The Digital Divide: Men Leading in Daily Internet Usage

According to the KNBS report, 63.5% of males in Kenya use the internet on a daily basis compared to 56.2% of females. This marked difference underlines a persistent gender gap in digital access, with men using the internet more frequently than women. In urban areas, the gender gap is even more pronounced: 77% of urban men are daily internet users, as opposed to 69.8% of urban women. In rural settings, the divide narrows but still exists, with 58% of rural men and 53.1% of rural women using the internet almost every day.

Urban vs. Rural: The Urban-Rural Divide in Internet Access

The report highlights a significant urban-rural divide in internet usage. In urban areas, internet penetration is notably higher, with 73.4% of residents accessing the internet almost every day, compared to just 55.6% of rural residents. This urban advantage is further illustrated by the fact that 28.5% of rural women use the internet at least once a week, compared to 20.1% of rural men. This discrepancy in access is not just about technology availability but also reflects deeper socio-economic factors, including differences in digital literacy, device ownership, and affordability.

The Age Factor: Youth Leading in Daily Internet Use

One of the most striking findings of the report is the correlation between age and internet usage. Males aged 25-34 are the most frequent users, with 73.9% using the internet almost every day. This demographic also includes the highest rate of female internet users at 65.4%. This age group is often the most engaged with digital platforms for work, education, and social interaction, emphasizing the role of technology in modern life for young Kenyans.

Regional Variations: Internet Use Across Counties

The report also provides a granular view of internet usage across different counties, revealing significant regional disparities. Nairobi City County has the highest proportion of daily internet users, with 89.7% of men and 76.4% of women accessing the internet regularly. Uasin Gishu, Mombasa, Kiambu, and Isiolo counties also show high usage rates among both men and women. Conversely, counties like Mandera, Tana River, and Turkana show the lowest usage rates, with male internet users significantly below the national average. This stark contrast underscores the challenges faced in rural and marginalized regions in terms of digital inclusion.

Implications for Policy and Future Development

The KNBS report not only highlights the existing gender and urban-rural digital divide but also points to the need for targeted policy interventions to bridge these gaps. The disparities in internet access and usage reflect broader socio-economic inequalities, where access to education, employment opportunities, and government services is increasingly mediated by digital technology. To ensure that the benefits of the digital age are accessible to all Kenyans, it is crucial for policymakers to implement strategies that enhance digital literacy, reduce costs associated with internet access, and expand infrastructure in underserved areas.

Furthermore, there is a need to promote digital skills development among women and rural populations. This includes not just access to devices and networks but also targeted training programs to empower individuals to use the internet effectively for communication, learning, and business. The private sector also has a role to play in driving affordability and accessibility, whether through providing subsidized devices, affordable data plans, or community centers with free internet access.

Conclusion

The KNBS report on ICT usage in Kenya serves as a wake-up call for addressing the gender and urban-rural digital divide. As the world becomes increasingly digital, it is essential that Kenya’s development agenda includes strategies to ensure equitable access to technology. By focusing on enhancing connectivity, promoting digital literacy, and addressing socio-economic barriers, Kenya can better harness the potential of the digital age for all its citizens. The data from this report provides a crucial foundation for informed policy decisions that will enable inclusive growth in the digital economy.

This report is not just a snapshot of current internet usage but a call to action for all stakeholders to work together in creating a more connected and equitable future for Kenya.

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In 2023, the number of women earning Ksh.100,000 and above rose from 125,579 in 2022 to 139,847, marking a substantial leap in this income bracket. While the growth in female high earners has been notable, men still dominate this earning category. However, the increase in the number of women reaching this financial threshold points to a shift in the labor market dynamics.

The growth in high-earning women stands in stark contrast to the marginal rise in male workers in the same income bracket. The number of male workers in this category rose slightly from 246,315 in 2022 to 247,571 in 2023, a modest increase compared to the 92 percent growth in the number of women top earners. This suggests that while men still represent the majority of high earners, women are rapidly narrowing the gap.

This remarkable change is a result of several factors, including the increased participation of women in formal sectors that have long been male-dominated. The construction, agriculture, and education sectors have seen the highest influx of women entering the workforce, which has contributed significantly to the rise in women’s earnings. Women are now not just a presence in these industries, but are rising to positions of leadership and high responsibility, often commanding salaries that were previously reserved for their male counterparts.

