Maize flour is sold at Samrat Supermarket in Nyeri Town on July 3, 2019.
The cost of maize flour has risen, making it unaffordable for majority
of Kenyans. PHOTO | FILE | NATION MEDIA GROUP
A two-kilogram packet of maize flour has hit Sh135, the highest
price in the last three years, making the cost of living the biggest
pain point in an increasingly bad economy for the poor.
Retailers
and shopkeepers further away from major towns are now selling the same
packet for as high as Sh140 due to transport costs.
This follows successive hikes by manufacturers in the last six months that have seen the commodity cost move from Sh110.
At Sh135, ugali is now more expensive than chapati, a departure from the norm given that maize is Kenya’s staple.
A 2kg packet of wheat flour is retailing at about Sh125 a piece, which is Sh10 less than maize flour.
But it is not just cost of food that is wrong with the economy. Government numbers paint a rosy picture of a growing economy.
Looking at all the major economic indicators, everything seems more than just fine.
DWINDLING FORTUNES
Last year, the economy grew by 6.3 per cent and provisional numbers show that it is headed for a similar expansion this year.
The Gross Domestic Product (GDP) is tipped to hit Sh10.1 trillion from Sh9 trillion in 2018.
At
3.83 per cent, inflation has fallen to its lowest point in the last 18
months and is well within the government’s target of between 2.5 per
cent and 7.5 per cent.
Data from the Kenya National
Bureau of Statistics (KNBS), the official statistical agency for the
government, also reveal a flourishing country that is way ahead of its
peers on the continent.
The economy has been growing by
between 5.6 per cent and 6.4 per cent in the last four quarters, an
enviable solid growth given that most nations in sub-Saharan Africa have
been growing by less than three per cent. But on the ground, things are
different.
Everyone you talk to will tell you that the Kenyan economy is biting — hard.
From
shopkeepers in Nairobi to boda-boda operators in Migori, importers in
Mombasa to big manufacturers in Industrial Area, from Small and Medium
Enterprises (SMEs) in Busia to blue chip companies listed on the Nairobi
Securities Exchange (NSE), everyone is hurting.
JOB CUTS
Ironically,
auctioneers who thrive in times of hardships are also feeling the heat
of the economy given that they are struggling to find buyers.
Mr
Joseph Gikonyo, a licensed auctioneer at Garam Investment Auctioneers,
says he has witnessed a 30 per cent jump this year in the number of
properties and real estate that have been put up for sale due to debt
distress.
Mr Gikonyo says auction requests are at an
all-time high, and attributes the turn of events to a bad business
environment, including non-payment of suppliers by both the national and
county governments.
“Weak purchasing power is a
reality. The private sector, including corporate entities, are also not
paying their suppliers and this has only served to compact the problem,”
he said.
Mr Stephen Kang’ethe, an auctioneer with
Nairobi-based Dalali Traders, says his firm has had to do several repeat
auctions to find buyers, but without much luck.
“We
are in a tight spot. We are advertising, but not selling. What you are
seeing are repeat adverts for the properties that did not go,” Mr
Kang’ethe said.
Nothing tells the story of the state of the economy better than the number of jobs it is able to generate or lose.
At
least 20,000 Kenyans have lost their jobs across various industries in
the last one-year as companies struggle to remain afloat.
UNCONDUCIVE ENVIRONMENT
Some
of the firms that have fired employees in the recent past include James
Finlay (1,100), East African Portland Cement (1,000), Kenya Airways
(600), Telkom Kenya (575), Karuturi (3,000), Sameer Africa (600), Airtel
(144) and Kenya Power (302).
Others that have
reorganised their operations in ways that have reduced their staff
counts include food giant Nestlé, Microsoft, HP, Tata Chemicals Magadi,
Coca-Cola and Cadbury.
Others have opted to close shop
entirely or shift operations to other countries due to various reasons,
among them competition, taxation and difficult operating environment.
These include Eveready, Sportpesa and Betin.
