NAIROBI, Kenya
Kenya’s economy grew 4.6 percent last year but only managed to create just over half a million jobs, official government statistics show, pointing to a tough task ahead for the new government in stimulating growth and getting more people on the payroll.
The Kenya National Bureau of Statistics (KNBS) released the 2013 Economic Survey yesterday, which showed the economy improved by only two percentage points from last year’s 4.4 percent, lifted mainly by agriculture, which expanded by 3.8 per cent and contributed 17.6 per cent of the overall Gross Domestic Product. There was also strong performance in retail, which accounted for 15.2 per cent of the GDP, while transport and communication contributed 10.8 per cent of the GDP.
The economy was also helped by easing inflation as favourable weather conditions that resulted to a decline in food prices in the country. Inflation averaged 9.4 per cent last year, down from 14 per cent recorded in 2011, meaning the cost of living dropped, leaving Kenyans with more disposable income to invest or improve their lifestyles.
“Overall, economic activity in 2012 showed improvement despite a myriad of challenges that include a turbulent global economy, delayed long rains and a weakened Kenya shilling in the beginning of the year,” the survey says. Although Kenya’s economic performance exceeded projections by the World Bank, it will not be easy for the government to reach its promise of double digit growth. KNBS warns that increasing government expenditure on social services and a devolved government as well as a push for higher salaries in the public sector could further derail growth.
Growth in job creation slowed to 5.5 percent from 5.8 per cent in 2011. This is likely to present a bigger challenge to the new government since most of the employment is still in the informal sector at 89.7 per cent, while the modern sector generated only 68,000 jobs. It is projected that the economy will fare better in 2013 – projected at 6 per cent growth – and this is expected to boost job creation as well.
Unemployment rate in Kenya stands 40 per cent of about 16 million people out of the country’s population. Among the youth that figure rises to 70 per cent. At least 750,000 young people enter the job market every year, government statistics show. This large number of educated youth entering the job market annually means government bureaucrats have to think out of the box to create high-quality jobs.
The jubilee government’s job-creation strategy will mainly involve facilitating the private sector to expand and generate employment. A bad signal in the survey is that that manufacturing recorded slow growth. This sector, which together with agriculture are rated as the most labour-intensive, grew by just 3.1 per cent in 2012, compared to 3.4 per cent the previous year. To generate one million jobs, the economy as whole must expand by at least 10 per cent every year.
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