Why bulk of Kenyans did not feel the 7.5 percent GDP growthMonday January 02 2023
The National Treasury has noted that a lot of Kenyans did not feel the 7.5 percent economic growth registered in 2021 because of poor perfomance in agriculture, which is the country’s largest employer.
Kenya’s gross domestic product (GDP) — or the value of all goods and services produced in the economy—in 2021 expanded by 7.5 percent as the country continued to recover from the adverse effects of Covid-19 pandemic that negatively impacted sectors such as hospitality, education, and transport.
A member of the public who attended a stakeholder meeting to discuss the Budget Review and Outlook Paper 2022, however, wondered why this growth had not been felt by ordinary Kenyans. According to the Treasury, economic growth last year was largely driven by the growth in the services and industry sectors.
“Agriculture subdued, recording a contraction of 0.2 percent. About 60 percent of the population practice agriculture therefore they have not felt the growth effect in the economy,” said Treasury in comments captured in the 2022 Budget Review and Outlook Paper.
The dismal performance continued in the first half of the year as the sector grappled with bad weather and expensive inputs such as fertiliser due to the war in Ukraine.
Depressed harvests have hit the cost of living with prices of foodstuff skyrocketing, thereby hurting many ordinary Kenyans.
Agriculture constitutes more than a quarter of Kenya’s economy and is also the largest employer.
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It also has linkages with other sectors such as manufacturing, which means that the effects of its underperformance are widespread and run deep. The economy grew 6.8 percent in the first quarter of 2022. At this moment, the administration of President William Ruto expects the economy to remain resilient at 5.5 percent and above six percent over the medium term.
This growth, the Treasury reckons, will be supported by the prevailing stable macroeconomic environment, continued strong performance in the services and industry sectors and favourable weather conditions to support agricultural output.
The World Bank, in a new report, has also faulted Kenya’s economic structure, noting that the growth in the last decade has not been pro-poor, an indictment on the policies of former President Uhuru Kenyatta’s administration whose 10-year term ended this year.