Economy

Agriculture powers the economy to 5.9pc quarter one growth

farm

A coffee farmer tends her cash crop. Agriculture employs up to 80 per cent of Kenyan workers in rural areas. PHOTO | FILE

The economy recorded the highest first quarter growth in five years, helped by good weather, improved security and continued investment in public infrastructure, according to newly released data.

The Kenya National Bureau of Statistics (KNBS) on Thursday said the economy expanded by 5.9 per cent in the first three months of the year compared to five per cent in the same period last year.

The growth - second only to the 7.6 per cent that was recorded in the first quarter of 2011 – is attributed to growth in all segments of the economy.

The KNBS data shows that agriculture, which accounted for 34 per cent of the total production expanded by 4.8 per cent in the first quarter compared to 2.9 per cent in the previous period.

“Agriculture showed marked improvement in the first quarter, mainly buoyed by considerable growth in value addition for key crops such as tea and horticultural crops,” the KNBS said in a statement 

Agriculture employs up to 80 per cent of Kenyan workers in rural areas, feeds majority of citizens and provides raw material for agro-based industry.

The economy has also gained from improved security that has encouraged Kenyans to engage in local tourism and buoyed source markets to lift travel bans.

“The most notable improvement was the rebound in accommodation and food services at 12.1 per cent compared to a contraction of 11.4 per cent during the same quarter in 2015,” the KNBS said.

While accommodation and food services accounted for a paltry one per cent of the first quarter production, improved security may have had a multiplier effect as tourist arrivals grew significantly.

The number of international visitors increased 16.8 per cent to stand at 206,978 between January and March compared to a similar period of 2015, much to the relief of hoteliers.

READ: Strong agriculture growth boosts GDP expansion to 5.6pc

The hoteliers had earlier cut jobs, slashed pay and closed shop in the wake of 2014 travel alerts issued by American and European governments in response to the then frequent terrorist attacks.

“We are optimistic, things are looking up,” said Mohamed Hersi, the chief executive of Heritage Hotels.

The January-March boom extends to electricity generation, transport and mining segments which also recorded significant growth in the first quarter.

The KNBS data shows electricity generation grew by 8.3 per cent in the first quarter of 2016 from 2,235.43 Kwh in the first quarter of 2015 to 2,241.18 Kwh.

The rainfall-linked hydro production expanded by 26.5 while the capital-intensive geothermal generation grew by 4.4 per cent.

Over the same period, diesel-fired power production declined by 17.5 per cent during the period. The KNBS said: “The decline was mainly due to favourable weather conditions experienced during the quarter that necessitated the scaling down of the more expensive thermal generation in favour of hydro and geothermal generation.”

Sectors such as construction, manufacturing and finance however registered slowed growths in the first quarter.

The construction industry – mainly driven by implementation of government’s flagship projects - expanded by 9.9 per cent which was a slowdown when measured against an expansion of 12.6 per cent in a similar period of 2015.

Similarly, the manufacturing defied drop in international oil prices when it registered a slow growth of 3.6 per cent in the first quarter of 2016 compared to 4.1 per cent in 2015.

“The growth of the sector was partly supported by production of beer and stout but dampened by production of soft drinks as well as wheat and maize flour,” KNBS said.

Other segments that pulled down manufacturing activities are the textiles and clothing which declined by 22.0 and 8.8 per cent, respectively, in the first quarter as well as assembly of motor vehicles which dropped by 35.3 per cent.