The latest economic survey released by the Kenya National Bureau of Statistics has some sobering figures.
In 2024, economic growth declined from 5.7 per cent in 2023 to 4.7 per cent last year.
The one percentage point decline is often associated with election years, perhaps a reflection of the heightened political tension in the country. Indeed, if you did not know our electoral calendar you would assume that the President spends all his time atop cars at rallies because we are in an election year.
Unsurprisingly, the best performing sector in the survey was the finance and insurance sectors. This is not necessarily due to any innovations in the sector or increased lending to businesses and households.
Rather, the 7.6 per cent expansion in the sector is most likely due to increased government borrowing, which continues to crowd our private sector lending.
Interesting, the construction sector saw a contraction of 0.7 per cent (down from a growth of 3 per cent in 2023). This is odd, given the fact that housing is the president’s signature initiative, for which he raids taxpayers’ pay slips every month.
It is also noteworthy that Kenyans’ real wages declined for a tenth consecutive year, albeit at a much slower pace.
Overall, the President’s economic team should view this as a glass-half-full situation. On one hand, a 4.7 per cent growth rate is nothing to sneer at – especially in the context of both global uncertainties and the increase in political risk in the latter half of 2024 (largely due to the president’s own doing regarding the Finance Bill).
There are also promising numbers in the rise of manufacturing employment, robust performance in agriculture and agro-based industries, and growth in the logistics and transportation sectors. These sectors ought to be the basis of the President’s growth and jobs agenda.
On the flip side, there are worrying signs from the energy and construction sectors. Growth in fuel demand was a tepid 2 per cent. Growth requires energy, and a reduced rate of increase in demand suggests that the economy is not firing on all cylinders.
The failure of the President’s housing programme to increase output in the construction sector speaks to ongoing weaknesses in policy design and implementation, which are not limited to the sector.
If you have to hit consumers with a dubious tax like the housing levy, the least you could do is keep your word and build lots of affordable housing units and create hundreds of thousands of jobs while at it.
By Ken Opalo