In
firing 1,100 employees last week, James Finlay joined several flower
firms that have taken that path in painful decisions that are rendering
thousands of flower firm workers jobless. The multinational fired 1,800
workers last year.
On its part, Karuturi, a flower firm that was based in Naivasha, went down with 3,000 jobs.
Some of its former employees have turned to illegal fishing in Lake Naivasha while most are languishing in joblessness.
Security firm Securex is also sending home more than 200 workers, citing ‘difficult prevailing economic times’.
INSOLVENT FIRMS
It is not just the private companies that are firing. Government-owned entities are also increasingly taking that route.
The
Nakumatt and Uchumi supermarkets retail chains have cut about 5,000
retail jobs directly and thousands more indirectly, according to the
Kenya Union of Commercial, Food and Allied Workers.
Due
to its planned merger with Airtel, Telkom Kenya plans to lay off 575
employees so as to start on a clean and leaner slate after the merger.
Despite the huge infrastructure spend by the government, local cement manufacturers are not getting a piece of the action.
East African Portland Cement Company (EAPCC) wants to retrench all employees and let them reapply under new terms.
Today, Mumias Sugar Company has less than 500 employees, down from about 1,500 in 2017.
Other state-owned sugar firms, including Sony, Nzoia, Chemelil, Muhoroni and Miwani, are also insolvent.
Commercial
banks have collectively laid off more than 5,300 workers over the last
few years as technology and interest rate caps take away jobs.
There is always a bank dismissing staff every quarter since 2018. This year, Stanbic sent home 200.
INEQUALITY
The
KNBS data shows that earnings from exports shrank by Sh16.7 billion to
Sh303.31 billion in the first six months of this year.
A
drop in exports points to difficult times for local firms growing or
manufacturing goods for the export market and it means fewer jobs.
Economists argue that the Kenyan economy is just good for the top 10 per cent while squeezing most citizens.
“Since
the Jubilee government came in, they chose to invest heavily in
infrastructure projects over the basics of development such as access to
quality education, better healthcare services, and other poverty
alleviation programmes that target the standards of living of majority
of Kenyans,” Mr Tony Watima, an economist, says of many infrastructure
projects that do not directly uplift the standards of the 70 per cent of
the population that live in rural areas.
“That’s
without mentioning the questions surrounding the economic viability of
the many projects. And many are just rent-seeking deals,” he adds.
More than a dozen people interviewed for this story share his sentiment.
Mr Jude Maina, a bus driver plying the Nairobi-Kiambu route, says he used to make about Sh1,500 a day last year.
Today,
he is lucky to go home with Sh1,000. Mr Maina, who recently got a baby,
says he has to make a lot of personal sacrifices to make ends meet.
SLOWDOWN
Ms Mary Waithera, a Kimathi Street fruit vendor, says she used to make Sh500 from selling three bunches of bananas a day.
On
the day we spoke to her, she had made Sh300. She says her capital takes
away Sh150, leaving her with only about Sh150 to take care of her
family.
Shop owners are also feeling the effects of the economic downturn and are being forced to adjust accordingly.
Ms
Evelyn Njambi, a boutique owner, says her colleagues have had to vacate
their premises because they are unable to pay rent, a trend that has
been the norm since the beginning of the year.
The
story is the same for laptop vendors we spoke to in various parts of the
capital. Two such vendors, who chose to identify themselves as Kariuki
and Jennifer, say they have seen the biggest slowdown after the Central
Bank replaced the old generation Sh1,000 notes.
BLEAK FUTURE
This
is a sentiment shared by Pauline, an M-Pesa shop owner, who says that
for the last three months, the number of transactions using the platform
at her shop have significantly diminished. This, she says, is hurting
her livelihood.
“It is very difficult to save any money
with this economy,” she says. Macharia, a hotel manager at Cafe San
Burners, says the number of clients has been going down.
Around
2pm in the afternoon, on a weekday, his restaurant was nearly
three-quarters empty. Oduor, a coffee shop owner inside the Technical
University of Kenya, says business has been slowing down.
He was hoping that with the reporting of First Year students in August, things would improve. This, however, was not the case.
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