Tourism, construction drive Kenya's economic growth

Friday, April 28, 2017 — updated on July 05, 2020 - 5 min read

Tourists at the Serengeti National Park in Kenya. The country's economy grew by 5.8 per cent in 2016 supported by a significant increase in tourism earnings and the construction sector, according to the Economic Survey 2017.

FILE PHOTO |

Kenya’s economy grew by 5.8 per cent in 2016 — the highest in five years — supported by a significant increase in tourism earnings and the ever-growing construction sector.

Data from the Economic Survey 2017 — the primary source of official statistics — released April 19 showed a turnaround in the tourism sector, which grew 13.3 per cent after contracting 1.3 per cent the previous year.

Growth in all the other critical sectors of the economy tanked, painting a gloomy picture of the economy last year that saw the jobs creation drop.
Agriculture grew by only 3 per cent, manufacturing at 3.5 per cent, down from 3.9 per cent in 2015, while financial services industry fell to 6.9 per cent from 9.4 per cent the previous year.
On the question of how the economy grew courtesy of the smaller sectors as the larger ones slowed down, management consultant and institutional specialist Denis Kabaara said slower growth does not necessarily mean a contraction, “as growth contributions are a function of the sectors’ economic size”.
Kenya is the world’s biggest black tea exporter and agriculture, which accounts for about 25 per cent of GDP, rose 4 per cent from a revised 5.5 per cent a year earlier, mostly due to debilitating drought. The country had forecast growth of 6 percent last year. The statistics agency revised 2015’s expansion upward from 5.6 per cent.
Foreign direct investment is projected to hit $2.5 billion in 2016 up from $1.5 billion dollars the previous year, according to Kenya Investment Authority (KenInvest).
“Kenya’s attractive investment climate, being perceived as a financial hub and the ease of doing business have seen us continue to be a magnet for investors,” KenInvest managing director Dr Moses Ikiara said.
The budget statement, however, put the figure higher at $2.6 billion, alluding to improvements in the ease of doing business in Kenya. On the other hand, data from the Economic Survey 2017 paints a different picture, showing that Kenya received $2.47 billion in FDI last year.
But the Economic Survey 2017 shines the spotlight on government statistics, as some of the figures in the report are at variance from those on the government’s online portal, launched only two weeks ago; those released by Treasury Cabinet Secretary Henry Rotich at the reading of the national budget last month; and those contained in President Uhuru Kenyatta’s State of the Nation Address last month.
On the police-to-civilian ratio, President Kenyatta said: “In the Jubilee manifesto, we promised to push the ratio of police officers below one officer for every 800 citizens. Today, I am pleased to report that we have kept our promise. Our ratio of police to the population is one officer per 380 citizens, better than the prescribed UN ratio of 1 officer for every 450 citizens.”
However, data from the Survey shows that the average ratio stands at one police officer for every 478 citizens, a significant improvement from the 2013 ratio of one officer to 800. It still falls short of the prescribed UN ratio.

Tourism, construction drive Kenya's economic growth

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