Economy on the upswing, latest scorecard shows

The Government yesterday released its performance scorecard in the form of mid-term review of its Economic Recovery Strategy.

The report shows a significant growth in various sectors over the last three years but unemployment remained the greatest challenge.

The economic recovery strategy was launched in 2003 when Narc came to power with the aim of speeding up wealth and employment creation. It covers the period between July 2003 to June 2006.

Although the Government had set a target of creating 500,000 jobs every year, the economy managed to create an average of 470,000 annually. 

Most of these jobs were created in the informal sector. The share of modern sector employment declined from an average of 25.4 per cent of the jobs created in 2001-2002 to 22.6 per cent in 2003-2005.

Speaking at The Stanley Hotel in Nairobi on Thursday night, Planning and National Development permanent secretary Edward Sambili said: "When the economy was at its worst, the jobs created were 450,000 per year. 

The Government is concerned with the slow rate of creation of jobs and we shall soon be making recommendations on how to accelerate job creation."

However, yesterday Head of Public Service Francis Muthaura said the country was on the path to sustainable development.

"We are now beyond economic recovery and are moving towards sustainable economic development," he said at the Kenyatta International Conference (KICC) during the launch of the report.

The report says there was steady growth in the economy from 0.6 per cent in 2002 to 5.8 per cent in 2005. The challenge, he added, was to sustain the momentum and safeguard the gains made. 

Among the sectors that surpassed targets was agriculture which registered 6.7 per cent growth in 2005 against a target of 3.1 per cent. This was driven by the recovery of cane, horticulture, cereals and dairy farming. Others were coffee and tea.

Between 2002 and 2005, the value of tea increased to Sh37.7 billion from Sh33.4 billion, coffee nearly doubled to Sh9 billion from Sh5.4 billion, horticulture increased to Sh38.8 billion from Sh26.7 billion and maize fetched Sh6.3 billion up from Sh4.5 billion.

Construction sector's share contribution to the GDP reached four per cent in 2005 against a target of 4.2 per cent by end of 2007.

Tourism, which the report described as "a key driver to growth" registered phenomenal growth exceeding the target by 25.6 per cent and six per cent in 2004 and 2005. The earnings increased by 27 per cent to Sh48.9 billion in 2005 from Sh38.5 billion in 2004.

The manufacturing sector's share contribution to the GDP stood at 10.5 per cent in 2005 for 9.7 per cent in 2003 indicating slow progress was made. 

The targeted growth is 15.7 per cent by the end of 2007. Planning and National Development minister Henry Obwocha attributed the sluggish growth to poor infrastructure. 

"The cost of doing business is still costly due to high fuel and electricity costs, poor roads among other factors," he said.

Information Communication Technology (ICT) sector registered 11.8 per cent growth against a target of five per cent to 2007, which indicates its way beyond the target. The number of Internet Service Providers increased to 78 from 66 between 2001 and 2004.

With the duty waiver on computers and ICT items during this year's Budget, and the laying of undersea cable next year, the sector is expected to grow even faster.

Built roads

According to the report, the Government built 1,063 kilometres of roads while another 40,500 is under routine maintenance. 

Additionally, 236 boreholes ware drilled serving about 260,000 people. The Government also rehabilitated 67 rural water supply systems and another 74 are under construction.

The foreign exchange reserves at the end of 2005 was $1.8 billion against a target of $1.7 billion by the end of 2007, while the public debt as a percentage to the GDP declined to 50.1 per cent in 2006 from 53.2 per cent in 2004.

The report also says that this will result in debt service as a percentage to the revenue to drop to 14.6 per cent in 2006 from 15.6 per cent in 2004.