Transport, tourism key GDP contributors

Contribution of President Uhuru Kenyatta’s legacy sectors to Kenya’s overall economic output fell in the first year of implementation as other sectors such as tourism and transportation grew at a faster pace.

The Economic Survey 2019 shows construction, manufacturing and agriculture sectors’ contribution to the gross domestic product (GDP) dropped in 2018 while human health remained flat.

The four sectors are directly linked to the ambitious “Big Four” plan, where the Jubilee administration has concentrated resources.

Some of the sectors that grew faster than Mr Kenyatta’s legacy sectors are accommodation and food services (16.6 percent), telecommunications (13.5 percent) and transportation and storage (8.8 percent).

The share of the manufacturing sector shrank to a decades-low of 7.7 percent in 2018 from a revised 8.0 percent a year earlier, just over half of the targeted 15 percent under the Big Four plan.

This is despite the sector recovering to a 4.2 percent growth from a revised 0.5 percent in 2017, helped by agro-processing activities such as sugar, milk, bread, black tea as well as production of beverages such as beer and soft drinks.

Kenyan manufacturers have largely blamed higher taxes and levies as well as cost of electricity relative to competitors as a stumbling block to creating about 800,000 new decent jobs targeted under the Big Four plan between 2018 and 2022.

This is to be achieved through setting up of additional 1,000 small and medium-sized (SMEs) factories in targeted sub-sectors such as agro-processing, leather, textiles and fish-processing.

The contribution of the larger agricultural sector to the GDP was also flat at 34.2 percent compared with 34.8 percent in 2018 on adequate rainfall, despite rebounding to grow 6.4 percent from a decade-low of 1.9 percent in 2017.

The sector, key to making Kenya food secure by 2022 through targeted irrigation projects, witnessed improved crops and animal production, helping boost food supply in 2018.

Growth in construction sector, under which the now controversial affordable housing scheme that targets 500,000 homes falls, slowed to a multi-year low of 6.6 percent in 2018 from 8.5 percent the year before.

The slowed performance in construction saw their share to the economic output slow down to 5.4 percent from 5.6 percent previously.

The contribution of real estate was also flat at 7.0 percent compared with 7.1 percent in 2017 after growth slowed two percentage points to 4.1 percent. The contribution of human health and social work activities to the GDP, which is related to universal healthcare agenda, remained flat at 1.5 percent. The sector grew marginally to 4.5 percent versus 4.3 percent a year earlier.