Kenya may be growing but ‘you can’t eat GDP’

Nicolas Delaunay -

The timing was perfect. Two months before Kenya’s August 8 vote, President Uhuru Kenyatta inaugurated the nation’s biggest infrastructure project: a railway connecting the capital Nairobi and the port of Mombasa.

Kenyatta touted the railway as proof of his campaign promises on the economy, yet at the same time the price of maize flour, a Kenyan staple, was rising fast, stoking anger.

Rising food prices constitute a crisis on the eve of a high-stakes election in which Kenyatta goes head to head with longtime opposition leader Raila Odinga.

“On the one hand, there’s the symbol of Kenya which continues developing and remains the most dynamic economy in East Africa,” said Francis Mwangi, an analyst at Standard Investment Bank. “On the other hand, there’s the Kenya which hardly benefits from the effects of economic growth.”

Kenyatta has put the economy at the heart of his campaign. Thanks to increasing household consumption and public investment, Kenya has seen a growth of more than five per cent a year since his election in 2013. But analysts say there is more to Kenya’s economy than meets the eye.

The country’s debt is rising, corruption is endemic and economic growth has not benefited the country’s poor, they say.

Terror warnings and attacks, including the 2013 extremist assault on Nairobi’s Westgate mall, scared off tourists for a while, but the country’s International Monetary Fund representative Armando Morales said the country has since bounced back.

“Despite that, the GDP grew quite well, and conditions for business have improved,” he said.

But not all of Kenya’s progress can be credited to Kenyatta. His term in office coincided with low oil prices and his economic policies match those of his predecessor who kickstarted some of the infrastructure projects Kenyatta takes credit for.

Government spending on new public works has caused Kenya’s debt to balloon, increasing during Kenyatta’s term to over 50 per cent of GDP, much of it owed to Chinese lenders who negotiated advantageous terms.

With elections less than a week away, opinion polls have identified food prices as the top issue.

“In Kenya, we have a saying: ‘you can’t eat GDP’”, said Aly-Khan Satchu, a Kenyan analyst. — AFP