Terrorism, erratic rains and sluggish spending of development funds have been listed as the key reasons why Kenya missed last year’s economic growth target.
The country had set a growth target of 5.5 per cent but the economy registered a flat growth of 4.7 per cent, compared to 4.6 per cent in 2012. That means 2013 was a difficult year for the national government, whose spending drastically reduced.
Counties also experienced delays in spending money allocated to them because they were still setting up new governance structures after the March 4 General Election.
Erratic rains in some regions led to a decline in agricultural production while terrorism resulted in travel advisories by leading tourist markets, a move which led to a decline in tourist numbers and a drop in earnings from the sector.
Tourist arrivals dropped from 1.7 million to 1.5 million following security concerns brought about by terrorist attacks, among the most pronounced being the Westgate attack in which 67 people were killed.
This was followed by travel advisories from key markets in America and Europe. This saw earning from the country’s second source of foreign exchange fall by 2.1 per cent from Sh96 billion in 2012 to Sh94 billion in 2013.
“Reduced spending by government agencies during the transition and risk aversion in the lead-up to the 2013 general elections and security concerns were reasons for slow economic growth,” said Ms Anne Waiguru, the Devolution and Planning Cabinet Secretary. She spoke after unveiling a survey in Nairobi yesterday.
Supply of basic goods
The 4.7 per cent growth rate was lower than the World Bank projected rate of 5 per cent. The World Bank had projected that the growth would be “the highest level since 2010, when the economy grew by 5.8 per cent.”
The survey revealed that the economy benefited from improved supply of basic goods, lower international oil prices and lower electricity prices, which eased inflation from a high of 9.4 per cent in 2012 to 5.7 per cent in 2013.
However, the volume of exports declined and the international prices of key exports like tea, coffee and horticulture declined worsening the balance of trade. Total exports declined from Sh517.8 billion to Sh502.3 billion in 2013 while imports increased from Sh1.37 trillion in 2012 to Sh1.41 trillion in 2013.
The economy generated 742,000 new jobs, 84 per cent in the informal and 116,000 in the formal sectors out of which 26.3 per cent were in both the central and county governments.
“This is an improvement and we want to see more of these jobs and the interventions by government will be seen in the Budget that is meant to spur growth in these numbers,” Ms Waiguru said.
Manufacturing grew at 4.8 per cent compared to 3.2 per cent in 2012. This was attributed to increased investor confidence, stable exchange rates and the easing in inflationary pressure over the year.
Increased production was registered in cement, rubber, sugar, fabricated metal, basic metals, furniture, pharmaceutical, prepared and preserved fruits and vegetables.
However, a drop in production was recorded in the manufacture of refined petroleum products, processing and preserving fish, manufacture of electrical equipment, beverages and tobacco.
Building and construction sector expanded 5.5 per cent in 2013 compared to 4.8 per cent in 2012, while the wage employment in the sector increased by 12.2 per cent from 166,100 to 130, 300 workers in 2013.
On the downside, agriculture — the highest contributor of wealth — recorded a 2.9 per cent growth compared to a revised growth of 4.2 per cent in 2012, due to erratic rainfall in various regions. The sector’s contribution to the overall growth increased to 25.3 per cent in 2013 compared to 24.6 per cent in 2012.
“Due to the high contribution of the agriculture to the national wealth, a slight drop in the sector has a great impact on the overall growth of the economy,” Ms Waiguru said.
The mobile money transfers increased by 36 per cent to Sh914 billion mostly due to increased number of mobile money subscribers. The mobile penetration, however, remained unchanged at 74.9 per cent, with number on new subscribers increasing by 2.9 per cent in 2013 compared to 12.8 per cent growth in 2012.
On health, the survey said the number of dentists to the population remained relatively low at three per 100,000 persons compared to the doctors and nurses ratio of 21 and 91 within the same population.
The survey, however, noted an increase in the number of registered medical personnel from 104,913 in 2012 to 112,576 in 2013.
The report also shows that the number of fully immunised children reduced from 1.09 million in 2012 to 1 million in 2013. Full immunisation coverage also dropped from 83 per cent in 2012 to 74 per cent in 2013.
