Tuesday, October 19, 2021

    Kenya Economy Overtakes Ghana, Tunisia as Data Revision Boosts GDP

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    Babatunde Akinsolahttps://naija247news.com
    Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports
    Kenya"s President Uhuru Kenyatta listens to opening remarks at the start of the U.S.-Africa Leaders Summit Session One on "Investing in Africa"s Future", at the U.S. State Department in Washington August 6, 2014. Also pictured is Guinea-Bissau"s President Jose Mario Vaz (R). REUTERS/Jonathan Ernst
    Kenya”s President Uhuru Kenyatta listens to opening remarks at the start of the U.S.-Africa Leaders Summit Session One on “Investing in Africa”s Future”, at the U.S. State Department in Washington August 6, 2014. Also pictured is Guinea-Bissau”s President Jose Mario Vaz (R).
    REUTERS/Jonathan Ernst

    Kenya’s economy overtook those of Tunisia and Ghana after the statistics agency overhauled its data to increase the size of gross domestic product by a quarter.

    GDP was measured at $55.2 billion last year from $44.1 billion previously, Zachary Mwangi, acting director-general of the statistics agency, told reporters in the capital, Nairobi. That compares with the World Bank’s estimates of $48 billion for Ghana and $47 billion for Tunisia.

    Kenya revised its data to take account of expanding industries such as mobile-phone money transfers and informal businesses, while also changing the base year of the figures to 2009 from 2001. Last year’s growth rate was adjusted to 5.7 percent from 4.7 percent, Mwangi said.

    “The rebased GDP estimates put Kenya among the lower middle-income nations,” Planning Secretary Anne Waiguru told reporters. The data “demonstrates that the economy is larger, but doesn’t mean that people are less poor or wealthier than they were yesterday,” she said.

    The shilling fell 0.3 percent to 89.33 against the dollar as of 5:18 p.m. in Nairobi after earlier strengthening to 89.15 following the publication of the data.

    Borrowing Costs

    A higher figure for GDP will help to lower Kenya’s debt ratios, improving the nation’s ability to borrow. It may also reduce Kenya’s access to low interest-rate loans, although the World Bank and International Monetary Fund have said the move won’t close off Kenya’s access to concessional funds.

    The rebasing “makes it more attractive as a country in Africa that can raise local currency debt and U.S.-dollar denominated debt,” Angus Downie, head of economic research at Ecobank Transnational Inc., said by phone today from London. “Kenya as an investment looks more appealing” with budget and current-account deficit ratios improving, he said.

    The parliamentary budget office on Sept. 11 estimated the fiscal gap at 8 percent of GDP in the year through June 2015.

    Kenya follows Nigeria, which earlier this year rebased its GDP data to overtake South Africa as the largest economy in Africa, estimated now at about $500 billion.

    Tanzania, East Africa’s second-largest economy after Kenya, plans to revise its GDP data later this year, which may increase the size of the $33 billion economy by a fifth.

    Tourism Slump

    “The GDP rebasing exercise in Kenya will provide a much needed boost to the Kenyan economy as the government tries to spur economic growth in light of the challenges facing its important tourism industry,” Ahmed Salim, a Dubai-based senior associate at risk-advisory group Teneo Intelligence, said in an e-mailed response to questions.

    The government in September cut its 2014 growth estimate to as low as 5 percent from 5.8 percent because of a drop in tourism revenue following a series of gun and grenade attacks in the country.

    Even after the recalculation, the economy still faces wide economic disparities and social inequalities, Salim said. Almost four out of 10 Kenyans live in poverty, according to the World Bank. GDP per capita was estimated at $1,246 after the rebasing, according to the statistics agency.

    Kenya is the world’s biggest exporter of black tea and it supplies a third of the flowers traded in Europe.

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