Forget the pessimists, Kenya’s economy has picked up pace

Opinion and Analysis

A trader arranges his wares at Kamukunji ‘jua kali’ market in Nairobi. Opinion is divided on how fast Kenya is growing and whether the benefits of growth are reaching the citizens. PHOTO | FILE 

By NDIRITU MURIITHI

The Kenya National Bureau of Statistics recently released the Economic Survey 2016, which showed that the economy expanded at a rate of 5.6 per cent in 2015.

This has prompted responses from many naysayers, and debate on just what does economic growth mean for the ordinary mwananchi.

You would think that economic growth is a straight forward matter, but in Kenya’s sometimes high voltage politics, how fast we are growing and whether the benefits of growth are reaching Wanjiku is a hot topic.

And there is a long list of commentators. Respected columnist, editor and newspaperman Jaidi Kisero bemoaned the fact that 87 per cent of all new jobs were created in the informal portions of our various economic sectors. Further he doubted the ‘integrity of official statistics’ (Business Daily, May 6) - how dare they say there was growth?

Edwin Okoth (Daily Nation May 10) quoting Kenyatta University’s Dr Paul Gachanja and Prof Michael Chege, while admitting growth, opined that it means nothing for Wanjiku.

He argues that the benefits of economic growth to the citizen may not accrue until the infrastructure items such as standard gauge railway (SGR) whose construction is in part fueling growth are complete.

Further afield, the IMF says Kenya is one of three countries in Africa that are doing well. But the World Bank published the Kenya Country Economic Memorandum in March which took on a rather condescending note. You are growing but you are not a stellar performer.

Meanwhile McKinsey Global Institute told the World Economic Forum in Kigali recently that Kenya is among the best performing growth stars alongside Ethiopia, Morocco, Rwanda and Co’te D’Ivoire.

This view corresponds more closely to the data. The East Africa Community as a whole grew by 6.1 per cent in 2015, weighed down by instability in South Sudan and Burundi, while in comparison Kenya grew at 5.6 per cent.

With all these contradicting viewpoints, what is one to believe?

And we have been here before in 2007. Then as now, columnists and analysts doubted the growth story or if they grudgingly accepted growth, they have sought to downplay its impacts on the lives of Kenyans.

When the data does not conform to their conventional wisdom they question the integrity of that data.

Back in the middle of 2007, I wrote an opinion piece (Kibakinomics vs. trickle down) intended to explain the meaning of economic growth for the ordinary citizen.

The good editorial staff at the Daily Nation took out the choice paragraphs, and ended up with a piece saying that growth was not reaching Wanjiku!

I tried to convince the Daily Nation folks to see the error of their interpretation, but they would have none of it! Their mind was made up. Economic growth was not changing Wanjiku’s fortunes.

Many columnists approach this issue by asking whether Wanjiku has more money purse. This is a fair enough if incomplete question, for you may also want to ask for instance how hospital equipment, improved security, and electricity to all primary schools are financed and what their provision means to the balance in Wanjiku’s purse.

The provision of the above services means that even if an individual Wanjiku’s purse did not change in a given year— for example she is earning the same salary as last year — she will still be better off because less is leaving her purse!

But we should accept that where economic growth exceeds population growth, per capita income goes up. Where it is 5.6 per cent and population growth is 2.5 per cent, per capita income goes up by 3.1 per cent.

This increase however distributed, would not be available without growth and the economy would lack capacity for free education, cash transfers to the most vulnerable and free health services.

What are the numbers? Total expenditure on social services (for example free primary education, subsidised secondary and technical education, free maternity and clinic services, cash transfers to the most vulnerable) nearly doubled between 2011 and 2015 rising from Sh258 billion to Sh455 billion, with education increasing from Sh 179 billion to Sh 339 billion and healthcare increasing from Sh48 billion to Sh62 billion over the same period.

The economy is growing robustly and this makes possible the provision of services for all Kenyans.

The author is an economist and former MP for Laikipia West