ECONOMY

Education, transport sectors drive economic growth

Real GDP grew by 9.9 per cent in the third quarter of 2021.

In Summary

•According to KNBS, the education sector had the biggest impact, accounting for about 64.7 per cent of the growth.

•Accommodation and food serving activities accounted for 24.8 per cent, transportation (13%) financial, insurance activities (6.7%) and manufacturing 9.5 per cent.

Education and transport are among key sectors that helped economic growth in Kenya, latest data by the Kenya National Bureau of Statistics show.

This, as real GDP grew by 9.9 per cent in the third quarter of 2021 compared to a contraction of 2.1 per cent in the same quarter of 2020.

According to KNBS, the education sector had the biggest impact, accounting for about 64.7 per cent of the growth.

Accommodation and food serving activities accounted for 24.8 per cent, transportation (13%) financial ,insurance activities (6.7%) and manufacturing 9.5 per cent.

However, the agriculture, forestry and fishing sectors contracted by 1.8 per cent in the reviewed period compared to 4.2 per cent growth in the same quarter of 2020.

“Agricultural production was constrained due to drought conditions that characterized the quarter under review in most parts of the country,” KNBS notes.

National Treasury CS Ukur Yatani says economic recovery from the effects of the Covid-19 pandemic continued in the third quarter of 2021 as a result of the gradual easing of containment measures instituted to curb the spread of the disease.

The Q3 growth comes after an earlier impressive second-quarter performance of 10.1 per cent of real GDP growth of 2021.

“The 9.9 per cent real GDP growth is testament that the economy is recovering from the effects of the Covid-19 pandemic, and that the government’s interventions are working for the good of our people. I thank Kenyans for their hard work and resilience," Yatani said in a statement.

The dismal performance of the agriculture, forestry and fishing sector was evident in the significant decline in fruit exports, cane deliveries, tea production and coffee exports, KNBS notes.

The volume of fruit exports and cane delivery declined by 19.9 and 5.6 per cent respectively in the third quarter of 2021.

Similarly, production of tea and coffee declined by 5.9 and 24.1 per cent, respectively.

In addition, the unfavourable weather conditions experienced in most parts of the country impacted on production of major food crops during the review quarter.

In manufacturing, the food sub-sector expanded by 8.6 per cent as manufacturers of beverages, dairy products, bakery products and grain mill products registered substantial growths.

During the period, the electricity and water supply sector recorded an accelerated growth of 4.5 per

cent compared to a marginal growth of 0.2 per cent in the corresponding quarter of 2020.

Passenger transportation through the SGR notably contributed to growth in the transport sector where passengers increased from 95,378 in the third quarter of 2020 to 600,070 passengers in the corresponding quarter of 2021.

During the third quarter of 2021, macroeconomic indicators showed mixed performance but largely pointed to increased economic activity in the quarter under review compared to the same quarter of 2020.

Inflation however edged upwards from an average of 4.31 per cent in the third quarter of 2020 to 6.68 per cent in the third quarter of 2021, owing to increase in prices of food and non-alcoholic beverages and transport.

The Kenyan shilling also depreciated against all major international trading currencies except the Japanese Yen.

It ceded ground against the Pound Sterling, Euro and the US Dollar by 8.0 per cent, 2.0 per cent and 1.1 per cent, respectively.

The local currency however appreciated notably against all the regional currencies except the South African Rand.

Central Bank Rate (CBR) was maintained at 7.00 per cent in the third quarters of 2020 and 2021.

Broad money supply increased from Sh3.8 billion as at September 2020 to Sh4.1 billion as at September 2021.

Acceleration in economic activity was manifest in increased activity at the Nairobi Securities Exchange (NSE), where the NSE 20 share index, which tracks the performance of 20 best performing listed companies listed, rose from 1,852.3 points in September 2020 to 2,031.0 points in September 2021.