Kenya's economic quality worsened in the last decade: Report

An areal view of Kenya's financial centre Nairobi.

Photo credit: File | Nation Media Group

Kenya’s economic quality worsened over the past decade amid swelling government debt, negative credit ratings, dwindling savings and a drop in government integrity.

This is according to the Legatum prosperity index, which ranked the country position 108 out of 167 for economic quality globally, a four-point drop from its position in 2010.

This year’s report shows that Kenya scored 43.0 points in terms of economic quality, down from 43.8 points in 2010. The report paints a grim picture of the country’s fiscal sustainability, where all aspects of economic resilience have been dropping.

For instance, the government’s budget balance dropped from -4.3 per cent in 2010 to -7.8 per cent, while government debt rose from 41.5 per cent to 60.1 per cent.

Gross savings, on the other hand, reduced from 14.5 per cent to 9.2 per cent. The metric is calculated as GDP minus final consumption expenditure, and is used to measure the extent of resources available for investment in productive capital.

In 2010, Kenya ranked at position 92 in terms of budget balance but, today, it is ranked in 159th place out of the 167 countries surveyed. This means that even though the government’s spending continues to grow, its revenues cannot match because much of the money is being used to service debts.

The overall fiscal sustainability of the country has dropped from 49.4 points to 35.9, as Kenya is now ranked 148 from position 109 in 2010.

This comes as government integrity drops, with independent and non-governmental checks on its powers weakening, the report says.

However, Kenya scored better in terms of overall prosperity, measured aspects of Inclusive Societies, Open Economies, and Empowerment of People. Overall, Kenya ranked at position 113 out of the 167 countries that were assessed, scoring 51 points, up from position 121 and 46 points in 2010.

“The Index reveals that, prior to the pandemic, global prosperity stood at a record high, with 147 out of 167 countries seeing prosperity rise over the last decade, driven by improved health, education, and living conditions, and more open economies,” the report released on Monday stated.

All regions had seen an improvement in education in the last 10 years, with people starting education earlier and continuing later in life, researchers observed.

The report, which assessed the overall performance between 2010 and 2020 pre-Covid-19 times, poked holes in the country’s governance system and its lack of accountability, which seems to be failing the other performing sectors of life.

“Although the world has changed, how prosperity is generated and perpetuated within a nation is unchanged. While many nations continue to grapple with the social, economic and health impacts of Covid-19, choices need to be made that are likely to have longer-term consequences,” said Dr Stephen Brien, Director of Policy at the Legatum Institute.

Neighbouring South Sudan was the worst ranked country, followed by the Central African Republic (CAR) and Yemen. In total, seven African countries dominated the bottom 10 list of poorest performers, with the others being Somalia, Chad, Sudan, Eritrea and Democratic Republic of Congo (DRC).

The top five countries were Denmark, Norway, Switzerland, Sweden and Finland.

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