The country’s economic growth dipped in 2011 after registering a paltry 4.4 per cent improvement compared to the revised 5.8 per cent witnessed in 2010.The downturn was attributed to high oil and food prices as well as unfavourable weather conditions in some parts of the country according to the Economic Survey 2012 which was released on Tuesday.

Speaking while launching the annual Report, Planning, National Development and Vision 2030 Minister, Hon. Wycliffe Oparanya said the weakening of the Kenya Shilling in the foreign exchange market experienced in the third quarter of 2011 further worsened the situation by suppressing economic activities.

At the same time global economic factors such as high oil prices and inflationary pressure in many emerging and developing economies negatively affected the country’s Gross Domestic Product (GDP).
Despite the sluggish economic performance during the year, some sectors posted impressive results. These included financial intermediation, wholesale and retail trade, mining and quarrying, hotels and restaurants, education and construction with respective growths of 7.8, 7.3, 7.1, 5.0, 4.9 and 4.3 per cent.

“The year witnessed good prices for tea and coffee in the world markets which significantly boosted the agricultural sector,” noted Mr. Oparanya.
However, the minister noted that the production of these crops was suppressed by adverse weather, thus preventing the country from reaping sufficient gains from the improved international market.

During the period, agriculture, a key sector of the economy registered a slower growth of 1.5 per cent in 2011 compared to a growth of 6.4 per cent in 2010. This decelerated growth was attributed to the unfavourable weather conditions coupled with high cost of production occasioned by the rising costs of farm inputs.

“Production of maize decreased slightly to 34.4 million bags in 2011 from 35.8 million bags in 2010, while production of beans increased by 48.8 per cent to 6.4 million bags.”
On the other hand, the manufacturing sector expanded by 3.3 per cent in 2011 compared to 4.5 per cent in 2010. The slowed expansion was attributed to increased prices of primary inputs and high fuel costs.

Sectoral analysis highlighted by the minister as captured in the latest report, indicate that Transport and Communications sector recorded a real value added growth of 4.5 per cent in 2011 compared to 5.9 per cent recorded in the previous year.
“The number of newly registered motor vehicles increased from 196,456 units in 2010 to 205,841 units in 2011,” said Oparanya.
In the communication subsector, mobile telephony market continued to thrive with the number of subscribers hitting 25.3 million, representing a mobile penetration rate of 65.6 per cent as at June 2011.

Hotels and restaurants recorded a growth of 5.0 per cent in 2011 compared to 4.2 per cent in 2010 with tourism earnings increasing by Kshs 24.2 billion to Kshs 97.9 billion. The growth was attributed mainly to increased international arrivals and conference activities and high tourist arrivals in the year under review.
In the period, the financial sector faced a number of challenges including persistent high inflation and volatility of the shilling but weathered the constraints to post an impressive growth of 7.8 per cent, a slowdown from a growth of 9.0 per cent achieved in 2010.
Electricity sector was the only sector that recorded a reduction in growth during the period against a background of insufficient rainfall in the long rains season which occasioned increased reliance on thermal power generation. This is more expensive to produce than hydro and geothermal power, resulting to lower value addition.
In the construction sector, a growth of 4.3 per cent was recorded in 2011 compared to 4.5 per cent witnessed in 2010.
“The overall expenditure by the Ministry of Roads increased from Kshs 61.1 billion in 2010/2011 to Kshs 82.3 billion in 2011/2012 mainly due to increased expenditure on trunk roads.”
In the social sector, the number of educational institutions rose marginally from 74,172 in 2010 to 76,264 in 2011. This was mainly due to increased number of primary schools which rose by 3.9 per cent from 27,489 in 2010 to 28,567 in 2011.
Pupils’ enrolment at pre-primary schools increased by 9.1 per cent from 2.2 million in 2010 to 2.4 million in 2011 while enrolment in primary schools rose by 5.3 per cent to 9.9 million in 2011.

Similarly, total enrolment in secondary schools rose by 5.9 per cent from 1.7 million in 2010 to 1.8 million in 2011 while adult education enrolment increased by 10.1 per cent from 252,553 in 2010 to 278,090 in 2011.
The number of births registered reduced from 747.6 thousand in 2010 to 746.6 thousand in 2011 while deaths decreased from 175.8 thousand to 174.5 thousand in the same period.

Commenting on the economic survey findings, Planning, National Development and Vision 2030 Assistant Minister Hon. Peter Kenneth, urged all ministries to examine shortfalls within their jurisdiction and come up with strategies to restructure and improve their performance.
“Growing at 5 per cent means that we are growing at same level of status quo meaning we are not moving forward and therefore the achievement of the Kenya Vision 2030 will be delayed because it is pegged on a growth of at least 10 per cent,” he said.

To jumpstart the economy, Kenneth said investment, exports and production as factors of the economy must be present to ensure an annual growth of 10 per cent.
On his part, the Ministry’s Permanent Secretary Dr. Edward Sambili said that the Ministry requires more resources from the Government to strengthen the capacity of the Kenya National Bureau of Statistics (KNBS).
He noted that KNBS’s statistics were crucial for effective planning, adding that under the Kenya Constitution 2010 services such as those offered by the bureau need to be decentralised.
“There’s high demand for comparable timely statistics and these statistics will be used for resource allocation and also to assess the impact of these resources,” observed the PS.
KNBS Chairman Mr. Edwin Osundwa, announced that plans are underway to replace the existing district statistical offices with fully fledged county offices in line with the Kenya Constitution 2010.
“The board therefore reiterates the need for an enhanced budget to support KNBS activities,” he added.
Ends………

Download ECONOMIC SURVEY 2012 HIGHLIGHTS

Nairobi – May 15, 2012