Kenya’s Economy

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Covid shocks

Kenya’s economy contracted by 0.3 per cent in 2020 on the back of the Covid-19 pandemic that led to the worst economic crunch the country has recorded in over two decades. The size of the economy last year shrank to 8.71 trillion from Sh8.74 trillion in 2019. This means that the economy lost goods and services worth Sh27.6 billion.

According to the Kenya National Bureau of Statistics (KNBS), the decline in performance of key economic sectors like manufacturing and tourism was largely to blame, with suppressed demand and earnings forcing many firms to retrench thousands of workers.

Kenya’s economy defied Covid-19 pressure to add almost half a trillion shillings to its gross domestic product in market price in 2020.

Data from the delayed 2021 Economic Survey covering the 2020 calendar year published yesterday shows the nominal GDP grew to Sh10.75 trillion last year compared to Sh10.25 trillion in 2019.

Although there was an increase of Sh498 billion, it was the slowest growth in two decades, an aspect attributed to the Covid-19 crisis that saw economic growth contract by 0.3 per cent during the year under review.

According to the National Treasury, without Covid-19 and related containment measures, the economy would have grown by Sh1.35 trillion. This is equivalent to the 6.2 per cent expected growth in 2020.

“This is, however, not regrettable considering that had we not shut down, we would have lost 800,000 lives to corona in one year or 2,564 lives daily,” National Treasury CS Ukur Yatani said. 

The five per cent growth in nominal GDP pushed Kenya to the sixth-largest economy in Africa and the third biggest in sub-Sharan Africa after Nigeria and South Africa. 

Kenya has gained six positions as one of Africa’s big boys in terms of GDP since President Uhuru Kenyatta took over the reins in 2013. 

According to the survey data, over 740,000 jobs were lost in Kenya to the Covid-19 pandemic. 

Speaking when releasing the Economic Survey 2021, Yatani said the number of employed people fell to 17.4 million at the end of 2020 from 18.1 million.

“Wage employment in the public sector increased. Informal sector employment contracted, 2.9 million jobs were reported in the formal sector in 2020,” the report says.

Wage employment in the private sector declined by 10.0 per cent from 2,063,000 jobs in 2019 to 1,856,000.

Within the public sector, wage employment increased from 865,200 in 2019 to 884,600 in 2020.

According to the report, the total employment outside small-scale agriculture and pastoralist activities contracted by 4.1 per cent to 17.4 million last year.

Eighty-three per cent of recorded employment last year was in the informal sector, while 2.9 million jobs were reported in the formal sector.

Informal sector employment is estimated to have contracted to 14.5 million jobs compared to 15.1 million jobs in 2019.

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