Kenyans getting poorer

Ten months after the National Rainbow Coalition [NARC] government took over,
it has yet to fulfil a number of pre-election pledges it gave to the
electorate during the campaign period in December last year. The revelations
are contained in the government's own publication, "Economic indicators",
published by the Central Bureau of Statistics [CBS] - a department in the
Ministry of Planning and National Development - in its September 2003
edition.

Whereas the Planning and National Development minister Prof Anyang Nyongo
has translated the NARC election manifesto into a five-year blueprint titled
"Economic Recovery Strategy for wealth and employment creation", the
promised annual economic growth rate of 7 per cent per annum and the
creation of 500 000 jobs a year seem to be untenable in the near future.

The report notes that after a buoyant confidence in the first three months
of NARC rule, most economic indicators took a nosedive, with the sharpest
decline in businesses being recorded in the first seven months. Basic
foodstuff such as maize now cost more and kerosene, used by the majority of
the populace for cooking and lighting has become unaffordable.

Following the November 2002 terror attacks and the subsequent western travel
advisories warning against travel to Kenya, tourist earnings have
significantly dropped. The tourism industry - the second foreign exchange
earner - is currently teetering on the brink of collapse. The Kenya Tourism
Board [KTB] has, however, embarked on ambitious marketing campaigns to bring
the industry back on its feet.

Although the Kenya Shilling was initially bullish, breaking the KES 70 to
the dollar barrier in May for the first time in three years, by September it
had edged back to the KES 80 mark due to what experts explained as "a
disappointing economic recovery".

Whereas former assistant minister for Planning and National Development
Musikari Kombo [Now minister for Regional Development] said in early July
that the government was collecting more revenue than ever before, a Central
Bank of Kenya [CBK] report for the week ending August 29 showed that the
government had collected KES 2.2billion compared with KES 2.7billion
collected over a similar period last year. The same report also notes that
Value Added tax [VAT] collection had fallen below par.

According to the aforementioned CBS report, the projected Gross Domestic
Product [GDP] growth for this year was pushed down from 2.3 per cent to 1.9
per cent. As an indication of the economy's poor performance, the Consumer
Price Index [CPI] has been rising steadily in the past seven months. The
figure stood at 130.66 in January and rose to 135.33 by June.

The upshot is that the average Kenyan consumer has to pay more to buy the
same basket of essential goods and services this year compared to last year.
For instance, a kilo of dry maize - a staple Kenyan diet - which cost KES 11
last year is now retailing at KES 18. Kerosene consumption went down from
273000 metric in June last year to 8200 metric in June this year. In other
words, the commodity has become unaffordable to many consumers.

In the banking sector, CBK's "Monthly Economic Review" says in its July 2003
issue that public borrowing rose to 9.4 per cent in May this year, compared
to 3.6 per cent in the same period last year.

Economic development has been on the downswing despite the fact that Kenya
is the seventh largest economy in Africa. In Sub-Saharan Africa, only the
Nigerian and South African economies are larger than Kenya. However, 56 per
cent of Kenya's population live below the poverty line of less than a dollar
a day.

In terms of job creation, the report notes that the previous Kenya African
National Union [KANU] regime directly or indirectly created an average of
400000 jobs a year, mostly in the informal sector in its final five- year
term. What this means is that given the will and the determination, the NARC
government can easily fulfil the promise of creating 5000000 jobs annually.

"It is worth noting that excess liquidity in the financial sector, arising
from low market demand due to a depressed economy and lowered cash ratio at
the Central Bank has driven the Treasury Bill rate to below 1 per cent", the
report observes.

However, the manufacturing sector still remains slumped, largely due to
erosion of competitiveness of products, a weak tax and duty controls over
imports, the report notes, while adding that inflows from traditional tea
and coffee exports have not increased due to low market prices.

The report also observes that the suspension in May of the government's
procurement process significantly contributed to the stagnation in the
economy. In a bid to curb corruption, Finance minister David Mwiraria
suspended all government procurement officers, citing massive corruption
among them.