The year started with delayed onset of long rains and it now closes with killer floods. A strange cocktail that has thrown Kenyans’ well-being and economic growth numbers worlds apart.
Many top companies shed profits and laid off workers to stay afloat despite government data showing that the economy was expanding. The cash crunch among consumers only served to worsen the situation.
So where did the money go to? It’s a puzzle that the Central Bank of Kenya (CBK) Governor, Dr Patrick Njoroge, was alerted to when he faulted the structure of Kenya’s economy for delivering growth in Gross Domestic Income (GDP) amid cash crunch and job losses among Kenyans.
This Christmas, more than 1,000 workers who were earning income from multinational firm Finlays have little to celebrate. Finlays is closing down its flower farms and exiting Kenya due to reduced earnings.
NCBA group managing director John Gachora, who oversees the third largest lender in Kenya, told Smart Company in an interview that the economy is at a standstill.
"The economy continues to be the talk of town. We need to really think deeply about how to get this economy restarted. I challenge all banks and government to reboot this economy and it cannot be a piecemeal approach," he said.
"We see buildings that are lying idle because prices are up. We need a reboot button that moves the price within affordable range. Someone eyeing a Sh10 million apartment hasn’t bought it because the price is stuck up there. That kills commerce."
The reboot has been suggested in many ways, including government agencies being compelled to pay suppliers the pending bills or lowering electricity bills for small businesses.
But with poor and slow implementation standing in the way, it’s been another challenging year with household feeling the hardest impact.
Central Bank of Kenya Governor Patrick Njoroge said in October that the economic growth had not trickled down, a situation he explained has been worsened by the capping of interest rates and more dependence on state’s infrastructure spending."It’s true you have GDP numbers, but you can’t eat GDP. At the end of the day, what is needed is specific income. That is what anybody else wants plus jobs," Dr Njoroge said.Kenya’s economy recovered from a sluggish 4.9 per cent growth in 2017 to 6.3 per cent last year and has remained strong at 5.6 per cent in the second quarter of 2019.But the rosy figures have coincided with […]