Whilst Kenyans are grappling with the many challenges facing our Economy today, there are serious indicators that the economy is heading in the right direction, hence the nation too.
Looking at the trend of inflation as one of the macroeconomic indicators, it is apparent that the inflation has come down dramatically and is today much lower than the levels in October 2022 when it peaked at 9.6 per cent.
Today, the inflation rate is just above 2 per cent and that shows that since President Willman Ruto ascended to the highest position in the Land, there has been remarkable improvement in the Consumer Price Index (CPI).
This is an indication that retail prices have come down markedly over the last two years.
Take the price of Unga, for instance – in October 2022 the price of a 2kg maize meal packet was averaging Sh 230 and today it has come down to just Sh 110 which is a whopping 50 per cent drop!
This drop has been largely attributed to a better yield due to drastic and bold moves by the government to subsidize farm inputs, namely fertilizers that have cost Sh 2500 per 50kg band down from Sh 6,500 per 50 kg bag at the onset of Ruto’s election in September 2022.
Additionally, Kenya has shrugged off the vagaries of a long drought having experienced particularly long and reliable rainfall within the same period.
Early in the year Business Daily reported that Kenyans had increased consumption of milk by 5.1 per cent due to drop in milk retail prices with the Kenya Bureau of Statistics indicating 730.87 million litres being consumed up from 695.08 million litres compared one year earlier.
As has been demonstrated, the cost of doing business in an economy can significantly affect the final cost to the end user.
And looking at one of the most crucial inputs in production which is energy, one can easily see the downward trend in reducing the cost of pump prices for petrol, diesel as well as kerosine.
Data from the Energy and Petroleum Regulatory Authority (EPRA) released on October 14 this year show very positive signs of a steady downward trend in the landing cost of these petroleum products.
The resultant effect has been cheaper fuel for transport and for industrial production use in the manufacturing sector with an overall contribution to lower CPI and inflation.
EPRA attributed the decline in price to lower international landing costs as shown in the Table below (SOURCE: EPRA October 2024).
The average landed cost of imported Super Petrol decreased by 8.59 per cent from USD 697.62 per cubic metre in August 2024 to USD 637.7 per cubic metre in September 2024. Diesel decreased by 5.52 per cent from USD 673.36 per cubic metre to USD 636.22 per cubic metre while Kerosene decreased by 6.73 per cent from USD 668.34 per cubic meter to USD 623.39 per cubic meter.
The prices have been spiraling downwards so much so that it may be contributing to increased traffic snarl-ups in Nairobi.
Similarly, there was a slight drop in the cost of power per kilowatt between October and November for this year from Sh 20.35 to Sh 20.28 per Kilowatt Hour for domestic costs.
Significantly, the Kenya Shilling has stabilized against the US Dollars after a powerful rally that brought it down to Sh 129 per USD today.
Whilst these indicators might show more macroeconomic data there is great sign the household is getting trickle down benefits with the current policies.
But the biggest impact yet has been in the health sector reform that has seen many patients now access hitherto expensive medical procedures such as surgery without much red tape in approvals.
Before the Social Health Insurance Fund (SHIF), there was a very sad but true saying that many middle-class Kenyans and indeed majority of Kenyans were just one sickness away from poverty.
But that is now going to be a thing of the past as many Kenyans who have successfully migrated for the now defunct National Hospital Insurance Fund (NHIF) are breathing a sigh of relief as approvals are immediate and this includes very pricey procedures.
“Last week I had my auntie get a Sh 512,000 surgery approved at the Moi Teaching and Referral Hospital in Eldoret and today as a family we are such a happy lot,” disclosed a man whose kith and didn’t have to sell a cow or piece of land or that family jewel to raise funds for their auntie to receive immediate and reliable medical attention courtesy of SHIF.
According to the Kenya National Bureau of Statistics, the Consumer Price Index (CPI) fundamentally tracks the average change overtime in the prices paid by all consumers for a market basket of goods and services.
During a public function at the end of last year the treasury PS Dr Chris Kiptoo predicted an improved economy saying the good rains and government interventions in Agriculture would lower consumer prices
Dr. Chris Kiptoo, Permanent Secretary National Treasury & Economic Planning.
This measurement is achieved by regularly re-pricing the same basket of goods and services and comparing the total cost a household would incur to purchase this basket in the current period with the cost during a selected base period.
The Kenya CPI is an urban CPI, therefore the prices are tracked for a market basket of goods paid by urban households over time.
Of course, there is a lot of room for improvement for this economy to truly get to optimum levels with crucial interventions required.
These include the release of over Sh 900 billion in pending bills, monies held at the treasury that would be circulating in the economy and boosting aggregate demand for goods and services with a booming effect in the economy.
Pundits say that should the government release just a third of it, the impact will be huge and would be felt far and wide with increased productivity and job creation as other economic indicators are unlocked.
The elephant in the room though is the pilferage in the manner we utilize the little we collect as taxes.
The fourth President of the Republic of Kenya Uhuru Kenyatta claimed that Kenya loses Sh 2 billion per day on corruption.
Former Justice Minister Kiraitu Murungi, once said at an anti-corruption conference in Kenya, “We have seen corruption destroy our agriculture. We have seen corruption close our factories. We have seen corruption destroy our roads. We have seen corruption steal famine relief. We have seen corruption slowly killing our society. Corruption for us is not simply a matter of crime. Corruption is a crime against humanity. For us, corruption is the public enemy number one.
