The Kenyan Economy: Separating Facts from Propaganda
Online conversations of late have centered around the essence of pay and how much particular careers pay and what not. People have shared their view and thoughts and blogs have been written to storify and repudiate the same.
This has got me thinking, if our economy is growing at 5.9% and everything is rosy and dandy, then why are we complaining about how expensive tomatoes are and how buying a cob of roasted maize is a big challenge and how a PhD holder who is a higher education lecturer earns peanuts?
If we are doing so well that world leaders are visiting us every month and our dear President is forever travelling every week, then why is KRA having serious problems meeting its revenue collection targets and why is the treasury operating on a dangerous deficit? Why are the beloved middle class complaining about increasing fuel costs? At 5.9% growth, as Economist @Nderi_J jokingly puts it, everyone should be 5.9% better off but is that the case?
Last week middle class folks took to their favorite street called Twitter and lamented just how expensive life had become. They whined under the hashtag #CutCostOfLiving and to be honest, I laughed my head off, because everyone seemed to have missed the point.
The reason why living costs have sky rocketed is simple. Our economy has structural deficiencies that cannot be fixed in a day or year and given that election time, this is a problem that no single leader is going to bother with. The problems are deep rooted but we simply have opted to ignore them or create and develop policies that can be able to nurture a new foundation of our economy. In essence, our economy is virtually inverted. Someone on twitter put it aptly. Out with the factories, farmers, producers and in with the betting and gamblers. The core sectors that form the foundation of any economy are non-existent. We are a net import country and we seem to be clapping our hands at this. The bottom of the pyramid is critical to any economy, the key sectors must strive to serve this group, but in Kenya, this group is at the behest of tenderpreneurs. IPSOS in their enigmatic research indicated that more and more Kenyans are going to bed hungry and honestly, hunger is the mother of crime for many who have no options.
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So, how do we tell our economy is growing and its growing well? How do we ascertain this 5.9% and vouch for it? How do we read the truth from the propaganda? What must we look for? As an ordinary Kenyan, with no economics background, how can I trust the numbers that are coming out of government?
According to Investopedia, the best way to read an economy is by looking at key factors like income. Income is one of the most significant factors in measuring economic performance, and gross domestic product (GDP) is the most commonly used measure of a country’s economic activity. In short, GDP reflects the value of all final goods and services legally produced in an economy in a given time period.
Traditionally, the key measures of economic performance in macro-economics include:
- Economic growth – real GDP growth.
- Inflation – e.g. target CPI inflation of 2%
- Unemployment – target of full employment
- Current account – satisfactory current account, e.g. low deficit.
The GDP in Kenya expanded 5.9 percent year-on-year in the first quarter of 2016, following a 5.7 percent increase in the previous period. Kenya Inflation Rate at 3-Month High of 5.8% in June. Consumer prices in Kenya increased 5.8 percent year-on-year in June of 2016, accelerating from a 5 percent rise a month earlier. It was the highest figure since March 2016, driven by cost of food. 80% of unemployed Kenyans are below 35 years old as 35%, compared to the overall national unemployment rate of 10% according the guardian online magazine. Kenya recorded a Current Account deficit of 140.92 USD Million in March of 2016. Current Account in Kenya averaged -199.99 USD Million from 1994 until 2016.
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Of these indicators, economic growth is usually the most importance and given the greatest credence for economic performance. It is frequently used for international comparisons and is probably the most prominent statistic. Politicians can use GDP statistics as a trump card –