is the money funding massive developments in the property sector coming from? On second thought, a Capital Gains Tax may not be a bad idea after all.

We must start discussing the gradual decay of Kenya’s productive potential.

We often forget that the backbone of this economy was built by serious entrepreneurs prepared to bear the burden of uncertainty.

Today’s businessman is a passive investor keen on interest on capital and regular rent on land and houses. Instead of entrepreneurs, we have deal-makers and tenderpreneurs.