Kenya’s economy grows marginally to 5.6pc amidst difficult environment

April 19, 2017
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Agriculture contracted by 1.5 percent in 2016 compared to a growth of 5.5 percent in 2015 despite a rise in Tea and Coffee production by 18 percent and 10.8 percent respectively/FILE

, NAIROBI, Kenya, Apr 19 – Kenya’s economy expanded marginally to 5.8 percent in 2016 compared to 5.7 percent in 2015 amidst a tough economic environment which has seen major sectors record subdued growth.

The slow growth led to fewer jobs created in 2016 at 832,900 compared to 841,600 in 2015, with nearly 750,000 (90 percent) of new jobs created in the informal sector.

According to the Economic Survey 2017 by the Kenya National Bureau of Statistics, tourism was the best performer as international arrivals went up by 13.5 percent to 1.34 million in 2016 from 1.18million in 2015.

Revenue from the sector went up by 17.8 percent to Sh99.7 billion from Sh84.6 billion in 2015.

Information Communication and Technology was also a major driver of the economy growing at 9.7 percent in 2016 compared to 7.4 percent growth in 2015.

The value of the ICT output in the period under review went up by 11.1 percent to Sh311.1 million in 2016 from Sh280 million in 2015. Meanwhile, Mobile subscription improved by 85.6 percent from 85.4 percent in 2015.

The value of mobile money transactions hit Sh3.4 trillion in 2016 from Sh2.8 trillion in 2015.Other sectors that recorded growth includes real estate as well as transport and storage.

However, key sectors regarded as the backbone of the economy recorded slow growth.

Agriculture contracted by 1.5 percent in 2016 compared to a growth of 5.5 percent in 2015 despite a rise in Tea and Coffee production by 18 percent and 10.8 percent respectively. The sector was hampered by drought in the fourth quarter of 2016.

Manufacturing recorded a 3.5 percent growth in the period under review which is a decline compared to 3.6 percent growth in 2015 even as sales from export processing growth recorded a 5.8 percent increase to Sh68.7 billion.

The construction industry, on the other hand, recorded a 9.7 percent growth in the period under review compared to a 13.9 percent growth registered in 2015.

The financial sector also recorded a decline growing by 6.9 percent in 2016 compared to 9.4 percent growth in 2015 amidst the amendment of the banking act that introduced capping of interest rates on loans in the fourth quarter of 2016.

Import bill went down by 9.2percent to Sh1.4trillion in 2016 from Sh1.6 trillion in 2015 attributable to a decline in global oil prices in 2016 as total import bill on petroleum products declined by 12.6 percent to Sh197.5 billion.

Export earnings also declined marginally to Sh578.1 billion in 2016 from Sh581 billion in 2015.

Going forward in 2017, the agricultural sector is expected to be hard hit as drought continues to bite in the first and second quarter of 2017.

Other factors likely to affect the economy include the continued deceleration in growth of credit to the private sector that has stabilized at 4 percent owing to the interest Rate capping.

Also, international oil prices are expected to rise in 2017 suppressing the transport sector growth that posted 8.4 percent growth in 2016 a slight improvement from 2015 owing to a 2.8 percent increase in total cargo throughput at the port of Mombasa as well as an increase in total commercial passengers handled in the period under review.

Compared to the East African Community Kenya’s growth is lagging behind its neighbors with Tanzania and Rwanda growing at 7.2 percent and 6 percent respectively. Uganda grew by 5.9 percent.

The East African Community registered 6.1 percent growth even as Sub Saharan Africa grew by 1.4 percent from 3.4 percent registered in 2015.

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