Here is how the Kenyan economy stays afloat and it’s not what you think
The World Bank recently released a report on the Kenyan economy, stating where the country is currently, while proffering solutions on where the country could ascend to, economically, in a few years. Themed ‘From Economic Growth to Jobs and Shared Prosperity,’ the report was the collaborative effort of many experts including Borko Handjiski, Senior Economist, with supervision and direction from Apurva Sanghi, Lead Economist.
The Country Economic Memorandum (CEM) report, which is country specific, is a strategic World Bank product that analyses key aspects of a country’s economic development, with the main aim of providing an integrated and longterm perspective of the country’s development priorities. The CEM report notes that, despite the fact that Kenya has recorded some success in innovation and economic prosperity, there are some loopholes that cannot be ignored. “The economy remains among the poorest 25 percent of countries in the world and poverty is high at around 40 percent of the population,” it says.
The Kenya National Bureau of Statistics believe that the economy has improved with regards to the inflation rate. The Consumer Price Index (CPI) has decreased by 0.42 percent from 165.37 in January 2016 to 164.67 in February 2016 and the overall inflation rate stands at 6.84 percent in February 2016.
However, the CEM report cites Kenya’s current economic prosperity hinges on modern and traditional services provided by many of those without white collar jobs, for instance, the jua kali; “fierce sun” in Kenyan Swahili but also a person, businessman, or entrepreneur that can fix or practically do anything upon request as well as the innovators who develop services to address and meet up with local demand in an ever changing digital world like Patauza, m-Pesa, Ushahidi and Ufahari. Also, rising private consumption has contributed greatly to economic growth. This has been aided by a growing middle class, booming informality in services, increasing credit to households and income from abroad.
While agriculture and industrialization have taken a backseat on the cadre of economic drivers, informal services have picked up the slack but is that enough to keep Kenya’s economy afloat? Remember the Kenya Vision 2030 as initiated by former president, Mwai Kibaki, in 2008? The plan to drive Kenya towards a globally competitive and prosperous nation can come through if the country is and remains committed to saving more money (both the citizens and the government) in order to ensure shared prosperity.
Last year, the Kenyan treasury introduced a new government bond called M-Akiba, for mobile money users. At the time of the launch, the CEO of Rich Management, Aly Khan Satchu, called the idea revolutionary. “It is very grassroots-oriented and financially inclusive. It is a perfect example of democratizing the markets,” he said. The Cabinet Secretary for National Treasury, Henry Rotich, said the move was a way of enabling the government raise money. “Obviously our strategy is to get cheap sources of funds so we’re looking at all answers for funding.”
The World Bank also proposes employment of the Kenyan youth as a way of growing the economy. The CEM report states that the number of unemployed surpass the number of jobs available. “Kenya’s labor market entrants for the next 15 years have already been born and getting them employed will require much faster job creation than in the past. Kenya’s working-age population is projected to be 39.2 million in 2030, from the current 25.5 million in 2015,” the report states.
The CEM report also suggests that policy reform which can aid economic growth will also be welcome if Kenya wants to surpass their current prosperity level. It also referred to natural resources as a prime aspect of growing the economy. “Resource extraction will make a direct contribution to economic output, but more importantly, it will generate fiscal resources that could be used to raise public investment, human capital, and productivity in the non-resource sectors of the economy,” the report stated.
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