Why economic growth figures remain on paper for ‘Wanjiku’

What you need to know:

  • Dr Paul Gachanja told the Nation that the goodness in GDP figures only show growth in the wealth of the nation.

  • Data from the Kenya National Bureau of Statistics released on Tuesday said the country made a climb in growth rate from 2014’s 5.3 per cent.

  • Some of the projects such as SGR had its other negatives in the economic structure as the KNBS data showed a slowed revenue from import duty.

After the government announced last week that the economy grew by 5.6 per cent in 2015, experts now contend that the common citizen will have to wait a little longer to feel the impact.

Others have questioned the use of GDP to measure the wealth of a country given the wide disparity between the numbers and the general economic wellbeing of wananchi.

Analysts also argue that real benefits will only be felt if economic expansion widens further and is sustained for a longer period before the good news trickles down to citizens.

Department of Economic Theory Chairman at Kenyatta University, Dr Paul Gachanja, told the Nation that the goodness in GDP figures only show growth in the wealth of the nation, which may not have any direct link with the common man at the moment.

“Most of what has boosted the GDP is yet to be translated into real economic impact like the standard gauge railway, which is yet to start operating. Unless and until we have such assets beginning to translate to the envisaged economic benefits, they will be felt at the numbers level but not by the common man.

“Even the construction industry is benefiting the rich few, they have an impact in pushing the wealth of the country up but for the poor man who has no stake in it may never feel anything,” Mr Gachanja said

Data from the Kenya National Bureau of Statistics released on Tuesday said the country made a climb in growth rate from 2014’s 5.3 per cent.

The marginal rise was helped by swifter expansion in agriculture, construction and real estate as several other economic segments expanded save for tourism, which continued to bear the brunt of negative travel advisories.

Some of the projects such as SGR had its other negatives in the economic structure as the KNBS data showed a slowed revenue from import duty.

Import duty from machinery category declined by 2.7 per cent in 2015, a reversal from a 10.8 per cent growth in 2014 possibly due to duty free imports associated with the standard gauge railway,” the data showed.

The university don said benefits that would filter to the common man through reduced cost of energy are blocked by additional factors such as corruption and high labour charges.

As a result, manufacturers find it hard to reduce the price of commodities as they compensate for these indirect expenses and cater for increases in other costs in terms of heightened taxation.

Economic policy expert, Professor Michael Chege, said the numbers will only mean much after they are kept higher for a period of time but says its translation to the common man is a policy issue that the government needs to deal with.

“We have a tradition that a fall in prices does not normally reach the consumers and this is happening across several sectors. From the manufacturing to the banking sector, changes that would translate to a price relief for consumers are either delayed or not effected at all. I think this is a policy concern that Kenya needs to address,” Mr Chege said.