Is the economy growing and creating jobs or not?

CS Rotich’s message was that the economy created 800,000 jobs a year in 2014 and 2015.

Saturday March 26 2016

National Treasury Cabinet Secretary Henry Rotich at a past function. The fundamental issue that Treasury Cabinet Secretary Henry Rotich tackled during the opening session of the inter-ministerial public forum was whether President Uhuru Kenyatta and his deputy, Mr William Ruto, are steering the administration towards delivering on their pre-poll pledges. PHOTO |  DIANA NGILA | NATION MEDIA GROUP

National Treasury Cabinet Secretary Henry Rotich at a past function. The fundamental issue that Treasury Cabinet Secretary Henry Rotich tackled during the opening session of the inter-ministerial public forum was whether President Uhuru Kenyatta and his deputy, Mr William Ruto, are steering the administration towards delivering on their pre-poll pledges. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By PETER WARUTERE
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Over the past few months, the financial scandals such as the one at the National Youth Service and “Chicken gate”, and political bickering have dominated media headlines, leaving no space for objective analysis and public debate on emerging economic trends.

One key issue that should take centre stage is how to deal with the concerns and fears of the youth, who are the majority and the future of Kenya. In recent public surveys, the youth have expressed dismay at the lack of jobs and opportunities to lead decent lives.

So, on the basis of this primary concern, we should ask ourselves: is the economy creating jobs and if so, how many? If not, why, and what needs to be done?

And since successes and failures are attributed to the leadership, it is fair comment to ask if President Uhuru Kenyatta and his deputy, Mr William Ruto, are steering the administration towards delivering on their pre-poll pledges.

This is the fundamental issue that Treasury Cabinet Secretary Henry Rotich tackled during the opening session of the inter-ministerial public forum which focused, in a holistic way, on a mid-term review of the Jubilee government’s achievements.

JOB CREATION

Mr Rotich’s message was that the economy created 800,000 jobs a year in 2014 and 2015.

These jobs could be attributed to the expansion of the economy from 5.3 per cent in 2014 to 5.6 per cent in 2015.

The achievements need to be seen in the context of the positive influences on growth such as the benefits of low global petroleum prices on the cost of living, as well as the difficult national, regional and global economic environment, which is seen foremost in China’s economic downturn and the marked impact of terrorism on international trade and exchange.

In a simplistic economic model, jobs are created when the economy is growing, so the expectation is that as the growth rate improves towards six per cent, new jobs will inch towards one million a year.

However, the big story isn’t that Kenya is an emerging middle income economy. Growth is not a sufficient condition to meet the expectations of the youth and Kenyans at large.

The pace of job creation is just one important component of the whole mix of ingredients in the bowl of economic prosperity.

There are more hard issues to consider such as quality of jobs, sustainability of job creation, distribution of opportunities and impact of growth and jobs on sustainable economic development.

The ability of the economy to continue growing and creating jobs depends very much on all the other things that the government is doing, with financing from the funds mobilised and allocated by the Treasury.

But, the focus should not be on the billions being spent on public sector projects.

TRANSFORMING LIVES

The issue, really, is how the programmes being funded are touching the people and transforming their lives by increasing their economic opportunities, reducing poverty and assuring them that they, or least their offsprings, will enjoy better prospects in a more equitable society.

In this respect, outcomes from the massive spending on infrastructure projects have perhaps been the most spectacular. A few of these clearly stand out, in both quality of implementation and their impact on the people and improving the cost of doing business:

Accelerated investment in geothermal and other green energy sources has reduced electricity bills by 30 per cent and also contributed to a cleaner environment.

More than 4.3 million Kenyans (53 per cent of potential consumers) are now connected to electricity, from only 2.3 million in 2013, and the rapid scaling up of the connectivity is on target to reach 70 per cent of Kenyans by 2017.

Large spending on road projects has contributed to economic efficiency through faster movement of people and goods.

For instance, Cargo transit time from Mombasa to Malaba on the Kenya-Uganda border has reduced from over two weeks to only four days on average.

Increased efficiency and lower transport costs translate into lower prices of goods and services.

Other sectors can boast of their own achievements. Innovation and financial inclusion have put Kenya on the world map of the most promising new emerging economies for young entrepreneurs.

Every adult Kenyan has a mobile phone, critical government services are available on technology platforms and over 70 per cent of Kenyans have access to modern financial services.

These phenomenal achievements have been made possible by the substantial public and private investments.

Kenyans have also benefited from the considerable scaling up of social development programmes especially in education, health and social protection.

These include the following: The cost of public education at primary and secondary levels is heavily subsidised enabling millions of children to receive education without interruption and taking the burden off parents’ shoulders.

Parents can now use the disposable incomes to finance other household needs, thus improving their quality of life.

The national social protection programmes for vulnerable Kenyans including orphans, elderly and those living with disabilities, started on a pilot basis with monthly cash transfers to less than 100,000 households, has rapidly been increased to over 700,000 households, greatly improving the livelihoods of millions of the poor in arid and semi-arid areas, and also in slums.

It is on course to reaching one million households this year.

Transfers to counties, which are 30-40 percent of the audited annual revenue or double the 15 per cent stipulated by the Constitution, have expanded health, rural roads networks and other services at local levels.

Taking critical services such as ambulances, clinics and children immunisation closer to the people, has successfully reduced child and maternal deaths.

These achievements should also be seen in a broader context. A healthy community is not just a function of better health services.

Investing more in water and sanitation, agriculture and infrastructure has contributed to better health outcomes for the people.

Of course, these achievements do not mean that Kenya is not experiencing development challenges.

The economy continues to suffer from internal and external shocks, which constrain its ability to grow at a faster rate (eight to 10 per cent) and create millions of quality jobs each year.

OPTIMISM

The million dollar question is whether the outlook is positive or negative. On balance, there is a deeper sense of optimism than pessimism. Implementation of devolution has posed challenges in the past two years, but opportunities for making it work for the people are enormous.

Amid the political noise, which is really the hallmark of a mature democracy and freedom of expression, there is increasing confidence that the government has laid a strong foundation for economic prosperity.

Confidence is measured in terms of how investors are positioning themselves for the future.

Foreign direct investments inflows increased from US$597 million (Sh60.7 billion) in 2012/13 to US$868.4 million (Sh88.3 billion) in 2013/14, reflecting a growth rate of 45.5 per cent.

Moreover, monthly remittances by Kenyans in the Diaspora increased by 19.9 per cent, from Sh114.5 billion in January 2015 to Sh137.5 billion in January this year.

On average, these Kenyans send home over Sh1.57 trillion a year, making a greater contribution to development than official development assistance.

Tourism is making an encouraging recovery, supported by improved security and the regular international conferences in Kenya.

These are clear signals of a potentially more prosperous Kenya.

The writer is an economist, governance and communications specialist

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