Cabinet: Future looks bright with strong economy, steady growth

The economic situation in the country has shown signs of recovery following two years of deliberate fiscal management, the Cabinet announced yesterday.

According to a Cabinet dispatch, inflation—which measures the increase in prices over time—fell to 2.7 per cent last month, down from a high of 9.6 per cent in September 2022. This significant drop indicates that the economy is rebounding strongly from past global and domestic challenges, achieving robust growth.

During the meeting, President Ruto welcomed Deputy President Kithure Kindiki to his first Cabinet session as Deputy President, congratulating him on his nomination and appointment.

“This is the lowest inflation rate since 2007, during President Mwai Kibaki’s tenure, and aligns with the target set in the Kenya Kwanza Manifesto,” the Cabinet dispatch stated.

“Consequently, the prices of various food items, particularly maize, beans, and peas, have decreased over the past year. A 2kg packet of maize flour, which sold for KSh176 a year ago, is now retailing at KSh124,” the Cabinet communication continued.

The Cabinet was also updated on the Social Health Insurance Fund, where it was reported that Sh5 billion has been disbursed to faith-based, public, and private hospitals to settle outstanding bills from the defunct NHIF. Additionally, over 14 million Kenyans have registered with the Social Health Authority.

In another economic highlight, the Cabinet noted that the foreign exchange reserves at the Central Bank have reached an all-time high of $9.5 billion—an increase of $2.4 billion, covering 4.4 months of imports. The economy is reportedly growing at 5.6 per cent in 2023, with projections of 5 per cent growth this year and 5.6 per cent in 2024, ranking Kenya’s growth among the highest globally.

Regarding the exchange rate, the Cabinet noted its stabilisation at Sh129 from Sh162, reflecting an appreciation of nearly 20 per cent earlier in the year. This improvement has helped reduce external debt service costs and contributed to lowering domestic interest rates, creating fiscal space.

“On the revenue side, Kenya Revenue Authority’s tax collections have grown by double digits, with tax revenue increasing by 11.5 per cent in the year to June 2024,” the dispatch added.

The Cabinet was informed that the country is now food secure due to government-subsidised fertiliser and other support measures for farmers.

“As a result, most households can access basic food requirements. Currently, Kenya has 95.2 million 50kg bags of maize, 8.8 million bags of beans, 10.4 million bags of wheat, and 2.1 million bags of rice in stock.

“For the first time, Kenya has produced enough sugar to meet local demand, eliminating the need for imports this year. This milestone is attributed to subsidised fertiliser and improved sector management,” the dispatch read.

The market for coarse grains, especially maize, has shown stable prices.

“In August, the average wholesale price for a 90kg bag of maize was Sh3,300, with the highest prices in Nandi at Sh3,600 and the lowest in Nyamira ranging from KSh2,800 to 3,600.

“Farm gate prices in Trans Nzoia and Nyamira were as low as Sh2,500–2,800 per 90kg bag. Maize flour prices also declined, with a 2kg packet retailing at an average of KSh124 in Nairobi supermarkets, down from KSh139 in June,” the Cabinet noted.

A similar downward trend was observed in the dry beans market, where wholesale prices for a 90kg bag fell to Sh9,400 in August from Sh10,500 in July, largely due to recent harvests. The lowest prices were recorded in Embu at Sh7,200 and in Laikipia at Sh7,500, while Kisumu saw the highest prices at Sh14,000 per 90kg bag...

The Cabinet also received a briefing on labour migration, noting that since July 2023, 105,367 Kenyans have secured jobs abroad, while 16,943 have been cleared for overseas work since January this year following labour agreements with Germany and Austria.

The Ministry of Labour has also identified other destination countries for Kenyan workers, including Australia, Qatar, Canada, Saudi Arabia, Oman, the UAE, the United Kingdom, Kuwait, and Northern Ireland.

“These opportunities span professional, skilled, and unskilled jobs, including roles for nurses, aged-care workers, and teachers in subjects such as science, mathematics, English, and physical education,” the dispatch read.

The Cabinet also approved several policies, including the upgrading of five Technical Training Institutes to National Polytechnics—namely, Michuki TTI, Mitunguu TTI, Ol’lessos TTI, Nairobi TTI, and Friends College of Research and Technology in Kaimosi—raising the number of national polytechnics from 23 to 28.

Additionally, the transfer of Amboseli National Park to the County Government of Kajiado and Kenya’s ratification of the United Nations Agreement on the Conservation and Sustainable Use of Marine Biological Diversity of Areas Beyond National Jurisdiction were approved.