According to the 2018 economic survey report, 2017 was among the worst years Kenya has ever faced with the growth of the economy slowing down to 4.9% as compared to the previous year where it stood at 5.9%. The report accredited the slowdown to the uncertainty created as a result of the recent prolonged electioneering period and the severe weather conditions the country faced.
Worse still, Kenya is losing among its major sectors such as finance, agriculture and manufacturing. For instance, despite an increase in terms of marketed production in the agriculture sector, the net output of the sector decelerated from 5.1% in 2016 to 1.6% in 2017. On the other hand, the manufacturing sector, which is one of the largest in Africa, declined from 2.7% in 2016 to 0.2% in 2017.
This was a result of the uncertainty created by the recent General Election, which saw many companies slowdown production and in some cases close down. In addition, there was also increased competition from imports, which are cheaper as compared to local goods whose production costs are high.
The vibrant financial sector was also not spared as despite being on an average growth in the last several years, 2017 saw a sharp deceleration to 3.1% from 6.7% in the previous year. The interest rate cap has been fingered as the main reason behind the sharp fall in the financial sector as it saw access to credit become scarce especially for SMEs. However, with the review of the law in sight, things might change for better. Nevertheless, the government needs to also ensure that regulations to protect the public against rogue banks charging abnormally high interest rates are put in place.
Elections and drought are long gone, but it needs concerted efforts to get Kenya’s economy back on track. Great focus should especially be put on mechanisms to stem influx of cheap goods especially from China to rescue the manufacturing sector from the death bed.
In addition, government needs to handle, once and for all, the case of effects of severe weather conditions. This segment has, in its previous publications, called on government to put in place tangible programmes to deal with the impact of severe weather. We want to reiterate ones more that drought should not kill Kenyans in this age.