This archive report was first published on 30 October 2019.
Kenya's Economic Puzzle: Empty Pockets in a Thriving Economy ¶
Published on October 30, 2019
Kenya's economy is often touted as one of the fastest-growing in Africa, but beneath the surface, a different story unfolds. The cost of living has skyrocketed, leaving many Kenyans struggling to make ends meet.
A two-kilogram packet of maize flour has hit Sh135, the highest price in the last three years, making the staple food unaffordable for many. Retailers in rural areas are selling the same packet for as high as Sh140 due to transport costs.
Manufacturers have hiked prices in the last six months, pushing the commodity cost from Sh110 to Sh135. This has made ugali more expensive than chapati, a departure from the norm given that maize is Kenya's staple.
Meanwhile, the government's economic indicators paint a rosy picture of a growing economy. The Gross Domestic Product (GDP) is expected to hit Sh10.1 trillion from Sh9 trillion in 2018, with inflation at 3.83 per cent, well within the government's target of between 2.5 per cent and 7.5 per cent.
However, on the ground, the reality is stark. Shopkeepers, boda-boda operators, importers, and big manufacturers are all hurting. The number of jobs lost in the last year is staggering, with at least 20,000 Kenyans having lost their jobs across various industries.
Government-owned entities are also laying off employees, with the Nakumatt and Uchumi supermarkets retail chains cutting about 5,000 retail jobs directly and thousands more indirectly. Telkom Kenya plans to lay off 575 employees due to its planned merger with Airtel.
Local cement manufacturers are struggling, with East African Portland Cement Company (EAPCC) wanting to retrench all employees and let them reapply under new terms. Mumias Sugar Company has less than 500 employees, down from about 1,500 in 2017.
Commercial banks have collectively laid off more than 5,300 workers over the last few years as technology and interest rate caps take away jobs.
Economists argue that the Kenyan economy is just good for the top 10 per cent while squeezing most citizens. 'Since the Jubilee government came in, they chose to invest heavily in infrastructure projects over the basics of development such as access to quality education, better healthcare services, and other poverty alleviation programmes that target the standards of living of majority of Kenyans,' says Mr Tony Watima, an economist.
