The year that was: 2018 in numbers

By all accounts, 2018 has been a tumultuous year. With the many changes in the 12 months, it’s all too easy to lose one’s bearings. That’s why the Financial Standard seeks to take stock of the key numbers that have shaped the year before the New Year dawns. We restrict ourselves to the cold, hard numbers. Below are statistical facts that shaped 2018, using the latest obtainable figures:

1. Sh5.1 trillion

The country’s total debt stock raced past the Sh5 trillion- mark in June this year as the Government continued its unbridled borrowing spree. A heavy debt load which now accounts for more than half of the sum of all goods and services produced in the economy - the Gross Domestic Product (GDP) - is exerting pressure on the country’s income.

A huge chunk of the country’s tax revenue is being channelled to creditors as interest payment on debts and debt redemption.

This is money that would have been used to buy more drugs for public hospitals or hire more primary school teachers. 

Public and publicly guaranteed debt has grown at a jet speed of 183 per cent, from Sh1.8 trillion at the beginning of 2013 when President Uhuru Kenyatta took over the reins of power from former President Mwai Kibaki to a staggering Sh5 trillion. And this is projected to hit a jaw-dropping Sh7 trillion by the time Kenyatta exits the political scene in 2022. 

His administration has been at pains to defend such ravenous uptake of debt, arguing that the funds have been pumped into critical projects aimed at turbo-charging the economy.

Some of these projects include the construction of a modern railway, expansion of air and sea-ports, stretching the highways and energy projects to power industries. While it would ordinarily take longer for the benefits of these projects to start percolating to taxpayers, economists are worried about whether some of them will really live up to their hype.

2. 15 hours

This is the time it will take to fly directly from Nairobi to New York City on Kenya Airways (KQ).  Finally, Kenyans- and indeed anyone - can fly directly to the US, or vice-versa. It is a heaven-send short-cut that has seen travel-time to the US slashed to 15 hours from the erstwhile 20 or more hours depending on the layover.

The longer flying period before was due to a connection of flights.

Throw in the odd hours it took travellers to check-in, as well as a rather long wait for a connecting flight at Amsterdam Airport Schiphol, and you begin to understand why Government officials are sheepishly excited. Government officials believe potential American visitors to Kenya from North America were put off by this rather tedious journey. This must have denied Kenya a lot in terms of tourist earnings.

Unfortunately, the celebrations might have been premature. Barely a month after its maiden trip to the US, KQ reduced the number of trips on this route by 30 per cent in what is a signal to a miscalculation on the viability of the trumpeted directly flight to the Land of Opportunity. Perhaps Kenya Airways, yet to walk free from financial mess, was biting more than it could chew by starting with two trips daily instead of just a few in a week. It is too early to make a call, but experiencing turbulence during take-off, KQ pilots will tell you, is a rarity. The skies to New York City might not be too clear for the national carrier, after all. 

3. 6.3 per cent- GDP

There has never been any doubt that Kenya’s economy can be resilient.

And resilient it was.  After a devastating 2017 in which a protracted electioneering period saw investors sit on their cash even as ravaging drought decimated a huge chunk of the country’s harvests and banks got picky with credit, the economy made a comeback in 2018.

The GDP expanded by 6.3 per cent in the second quarter- the fastest second-quarter growth in five years.

  The impressive growth started in the first three months of the year with GDP growing at 5.7 per cent compared to 4.8 per cent in the first quarter of 2017 as favourable weather conditions bolstered country’s main economic sector- agriculture- and businesses started spending as election jitters receded.

Unfortunately, even with prices of consumer goods and services increasing at a slower pace in the first six months, the big question Kenyans are still asking is: where is this growth?

4.Eight per cent

This is the new Value Added Tax (VAT) on petroleum products that came into force this year. And for the passage of the controversial law, President Kenyatta got flak from Kenyans on the Twitter (KoT). Before the President intervened, the rate had been pegged at 16 per cent. The law was acrimoniously passed by the National Assembly and signed into law shortly thereafter.  Pump prices of petrol, diesel and kerosene have since gone up, eating into Kenyans’ dwindling income. Those hit the most are the poor who use kerosene for cooking and lighting. Apart from attracting the eight per cent levy, kerosene was also slapped with a special anti-adulteration tax of Sh18 per litre.  

5.Sh3 trillion?

This is the sum of the money that Treasury will spend by the end of the current financial year. However, Treasury insists that the Government would spend only Sh2.5 trillion by June 2019, including Sh1 trillion on ministerial recurrent expenditure, Sh671 billion on development and Sh314 billion to counties, and Sh490 billion for pensions, debt repayment, salaries to constitutional office holders and payment and fees for international treaties.  There is also net lending of about Sh2.5 billion, and a contingency fund of Sh5 billion.

However, a Parliamentary report put Government’s expenditure for this Financial Year at Sh3 trillion, a figure that was quickly picked up by the media. Treasury says that the difference lies in the fact that Parliament might have included redemption of some domestic bonds, which it excludes in the computation of the total budget.

