Kenya growth shrinks to 5.3pc on tourism, agriculture slump

Tourists wait for a flight at the Moi International Airport in Mombasa following a travel advisory last year. PHOTO | FILE 

By BD REPORTER AND REUTERS

In Summary

• Key foreign exchange earners hurt by drought and Shabaab attacks.

Kenya’s economic growth slowed to 5.3 per cent in 2014 from 5.7 per cent the previous year, hurt by a contraction in tourism and weaker agricultural output.

Kenya has struggled with challenges that have hurt its key foreign exchange earners, including periodic droughts that have reduced farm output and attacks blamed on Somalia’s Al-Shabaab militants that have hurt tourism.

The slowdown and the government’s quest to curb its growing bill partly undermined the ability of the economy to create employment with 106,300  new jobs created last year, down from 134, 300 in 2013.

“Factors that impacted negatively on the tourism sector include security concerns, negative travel advisories and fear of spread of Ebola,” said Anne Waiguru, the Devolution and Planning secretary.

Ms Waiguru said increased government spending on roads and railways had helped growth in the construction sector, but the agriculture sector had experienced a slowdown.

Data from Economic Survey indicated that agriculture output in 2014 slowed to 3.5 per cent compared with 5.2 per cent in 2013, while earnings from tourism were down 7.3 per cent to Sh87.1 billion.

Agriculture, which is the largest sector with 27.6 per cent share of the GDP, was hurt by poor weather and reduced earnings from cash crops.

“Low levels of rainfall resulted in decreased production for some crops as well as pasture availability for livestock,” noted the survey.

READ: Economy faces bad weather and terrorism shocks

Maize production dropped 4.2 per cent to 39 million bags while sugar output dropped to 6.5 million tonnes from 6.7 in 2013. The value of marketed crops declined by 1.4 per cent to Sh238 billion. 

International visitor arrivals dropped to 1.35 million last year from 1.52 million in 2013 and 1.82 in 2011, affected this year by a string of deadly attacks on Kenya’s Indian Ocean coast and elsewhere, which were blamed on Islamist militants and prompted some Western countries to warn against travel to the country.

This has seen thousands lose jobs and more than 40 top hotels close shop due to the low bed occupancy.

The Manufacturing sector slowed to 3.4 per cent compared to 5.6 per cent the previous year with the retail sector having grown 6.9 per cent, down from 8.5 per cent in 2013.