How Kenya achieved 6.3 per cent growth

Kenya National Bureau of Statistics Director General Zachary Mwangi (left), Principal Secretary Department of Planning Julius Muiya (centre) and Treasury CS Henry Rotich during the launch of 2019-2022 economic survey at KICC. [Beverlyne Musili/Standard]

Kenya’s economy grew by 6.3 per cent last year lifted by good rains that helped agriculture – the biggest pillar that contributed more than a third of the wealth.

Sufficient rainfall also meant that food prices were stable to keep inflation down while the spillover was felt in other sectors, including manufacturing and electricity generation.

“I am delighted to note that the agriculture sector growth accelerated from a growth of 1.9 per cent in 2017 to 6.4 per cent in 2018. The growth was mainly driven by a marked improvement in crops and animal production,” said Treasury CS Henry Rotich.

Production of horticulture, tea, maize and coffee soared to overturn depressed yields in 2017 when the country faced a prolonged drought whose impact was compounded by political tensions in the election year.

Mr Rotich added that the country had received more than two million tourists, a record high, which is attributable to the stable political environment following the “handshake” and withdrawal of travel advisories.

Tourism reported the biggest growth at 16.6 per cent to earn the country a record Sh157 billion, according to the Economic Survey 2019 released yesterday.

“The improved performance in the tourism sector is attributed to stable political environment, withdrawal of travel advisories, improved security and investor confidence in the country,” said the CS.

Compared to agriculture, however, the tourism sector is much smaller, meaning that despite reporting the significant increase, the overall impact on the economy is minimal.

More than Sh3 trillion in wealth was created in the agriculture sector.

Rotich said the transport sector was second after agriculture. Injecting Sh711 billion into the Kenyan economy, with part of the push coming in from the Standard Gauge Railway.

“One of the key sub-sectors that contributed to this growth is rail freight traffic, that more than tripled to 3,544 thousand tonnes in 2018, mainly due to the introduction of freight transportation services on the SGR,” he said.

More cargo

Pushing more cargo to the SGR enabled the State to capture the contribution of the transport sector, which has previously been majorly informal.

SGR earned Sh9.8 billion from ferrying cargo and Sh1.7 billion from passenger service – more than double the previous year.

Rotich averred that the transport sector also benefited from the heavy investment in the development of roads, ports and the railway.

Transport as a sector accounted for 8.8 per cent of the Sh8.9 trillion economy.

Manufacturing, which grew 4.2 per cent from the previous year, contributed Sh689 billion.

Other sectors, which lifted the economy, are telecommunication and financial services which consist of commercial banks, insurance firms and money transfer services.

Kenyans moved Sh3.9 trillion via the mobile phone, making communication one of the most important sectors.

Rotich projected that the tourism sector would remain vibrant this year as seen from the trend in tourist arrivals so far.

Further growth, he said, would be realised from the construction sector where the Government is planning to build affordable housing, which is one of President Uhuru Kenyatta’s development agenda.

Robert Shaw, a Nairobi-based economist, said the good rains received last year was the main reason all sectors thrived coming from a “horrible” 2017.