Why Kenya's GDP figures contrast the actual situation on the ground.

 

About a month ago, during  president Uhuru Kenyatta’s  last Madaraka day address in office, he pointed out that since his government came into office in 2013, the country’s Gross Domestic Product (GDP) had risen from sh4.5 trillion in 2013 to close to sh13 trillion presently, making Kenya’s economy the  6^th  largest in Africa, up from position 12.

While the growth in the GDP numbers is laudable, there are pertinent questions to ask about the same. For starters, it is expected that growth in GDP, which represents the growth of a country’s market output, will automatically result in the reduction of unemployment rates as more jobs are created. The creation of more jobs leads to a rise in per capita incomes which consequently leads to a higher standard of living among the population. How then is it that, for the longest time now, social media, newspapers, radio and TV news reports have all been awash with stories of Kenyans lamenting about the high costs of living, drought, rising unemployment levels among a host of other maladies? This points to the fact that GDP figures only tell half the story. Two fundamental reasons suffice to explain this.

Firstly, the GDP only deals with averaged figures. It tells nada about the distribution of the income generated from the economic activities undertaken. In Kenya’s case, there are chances that the larger portion of growth accrues to the few at the higher rungs of the economic ladder as compared to the majority who occupy the bottom rungs. To corroborate this fact, a report released by Oxfam International in early 2019 posited that 10 per cent of the richest people in Kenya (about 8, 300) earned on average 23 times more than the poorest 10 per cent in the country. The report further added that the number of the super rich in Kenya was one of the fastest growing in the world.

Secondly, the GDP by itself is a figure that merely measures the market activity. Nothing more. However, most oftenly, like in Kenya’s case, the GDP is mistaken for a measure of social and economic well being. Nobel Laureate, Joseph E. Stiglitz in an article for the Scientific Journal Magazine‘s August 2020 issue, posits that the 2008 financial crisis in the US- where the country’s booming financial sector pushed up the country’s GDP giving the false impression of economic wellbeing only to lead to a financial meltdown later- is a clear testament that the GDP isn’t a good measure of economic performance. In our case, over the past 10 years, the government has borrowed heavily to invest in infrastructural development projects such as roads, which have contributed to the increase in GDP which is perfectly alright. However, less attention has been paid to the negative externalities some of these projects have had on other economic activities. A case in point is the impact of the SGR railway on commercial activity in small towns along the Nairobi-Mombasa highway such as Mtitio Andei, whose vibrance depended on truck drivers who plied that route.

In addition to the GDP, the Human Development Index (HDI) - which measures metrics such as the inequality levels, literacy rates, the Gross Income per Capita among others, would suffice to explain Kenya’s situation. For instance, a study report released by the Kenya Institute of Public Policy Research and Analysis (KIPPRA) in April this year indicated that 63 per cent of Kenyan households experienced multi-dimensional poverty in the financial year 2020/2021 which was 25 percentage points higher than the levels registered in 2014, while the gap between the rich and the poor stands at 8.3 according to the Oxfam report earlier mentioned.

As is starkly apparent, the growth in GDP over the years has barely translated to the well being of a majority of Kenyans.