Economy defies key indicators to grow at 5.8pc

Kenya’s economy recorded a 5.8 per cent growth last year despite a decline in major sectors of the economy, according to the latest data from the Kenya National Bureau of Statistics.

Accommodation and food services, information and technology, real estate, transport and storage, among other non-mainstream sectors, pushed economic growth marginally from 5.7 per cent recorded in 2015.

Sectors whose contribution to the Gross Domestic Product traditionally carry lesser weight lifted the economy despite the drops recorded in key sectors like agriculture, mining and manufacturing, which experienced slowed growth last year.

The KNBS data released on Wednesday also show that accommodation, which is the main component of tourism, recorded massive growth from a contraction of 1.3 per cent in 2015 to 13.3 per cent.

Devolution and Planning Cabinet Secretary Mwangi Kiunjuri said the government had invested in security and other measures to make the business environment conducive, hence the revival of the sector which has suffered from insecurity since 2013.

“We have made massive efforts to improve the business environment through better security, infrastructure and electricity connection. All these have resulted in more attraction for investors.

“There was also an increase in the number of tourists visiting the country, in addition to the many successful conferences hosted here since 2015,” Mr Kiunjuri said.

Recovery of accommodation sector, which takes only 0.7 per cent of GDP, grew earnings from tourism by 36.8 per cent to Sh99.7 billion last year.

International arrivals rose from 1.18 million to 1.33 million in the same period as heads of states and other dignitaries were hosted in Nairobi for high profile conferences last year. Reversal of travel advisories and visa fee waivers also boosted the sector.

The Tokyo International Conference on African Development (TICAD) for African presidents, the United Nations Conference on Trade and Development, the Africa Academy of Management Biennial Conference and the Environmental Cement Africa conference were among the key events hosted in 2016.

These meetings saw Nairobi voted as Africa’s Leading Meetings and Conference Destination at the 2016 World Travel Awards.

But agriculture, which accounts for 32.6 per cent of the country’s economy, suffered bad weather to post a decline from the 2015 figure of 5.5 per cent, to 4 per cent.

The sector, which is worth Sh937 billion, was depressed, despite growth recorded in production of coffee and tea, which are among the country’s top exports.

Maize production declined from 42.5 million bags in 2015 to 37.1 million bags in 2016, leading to the current shortage that has seen the price of maize flour shoot to a high of Sh150 for 2kg packet. The decline in agriculture caused a slight drop in manufacturing to 3.5 per cent compared with 3.6 per cent in 2015.

Construction declined to 9.2 per cent from 13.2 per cent recorded in 2015 due to a slow-down of activity at the standard gauge railway construction. Phase one of the new railway is nearly complete.

The marginal growth in the overall economy was also boosted by sectors such as information and communication technology, transport and storage, and real estate.

The report also shows that last year inflation stood at 6.3 per cent average, while the economy created 832,900 new jobs, down from 841,000 in 2015.

This year, inflation in the first three months has been at an average 8.7 per cent. It was highest last month at 10.28 per cent, driven by high food inflation.

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