The nation’s economy is also galloping along at a faster pace than previous estimates, the Kenya National Bureau of Statistics, which compiles such indicators, said while releasing the new GDP figures in Nairobi this week.
The sum total of all goods and services produced in the country in 2013, the Bureau said, is actually US$55.2billion and not $41billion as earlier stated.
The figure evenly shared amongst those resident in the country, pushes Kenya into the low middle income status of $1,246 per person per year, above the threshold of $1,036 set by the World Bank.
The previous figures gave Kenyans a per capita income of $999, still within the league of poor nations.
But like Nigeria and Ghana before it, Kenya’s improved statistics do not mean that Kenyans are better off; rather that their status quo has been more accurately defined.
The 25% revision in fortune is not without precedent. Ghana which rebased its economy in 2010, saw the size of its economy surge 62% while Nigeria that rebased earlier this year, saw its GDP revised upward by 89% becoming Africa’s largest economy at US$510billion.
Nigeria is now Africa’s largest economy with South Africa and Egypt in second and third place respectively.
Kenya comes in 9th place, a jump from the 13th spot it previously occupied. It is also the fourth-largest economy in sub-Saharan Africa after Nigeria, South Africa and Angola.
A little politics in it
Nigeria had not changed the base year for calculating the value of its gross domestic product since 1990, meaning changes in the prices of its goods and services over the period as well as the growth of new economic sectors was not being factored in compiling its annual output.
Some see politics in this. At the beginning of the 21st Century, seen by some as the African dawn, many countries were clamouring to receive debt relief.
There are those who argue that an earlier rebasing of Nigeria’s economy would have put it into middle income status much earlier, making it ineligible for the debt relief it later received.
It also makes a country too rich to access the World Bank’s concessionary lending under its International Development Association (IDA) arm.
Newly rich countries like Ghana are instead directed to the more commercial International Bank for Reconstruction and Development (IBRD) arm where they borrow at higher interest rates.
The amount available to them for development assistance under IBRD however, what the bank calls the resource envelope, is significantly larger.
The United Nations Statistical Commission recommends countries carry out the rebasing every five years but the process is involving and expensive.
Technical assistance and funding often has been sought from the Bretton Woods institutions - the International Monetary Fund and the World Bank.
“Statistical tragedy”
They have an interest in the process as financing partners as they have often had to rely on sketchy numbers when approving projects funding.
Shanta Devarajan, the World Bank chief economist for Africa has in the past referred to Africa’s “statistical tragedy” of having unreliable numbers from which to draw on when making policies.
African countries tend to have vast informal sectors that are not well-captured by existing statistics. Rebasing has become necessary as more data from these sectors is recorded.
The fast economic growth across the continent has also seen the emergence of new sectors that are playing a bigger role in the national economy than before.
Telecoms is one.
From the early 2000s, there has been an explosion of mobile phone usage across all income levels.
Previously countries like Nigeria and Kenya boasted of just about 300,000 fixed line telephones each confined mainly to upper income classes.
Nigeria now has 125million cell-phone subscribers, a 74% penetration according to August 2014 statistics from BuddeComm, an independent telecommunications research site.
These are the new sectors that recalculated national statistics reveal that had not been captured in previous data.
For Nigeria, the Nollywood film industry that was virtually non-existent in 1990, is now thought to contribute 1.42% - or US$7.2bn - of Nigeria’s half-trillion dollars economy.
Tanzania’s recalculation
Tanzania has also rebased its accounts to the year 2007 up from the year 2001 and its GDP is expected to rise to $40bn up from $32bn on account of the growing extractives sector. The country will begin exporting natural gas once it completes building a pipeline to the port.
Other sectors that have emerged to contribute notably to economic expansion across the continent include financial services and real estate development.
While the UN Statistical Office has recommended that countries base their GDP calculations on a year within the last five, only 10 African countries meet this criteria. The majority base their national accounts on earlier years.
This in the past has been partly because of development aid politics, but more so because of lack of technical and financial capacity to carry out such statistical reviews.
With the review of Millenium Development Goals (MDGs) approaching and talk of poverty eradication increasingly being replaced by talk of equity, the political motivation not to rebase might no longer be there.
The technical and financial challenges remain. Nigeria was meant to restate its accounts in 2012, but slow funding streams meant the process was delayed until April 2014.
The Kenyan process illustrates the complexity of rebasing. No fewer than four national surveys have had to be carried out to give a more accurate picture of the economy.
There was a population census in 2009. This was followed by an industrial production (manufacturing sector) census in 2010, and a survey of services the same year. 2011 saw the cost of agricultural production survey, a construction survey and a national education accounts revision.
Nonetheless, in the East African Community (EAC) bloc that comprises Kenya, Tanzania, Uganda, Rwanda and Burundi, partner states are expected to rebase to a common year of 2015.
Some of the payoffs for rebasing have come from the exposure of newly important sectors, which have potential for growth and are likely to attract investors.
It also means countries are not as debt-laden as initially thought because the debt-to-GDP ratio improves when there is an expansion in GDP.
Nigeria whose GDP expanded by a massive 89%, saw its debt as a percentage of total production fall from about 19% to 11%.
Kenya will also see its debt to GDP ratio fall from 57% to 46%.
This provides more headroom for growth but as Kenya’s Treasury Secretary said during the unveiling of the new figures, there will be no rush to borrow because the question of servicing the debt remains a headache.
Indeed for many African countries, rebasing has also revealed that they have weak tax bases as a percentage of GDP, which points to inefficiency in application and collection of taxes.
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