Economy records slowest pace in five years as growth is projected at seven per cent in 2018
Fred Aminga @faminga
Kenya’s economy expanded by 4.9 per cent in 2017 from 5.9 per cent the previous year on the back of prolonged presidential poll, drought and a tight credit squeeze.
Key sectors, including agriculture, manufacturing and construction recorded significant dip to dampen growth last year even as the Economic Survey 2018 released yesterday shows 897,000 jobs were created in the turbulent year out of which 787,800 were in the informal sector.
The services sector among them tourism remained robust recording significant expansion to cushion slowdown in agriculture and manufacturing.
This year, the economy is projected to absorb any shocks as political tension subsides and favourable weather signals economic stability with Treasury projections showing a 5.8 per cent growth. Increased investment is expected in manufacturing, agriculture, housing and healthcare sectors that anchor the Big Four development plan.
Speaking during the launch of the survey in Nairobi, Treasury Cabinet secretary Henry Rotich said efforts are being put in place to support the business environment, create jobs and ultimately promote broad based inclusive Big Four agenda.
“This includes increasing the share of manufacturing sector to Gross Domestic Product, ensuring all citizens enjoy food security and improved nutrition by 2022, expanding universal health coverage, and delivering at least 500,000 affordable housing units,” he said.
The agricultural sector continued to be the major contributor to economic growth despite a decelerated growth of 1.6 per cent compared to 5.1 per cent growth in 2016.
“Apart from raging drought, pests like the fall army worms and diseases led to the overall decline in agricultural production,” he said. This led to an increase in the cost of living as prices of foodstuff skyrocketed leading to the importation of maize in 2017.
The drought also had a direct impact on electricity production as the country had to use the more expensive thermal energy. While total electricity generation expanded by three per cent to 10,359.9 GWh in 2017, electricity generated from hydro-generated power dropped by 29.9 per cent.
Thermal generated power expanded by a whooping 72.3 per cent in 2017. The manufacturing sector recorded a slower 0.2 per cent growth mainly due to election uncertainties, rise in the cost of living, high production costs and competition from imported goods.
Kenya National Bureau of Statistics director general Zachary Mwangi said the financial sector recorded a decelerated growth of 3.1 per cent in 2017 compared to a growth of 6.7 per cent in 2016 and 9.4 per cent in 2015.
“Total domestic credit grew by 7.9 per cent to Sh3.3 trillion by December 2017 while credit to the private sector expanded by 2.4 per cent,” he said. In 2016, it grew by 20 per cent.
The construction sector recorded a slower growth of 8.6 per cent last year compared to a 9.8 per cent growth in 2016 as cement consumption dipped by 8.2 per cent in 2017. But loans to the sector increased slightly from Sh104.8 billion in 2016 to Sh109.9 billion in 2017.
Nairobi Securities Exchange 20-share index grew to 3,712 points in December 2017 from 3,186 points in December 2016 as market capitalisation increased to Sh2.522 trillion.
Due to slower growth in land transportation, particularly that of freight, the gross value added in the transport sector decelerated to 7.3 per cent in 2017 from 7.8 per cent growth in 2016.
The number of newly registered trucks, pick-ups and heavy vans commonly used for transportation of goods declined significantly by 22.5 per cent. During that period, earnings from passenger traffic increased more than five times from Sh134 million in 2016 to Sh700 million.
It is estimated that about 689,205 passengers traveled using the standard gauge rail (SGR) as revenue earned from the SGR passenger service hit Sh590.2 million at the end of 2017.
“Freight traffic decreased by 16.9 per cent from 1,380 thousand tonnes in 2016 to 1,147 thousand tonnes in 2017,” says the report.
The report also indicates that pneumonia, malaria and cancer continue to be the main causes of death in the country amid runaway health inflation estimated to be 12 per cent according to industry sources.