Economic reality doesn't align with narrative touted by Kenya Kwanza

This week the Kenya National Bureau of Standards (KNBS) released the 2024 Economic Survey. This is probably the single most important economic document that presents key economic trends of the past five years. It allows analysts track market shifts in the economy generally and across specific sectors.

In today’s article, we explore some of the key indicators and their underlying implications for individual consumers, households and businesses. Overall, the key indicators do not seem to be consistent with claims by the Kenya Kwanza (KK) elites that they have stabilised the economy. This fact was confirmed by the country’s top economic adviser, Dr David Ndii, on his X-handle, claiming those complaining of the poor economic performance are the ones who derailed the growth (implicitly, during the Gen-Z uprising last year.

="https://www.standardmedia.co.ke/business/article/2001495543/850000-new-jobs-created-last-year-signal-economy-is-on-the-mend">One of the emerging< truth from the 2024 indicators is that lofty speeches and political chest thumping do not alter the real side of the economy. Economies only respond to sound and well thought out policies or fundamentals. Contextually, seasoned analysts would moderate the publicly shared indicators by the government statistician to factor in the prevailing political climate.

Simply put, the real side of the economy would be worse than it is publicly presented in the report to serve the political interest of the day. Take for instance, the outlier economic growth declared for 2021 at 7.6 per cent, only months to the 2022 General Election. This growth is not supported by any discernible underlying trends even in the 2025 economic report. This brings us to the present economic growth rate of 4.7 per cent reported for 2024.

While it is not for this column to dispute official statistics once issued, a seasoned analyst will not fail to relate this indicator with the prevailing political environment for a more accurate interpretation. Associated indicators point to trouble in KK’s paradise. Agriculture, the mainstay of the economy grew by a modest 4.4 per cent, with mixed production performance of the main crops. Sugarcane and rice production increased, while maize production, a key target for the fertiliser subsidy programme declined by 6.1 per cent.

Structurally, the economy remained heavily skewed towards the informal sector, that accounted for 83.6 per cent of the employment, translating to 17.4 million jobs. The formal sector accounted for a paltry 3.4 million jobs, up from 3.1 million in the 2024 survey report. That means the economy only added about 200,000 formal jobs, consistent with the average trend over the past 10 years. This means that there is no appeasement for the jobless Gen Zs on sight, estimated to be about one million that enter the labour market each year.

The informal nature of the economy provides leeway for political and bureaucratic elites to play around with reported job creation in the economy. For example, of the 782,300 jobs created in 2024, the easily verifiable jobs would be the 78,600 reported in the formal sector. The informal jobs can be any one’s guess.

On revenues, the government collection remained within projected targets with tax revenue amounting to Sh2.5 trillion, as revised during supplementary budgets. Ordinary revenues were estimated at Sh500 billion and grants at Sh100 billion. This nullifies frequent claims by the KK administration elites that the collapse of the 2024 Finance Act derailed their development agenda. What is emerging from this indicator is that the problem is not one of revenue, but of priorities on spending and public waste. Overall, the administration had at it’s disposal a total of Sh3.1 trillion in revenues.

="https://www.standardmedia.co.ke/health/counties/article/2001495528/state-set-to-double-health-expenditure-to-sh1618-billion">As expected, public

This implies that the government has crowded out trading and manufacturing sectors from the domestic credit market. Further, the data indicates that available domestic credit in the country is not been channelled towards the productive sectors of the economy, but rather towards consumption by both the government and private households. Turning to trading activities for 2024, the country remained a net importer with imports growing with Sh2.7 trillion compared to export growth of Sh1.1 trillion. Our main export destinations in 2024 were Uganda, United States, Pakistan, Netherlands, Tanzania and United Kingdom in that order. Horticultural exports dropped by 14.1 per cent  due to declines by the European Union as per the survey.

The reason why this export indicators must worry Kenyans is the emerging diplomatic goofs and the additional 10 per cent tariffs on exports to the US. Official comments from the President, dalliance with warring factions in North and South Sudan, and confusion in response to the Democratic Republic of Congo conflicts would directly impact our key markets for tea, coffee and horticulture crops, and manufactured products and services to our neighbours.

On the manufacturing front, the economy continued on a downward trend to 7.3 per cent contribution to the Gross Domestic Product. This is not surprising though, since the KK administration abandoned the ambitious target set under the Vision 2030 of 25 per cent, in favour of Micro, Small and Medium Enterprises under the Bottom-up Agenda.

In a war of words on X, Ndii informed a user that the word industries is only used once in the entire KK manifesto.

="https://www.standardmedia.co.ke/amp/article/2001509381/what-knbs-numbers-reveal-about-economy-in-first-2-years-under-ruto">In a technical sense,< manufacturing represents a key component of the translation of a national human capital into economic output. If this is true, then it is time that the Kenyan population withdrew any hopes from the KK administration for better quality jobs. The best they are going to offer is what we’ve seen so far, that is, export her young people to foreign capitals for menials jobs and abandon the rest to small time hawking activities purely for basic survival. When time comes, they have stolen enough to buy voters in exchange for a second term in office!

The final indicator that I shall discuss today is for the tourism sector. According to the survey, the number of international arrivals in 2024 rose by 14.7 per cent to 2.39 million. Tying this indicator with the available bed capacity and bed occupancy rate provides interesting insights for existing and potential investors in the hospitality industry. Beds available in 2024 were 35.5 million compared to 33.0 million in 2023. Beds occupied in 2024 were 10.3 million compared to 8.6 million in 2023, translating to occupancy rates of 28.9 and 26.2 per cent respectively.

Thus, these indicators point to the growing importance of domestic tourism in the hospitality industry. More importantly, the evidence point to over investment in the sub-sector, raising questions as to why investors would pour millions in investments in a sector absorbing barely one third of the available capacity.

It is such contradictions that prompt economic analysts to seek meaning through intuition. In this case, it is not difficult to connect the excess capacity in the hospitality industry with the deeply entrenched corruption networks in the country. This sector appears to offer a fertile ground to clean corrupt money both on the installed capacity and income flows.

Does it surprise anybody that the every single politician and senior government officer at both levels of government seems to own a hotel or guest house somewhere?