Revealed: Data shows why Kenyans felt poorer in 2017

The new, harsh reality is that Kenyans are poorer today than they were in 2016 despite rising incomes.

This is according to new data that has confirmed the general feelings shared across ordinary households.

Prices for essential goods and services rose much faster, wiping away any wage increases awarded by employers.

Many employers sharing in the economic difficulties did not raise wages while in extreme cases, opted to slash their workforce to survive the tumultuous period.

Kenya National Bureau of Statistics yesterday released the damning yet unsurprising findings in its annual publication, Economic Survey 2018, which is the most comprehensive Government compilation of data.

Monthly earnings for formal sector workers rose by more than Sh3,200 to Sh57,000 – a figure that could be viewed as too high, yet the ordinary household found the going tough.

After adjusting the wages for inflation, which is the measure of how fast prices rose, the average employee’s monthly income fell by nearly Sh1,000 to Sh30,750.

In essence, the salaries as indicated on pay slips is actually grossly exaggerated thanks to the rapid rise in the cost of living.

Employers would, in ideal situations where payable wages are tied to inflation, be required to compensate their workers for the eroded earnings should they be expected to maintain their regular living standards.

The KNBS heaped blame on soaring food prices whose impact on household budgets was compounded by higher petroleum prices.

“This could be attributed to increase in inflation rates over the period,” KNBS Director General Zachary Mwangi said in his report.

Inflation rose by eight per cent last year compared to 6.8 per cent in 2016.

National Treasury Cabinet Secretary Henry Rotich, who attended the unveiling of the findings, acknowledged the challenges but took comfort in the consolation that Kenya “did better than many African countries”.

He projected that 2018 would be better, citing that the ongoing rains would support food production and dampen any inflationary forces to help the economy grow by 5.8 per cent from the 4.9 per cent last year.

Preceding year

In the preceding year, KNBS reported, earnings rose faster than the cost of living, explaining in part why most people felt 2016 was better.

Research firm Trends & Insights for Africa (Tifa) reported that 75 per cent of respondents in a survey carried out last December hated 2017 owing to, among other things, the cost of living and massive job losses.

“The crisis in Kenya was not only evident in political tension but also in the wallets of many citizens who could not afford to purchase basic food commodities such as maize flour, milk and sugar,” said Tifa boss Maggie Ireri.

Kenyans began 2017 on the wrong footing following a biting shortage of staple foods including maize, as a spillover effect of the previous year's drought.

By March, a 2kg packet of maize flour had edged towards a record high Sh200. Even worse, the commodity was not available on retailers’ shelves.

The shortage devastated households, with many turning the search for unga into a nearly full-time job much to the dismay of Government officials.

A hunger crisis threw everyone into a panic, informing the broad interventions that included duty-free importation of foodstuff and the unprecedented maize flour subsidy programme.

The year was specifically a trying period for President Uhuru Kenyatta, who was seeking re-election as the cost of living hit the roof to further disenfranchise the electorate.

Fuel prices

The decision to cap the maize meal prices at Sh90 per 2kg packet may have helped to pacify the voters, who ultimately handed him another term despite being poorer.

Implications of increased prices for diesel, petrol and kerosene had an immediate effect on transport expenses - whether public or private - and cooking.

Poorer households that use kerosene for lighting and cooking were worst hit as prices almost doubled in the year.

Government-led reforms aimed at discouraging the use of kerosene – also the main product in the adulteration of diesel - caused the surge in pricing.

But it was the increase in diesel prices that had an economy-wide impact, hurting every household in more ways than one.

Beyond motoring, the drought shifted the burden of electricity production from hydro to thermal.

Several private diesel-powered generation plants that had been rested were switched back on to, collectively with KenGen, produce 2,534 units.

In the previous two years, diesel-powered plants generated 1,412 and 1,470 units respectively.

The contribution of diesel to the national electricity grid is factored into the bills of every household on a pro-rated basis, meaning the more power you consume, the higher the payment portion towards the dirtier but costlier energy.

This would explain the sudden ballooning of electricity bills that have caused loud protests directed at the electricity distributor, Kenya Power.

Combining the higher food, energy and transport costs amid stunted salaries would explains why Kenyans are feeling poorer despite the modest pay rise.

It could be worse if your former employer closed shop and sent you home to face the sky-rocketing cost of living.