The economy last year grew by 4.6 per cent, a modest improvement from 4.4 per cent recorded in 2011, buoyed by strong performance in the agriculture, retail and transport sectors.
According to the Kenya National Bureau of Statistics (KNBS) 2013 Economic Survey, agriculture, which grew by 3.8 per cent, contributed 17.6 per cent of the overall Gross Domestic Product (GDP).
The retail sector accounted for 15.2 per cent of the GDP while the transport and communication sector contributed 10.8 per cent of the GDP.
Economic growth was aided by easing inflation as favourable weather conditions resulted in the decline of food prices in the country.
Average annual inflation last year stood at 9.4 per cent from the 14 per cent recorded in 2011.
“Overall, economic activity in 2012 showed improvement despite a myriad of challenges that include a turbulent global economy, delayed long rains and a weakened Kenya shilling in the beginning of the year,” the survey says
Growth in the financial sector slowed to 6.5 per cent compared to 7.8 per cent in 2011 on account of reduced growth in credit following the tightening of the monetary policy by Central Bank in 2011.
Although Kenya’s economic performance exceeded projections made by the World Bank, it will pose a serious challenge to the Jubilee government’s electioneering pledge to grow the economy by double digits.
High salaries clamour
Additionally, KNBS warns that increasing government expenditure on social services and a devolved government system as well as a clamour for higher salaries in the public sector could further derail government promises.
In a report on the implementation of the 2012/2013 national budget, Controller of Budget Agnes Odhiambo warned the government against wasteful spending of national resources in funding domestic and foreign trips.
“This is a substantial amount allocated to these activities, some of which may not be directly contributing to economic development,” says the budget implementation review report.
In the nine months to March 2013, the government had spent up to Sh18 billion on trips made by ministers, government agencies, departments and other government officials.
“Gross operating balance is expected to worsen from a deficit of Sh51.4 billion in 2011/12 to a deficit of Sh152.1 billion in 2012/13 due to faster growth of expense relative to revenue,” the survey says.
Growth in job creation slowed to 5.5 from 5.8 per cent in 2011. This is likely to present another challenge to the new government
The informal sectors accounted for 89.7 per cent of all jobs while the modern sector only generated 68,000 jobs.
It is projected that the economy will fare better in 2013 as the country reaps the dividends of a peaceful election period.
Further, Agriculture is expected to post even higher growth rates due to favourable conditions thereby causing a ripple effect in the manufacturing and financial intermediation sectors.
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