Kenya Joins Africa's Top 10 Economies After Rebasing Of Its Gross Domestic Product (GDP)

Farai Gundan

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Kenya has been classified as a middle-income country after a statistical reassessment of its economy increased the size by 25.3 per cent. The East African nation effectively becomes Africa’s ninth largest economy, up from 12th, surpassing Ghana, Tunisia and Ethiopia. Kenya became the latest African country to benefit from rebasing its economy after Nigeria overtook South Africa to became the continent’s biggest economy earlier this year. Nigeria, South Africa, Egypt, Algeria, Angola, Morocco, Libya and oil-producing Sudan still rank higher than Kenya.
This is the sixth time that Kenya has revised its Gross Domestic Product (GDP) conducted by the Kenya National Bureau of Statistics (KNBS), an exercise which started in 2010.
The jump by Kenya’s economy into this middle-income status was driven largely by agriculture, manufacturing, and real estate sectors. Agriculture is still the backbone of the Kenyan economy with its GDP  contribution going up from 24.1% to 25.4% based on 5-year average 2009 to 2013. Manufacturing contribution to GDP increased from 9.5% to 11.3%. Information and Communication Technology (ICT) sectors are now treated as a standalone sector, taking into account its vibrant telecoms industry which pioneered mobile payments technology and exported the innovation across Africa and around the world.

Kenya (Photo credit: DestinyConnect)

According to a Reuters report, the East African nation’s GDP was estimated to be 25.3 percent bigger after Kenyan authorities changed the base calculation year to 2009 from 2001. The updated base year, 2009, was chosen due to the fact that it was a year when many of the country’s reference surveys were undertaken. The rebasing was last done eight years ago in 2005 and affected GDP figures from 2006 to 2013. The value of goods and services – GDP – is now estimated at USD $53.4 billion (4.76 trillion shillings) in 2013 after the rebasing, up from USD $42.6 billion (3.8 trillion shillings) Kenyan Minister for Devolution and Planning, Anne Waiguru, told a news conference on Tuesday.
“All that the new GDP estimates tells us is that the economy is worth more than we thought. This gives hope and drive that the policies put in place to realize the vision 2030, of transforming the country into an industrialized middle income economy have kept us on course. We expect these results will make us work even harder to make our economy more vibrant that generate more jobs and better living standards for our people,” Waiguru said.

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As a comparison, the GDP for 2013 for Nigeria was USD $509.9 billion (80.22 trillion Naira) after rebasing of its economy earlier in April of this year. This catapulted the continent’s top oil producer to Africa’s number one position and the 26th-largest economy in the world.

English: Map of Africa indicating Gross Domestic Product per capita. (Photo credit: Wikipedia)

Additionally, as a result of the rebasing, the average wealth of the country’s citizens, GDP per capita stands at USD $1,246 (111,330 shillings) up from $994 (88,813 shillings). By GDP per capita, which factors in population size, Kenya has climbed to position 25 from its previous position of 31 in the ranking for Africa.
“I want to caution that an increase in GDP per capita does not necessarily mean that Kenyans will be better off nor does it imply that the existing social economic challenges have ceased to exist. Kenyans will be just as poor – or just as wealthy – as they were a year ago,” Waiguru was quoted as saying.
The revision also shows that Kenya’s growth rate in 2013 was 5.7 per cent, well above a previous estimate of 4.7 per cent, which is the average for sub-Saharan Africa. The rebasing exercise means debt levels fall as a proportion of GDP, a closely watched ratio, and could give the Kenyan government some breathing room for additional borrowing to help finance its plans to build new transport links and repair existing infrastructure.
The United Nations Statistical Commission (UNSC) recommends that countries rebase their GDP every five years to minimize the huge fluctuations that may result from using very old base years. According to the report by the KNBS, this is because economies are dynamic in nature: they grow, they shrink, they add new sectors, new products and new technologies, and consumer behavior and tastes change over time. Rebasing is used to account for these changes, so as to give a more current snapshot of the economy
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Why Africa Is the Next China

Wednesday, 14 May 2014 08:12 AM

By Patrick Watson

Anyone who invested in China 30 years ago and held on through the bumps is very wealthy today. Sadly, we can't turn back the calendar, but we can look for the next China. I think it will be Africa.

No single African nation is as large as China (yet), but their combined economic potential may be even greater. The continent's 1.1 billion people could rise from subsistence farming to modern industry much faster than the Chinese did, too. They have several key advantages.

