AFRICANGLOBE – Kenya has been classified as a middle-income country after a statistical reassessment of its economy increased the size by 25.3 per cent. The East African nation effectively becomes Africa’s ninth largest economy, up from 12th, surpassing Ghana, Tunisia and Ethiopia. Kenya became the latest African country to benefit from rebasing its economy after Nigeria overtook South Africa to became the continent’s biggest economy earlier this year. Nigeria, South Africa, Egypt, Algeria, Angola, Morocco, Libya and oil-producing Sudan still rank higher than Kenya.
This is the sixth time that Kenya has revised its Gross Domestic Product (GDP) conducted by the Kenya National Bureau of Statistics (KNBS), an exercise which started in 2010.
The jump by Kenya’s economy into this middle-income status was driven largely by agriculture, manufacturing, and real estate sectors. Agriculture is still the backbone of the Kenyan economy with its GDP contribution going up from 24.1% to 25.4% based on 5-year average 2009 to 2013. Manufacturing contribution to GDP increased from 9.5% to 11.3%. Information and Communication Technology (ICT) sectors are now treated as a standalone sector, taking into account its vibrant telecoms industry which pioneered mobile payments technology and exported the innovation across Africa and around the world.
According to a Reuters report, the East African nation’s GDP was estimated to be 25.3 percent bigger after Kenyan authorities changed the base calculation year to 2009 from 2001. The updated base year, 2009, was chosen due to the fact that it was a year when many of the country’s reference surveys were undertaken. The rebasing was last done eight years ago in 2005 and affected GDP figures from 2006 to 2013. The value of goods and services – GDP – is now estimated at USD $53.4 billion (4.76 trillion shillings) in 2013 after the rebasing, up from USD $42.6 billion (3.8 trillion shillings) Kenyan Minister for Devolution and Planning, Anne Waiguru, told a news conference on Tuesday.
“All that the new GDP estimates tells us is that the economy is worth more than we thought. This gives hope and drive that the policies put in place to realize the vision 2030, of transforming the country into an industrialized middle income economy have kept us on course. We expect these results will make us work even harder to make our economy more vibrant that generate more jobs and better living standards for our people,” Waiguru said.
As a comparison, the GDP for 2013 for Nigeria was USD $509.9 billion (80.22 trillion Naira) after rebasing of its economy earlier in April of this year. This catapulted the continent’s top oil producer to Africa’s number one position and the 26th-largest economy in the world.
Additionally, as a result of the rebasing, the average wealth of the country’s citizens, GDP per capita stands at USD $1,246 (111,330 shillings) up from $994 (88,813 shillings). By GDP per capita, which factors in population size, Kenya has climbed to position 25 from its previous position of 31 in the ranking for Africa.
“I want to caution that an increase in GDP per capita does not necessarily mean that Kenyans will be better off nor does it imply that the existing social economic challenges have ceased to exist. Kenyans will be just as poor – or just as wealthy – as they were a year ago,” Waiguru was quoted as saying.
The revision also shows that Kenya’s growth rate in 2013 was 5.7 per cent, well above a previous estimate of 4.7 per cent, which is the average for Africa. The rebasing exercise means debt levels fall as a proportion of GDP, a closely watched ratio, and could give the Kenyan government some breathing room for additional borrowing to help finance its plans to build new transport links and repair existing infrastructure.
The United Nations Statistical Commission (UNSC) recommends that countries rebase their GDP every five years to minimize the huge fluctuations that may result from using very old base years. According to the report by the KNBS, this is because economies are dynamic in nature: they grow, they shrink, they add new sectors, new products and new technologies, and consumer behavior and tastes change over time. Rebasing is used to account for these changes, so as to give a more current snapshot of the economy
By: Farai Gundan