Standard Gauge Railway CargoTrain at the Port of Mombasa during its
launch by President Uhuru Kenyatta in this photo taken on 30th May 2017.
FILE PHOTO | KEVIN ODIT | NMG
Summary
- Kenyatta has put the economy at the heart of his campaign.
- Thanks largely to increasing household consumption and public investment Kenya has seen growth of more than five per cent a year since his election in 2013.
- The country's debt is rising, corruption is endemic and economic growth has not benefited the country's poor, they say.
- Not all of Kenya's progress can be credited to Kenyatta.
- His term in office coincided with low oil prices and his economic policies broadly match those of his predecessor who kick-started some of the more eye-catching infrastructure projects Kenyatta takes credit for.
The timing was perfect. Two months
before Kenya's August 8 vote, President Uhuru Kenyatta inaugurated the
nation's biggest infrastructure project: a railway connecting the
capital Nairobi and the port of Mombasa.
With pomp and
ceremony Kenyatta touted the railway as proof of his campaign promises
on the economy, yet at the same time the price of maize flour, a Kenyan
staple, was rising fast, stoking anger, especially among the poorest.
Rising
food prices constitute a crisis on the eve of a high-stakes election in
which Kenyatta, and his economic record, go head to head with long time
opposition leader Raila Odinga.
"On the one hand,
there's the symbol of Kenya which continues developing — even though it
means an increased debt — and remains the most dynamic economy in East
Africa," said Francis Mwangi, an analyst at Standard Investment Bank.
"On the other hand, there's the Kenya which hardly benefits from the
effects of economic growth."
Kenyatta has put the
economy at the heart of his campaign. Thanks largely to increasing
household consumption and public investment Kenya has seen growth of
more than five per cent a year since his election in 2013.
But analysts say there is more — and less — to Kenya's economy than meets the eye.
The country's debt is rising, corruption is endemic and economic growth has not benefited the country's poor, they say.
Not your average African economy
As
in many other African countries, agriculture is the dominant activity,
but Kenya's economy is atypical in other ways. It has relatively few
natural resources, but the country's stability, economic dynamism and
well-developed service industry stand out.
Kenyatta has
presided over a slew of infrastructure projects, including airports,
roads, bridges, the start of a new port in the town of Lamu and wind and
geothermal energy plants to boost electricity production.
An aerial view of the Standard Gauge Railway Miritini Terminus in
Mombasa in this photo taken on 17th June 2017. FILE PHOTO | KEVIN ODIT |
NMG
An aerial view of the Standard Gauge Railway Miritini Terminus in
Mombasa in this photo taken on 17th June 2017. FILE PHOTO | KEVIN ODIT |
NMG
Ethiopia's larger, cheaper workforce
means it recently overtook Kenya as the region's biggest economy, but
analysts say the world's largest tea exporter remains East Africa's most
dynamic market thanks to its skilled workers, fast internet and
entrepreneurial mindset.
Terror
warnings and attacks, including the 2013 jihadist assault on Nairobi's
Westgate mall, scared off tourists for a while, but the country's
International Monetary Fund representative Armando Morales said the
country has since bounced back.
"Despite that, the GDP grew quite well, and conditions for business have improved," he said.
But
not all of Kenya's progress can be credited to Kenyatta. His term in
office coincided with low oil prices and his economic policies broadly
match those of his predecessor who kick-started some of the more
eye-catching infrastructure projects Kenyatta takes credit for.
Devolution
has given counties more money and power, which has led to improvements
in health infrastructure and the construction of wells and dams, said
Winnie Mitulah, a development specialist at the University of Nairobi.
But
government spending on new public works has caused Kenya's debt to
balloon, increasing during Kenyatta's term to over 50 per cent of GDP,
much of it owed to Chinese lenders who negotiated advantageous terms.
The interchange along Mombasa Road off the Eastern Bypass on March 30, 2017. FILE PHOTO | DIANA NGILA | NMG
The interchange along Mombasa Road off the Eastern Bypass on March 30, 2017. FILE PHOTO | DIANA NGILA | NMG
"I think Kenya had to make those
investments," said Aly-Khan Satchu, a Kenyan analyst. "But now, they
need to reap the benefits of those investments, but they also need to
space the next investments carefully."
Widespread corruption
Observers
say it's difficult to talk about Kenyatta's economic record without
including his poor performance in battling corruption.
Graft
is widespread in Kenya, and while Satchu said it is difficult to tell
just how deep it runs, he believes it represents a major drain on the
economy.
"Look where Kenya is now, and imagine where it could be without all that money disappearing through corruption," he said.
Perhaps
the biggest criticism levelled at Kenyatta is that despite the growth,
Kenya's poor haven't seen much improvement in their daily lives, Mwangi
said.
That's in part because Kenya lacks a strong manufacturing base able to provide mass employment.
A
drought since late 2016 has reduced agricultural production, hitting
the poorest hardest. Compounding the problem, producers speculated and
the government was slow to respond.
As a result, a two
kilogramme packet of the staple maize flour — known as 'unga' and used
to make the hugely popular 'ugali' — rose to as much as Sh180 shillings
($1.70; 1.80 euros), up by almost 50 per cent in a year.
READ: Kenyans buying maize flour above Sh90
With elections less than a week away, several opinion polls have identified food prices as the top issue among Kenyans.
With elections less than a week away, several opinion polls have identified food prices as the top issue among Kenyans.
"In Kenya, we have a saying: 'you can't eat GDP'", said Satchu.
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