Economy grows fastest in 11 years on easing Covid curbs - VIDEO


Traders selling onions at Marikiti Market in Nairobi on March 30, 2021. Farming activities contracted 0.2 percent in 2021 on poor weather that hurt production. PHOTO | LUCY WANJIRU | NMG

Kenya’s economy rebounded in 2021 to grow at the fastest pace in 11 years on easing of Covid-19 restrictions which boosted recovery in key sectors excluding agriculture whose activities were hit by poor rainfall.

Data from the Kenya National Bureau of Statistics (KNBS) showed economic activities expanded 7.5 percent compared with a contraction of 0.3 percent a year earlier when activities almost grounded to a halt because of measures to contain the spread of the pandemic.

This was the highest expansion since 2010 at 8.1 percent when economic activities were recovered from the aftermath of the twin shocks of the global financial crisis and post-election skirmishes in 2008 followed by a biting drought in 2009.

“The lessons we have learnt (from pandemic shocks) may give us that impetus to be more prepared and resilient in dealing with circumstances of similar nature in the future,” said Treasury Secretary Ukur Yatani.

The growth in 2021 was largely supported by improved performance in manufacturing, trade, transportation, real estate and financial services which befitted from re-opening of the economy.

Farming activities, which account for about 22.4 of Kenya’s economic output, however, contracted 0.2 percent as a result of poor rainfall which hurt production of key crops such tea, maize and coffee.

In 2020, the agriculture sector – which was a rare bright spot in pandemic-hit 2020 – grew 5.2 percent.

“When rains fail then agriculture fails, and that is a warning sign to the country. It’s high time that we move from to irrigation. Sectors that depended on irrigation … like cut flowers [and] rice recorded positive growth in 2021,” Mr Yatani said.

The manufacturing sector, which has the potential to drive growth in decent jobs in the formal sector, recovered from Covid pounds to grow 6.9 percent last year from a contraction of 0.4 percent in 2020.

Transport and storage activities, which were amongst the hardest hit sectors in 2020, rebounded to grow 7.2 percent from 7.8 percent drop in the prior year, while accommodation and food services benefitted from re-opening to grow 52.5 percent from a slump of 47.7 percent the year before.

The financial services sector grew 12.5 percent from 5.9 percent in 2020, while the ICT sector activities rose 8.8 percent compared with 6.3 percent.

Building and construction sector, however, slowed to a growth of 6.6 percent compared with 10.1 percent in the prior year.

The Treasury sees inflationary pressures coming from the rising cost of fuel and other basic commodities as a result of global supply constraints, weakening shilling and poor weather slowing Kenya’s growth 6.7 percent in this election year.

“[The country] is expected to continue on a growth trajectory after successful containment of Covid-19 pandemic and projected peaceful elections. As a country we have matured democratically, we have learnt our lessons from past elections,” Mr Yatani said.

“I am quite optimistic that we are going to maintain that sense of stability throughout the electioneering period.”

Kenya’s real GDP — a measure of economic output adjusted to inflation—has a history of slowing down during election years when firms put investment decisions on hold pending a return to normalcy in the political landscape.

During the last election in 2017, the economic growth slowed to 3.82 percent from 4.21 percent the year before, while in 2013 it decelerated to 3.80 percent from 4.57 percent.

The aftermath of the deadly December 2007 presidential sunk growth to 0.23 percent in 2008 from 6.85 percent, while in 2002 it slowed to 0.5 percent from 3.78 percent the year before.

The same trend was witnessed in 1997 when growth dropped to 0.48 from 4.15 percent, and in 1992 when it contracted to negative 0.8 percent from 1.44 percent on the onset of multiparty elections.