6.    Sh23 billion

This is the net foreign outflows from the Nairobi Securities Exchange as of September. This as conditions in developed markets improved attracting back the cheap money that had crossed the Atlantic after a housing crisis that saw Federal Reserve pump trillions into the American economy. Other than the improving conditions in the US and European markets, the Capital Markets Authority (CMA), in a report, blamed President Uhuru Kenyatta’s punitive taxes for scaring investors from the country’s stock market, with Nairobi Securities Exchange (NSE) suffering mass exits as of September. While there is still for recovery, the loss so far surpasses the Sh11.5 billion foreign outflow suffered in the whole of last year. In its latest Soundness Report, the CMA singled out increased excise duty fees on money transfer services by providers from 10 per cent to 12 per cent as one of the reasons for the record outflow in nine months this year. “Actions like the eight per cent fuel VAT tax and the 20 per cent and 12 per cent excise duty on transfer of funds in banks and when transferring fund using mobile phones respectively, have exacerbated the problem,” indicated the report.

7.     Sh102

This is the exchange rate of the Shilling against the US Dollar for the better part of the year. Except for that rare occasion when the Shilling nearly touched 104, the local currency has generally been steady. All other currencies in the region have ceded ground against a strong greenback as the American economy begins to recover from the effects of the 2008 recession. The Central Bank of Kenya Governor Patrick Njoroge deserves credit for the manner in which he has ably protected the Shilling from the vicissitudes of the global financial market. But he is not entirely blameless. Although a strong Shilling means that Kenya, a net importer, gets to buy such critical commodities as oil and food at low prices, the country’s exports including tea, coffee and horticulture continue to fetch lower prices from the global market.  

There have been murmurs that CBK is propping up the Shilling- mostly injecting more dollars into the market to stabilize the price of the Shilling, something that CBK has vehemently denied. However, these fears gained credence when the International Monetary Fund, in of its reviews on Kenya’s economy, suggested that the shilling may be overvalued by up to 17.5 per cent. “Reflecting limited movement of the shilling relative to the US dollar, MCM’s (Monetary and Capital Markets Department) 2018 report on exchange rate arrangement to be published in February 2018 will reclassify Kenya’s shilling from floating to other managed arrangement,” said IMF.  

8.    Sh36 billion

The money that French firm Rubis Energie was set to dish out to erstwhile shareholders of oil marketing company KenolKobil, in one of the biggest deals of the year. And with it, the family of the late Nicholas Biwott would pocket billions of shillings. But the deal, which had its fair share of mishaps, also earned stock market trader Aly-Khan Satchu a subpoena from the Capital Markets Authority for allegedly abetting insider trading. Rubis Energie completed the deal by first acquiring a 24.99 per cent stake from KenolKobil’s largest shareholder – Wells Petroleum Holdings – before casting its eyes on the remaining 75.01 per cent stake from the other shareholders. The completion of the transaction will see the company delist from the NSE, adding to the number of companies that have delisted in recent years. The deal is supposed to be completed by March 2019.

9.  Sh55.3 billion

Net profits made by telecommunications firm Safaricom for the Financial Year ending March 2018. This was a 14.3 per cent growth compared to Sh48.4 billion of profit-after-tax the telco made in the same period in 2017.  And in a sign that things could only get better for the NSE-listed firm, the company announced that its half-year profits had jumped 20.2 per cent. The company made Sh31.5 billion in the period ending September 2018. Both results were greatly supported by M-Pesa, Safaricom’s mobile money transfer services, with a massive subscriber base in the country.

M-Pesa, which put Safaricom’s shareholders in a celebratory mood also left them dejected this year. The service suffered two outages this year bringing economic activities in the country to a near halt. Eventually, the Government urged Kenyans to spread their use of mobile money service to other providers, not so good news for Safaricom.

10.  Sh 6.2 trillion mining

The amount of money Kenya would have paid to Cortec Mining Kenya Limited, Cortec (pty) Limited and Stirling Capital Ltd had it lost a case in an international tribunal. However, the Government of Kenya won the dispute for the first time following its decision to revoke Cortec’s license for mining niobium and rare earth materials in 2013. A tribunal at the International Centre for Settlement of Investment Disputes ruled that companies’ license was not a “protected investment,” after the latter had argued their project was nationalized after they had spent six years and millions of dollars in exploration and development.

11.  30,000

Barrels of crude oil that were evacuated via road from the oilfields in Turkana County to Mombasa County. Oil mining firm Tullow said the first lifting of the Kenyan crude oil stored in Mombasa is expected in the second quarter of 2019. The joint venture with National Oil Corporation was undertaken after Tullow resolved a dispute with the community seeking jobs, tenders and a better share of the revenue. The dispute saw the evacuation of the black oil suspended for two months. Kenya’s reserve of the fossil fuel is estimated at 750 million barrels.

The Standard
Celebrate Easter in style with our KES999 annual offer