|Cabinet Secretary for Devolution and Planning Anne Waiguru during the opening of International Conference on the Great Lakes Region (ICGLR) special summit on the fight against youth unemployment in Nairobi|
Kenya has jumped four slots on the richest African countries’ list in new accounting rules that have ‘grown’ the citizen’s combined wealth by 25 per cent.
Kenya National Bureau of Statistics (KNBS) yesterday announced that Kenya is now the 9th richest economy in Africa, overtaking Ethiopia, Tunisia and Ghana after a change in the formula used to measure economic activity.
While the improved ratings do not mean any improvement for the fortunes of the individual households, National Treasury Secretary Henry Rotich said it would help in raising the country’s profile.
“It helps to raise the profile of the economy to investors,” Mr Rotich said while explaining the importance of ‘re-basing’ of the economy, adding that Kenya has changed the base year from 2001 to 2009.
“The new data is a more accurate reflection of the economy,” Rotich said.
Prof Terry Ryan, the chairman of the KNBS, said the revised economic data captures the contribution of new sectors of the economy that might have previously been non-existent. One such data is on the Sh122 billion information and communication sector.
“It does not say anything about the well-being of the citizenry but it is an important measure of growth,” said Mr Ryan, also a member of the Central Bank of Kenya’s monetary policy committee.
Economic growth is measured relative to a base year, in this revised case 2009. Kenya follows in the steps of Nigeria, which re-based in April this year to become Africa’s biggest economy, overtaking South Africa. Egypt, Algeria and Morocco take up the rest of the top five slots.
The agricultural sector contributed Sh1.25 trillion to the country’s Gross Domestic Product (GDP) in 2013, retaining its top position as the largest contributor to national wealth.
The sector is followed by manufacturing, real estate, wholesale and retail, transport and storage and financial and insurance activities.
Rotich, who spoke at the launch of the re-based GDP figures by Ministry of Devolution and Planning said though there is a slight change in the structure of Kenya’s economy, agriculture remains its backbone while growth in the manufacturing sector is beginning to take shape.
The revised figures indicate that Kenya’s economy grew to Sh4.8 trillion, 25 per cent higher than initial estimates of Sh3.8 trillion.
“These figures do not mean that Kenyans are better off than yesterday but that the economy is worth much more that initially thought,” said Anne Waiguru, the Cabinet Secretary for Devolution and Planning.
Government officials had previously hinted that with the re-basing, the economy might be 20 per cent greater than previously measured. GDP has risen to Sh4.76 trillion in 2013 ($55b) from an earlier estimated Sh3.8 trillion.
This is effectively a 25 per cent increase on what had been anticipated, but within the range of expectations.
The re-basing lifts average per capita income in Kenya to $1,246 – effectively meaning that the country moves to lower middle-income status.
Rotich said the country does not expect this to change very much in the near term. The leap to lower middle-income status is not expected to affect access to the debt relief window.
However, Kenya could be disqualified from some categories of concessional lending.
The National Treasury ministry has said the new GDP figures will impact on several fiscal and macro indicators. “We are studying the new figures and how they will impact on both the fiscal and current account deficits, as well as public debt ratios,” said Rotich.
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