Kenyans highly dependent, says KIPPRA

October 28, 2009
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, NAIROBI, Kenya, Oct 28 – A local survey conducted by the Kenya Institute for Public Policy and Research Analysis (KIPPRA) has found that Kenya’s dependacy ratio stands at 84 percent.

Speaking during the launch of the Kenya Economic Report 2009 on Wednesday, KIPPRA Executive Director Moses Ikiara said the youth bracket has been growing steadily over the years without enough jobs for them to take up.

The report also finds that annual labour force growth was at three percent but Dr Ikiara said this did not reflect the true picture as many out of the 84 percent were working poor not able to fend fully for themselves.

“If the dependency level is that high it means there is no money to put into other sectors such as education, health which are a critical part of Vision 2030,” he remarked.

Plannining Minister Wycliff Oparanya said the government was currently facing major budget constraints and needed to cut down on recurrent expenditure to help spur economic growth.

He said this would enable the government create more jobs for the youth and reverse the dependacy ratio.

The report puts GDP growth for 2009 at between two and 2.5 percent and projections have it growing to 3.9 percent subject to risks and uncertainties related to the depth of the financial crisis, political stability, weather and ability to secure effective funding.

To achieve sustainable growth, the report calls for balanced growth in aggregate demand and capacity of the economy to produce goods. It calls for refocusing of efforts towards the supply constraints in different sectors of the economy and the adoption of policies that enhance domestic inter linkages in the economy.

In the agricutural sector, Kenya had maged to reduce hunger by five percent compared to 48 percent in Ghana over the same period. But in 2009 Kenya had been undergoing major food crisis and all efforts were going towards boosting food production.

The Manufacturing sector stood at 10 percent contribution to the GDP and accounts for 14 percent of wage emplyoment in Kenya.

The report however says emphasis needed to be channeled towards value addition of products for it to make a significant contribution to the economy. The current level is six percent compared to an average of 56 percent, value addition on manufactured products from the sampled countres.

“We need to do more to boost the global competitiveness of our products if we are to fair favourably in the world market,” Dr ikiara said.

The economic report for 2009, also raised concerns in the trade sector saying the trade to GDP ratio was low at 55.4 percent. It identifies the governmet has been focusing on domestic activities instead of making a bold claim to the world market. Ghana’s ratio stood at 97.6 percent while that of Malasyia was at 222.5 percent.

The tourism sector was also found not to be recouping on its investment. Despite the high numbers accounted for, tourists were found to be spending less in Kenya. The report says the sector needs to do more in creating new and exciting activities in the different tourist destinations to stimultae increased spending by tourists.

“Kenya is viewed as a cheap destination, yet we have first class facilities that can fetch so much more,” he expressed.

In the financials, despite improvements in investment growth, the country still has one of the lowest investment rates among comparator countries. The report identifies the country has failed in attracting foreign direct investment.  Flow of foreign remittances was however encouraging standing at Sh42.5 billion in 2008.

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