Kenya’s economy stagnates

Kenyans have little to cheer about on the economic front as they mark the New Year with news that the country’s economy failed to grow for the three months to September 30. “After recovery during the first and second quarters of 2009, the economy stagnated with zero growth in the third quarter,” the Kenya National Bureau of Statistics (KNBS) said in its report released on Wednesday.

The statistics by the bureau, which is the Government’s agency mandated to collect and analyse data to aid in planning and managing the economy, come at a time when the economy is projected to grow by 2 to 3.5 per cent in 2009.

In 2008, it grew by a mere 1.7 per cent down from a high of 7.1 per cent in 2007. Incidentally, the zero per cent growth up to September is its worst performance in recent times, way below even the 3.2 per cent growth recorded over the same period last year, one of the most difficult years for the economy, following the post-election violence.

KNBS attributed the poor performance mainly to a reduction in key sectors of the economy, especially agriculture and forestry, manufacturing, transport and communications, and construction. Like in the previous two quarters of the year, persistent drought, high energy prices and the global economic recession were the main factors that restrained economic growth in the three months.

“Output in agriculture and forestry, and electricity and water were the main casualties of the drought,” the bureau said of the factors that saw agriculture, which contributes about one quarter of the country’s total wealth, decline by 3.5 per cent during the quarter.

Over the same period, forestry, manufacturing, transport and communications, and construction declined by 2.4, 1.8 and 1.1 per cent, respectively. Other sectors that declined during the quarter include electricity and water, which fell by 7.4 per cent, fishing at 0.3 per cent and mining and quarrying at 9.0 per cent.

In addition, subdued external demand particularly for horticultural products weighed further on production in the agriculture sector. Similarly, reduction in domestic and external demands coupled with effects of higher costs of energy, restrained growth in the manufacturing sector.

“Construction was negatively impacted on by diminishing household savings, slowing the housing boom that has been witnessed since 2005,” KNBS said. However, hotels and restaurants, financial intermediation, real estate, renting and business services and wholesale and retail trade grew by 44.4, 8.9, 2.7 and 1.8 per cent, respectively during the period.

Justus Ondarip

Nation