Tuesday, July 24, 2007


By Karithi Amos Ngeera
According to figures from the Economic Survey 2006, released by Planning and National Development minister, Henry Obwocha, the economy grew by 5.8 per cent last year compared to 4.9 the previous year. This growth surpassed the government prediction of 5 percent and despite a devastating drought.
Let us decipher these figures and see what they mean to the common citizen who should be the target of any economic growth or decline.
Tourism and hotel sector grew by 13.3 per cent, earning Sh48.8 billion compared to Sh38.2 billion last year. But how are these billions finally shared out? The tourist hotels, lodges, tour operators and booking agencies are mainly owned by foreigners and a few wealthy Kenyans. While the people employed in this sector ideally should share in this success, unfortunately the sector is notorious for worker exploitation, remunerating them poorly and subjecting them to deplorable working conditions. Therefore the majority of Kenyans have nothing to gain from growth in this sector.
Transport and communication sector grew by 8.3 percent mainly boosted by increased mobile telephony with the total subscriber base reaching 5.6 million. Who benefits from mobile phone technology? While it is true that the cost of mobile phone handsets has significantly reduced, the cost of airtime remains prohibitive to many Kenyans. This locks out the poor from the benefits of this revolutionary technology.
It also beats logic why using mobile phones should be more expensive that landlines. Mobile technology is modern, cheap and efficient as opposed to the ancient landline technology requiring laborious laying down of posts and cables occasioning very high maintenance costs. It is always expected that a newer technology will be more efficient and cheaper than the old. But the converse is the case in Kenya.
It is also a pity that railway transport recorded the poorest performance in the transport sector. This ironically is the sector should be most beneficial to the poorer members of our society because it offers cheap means of transport and handles large volumes.
The agricultural sector grew at 6.7 per cent growth compared to 1.4 per cent in 2004. This however did not result much from any well thought out policy or investment by the government but luckily due to favourable weather conditions that boosted the cereals, horticulture and dairy sub-sectors.
But let us see how this growth in the agricultural sector cascades down to the common citizen.
The horticultural sub-sector grew despite the strong shilling, earning Sh38.8 billion compared to Sh36 billion last year. But horticulture farming continues to be dominated by big foreign companies and a few wealthy Kenyans who are able to afford the huge capital outlay required and are able to venture into the export market. The few small-scale farmers who venture into this sector are contracted as outgrowers by the big exporters who dictate the prices ensuring that they pocket more that 80 percent of the revenue earned form the export market with the farmer taking a paltry 20 percent or less.
A big disappointment is the performance of coffee sub-sector which at one time led in foreign exchange earnings in the mid 80. Production has continued to plummet every year by 6.6 percent. It is worth noting that this is the sector whose growth would result into wider benefit for many Kenyan rural farmers. Instead it declined.
This therefore means that even in agriculture, which is the lifeblood of our economy, growth did not occur in sectors that benefit the poor majority.
Manufacturing sector grew by five per cent compared to 4.5 per cent in 2004. The government attributes this to a stable macro economic environment and a mainly low interest rate regime that enabled most manufacturers to access credit. This growth defied high costs of energy, low priced finished goods from Asia and a strong shilling resulting in lower earnings of exported manufactured goods. This is one area the government needs to be commended for concerted efforts in partnership with the private sector. But did the jobs created in this sector make a positive impact on the unemployment levels in the country?
Building and construction also recorded growth with cement consumption growing by 10.9 per cent from 1.4 million tonnes in 2004 to 1.5 million tonnes. Does this growth reach the poor? With the poor wages paid to construction workers and the sector being dominated by a few wealthy contractors. The answer is clear–no poor Kenyan benefited from growth in this sector.
Commercial banks lending to the private sector increased by 18.5 per cent to Sh294.9 billion in December 2005. Most of the poor particularly in the rural areas and urban slums have no access to banking services and credit. Growth in Kenyan commercial banks is therefore irrelevant to them.
The government however should be commended on some areas; increase in expenditure on social sectors such as health, education and security is showing positive impact. The Ministry of Education got Sh88.3 billion shillings up from Sh80.2 billion the previous year. This has increased enrolment in primary schools from 7.4 million pupils in 2004 to 7.6 million last year.
This is a good sign that many children from poor families are accessing basic education which is important in shaping their future.
The depressing news in the education sector, however, is that the number of teachers dropped from 178,194 in 2004 to 171,033 in 2005. This will definitely impact on the quality of education offered in public schools where most Kenyans can afford to educate their children. This does not do very well in closing the income disparity as education remains a very powerful avenue of getting many children out of the poverty bracket.
The total enrolment in universities declined to 89,979 students in 2005 from 91.541 students in 2004. This is an irony considering that university education has been opened up with introduction of “day scholars” or what is popularly called the parallel and distant learning programmes.
Increased spending in health sector has also seen the number of health facilities increase and immunisation coverage improved from 59 per cent in 2004 to 65 percent. This is good for the country because a healthy nation is a productive nation.
Increase in government spending on security, community policing and reforms in the police have also seen the number of crime cases reported to go down by 10.1 per cent. Unfortunately crime against women, including rape, defilement and assault rose by 1.4 per cent. This is why the Sex Offences bill need to be supported by all. These figures clearly show that sex offences are not much of a security issue but a societal attitude problem and no amount of spending in security is going to stem them.
On employment, the informal sector generated 414,000 jobs while the formal sector managed a meagre 44,000. This growth has not resulted from any government policy or resources provision to the sector. With so many highly qualified and experienced Kenyans being pushed from the formal sector through redundancies, this sector has only one direction to go, upwards!
This sends a very strong message to our policymakers that more public resources should be redirected into this sector because it has bigger potential for creating jobs than the formal sector which is controlled by multinationals and the wealthy section of our society.
The above figures are largely encouraging that our economy is expanding. But the picture underneath the figures is not so rosy. While 20 percent of the Kenyans are marching forward into the 21st century, the majority of the country is slipping back to poverty, isolation, desolation, ill health and hopelessness.
The policymakers must in addition to the growing economy take radical steps to redirect this growth into development for its people.
As a country, we might continue living in a fool’s paradise, celebrating empty growth figures that are irrelevant to 80 percent of the population. These disenchanted members of the society are a time bomb that can explode with the slightest opportunity presenting itself.

Copyright © 2006 Times News Services, All rights reserved.

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