What KNBS numbers reveal about economy in first 2 years under Ruto

The challenge for political elites in the modern economic era is compounded by technology. With advancements in telecommunications, citizens no longer need to meet physically to deliberate on their agendas. They can connect and engage whenever and however they choose.

For instance, shortly after KNBS released the Quarterly Gross Domestic Product Report, I saw a summary of the key highlights shared in several WhatsApp groups I’m part of. Similar analyses appeared on X handles and Facebook pages of influential individuals who have made it their mission to track and share important economic information and business trends in the country.

The result is that such information now spreads much faster than in previous years. On several occasions, I have seen these facts directed at the government’s top economic advisor, Dr David Ndii, via his X account. These interactions often lead to exciting scholarly debates between Dr Ndii and his challengers. However, the widespread dissemination of these discussions could ultimately work against President William Ruto’s bid for a second term, as more people engage with and understand the economic issues at play.

The Kenya Kwanza administration has a narrow window of opportunity to restore its reputation on economic issues that matter most to ordinary citizens. Key officials have repeatedly asked for patience, arguing that more time is needed for the impact of their policies to be felt in people’s pockets. Over the past 28 months, their defense has consistently been that their time in office has been too short to achieve meaningful change.

But on the flip side, the administration’s tax policies have hurt the pockets of employees, households and businesses. According to Dr Ndii’s statements on his X account, the administration’s primary focus has been on stabilizing the economy rather than fostering growth. As he frames it, the financial burden imposed on citizens is a "necessary pain" to keep the economic ship from sinking.

Unfortunately, one of the most contentious positions taken by the Ruto administration—and one they may come to regret—was the argument that they never campaigned on an anti-corruption platform. Dr Ndii even remarked that they would leave the country as corrupt as they found it. This statement undermines basic principles of accountability and decency, particularly at a time when the government is asking citizens to make more sacrifices for the sake of the public good.

This brings us to the less obvious numbers hidden beneath the main macroeconomic indicators reported by KNBS. In this article, I will not dwell on the headline figures that have already been widely discussed in various media. Instead, I will focus on the numbers below the surface and the trends they imply.

KNBS reports a general slowdown in the economy across sectors compared to the same period in 2023. This suggests a systemic issue rather than a seasonal fluctuation and aligns with public sentiment that the economy is struggling. The government often counters these concerns by highlighting a reduction in unga prices in supermarkets. Notably, the data covers September 2024, marking 24 months of the current administration in office.

Digging deeper reveals the underlying dynamics of the economy. According to the report, growth in the Agriculture, Forestry and Fishing sectors was largely attributed to favourable weather conditions. Interestingly, this growth was primarily driven by just two products: increased sugarcane deliveries and higher milk intake by processors. In contrast, tea production declined by 12.2 per cent. These same two products—sugarcane and milk—also played a key role in driving growth within the manufacturing sector.

Curiously, the report makes no mention of the fertiliser subsidy, a flagship programme frequently touted by the administration’s political and bureaucratic elites, as a contributing factor to sector growth. Was this omission deliberate, or does it indicate that the statistician does not view the subsidy programme as a major driver of growth?

The construction sector presents another interesting case. President Ruto has consistently argued that the Affordable Housing Programme has created over 200,000 jobs and that most of the materials used are locally sourced. However, according to KNBS, the sector contracted by two per cent, with huge declines in the production of galvanized iron sheets, cement and the assembly of motor vehicles.

This data appears to contradict the hype surrounding the Affordable Housing Programme. Could it be that people are holding back, waiting for government houses to materialize? Additionally, this data supports criticism leveled against the Kenya Kwanza administration that it has yet to initiate any major public projects of its own since taking office.

More importantly, the data implies that people have reverted to survival mode, focusing their spending on basic essentials, as suggested by Maslow’s hierarchy of needs. This is further corroborated by a 13.6 per cent decline in credit to the construction sector during the quarter. For context, this period coincides with the dry season, traditionally a peak time for construction activity under normal circumstances.

Two other pieces of data add intrigue to the analysis. Both passenger numbers and cargo freight on the Standard Gauge Railway dropped significantly during the quarter, while electricity production also declined. These trends could provide insights into shifting consumption patterns within the middle class.

The decline in passenger numbers could be attributed to Kenya Railways' recent ticket price hikes. However, if this is the case, it suggests that the middle class has become highly price-sensitive—a behaviour typically associated with lower-income groups. On the other hand, the decline in electricity production, given our demand-driven production cycle, raises questions about reduced electricity demand during the quarter. Why was demand so low? This supports the broader consensus of decreased economic activity across the country.

In an article dated June 15, 1989, published by the International Monetary Fund, Vito Tanzi argued that achieving stabilisation with growth requires demand-management policies to be complemented by measures aimed at increasing potential output.

Ultimately, as 2027 approaches, what will matter most to the people is how they felt economically—what was in their pockets and what they could afford to put on their dinner tables.