Why Kenyans Need To Master Reading The Status Of The Economy To Avoid Being Lied To By Politicians

By Steve Biko Wafula / Published March 17, 2023 | 7:02 pm

KEY POINTS

According to the International Monetary Fund, the Kenyan economy is projected to grow by 6.3% in 2023, which is a positive sign for the country's economic stability.

KEY TAKEAWAYS

According to the Kenya National Bureau of Statistics, the rate of inflation in February 2023 was 5.8%, which is within the government's target range of 2.5% to 7.5%. This suggests that the government's efforts to stabilize the economy may have been successful in reducing inflation.

Kenya, like many developing countries, faces numerous economic challenges. Over the past decade, the country has experienced significant economic growth, but this has been accompanied by rising inequality, high levels of poverty, and a number of other economic problems.

In this context, the statement by the President that his government has stabilized the economy requires careful examination.

To begin with, it is important to acknowledge that there have been some positive developments in the Kenyan economy in recent years. For example, GDP growth has been relatively strong, averaging around 5% per year over the past decade. This growth has been driven in part by a vibrant service sector, particularly in areas such as finance, telecommunications, and tourism.

Additionally, there have been some efforts to address some of the underlying structural issues in the Kenyan economy. For example, the government has made some progress in improving infrastructure, particularly in transport and energy. This has helped to reduce the cost of doing business in the country, which has in turn attracted some foreign investment.

However, despite these positive developments, there are several reasons to question the President’s claim that the economy has been stabilized. First and foremost, the level of inequality in the country remains extremely high. This is particularly evident in the distribution of wealth, where a small elite holds a disproportionate share of the country’s resources. This inequality is a major source of social and political instability and is likely to undermine any progress made in other areas of the economy.

Kenya is a country that has faced various economic challenges in recent years, including high inflation, a growing public debt, and a trade deficit. These challenges have had a significant impact on the country’s economic stability, and there has been much debate over whether the government’s efforts to stabilize the economy have been successful. In this essay, we will examine the various economic indicators to determine whether the President’s statement on stabilizing the economy is true or not.

Key Indicators of the economy;

One of the primary indicators of economic stability is inflation. Inflation is a measure of the rate at which prices of goods and services are increasing over time. In Kenya, inflation has been a significant challenge for many years, with the rate of inflation reaching as high as 21% in 2011. However, in recent years, the government has made efforts to bring inflation under control. According to the Kenya National Bureau of Statistics, the rate of inflation in February 2023 was 5.8%, which is within the government’s target range of 2.5% to 7.5%. This suggests that the government’s efforts to stabilize the economy may have been successful in reducing inflation.

Another important economic indicator is public debt. Kenya’s public debt has been increasing steadily over the years, raising concerns about the sustainability of the country’s debt levels. However, in recent years, the government has taken steps to reduce the rate of debt accumulation. According to the Central Bank of Kenya, the public debt-to-GDP ratio stood at 68.4% in December 2022, which is a slight decrease from the 69.3% recorded in December 2021. This suggests that the government’s efforts to stabilize the economy may be having a positive impact on reducing the country’s debt burden.

Another indicator of economic stability is the balance of trade. Kenya has been running a trade deficit for many years, which means that the country imports more than it exports. This has put pressure on the country’s foreign exchange reserves and has contributed to a decline in the value of the Kenyan shilling. However, in recent years, the government has taken steps to address the trade imbalance. According to the Kenya National Bureau of Statistics, the country’s trade deficit narrowed to KSh 1.3 billion in January 2023, from KSh 11.8 billion in January 2022. This suggests that the government’s efforts to stabilize the economy may be having a positive impact on reducing the trade deficit.

Another important indicator of economic stability is the growth of the economy. Kenya’s economy has been growing at an average rate of 5.6% over the past decade. However, in recent years, the rate of economic growth has been slower, with the economy growing by 4.5% in 2021. The COVID-19 pandemic has had a significant impact on the country’s economic growth, but the government has implemented measures to support economic recovery, including tax cuts and stimulus packages. According to the International Monetary Fund, the Kenyan economy is projected to grow by 6.3% in 2023, which is a positive sign for the country’s economic stability.