“This could be attributed to the health workers strike during the review period,” the survey said.
Malaria is the leading killer disease in Kenya, according to the 2014 Economic Survey.
The report indicates that 12.2 per cent of reported deaths were caused by malaria while 11.8 per cent were attributed to the respiratory disease, pneumonia.
The findings of this report corroborate those of the 2008/2009 Kenya Demographic Health Survey that ranked malaria as a top killer.
Breast and cervical cancers have been identified as the biggest killers among women, while prostate, oesophagus and Kaposi’s sarcoma claim the most lives among men.
According to the survey, NHIF membership increased by 13.5 per cent from 3.34 million in 2011/2012 to 3.8 million with the informal sector beating the formal through what the agency attributed to social marketing and improved public information on the fund.
— By Joy Wanja Muraya
Building & Construction
Some 14,200 new jobs were created by the building and construction sector last year. This was a 12.2 per cent increase compared to 2012, when wage employment stood at 116,100 persons.
This was attributed to the expansion of the sector, which grew by 5.5 per cent against the 4.8 per cent growth registered in 2012.
The National Housing Corporation completed 215 residential houses in Nairobi last year at a cost of Sh99.5 million and an additional 161 in partnership with Housing Finance at a cost of Sh730 million.
Cement consumption increased by 6.9 per cent in 2013, which was an equivalent of 4,266.5 tonnes.
Bank loans and advances to the building and construction sector rose to Sh70.8 billion.
The department of infrastructure focused on completion of on-going projects as well as maintaining and rehabilitating the existing road networks.
The cost of the railway line and stations amounted to Sh1.092 billion.
— Samuel Born Maina
The Manufacturing sector accounted for 8.9 per cent of GDP and provided 12.4 per cent of jobs in the formal sector in 2013.
It recorded a growth in real output of 4.8 per cent compared to 3.2 per cent in 2012. The growth was attributed to the political stability that prevailed after the March 2013 elections, which increased investor confidence.
The sub-sectors that registered growths of above 10 per cent were manufacture of rubber, sugar, fabricated metals, basic metals furniture, pharmaceutical, food production, and preserved fruits and vegetables.
Assembly of motor vehicle, trailers and semi-trailers and building of bus bodies went up.
The dairy sector also saw an improvement with the quantity of processed milk rising. The meat and fish sector recorded a negative growth while production of bread and biscuits increased.
Manufacturing of shirts increased while production of T-shirts and knitted fabrics declined.
— Samuel Born Maina
The number in public and private primary schools increased by two per cent.
Enrolment in Standard One increased to 1.6 million in 2013 with enrolment of boys and girls increasing by 2.6 per cent and 0.7 per cent respectively.
The number of students in public and private secondary schools went up from 1.91 million in 2012 to 2.10 million in 2013 with enrolment of boys growing by 10.7 per cent and girls by nine per cent.
University enrolment rose from 240,551 in 2012 to 324,560 in 2013.
The growth in the number of teachers in primary and secondary schools was negligible.
— Patrick Nzioka
Nearly Sh1 trillion was transacted over mobile money platforms in 2013.
“The significant growth was mainly due to the preference for the service because of its efficiency and convenience,” says the survey.
As a result, mobile money and Internet drove growth in Information Communication and Technology, sector.
The number of Internet subscription grew to 13.3 million, up from 8.5 million in 2012. An estimated 21.3 million Kenyans had access to internet services.
Total output in the ICT sector was recorded at Sh127.28 billion.
— Muthoki Mumo
Low lending rates and improved business opportunities increased appetite for credit by 17 per cent.
The survey shows that total bank loans and advances expanded to Sh2 trillion compared to Sh1.7 trillion the previous year.
The credit boost was experienced during the second and third quarter of the year, compared to the earlier sluggish performance due to pre-election jitters.
“With the peaceful conclusion of the March 2013 general elections, the industry experienced an upward growth in demand for credit,” read the report.
Inflation for 2013 fell to an average of 5.7 per cent compared to 9.4 and 14 per cent in 2012 and 2011 respectively. — John Njiru
Additional reporting by Joy Wanja