Unlike China, where the Beijing-based communist party imposes its plans, Africa has political diversity. There is no single point of control in Africa. While corrupt presidents-for-life still hold power in many nations, they won't hold it much longer. Their people know what is possible, and they are slowly installing governments that will deliver it.

Aren't radical Muslim groups a threat to African stability? Yes, indeed they are. The Boko Haram kidnappings in Nigeria are only one example. Last year's Westgate Mall shooting in Nairobi, Kenya, is another.


On the other hand, Boko Haram is failing in its primary goal, which is to stop Nigeria from educating young girls. Likewise, the fact that Nairobi has a mall for terrorists to target is a sign of progress.

Africa also doesn't have to face the demographic disruption China inflicted on itself with the one-child policy. China is getting progressively older, while Africa is producing millions of future workers.

Young Africans, like young Americans or Europeans, are growing up with mobile technology all around them. The continent now has roughly a billion mobile phone users. Most of them are what we would consider old-fashioned phones with actual buttons, but Africans squeeze amazing feats from their phones. Kenya's M-Pesa mobile payment system is more secure than your credit card was at Target last Christmas.

The final reason Africa will surpass China is what I call the "leapfrog" effect. Africa is going to zoom straight through entire stages of development in the next decade. Huge areas never had phone wires, nor will they in the future, because cell towers made wires unnecessary.

The same will happen with electricity. Africa will never have a "grid" like ours because it will never need one. Solar cells and windmills are a far more cost-effective way to electrify tropical villages.

Think about the trillions of dollars the United States spent on coalmines and utility infrastructure, and the trillions more spent to clean up the messes. Africa is going to skip all that. There will still be plenty of mining, but driven by export demand, not domestic necessity.

Even China thinks Africa has more potential than China does. Companies from Beijing, Shanghai and Hong Kong are racing to invest in African infrastructure projects. Just last week, Chinese premier Li Keqiang visited Ethiopia, Nigeria, Angola and Kenya to negotiate trade and infrastructure deals.

Africa has all the ingredients to be the next China except one: capital. Chinese investors see the opportunity. For now, few Americans see it, but they will.

Tomorrow's China miracle will be Africa. The most successful investors will be those who get there ahead of the crowd.

China Understands What The West Doesn't: Africa Is Our Next Superpower

By Pascal-Emmanuel Gobry 
 
Not that “Africa” is a country, of course, but it helps to look at broad, continent-wide trends. People are reluctant to the idea of demographics as the great driver of history. In the general case, this might be true. But the 21st century will see an unprecedented situation: one where every continent will face large-scale aging and slowing demographic growth. Every continent, that is, except one: Africa (or, to be more specific, sub-Saharan Africa). Africa is young whereas the rest of the world is graying, and any strategic thinking about the 21st century must take this into account.
Add to this Africa’s steadily improving situation with regard to governance (there are still many problems, but steadily less war, steadily more free elections, and so on), and a technological landscape and future that will allow Africa to leapfrog many aspects of the rich life that the rich world takes for granted. And national resources are just icing on the cake.
As is frequently remarked upon, and as a book review in this week’s Economist touches upon, China has a very deliberate and ambitious strategy of investment in Africa. The old categories of “neocolonialism” miss the point. So does the remark that China is only interested in Africa’s natural resources in order to fuel its own manufacturing-driven growth and put its strategic eggs in more than one basket.
For sure, China’s drive into Africa is mainly motivated by natural resources. But this is merely the catalyst of a broader phenomenon, which is really driven by the frustration of so many Chinese with the unbearably stifling and corrupt Chinese system. From a slow-growth West myopically hypnotized by China’s largely meaningless growth figures (and a bizarre envy of authoritarianism), we don’t actually see China for what it is, which is a very unhealthy society. The limitation on births. The ruthless and ineffective education system, which now no longer provides the jobs it promised. The omnipresent corruption and inflation. The stifling (literally) pollution. No wonder everyone who can is running for the exits.

For Chinese who cannot find advancement or fulfillment in a tottering system, Africa is actually enticing. Chinese are more at home than Westerners in cultures where clientelism (understood non-judgementally as a system where networks of interpersonal reciprocal relations are very important) is more important than legalism, and in Africa they can find a world where opportunities are more available for the taking for the driven and hard-working who are shut-out of the best networks in China. And, of course, we cannot discount the fact that most of the Chinese doing business in Africa are men coming from a country with an increasing shortage of women to a continent where there is not.
It is this social phenomenon which is driving China’s scramble for Africa, more than “neo-colonialism” or a mere geopolitical grab for oil and soybean fields. And underlying it is an understanding that the West ignores at its future peril: Africa is where the future is.