Another indicator of economic stability is the level of unemployment. Unemployment is a significant challenge in Kenya, with the unemployment rate standing at 7.9% in 2021, according to the World Bank. However, the government has implemented various initiatives to address the problem, including the creation of employment opportunities through infrastructure projects and the promotion of small and medium-sized enterprises. According to the Kenya National Bureau of Statistics, the unemployment rate in December 2022 was 7.2%, which suggests that the government’s efforts to stabilize the economy may be having a positive impact on reducing unemployment.

Why Kenyans must monitor the economy;

It is important for Kenyans to monitor the growth of the economy for several reasons:

Understanding the current state of the economy: By monitoring economic growth, Kenyans can gain a better understanding of the current state of the economy. This includes factors such as inflation, unemployment, and GDP growth. This knowledge can help individuals make informed decisions about their personal finances, such as investments, savings, and spending.

Identifying areas of opportunity: Monitoring economic growth can also help Kenyans identify areas of opportunity within the economy. For example, if a particular industry is experiencing rapid growth, individuals may consider pursuing job opportunities or investing in related businesses.

Holding leaders accountable: By monitoring economic growth, Kenyans can hold their leaders accountable for the economic policies they implement. If the economy is not growing as expected, individuals may demand changes in economic policies or leadership.

Promoting economic stability: A stable economy is essential for the overall well-being of individuals and the country as a whole. By monitoring economic growth, Kenyans can take action to promote stability and prevent economic crises.

Overall, monitoring economic growth is important for Kenyans to make informed decisions about their personal finances, identify areas of opportunity, hold leaders accountable, and promote economic stability. Here are 20 key factors that Kenyans can analyze to understand whether the economy is stable or not:

Gross Domestic Product (GDP): This measures the value of goods and services produced in the country and is a good indicator of economic growth.
Inflation: This measures the rate at which prices for goods and services are increasing. High inflation can indicate an unstable economy.
Unemployment rate: This measures the percentage of the population that is unemployed. High unemployment can indicate an unstable economy.
Balance of trade: This measures the difference between a country’s imports and exports. A negative balance of trade can indicate an unstable economy.
Interest rates: This measures the cost of borrowing money. High-interest rates can indicate an unstable economy.
Consumer confidence: This measures how optimistic consumers are about the economy. Low consumer confidence can indicate an unstable economy.
Government debt: This measures the amount of money the government owes. High government debt can indicate an unstable economy.
Stock market performance: This measures how well the stock market is performing. A volatile or declining stock market can indicate an unstable economy.
Currency exchange rate: This measures how much one currency is worth in relation to another. A weak exchange rate can indicate an unstable economy.
Foreign investment: This measures how much money is coming into the country from foreign investors. Low foreign investment can indicate an unstable economy.
Business confidence: This measures how optimistic businesses are about the economy. Low business confidence can indicate an unstable economy.
Infrastructure development: This measures the quality and quantity of infrastructure in the country, such as roads, bridges, and airports. Poor infrastructure can indicate an unstable economy.
Corruption level: This measures the level of corruption in the country. High levels of corruption can indicate an unstable economy.
Natural resources: This measures the availability and quality of natural resources in the country, such as oil, gas, and minerals. A lack of natural resources can indicate an unstable economy.
Political stability: This measures how stable the political environment is in the country. Political instability can indicate an unstable economy.
Taxation policies: This measures the policies the government has in place for collecting taxes. High taxes can indicate an unstable economy.
Education level: This measures the level of education in the country. A low education level can indicate an unstable economy.
Healthcare system: This measures the quality and accessibility of healthcare in the country. Poor healthcare can indicate an unstable economy.
Population growth rate: This measures how quickly the population is growing. Rapid population growth can indicate an unstable economy.
Social services: This measures the quality and availability of social services, such as housing, water, and electricity. Poor social services can indicate an unstable economy.

About Steve Biko Wafula

Steve Biko is the CEO OF Soko Directory and the founder of Hidalgo Group of Companies. Steve is currently developing his career in law, finance, entrepreneurship and digital consultancy; and has been implementing consultancy assignments for client organizations comprising of trainings besides capacity building in entrepreneurial matters.He can be reached on: +254 20 510 1124 or Email: info@sokodirectory.com

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