State of Kenya's economy: What's really going on?

The 2022 polls put the economy on the pedestal. It’s likely to remain there in the foreseeable future. We have become more economically conscious as the country modernises.

One unintended consequence of this consciousness is corruption or nepotism, as more citizens come to learn what money can do for them.

Later, often late in life, the corrupt realise no one needs money; it’s the choices money allows you to make that matter. Why else is corruption so costly to the corrupt? It restricts their life choices. Read the previous sentence again.

What is the state of our economy? Looked at from a macro point of view, the economy is doing well. The exchange rate is stable, and the Gross Domestic Product (GDP) growth is expected to be shy of five per cent this year.

Inflation is stable, too. But external debt is a millstone around our economy, without enough tax revenues.

No wonder securitisation is gaining traction. Let’s not forget local debts owed to suppliers and contractors. The bank borrowing interest is still high, around 15 per cent.

No wonder inflation is low! What does the re-opening of some bonds (tap sale) tell us about the state of the economy?

One rarely highlighted economic indicator is productivity. Are we producing more with less? Higher productivity makes firms more profitable. Technology and innovation drive productivity, while culture is a drain on it. Remember, “we have always done it this way.” 

If the economy is doing so well, why are Kenyans unhappy, not feeling it? 

The macroeconomic view of the economy is like looking at a rainforest from the air. It’s a green curtain.

Explore the forest; you will find wild animals like alligators, snakes, mosquitoes, hyenas, stinging nettles, and other exotic plants and animals, and lots of humidity. These animals and plants compete for resources like air, sunshine and nutrients.

Our economy is like that; we compete for resources. While the economy is rosy, some citizens are left behind, either because of history or socio-economic constraints, including politics, regulations or family life.

Inequality is masked by macroeconomic indicators. Compare a polygamous family of 12 and a nuclear family of four.  Economic reports don’t report the plight of individuals, yet that’s what really matters. Few know what their neighbours ate last night.

We have rising petrol prices, likely to impact inflation. Will securitisation keep fuel prices high? Add other costs like school fees, transport, health and rent. And hope the rain will be reliable.

Joblessness is haunting the country. In the past, graduates went straight to the job market without internships. And I do not recall employers complaining.

Truth be told, internships are not “holding grounds” for jobs. We are not growing the economy fast enough to absorb job seekers.

Want more on the state of the economy? How many people have borrowed money from you this year compared with last year? 

Wondered why Kenyans are looking for any excuse to celebrate? Birthdays, weddings, graduations, baby showers, Halloweens, promotions, and even moving houses.

Such celebrations indicate the economy is not doing very well, citizens want to reduce stress, exhale and not really celebrate.

If the economy is not doing well, why so many huge construction projects in Nairobi? Simple; money is coming back to Nairobi from the counties, and the returns are higher in the city.

There is more money from abroad, making Nairobi so expensive. Why should an acre of land cost Sh500 million in Nairobi and Sh800,000 in my village (name withheld for security reasons)?

We can debate till daybreak the source of the funding for the huge construction projects in Nairobi. And I am not referring to affordable housing.

Clearly the affluent are enjoying the growth. The hoi polloi, no. Remember, we score highly on inequality. We had hoped that Kenya Kwanza would bridge this inequality. Any scorecard on Bottom-up Economic Transformation (BETA? 

The bright economic spots include information technology, seen more as a status symbol than a productivity driver. Finance is doing well, too. Add tourism and real estate.

Dull sectors include construction (except Nairobi), mining, agriculture and transport. Kenya National Bureau of Statistics (KNBS) has good data on key sectors.

What next?

Some think that after the 2027 polls, things will change economically. Sounds familiar? Should we get used to disappointments or remain forever optimistic? Others want to leave the country and seek greener pastures.

The government has tacit support for that. Remember the huge crowds outside the US embassy before the 2002 polls?

The truth is that many will not leave. What percentage of Kenyans own a passport? They can only hope the economy will pick up. When is another debate?

Ordinary Kenyans look subdued by the economy. I have suggested repeatedly that an economic stimulus package is needed, like the one we had during Covid-19. Our economy is now like a smouldering fire. Who will fan into it flames and growth?