Bad year for economy but more jobs created

Poor rains, insecurity and a reduction in tourist arrivals conspired to slow down the growth of Kenya’s economy to 5.3 per cent in 2014 from 5.7 in 2013.

Robust growth in the building and construction sector, however, helped to lift the economy, largely driven by the ongoing work on the Standard Gauge Railway.

The transport and storage sector also grew.
Interestingly, while the rest of East Africa was recording more robust growth compared to 2013, figures released by the Kenya National Bureau of Statistics yesterday showed that Kenya’s economy shrank while the cost of living went up.

On the positive side, the economy created 799,700 jobs with the informal sector contributing 693,400 of these. The private sector created 69,000 jobs while the public sector created 17,000. The number of people in employment rose from 13.5 million in 2013 to 14.3 million in 2014.

However, the number of jobs created in modern sectors of the economy reduced from 132,200 in 2013 to 106,300 last year, largely due to the slow down in the agriculture sector and lower absorption of employees in the counties compared to 2013.

On the key sectors which drive growth, tourism declined with arrivals reducing from 1.52 million in 2013 to 1.35 million in 2014. This shaved off Sh6.9 billion from the sector’s earnings compared to the previous year.

Overall the sector earned Sh87.1 billion compared to Sh94 billion in 2013. The reduction was largely as a result of insecurity which made Kenya’s travel destinations less attractive; travel advisories from key markets in Europe and fear of contracting Ebola, which hit some countries in western Africa.

NEGATIVE PUBLICITY

No Ebola cases were reported in Kenya and the epidemic appears to have been contained in the affected countries. However, the deaths from the viral disease created negative publicity for Africa generally.
This is the third year in a row that tourism has been on a decline.

Last year, visitor arrivals through the Moi International Airport in Mombasa declined by 39 per cent to 118,000, down from 194,000 in 2013, while arrivals through Jomo Kenyatta International Airport in Nairobi fell from 912,000 in 2013 to 743,000 last year.

Growth in agriculture also slowed down from 5.2 per cent in 2013 to 3.5 per cent last year.

Economic experts have observed that every time agriculture performs poorly, the economy follows suit.

Growth in the manufacturing sector also slackened to 3.4 per cent compared to 5.6 per cent in 2013 with sugar production declining and manufacture of galvanised sheets reducing from 306 million tonnes in 2013 to 284.5 million tonnes last year.

Economic growth received a much-needed boost from the building and construction sector which recorded a 13.1 per cent growth buoyed by increased spending in capital infrastructure projects like the standard gauge railway, roads and private sector investment in real estate development.

The transport and storage sector also gave the economy a boost, recording total output value of Sh873.3 billion compared to Sh768.3 billion in 2013. Information Communication Technology also contributed significantly to stabilising growth with output increasing from Sh232.7 billion in 2013 to Sh262.3 billion last year.

On the flip side, exports grew at a slower pace than imports and this left the country’s balance of trade deficit worse off during the year under review. The import bill increased by 14.5 per cent while earnings from exports registered a slower growth of seven per cent. The balance of trade deteriorated from a deficit of Sh911 billion in 2013 to Sh1.08 trillion in 2014.

Devolution and Planning Cabinet Secretary Ann Waiguru, who launched the report in Nairobi, said the Budget for the next financial year would seek to put more resources into development projects, which could speed up growth.

“The next Budget will be seeking the re-orientation of spending from recurrent to development,” she said.

BIGGEST IMPROVEMENT

The International Monetary Fund has projected a 6.9 per cent growth in 2015 while the World Bank expects Kenya’s economy to grow by six per cent. However, the economic survey launched yesterday did not give a projection.

Going forward, the economy is likely to benefit from reduced population with the birth rate falling from 4.6 per cent in 2013 to 3.9 per cent while the infant mortality rate reduced from 52 per 1000 to 39 per 1000, the deaths of children under five years fell from 74 to 52 per 1,000. The immunisation rates also improved from 85 per cent to 87.1 per cent of the child population.

In education, the teacher-pupil ratio in primary schools worsened from one teacher to 41 pupils in 2013, to 1-43 last year. The number of girls joining Standard One for girls rose by 0.6 per cent but boys declined by 0.2 per cent. More girls were also remaining in school until Standard Five (96.7) but fewer boys were doing so (89.9).

One of the biggest improvements was witnessed in the Judiciary, with Kenyans finally showing growing confidence in the courts as more cases were registered and many more disposed off.

The courts have been undergoing reforms and expansion since 2013, including opening new High Courts in Murang’a, Kerugoya and Naivasha last year and employing more judicial officers.

As a result, the total number of cases filed increased by 56.6 per cent, those disposed with also grew by 53.3 per cent and those pending increased by 30.3 per cent. Cases filed in magistrates’ courts also increased from 277,666 in 2013 to 461,893 in 2014.