Kenya to make wealth leap with new GDP statistics, becomes middle income country.
Kenya is set to achieve the key middle-income economic status next month following a government-led statistical review that is likely to increase the size of the country’s economy by a fifth to $50bn.
The statistical review follows in the footsteps of Nigeria, where a similar exercise raised its gross domestic product by 89 per cent to $510bn, making the country the largest economy in Africa.
The middle-income status – if confirmed – will open the door for extra borrowing from international institutions and could serve as a catalyst for further foreign direct investment, analysts said. Telecom groups, banks and food companies traditionally target new middle-income countries as key investment destinations.
Benjamin Macharia Muchiri, senior manager at the Kenya National Bureau of Statistics, said the gross domestic product for 2009, the new base year, was “about 20 per cent higher than previously estimated”. He added: “Preliminary results for other years between 2006 and 2011 show revised GDPs going up by between 15 to 25 per cent.”
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The increase – expected to be announced in May, although 2014 quarterly figures will not be updated until September – would push Kenya’s GDP for 2009 to about $37bn. Applying the same jump to 2013 could put the country’s economy above $50bn. At that level, Kenya, a nation of more than 43m people, will enjoy a GDP per capita of more than $1,136, up from a current estimate of $943, and within the benchmark of $1,036 set by the World Bank for middle-income nations.
African countries are revising their GDP figures with the help of international donors to take into account new booming sectors, including banking, telecoms and entertainment. The revisions are providing a comprehensive estimate of their economies and will probably act as a further magnet attracting foreign investors.
Kenya will become the fourth-largest economy in sub-Saharan Africa, behind Nigeria, South Africa and Angola, according to IMF data. The east African country is already a regional heavyweight, with a developing stock market heavily backed by foreign money, consistent domestic consumer-driven growth and the prospect of a boost in the next few years from new oil and gas exploration should early finds turn out to be commercially viable.
Kenya’s bureau of statistics, which is changing the base year for calculating GDP from 2001 to 2009, says the upward revision reflects previously uncaptured data that shows growth in the manufacturing, agricultural, transport and communication sectors.
“The difference was primarily due to the use of new data sources [rather than change of base year],” said Mr Muchiri, who pointed to a 2010 Census of Industrial Production and VAT returns data from Kenya Revenue Authority among six improved new data sets.
Chart
The recalculations may still underestimate total GDP as 2009, the new base year, saw the country affected by drought that depressed agricultural output and household spending. The statistics bureau rejected 2008 as a possible replacement base year because of post-election violence that had a dramatic impact on the economy: growth fell to 1.5 per cent, down from 7 per cent the year before, and more than 1,100 people were killed.
Ragnar Gudmundsson, IMF representative in Kenya, said the new GDP estimates could make Kenya eligible for extra borrowing at a time when the country is hoping to tap international markets. “It would most likely give them access to our non-concessional facility but the amounts are still up for discussion,” he said.
Kenya is readying a maiden $1.5bn-$2bn sovereign bond, although officials fear they may have missed the best window because of the impact of the US curtailing its policy of quantitative easing. Zambia this week raised $1bn from a 10-year dollar-denominated bond, paying an interest rate of 8.625 per cent – significantly higher than the 5.625 per cent it achieved when it issued its first bond two years ago.
Kenya is set to achieve the key middle-income economic status next month following a government-led statistical review that is likely to increase the size of the country’s economy by a fifth to $50bn.
The statistical review follows in the footsteps of Nigeria, where a similar exercise raised its gross domestic product by 89 per cent to $510bn, making the country the largest economy in Africa.
The middle-income status – if confirmed – will open the door for extra borrowing from international institutions and could serve as a catalyst for further foreign direct investment, analysts said. Telecom groups, banks and food companies traditionally target new middle-income countries as key investment destinations.
Benjamin Macharia Muchiri, senior manager at the Kenya National Bureau of Statistics, said the gross domestic product for 2009, the new base year, was “about 20 per cent higher than previously estimated”. He added: “Preliminary results for other years between 2006 and 2011 show revised GDPs going up by between 15 to 25 per cent.”
Chart
The increase – expected to be announced in May, although 2014 quarterly figures will not be updated until September – would push Kenya’s GDP for 2009 to about $37bn. Applying the same jump to 2013 could put the country’s economy above $50bn. At that level, Kenya, a nation of more than 43m people, will enjoy a GDP per capita of more than $1,136, up from a current estimate of $943, and within the benchmark of $1,036 set by the World Bank for middle-income nations.
African countries are revising their GDP figures with the help of international donors to take into account new booming sectors, including banking, telecoms and entertainment. The revisions are providing a comprehensive estimate of their economies and will probably act as a further magnet attracting foreign investors.
Kenya will become the fourth-largest economy in sub-Saharan Africa, behind Nigeria, South Africa and Angola, according to IMF data. The east African country is already a regional heavyweight, with a developing stock market heavily backed by foreign money, consistent domestic consumer-driven growth and the prospect of a boost in the next few years from new oil and gas exploration should early finds turn out to be commercially viable.
Kenya’s bureau of statistics, which is changing the base year for calculating GDP from 2001 to 2009, says the upward revision reflects previously uncaptured data that shows growth in the manufacturing, agricultural, transport and communication sectors.
“The difference was primarily due to the use of new data sources [rather than change of base year],” said Mr Muchiri, who pointed to a 2010 Census of Industrial Production and VAT returns data from Kenya Revenue Authority among six improved new data sets.
Chart
The recalculations may still underestimate total GDP as 2009, the new base year, saw the country affected by drought that depressed agricultural output and household spending. The statistics bureau rejected 2008 as a possible replacement base year because of post-election violence that had a dramatic impact on the economy: growth fell to 1.5 per cent, down from 7 per cent the year before, and more than 1,100 people were killed.
Ragnar Gudmundsson, IMF representative in Kenya, said the new GDP estimates could make Kenya eligible for extra borrowing at a time when the country is hoping to tap international markets. “It would most likely give them access to our non-concessional facility but the amounts are still up for discussion,” he said.
Kenya is readying a maiden $1.5bn-$2bn sovereign bond, although officials fear they may have missed the best window because of the impact of the US curtailing its policy of quantitative easing. Zambia this week raised $1bn from a 10-year dollar-denominated bond, paying an interest rate of 8.625 per cent – significantly higher than the 5.625 per cent it achieved when it issued its first bond two years ago.
