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The Economic Survey for Dummies

The Economic Survey is not a best-seller. Produced annually by the Central Bureau of Statistics, it is our main compendium of numbers about the economy. Most people do not have the time (understandably) or the inclination (less so) to trawl through it. Fortunately, some mugs can be persuaded to do it on your behalf and report back in less than 1,200 words. This mug is happy to record his version of what’s what in the economy.

Before we begin our quick trip through the highways and dust tracks of the economy, let’s agree a basic assumption: that we will take what’s in the Survey as given. We will put aside our suspicious Kenyan natures just for a while, and we will not question the basis of calculation or the rules of measurement. What is reported is internally consistent, and follows one system. That’s good enough for our purposes.

You all know the headline news: that the economy grew by 5.8% in real terms in 2005, the healthiest growth in a long time. But let’s stop and ask: what makes up our ‘economy’? For all our modernisation, we’re still very much an agriculture-based country: a quarter of our GDP comes from the land – a proportion that has stayed steady for some time. Agriculture is followed by three other decent-sized sectors, all of which account for about 10 per cent each of the national cake: manufacturing, wholesale and retail trade, and transport and communications. So we’re still a tea-and-flowers, cattle-and-cereals, beer-and-bricks, kiosks-and-matatus kind of economy – and have been for a while.

What’s growing? The four sectors named above grew well in 2005, and accounted for nearly two-thirds of the overall growth in the economy. Again, agriculture looms large. When it ails (as in 2002) the economy retires to the sick-bed (overall growth was just 0.6 per cent in that year). When agriculture bounces back (as it did in 2004 and 2005), the overall economy is also buoyant.

Any new jobs out there? This government, remarkably, manages to more or less fulfil its hasty election pledge of half-a-million-new-jobs every year: the year 2005 recorded 458,900 new jobs. But, as in all recent years, nine out of ten of those jobs came from the informal sector. This is no cause for celebration: the jua kali sector is, by the Economic Survey’s own definition, small-scale, semi-organised, unregulated and low-tech. We now have a total of 6.4 million ‘jobs’ in this sector, out of a total of 8.2 million people in employment. In other words, we have just 1.8 million ‘proper’ jobs out there: jobs with terms and conditions, benefits and rights. Oh, wait: nearly 0.4 million of even those jobs were ‘casual’.

Two out of three of the ‘proper’ jobs were in the private sector. The Survey, somewhat disingenuously, states that “the Government continued in its efforts to maintain a leaner work force and privatisation of non-strategic public enterprises in an effort to contain public sector wage bill”. Remarkable efforts indeed: total public sector employment was 658,000 in 2001, and 654,000 in 2005. No matter how hard we try, it seems we just can’t dislodge all those thousands of non-workers in non-jobs building non-careers, and put them to productive use. Non-sense.

The Survey has a classic blooper on page 71: “Total average wage earnings per employee rose by 15.0 per cent from KSh 286.9 billion in 2004 to KSh 330.0 billion in 2005.” Only if you were measuring the average earnings of all those recent high-profile entrants to Kamiti, guys! So those of you rushing to your boss to demand an immediate pay-rise – calm down. Average wage payments per employee were actually a more modest Sh 330,000 per year. And those jua kali workers: what do they earn? Who knows?

Alongside all this we had a booming stock market. The NSE 20-Share Index was at 1,363 at the end of 2002, 2,946 in December 2004, and closed at 3,973 a year later. The value of shares traded rose from Sh 1.4 billion in 2004 to Sh 4.1 billion in 2005 – a threefold increase in one year. All of that was in spite of a significant correction in the latter part of 2005. Are we building a bubble? No, the profitability of most listed companies continued to rise, underpinning the stock market activity.

Who is gaining in all this? Stockbrokers are obviously on a roll. So are most people involved in tourism: earnings in that sector went close to the Sh 50 billion mark. The number of visitors arriving on holiday broke the 1 million barrier (from a low of 684,000 just two years ago). The value of air transport grew by over 35 per cent last year. Horticultural exports have doubled in value since 2001. And the growth story that tops them all? You guessed it: we used to have 374,000 mobile phone connections in 2001; by last year we had sold a total of 5.6 million.

So there are some very big winners in this poor country of ours. Yet we seem unable to do anything about the entrenched inequality that makes the lives of the vast majority such a misery. Some figures to ponder: Remember those 1.8 million ‘proper’ jobs? Less than 17,000 of them are in North-Eastern Province. In addition, NEP only manages to make up 0.5 per cent of the jua kali jobs. So, if you’re in the right places doing the right things in Kenya, the sky may well be the limit for you. If you happened to be born on the wrong side of the tracks, however, may the Lord be your shepherd.

Slowly, a new economy is emerging. In this economy, we reward enterprise and hard work. In this economy, private capital – the savings and surpluses of individuals and corporations – is being channelled efficiently to a whole new array of productive uses. This economy is not prone to the vagaries of the weather; looks to markets beyond our borders; is running on broadband and wireless communications; and provides meaningful careers that develop the whole person.

But that economy is still small. The bigger one is stuck in a low-skills, low-tech, low-reward, low-motivation prison. The new economy will grow, and it will deliver us to salvation. But it must be helped along by governments that give it the freedom to fly and the incentive to invest; and it must be nurtured by an inclusive mindset in all of us that reminds us we have to take all Kenyans with us, otherwise the destination will not be worth arriving at.

And finally, some facts you didn’t know. Last year, 62 people were killed or injured in road accidents – every day. 8,000 people arrived at our airports – every day. 853 people attended conferences and workshops – every day. And try this one for size: we sent each other 1.1 million SMS messages – every day.

Don’t believe me? Hey, you could always buy the Economic Survey (Sh. 900 – or two per cent of GDP per person) and read it (218 pages) yourself…

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