Kenya’s gross domestic product (GDP) grew by 25%, and is now calculated to be worth $55,2 billion (R593 billion), after rebasing its economy.
The new figures released by the Kenya National Bureau of Statistics on Tuesday provide a more accurate reflection of the country’s current economic activities. This is because the data previously used to calculate Kenya’s GDP was based on figures from 2001, and excluded burgeoning industries such as cellphone money transfers and informal businesses.
The revised data places the east African country among the lower middle income nations in the world, CNBC Africa reports.
The agricultural, manufacturing and real estate sectors were the biggest drivers of the change in economic figures contributing 19,9%, 11,4% and 5,9% respectively.
The rebasing of Kenya’s GDP moves the country’s economy from the 12th- to the 9th-largest economy in Africa, surpassing World Bank estimates for Ghana at $48 billion (R544 billion) and $47 billion (R532 billion) for Tunisia.
While the country’s GDP estimates have increased and last year’s economic growth rate has been adjusted to 5,7% from 4,7%, Anne Waiguru, Kenya’s cabinet secretary for devolution and planning, said it doesn’t necessarily make Kenya a richer country.
“GDP neither means that Kenyans will be better off nor does it imply the existing social economic challenges have ceased to exist. Rebasing Kenya’s GDP gives hope that the policies put in place to realise Vision 2030 have kept us on course,” Waiguru was quoted saying.
What the rebasing exercise does however mean, is that Kenya’s debt levels will drop in proportion to the GDP, giving the government greater borrowing scope to secure more financing to implement development plans. Economists say the rebasing is also likely to attract more foreign investment.
A Bloomberg report suggests that the rebasing could reduce Kenya’s access to low interest rate loans, but the World Bank and the International Monetary Fund have indicated that the move wouldn’t prevent the country from accessing concessional funds.
Kenya’s rebasing follows that of Nigeria in April this year, which catapaulted the West African country’s economy ahead of South Africa’s to become the biggest economy on the continent.
Source: CNBC Africa, Bloomberg