Economic Growth Yet to Have Trickle Down Effect, Amb Yattani
Challenges in the global economy notwithstanding, Kenya’s economic growth has remained steady.
This was the address to by the Cabinet Secretary for National Treasury and Planning, Ambassador Ukur Yattani, who said the economic growth of the country averaged 5.6 percent between 2018 and 2014.
The World Bank has termed this fast rate of growth by Kenya’s economy as one that has made Kenya to be having the fastest growth in the continent.
Other countries that have been ranked in a similar category by the International Monetary Fund, include South Sudan (8.2 percent), Rwanda (8.1 percent), Cote d’Ivoire (7.3 percent), and Ethiopia (7.2 percent). The criteria set by the IMF is that they should have an economic growth rate of 3.7 percent.
“ While the growth rate is impressive, it has not had a trickle down effect on Kenyans,” states the statement by Ambassador Ukur Yattani, which he hopes to present to the National Assembly for three days so that the cluster can access whether the Sector Budget proposals are in line with the development agenda of the government.
According to data from the Kenya National Bureau of Statistics (KNBS), the country recorded slow growth in the last three quarters of 2019, compared to a similar period the previous year.
This is because the rate of growth declined to 5.1 percent in the third quarter of 2019, compared to the 6.4 percent set in 2018.
Ambassador Ukur Yattani, speaking while at the Kenya International Conference Centre (KICC) states that the economic growth of the country is projected to reach 7 percent per annum, due to ongoing investments in priority areas under the Big Four agenda, that is affordable housing, manufacturing, food security and universal health coverage.
Ambassador Yattani says that the program and policies by the Kenyan government will focus on implementing programs and policies meant to make the country more resilient, as well as address financial weaknesses that will further pose a risk to the economic growth of the country in the medium-term.
He further said that to address the challenges of income inequalities and unemployment, the government shall try to implement programs and policy measures that will make growth more inclusive and ensure better economic prospects for all.
Ambassador Yattani says that the 2020 budget policy statement to be presented to the National Assembly for debate, will contain a medium-term fiscal framework, that will seek to achieve four main objectives.
These are: achieving a growth rate of 7 percent oer the medium term, mobilising revenue collection to over 20 percent of the Gross Domestic Product (GDP);ensuring that government expenditure are well below the rate of 23 percent of the GDP, as well as reducing the budget deficit to about 3.5 percent of the GDP.
Ambassador Yattani further said that the government will pursue measures that will address liquidity to the private sector, by innovating products that will boost credit to Micro, Small and Medium Term Enterprises, as well as enforcing compliance of earlier directives, leading to prompt and full payment of government bills that are pending.
“ So as to create a favourable environment for development of the private sector, the main aim of the government will be that of maintaining macro-economic stability over the long-term through a fiscal consolidation policy. Instituted two years ago, it seeks to provide and maintain the necessary balance between revenues and expenditures so as to ensure that the overall fiscal deficit is kept under control and to a bare miniumum, so as to safeguard macroeconomic stability,” he says.
The government views that the macroeconomic stability of Kenya has positive indications, based on inflation that has remained low and within target. The year-on-year inflation has averaged 6.2 percent, between 2018 and 2013; down from 9.6 percent in the period between 2012 and 2007.
Year-on-year overall inflation remained low and within the government target of positive five and negative 2.5 percent.
During the same period of 2018 and 2013, the inter-bank rate declined from 7.2 percent to 6.9 percent, while the 91-day Treasury bill rate increased to 7.8 percent, down from 8.6 percent.
“ The Kenyan shilling has also been relatively stable, due to improved foreign exchange inflows, narrowing of the current account deficit, and an adequate foreign reserve buffer,” he says.
Data shows that the shilling appreciated against the United States dollar and Euro, exchanging at an average rate of Kshs 101.4 and Kshs 112.7, in December 2019. In 2018, it was Kshs 102.3 and Kshs 116.4 in December 2018.
Ambassador Ukur Yattani says that the government is keenly observing the country’s public debt, estimated by the National Treasury to be close to Kshs 5.9 trillion. The reason for this is such that the government can be able to re-consider its re-profiling and improving its management.
While there has been concern regarding the consolidation and procurement of certain common user items in one Ministry/Department/Agency, away from the cost centres leading to delays in implementation and crowding out the small supplies in the procurement process, Ambassador Yattani says the government is keen on reviewing their policy to ascertain its appropriateness in the context of service efficiency and general good of promoting Small and Medium Enterprises (SME’s).