From left: Mining Secretary Dan Kazungu, Devolution and Planning Mwangi Kiunjuri and Planning and Statistics Principal Secretary Irungu Nyakera during the release of Economic Survey 2017 in Nairobi on April 19, 2017. photo | salaton njau
The 2017 Economic Survey is a rich treasure trove of data and information on the Kenyan economy.
The document shows the gross domestic product growth in 2016 of 5.8 per cent, an improvement on 5.7 per cent in 2015.
Kenya’s real GDP has grown from Sh100 to Sh124.93 in this period.
We’ve grown from a Sh4.3 trillion to a Sh7.2 trillion economy at current market prices — basically, Sh124.83 to Sh207.87 — but recall we are looking at real GDP adjusted for inflation effects.
Last week’s presidential launch of government’s latest digital initiative, the Delivery Information Portal elicited mixed reactions in line with the chasm that reflects our pre-election political divide.
The teachable moment for Kenya is the need to start viewing our country from a perspective built around good data in an era of “alternative facts”.
There’s much to interrogate, including close to 150 “infographics” covering ministerial achievements and outcomes — almost 300 claimed, excluding flagship projects and national spending in counties.
Beyond digital, certain analogue rituals remain. Like the launch of the 2017 Economic Survey this week. This document is a rich treasure trove of data and information on the Kenyan economy.
Even before we proceed into a deep dive of the data, here are a couple of quick thoughts.
The headlines spoke to gross domestic product growth in 2016 of 5.8 per cent, an improvement on 5.7 per cent in 2015.
The first surprise was slower growth rates — than in 2015 — in agriculture, manufacturing, construction, wholesale and retail trade and finance and insurance sectors; balanced against growth in the tourism — accommodation and food services — sector.
Overall, agriculture grew at four per cent and manufacturing at 3.5 per cent. Our much-hyped construction sector grew at over nine per cent, as did electricity and ICT. Real estate grew at just below nine per cent, while finance and insurance grew at seven per cent.
Transport and storage grew at more than eight per cent. Arts, entertainment and recreation — the creative sector — grew at four per cent. How is the economy growing at 5.8 per cent if the larger sectors are not and the smaller ones are?
First, slower growth does not mean contraction. Second, growth contributions are a function of sector economic size.
Let us illustrate using four years from 2013 to 2016 and reduce GDP to Sh100 in 2012 (in constant 2009 prices — our current GDP “baseline”). We’ll focus just on the headline sectors.
To begin, Kenya’s real GDP has grown from Sh100 to Sh124.93 in this period. Yes, we’ve grown from a Sh4.3 trillion to a Sh7.2 trillion economy at current market prices — basically, Sh124.83 to Sh207.87 — but recall we are looking at real GDP adjusted for inflation effects.
Now, in 2012, agriculture accounted for Sh26.20 of that Sh100. Manufacturing accounted for Sh11, mining and electricity Sh1.10 each, construction Sh4.50, trade Sh7.80, transport Sh8, tourism Sh1.30, ICT Sh1.60, finance and insurance Sh5.90, real estate Sh8.00 and the creative economy Sh0.10. The rest is accounted for by smaller sectors and indirect taxes — part of the GDP calculation.
In 2016, agriculture accounted for Sh32.60 of every Sh100 of GDP, manufacturing Sh9.20, mining Sh0.80, electricity Sh1.70, construction Sh5, trade Sh7.30, transport Sh7.90, tourism Sh0.70, ICT Sh1, finance and insurance Sh7.10, real estate Sh7.40 and the creative economy Sh0.10.
Given its sheer size, therefore, the contribution of one per cent growth in agriculture would be the equivalent of 300 per cent growth in the ICT sector or 3,000 per cent in the creative economy. Let us use this thought to revisit the earlier quoted growth rates.
The GDP of Sh100 in 2012 has grown to Sh124.83 in 2016. In 2015, the equivalent number was Sh 117.94. So in 2016, Kenya grew by Sh6.88.
Where did growth come from? Agriculture Sh1.05, manufacturing Sh0.43, mining Sh0.12, electricity Sh0.18, construction Sh0.56, trade Sh0.34, transport Sh0.67, tourism Sh0.17, ICT Sh0.42, finance and insurance Sh0.50, real estate Sh0.85 and the creative economy Sh0.01 (one cent). The balance of Sh0.96 includes indirect taxes.
Thus, in absolute terms, construction and real estate contributed as much to 2016 GDP as agriculture and manufacturing, while transport’s contribution equalled finance and tourism combined. Trade’s contribution exceeded that of mining and electricity, but fell short of ICT and the creative economy.
Do we have an emerging Kenyan economic story that deserves more than an information portal of mega-projects? Food for thought.
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Note: The results are not exact but very close to the actual.
