When statistics paint a rosy picture of worrying situation

The Central Bank of Kenya. The Economic Survey has painted too rosy a picture for the growth of the economy. FILE PHOTO |

What you need to know:

  • How can the economy be registering such high growth rates when agriculture and manufacturing are stagnant.
  • The Economic Survey has painted too rosy a picture for the growth of the economy.
  • Indeed, banks are just not lending: they are busy rebuilding their balance sheets.
  • Capital markets are still in the middle of a bear run.

In the din of the prevailing election campaign mood, we have consigned economic issues to the back-burner.

Does it surprise that there is little public discussion on the latest version of the annual Economic Survey.

We still remember that memorable quote attributed to former British Premier Benjamin Disraeli and popularised by Mark Twain that goes: There are three kinds of lies, damn lies and statistics.’

The Economic Survey has painted too rosy a picture for the growth of the economy.

There are just far too many proxies for growth showing that the economy is not performing that well.

GROWTH RATES

How can the economy be registering such high growth rates when agriculture and manufacturing are stagnant.

Yes, recent trends have shown that the two sectors are gradually being supplanted from their traditional roles as the main engines and most important contributors of growth.

We are gradually moving to a post-material world where the service sector will be creating more wealth than brick and mortar.

Still, far too many indicators have been pointing to anaemic growth.

They include an upsurge of profit warnings by listed firms, a slump in electricity demand by large and industrial consumers - widespread distress across large department stores and supermarkets, a drop in the flow of credit to the private sector, a rise in the number of redundancies by even profitable companies - and a spike in non-performing loans by banks and declining profitability of even some of the largest and highly-rated companies.

REBUILDING BALANCE SHEETS

Indeed, banks are just not lending: they are busy rebuilding their balance sheets.

Businesses and households are feeling the crunch as far as credit is concerned.

Even the usually bullish property sector is beginning to feel the heat, finding itself in the middle of an unprecedented fall in demand for office space and a fall in rental incomes.

Capital markets are still in the middle of a bear run.

Are the statisticians giving us damn lies and what can one say about the quality of the statistics presented in the Economic Survey?

I can’t pretend to have the answers. What I know for sure is that the Kenya National Bureau of Statistics has major capacity issues mainly as a result of chronic underfunding.

IMPORTANCE OF STATISTICS

The political elite don’t appreciate the importance of statistics. In the last Cabinet structure, they placed our statistics office under the Devolution and Planning Ministry, lumping this critical and technical institution with several unrelated departments, including graft-riddled departments such as the National Youth Service (NYS) and the Youth Enterprise Fund.

The upshot was that the statistics office found itself way below in terms of priority in budget allocations since the elite in that ministry preferred channelling money to departments with more rent- seeking opportunities such as the NYS. Our national statistics office needs funds to enable it to do regular poverty counts.

And, to count the poor, you need no conduct regular household surveys - those face-to-face home visits where people are asked how much they earn, own, and know.

I read somewhere that in some countries, national statistics offices now do household surveys, not only frequently, but continuously.

DESIGN POLICIES

As a policy maker, you need to know what your farmers, manufacturers and people in the service industry are doing and what prevents them from producing more.

This is how you manage to design policies to increase employment, productivity and economic growth.

Due to underfunding, the statistics is not able to produce industrial surveys frequently.

Labour market surveys are not done regularly. Yet without data, planning is impossible.

If we want to have accurate growth statistics, we must be prepared to spend more and to give more recognition to the national statistics office.

SATELLITE IMAGERY

In this day and age, we should be talking about spending big on satellite imagery and other modern means and methods for collecting data.

I hope the government that comes to power after the August elections will give national statistics and planning a higher priority.

For a start, can we do something about ‘Herufi House’, that derelict-looking building sticking out like a sore thumb between the National Treasury and the Central Bank of Kenya as if the sole purpose of its presence is to remind us just how successive governments have ignored national statistics.

Until we start see substantial investment in new plant and machinery, a vigorous rise in agricultural out-put an upsurge in consumer spending, a new trend in corporate profitability, a spike in credit to households and business and more investment in infrastructure - the much-touted green shoots of recovery will remain a myth. Period.