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Tuesday, October 7, 2014

Kenya’s economic growth devoid of prosperity

After a process known as rebasing, Kenya’s economy is now $55.2 billion strong. With a per capita GDP of about $1,250, we are a middle-income economy. And we have entered the league of Africa’s top ten economies.
Part of the reason our GDP shot up by 25 percent is because we were using outdated data and significant components of our economy were not measured. For example mobile telephony services, both utilization of voice and mobile money were hitherto not measured. The informal business sector, which employs over 60 percent of Kenyans, was never factored in GDP calculations. Moreover, the vibrant real estate sector was largely invisible in our national accounts.
In his book, “Poor Numbers: How we are misled by African development statistics and what to do about it”, Morten Jerven shows that the statistical capacities of a majority of African countries is in shambles and numbers often misstate the actual state of affairs. For a majority of African countries, data is at best incomplete or unreliable. Reliable national data and statistics are critical to the basic operations of government. Hence the paucity of accurate statistics has serious implications on policy formulation, national planning and welfare of citizens.
The collection of reliable statistics is inherently complex and is inextricably bound to the political economy. The quality of data and how it is used in national accounting and decision-making reflects political expediencies. In a sense data, especially in Africa, is political. For example, national population and demographic census is always a hot topic. We all understand very well the emotions around the so-called tyranny of numbers.  But the larger and more urgent question is about the production of data or statistics and the extent to which African governments rely on evidence for policy and decision-making.
Our economy is bigger than we once imagined. Our per capita GDP is actually $400 bigger. And yes, agriculture, the informal sector, real estate and mobile money are critical drivers of our economy. More importantly, as the government would like us to believe, we are using better data.
But how does the fact that our economy is vibrant and growing square with the fact that less than one percent of the young men and women who graduate from our schools and colleges cannot find gainful employment? How does a per capita GDP of $1250 square with the fact that more than 4 out 10 Kenyans live on less than $1.25 a day? What does $55 billion economy mean when over 1 million children of school going age are out of school? How will the millions of children whose cognitive capacities have been undermined by severe malnutrition share in the economic growth?
What is it about a $55 billion economy that would excite 25 percent of our fellow citizens who don't know where their next meal will come from? What do we say to millions of young mothers who won’t start their own business or take up paid employment because they can’t afford to hire a nanny to mind their little children while they work? What side of the real estate boom story do we tell millions of hard working Kenyans who will never own a home or find a decent, affordable house to rent? Which part of the growth story do we tell the Jua Kali artisan who dares to dream big but won’t get credit to expand his business and train more apprentices?
A fundamental characteristic of our much-celebrated growth is the unconscionable inequality that it has produced. This is partly because the structure of growth has tended to reward capital and the very high end of skilled labor. Moreover, growth in the last decade has been characterized by prodigious unemployment among the youth, who constitute more than 60% of our population.
Headline GDP alone just won’t do. We need equitable growth and shared prosperity. How do we ensure that every Kenyan receives a fair shake of the $55 billion economy?
The next decade must be about shared prosperity. We must embark on a path of structural transformation. Equitable growth and shared prosperity can be achieved through enlightened redistributive social policies, which enable millions of young people and rural poor farmers to participate in the economy, contribute to growth and share in the prosperity. 

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