Industries with the highest number of top earners in 2023 include education, wholesale and retail trade, social work, and agriculture. Among these, the education sector stands out as the leader, with 89,125 female workers earning above Ksh.100,000, accounting for 21 percent of the total top earners. Education has long been a stable and growing sector in Kenya, and women have increasingly found opportunities for advancement. This trend is particularly evident in the rise of female teachers, administrators, and educational consultants.

Following education, wholesale and retail trade saw 46,911 female workers earning above Ksh.100,000, while social work had 39,643, and agriculture 35,144. These sectors reflect a diverse range of career opportunities where women are not only entering the workforce but excelling in their roles.

The overall distribution of Kenyan workers by income shows that the majority of employees fall within the Ksh.30,000 to Ksh.49,999 and Ksh.50,000 to Ksh.99,999 brackets. However, the growing number of women in the Ksh.100,000-plus category highlights the changing nature of the labor market. It is also important to note that women are increasingly being found in sectors like public administration, which was once perceived as challenging for female workers to penetrate.

While the rise in the number of women earning above Ksh.100,000 is promising, it’s important to remember that women still face barriers to achieving full equality in the workplace. The gender pay gap, unequal access to opportunities, and underrepresentation in leadership roles remain challenges. However, the progress witnessed in the past year is a hopeful sign of positive change.

In conclusion, the dramatic 92 percent increase in the number of women earning over Ksh.100,000 represents more than just a statistical rise—it is indicative of the growing economic empowerment of women in Kenya. As more women enter formal sectors like education, agriculture, and construction, their presence in high-income brackets will continue to grow, leading to broader societal benefits and greater gender equality in the workforce. Kenya’s labor market is evolving, and women are at the forefront of this transformation.

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Understanding the Inflation Rate

Inflation is a critical economic indicator that reflects the rate at which prices for goods and services rise, eroding purchasing power. A lower inflation rate is generally seen as a positive sign, suggesting stability in the economy and providing relief to consumers facing rising costs. The recent drop in Kenya’s inflation rate can be attributed to several key factors, primarily affecting housing, utilities, and transportation.

Key Drivers of Inflation Reduction

1. Housing, Water, Electricity, Gas, and Other FuelsOne of the most significant contributors to the decline in inflation has been the Housing, Water, Electricity, Gas, and Other Fuels Index, which saw a decrease of 0.3% between September and October 2024. This reduction was largely driven by a drop in the prices of kerosene and liquefied petroleum gas (LPG), which fell by 4.3% and 0.4%, respectively.However, it is essential to note that while kerosene and LPG prices decreased, there was a slight uptick in electricity costs. The prices for 50 kWh and 200 kWh of electricity rose by 0.3% and 0.2%, respectively. This mixed trend highlights the complexities of energy pricing in Kenya, where consumers may experience relief in some areas while facing increases in others.
2. Transport SectorAnother notable factor contributing to the easing of inflation is the decline in the transport index. Fuel prices, specifically petrol and diesel, saw significant drops of 4.3% and 2%, respectively. These reductions can have a ripple effect throughout the economy, as lower transportation costs typically lead to decreased prices for goods and services, further contributing to a lower inflation rate.The transport sector’s performance is crucial in an economy like Kenya’s, where the movement of goods relies heavily on road transport. Therefore, a decrease in fuel prices can help stimulate economic activity by making it cheaper to transport products from manufacturers to consumers.
3. Food and Non-Alcoholic BeveragesDespite the overall decline in inflation, there was a noticeable increase in the Food and Non-Alcoholic Beverages Index, which rose by 0.5% from September to October 2024. This increase was primarily driven by rising prices of certain fruits and vegetables, including mangoes (up 9.9%), carrots (up 5.7%), and oranges (up 5.1%).Interestingly, some staple food items experienced price declines during the same period. The prices of sugar, sifted maize flour, and fortified maize flour decreased by 2.3%, 1.8%, and 1.7%, respectively. This divergence in food prices highlights the volatility within the agricultural sector and the various factors influencing food supply, including weather conditions, market demand, and supply chain dynamics.

Implications for Consumers and the Economy

The reduction in the inflation rate has several implications for both consumers and the broader economy. For consumers, a lower inflation rate means that their purchasing power is preserved to a greater extent, allowing them to buy more goods and services for the same amount of money. This can lead to increased consumer confidence and spending, which is vital for economic growth.

However, the mixed trends in food prices indicate that consumers may still face challenges in specific areas. The rise in prices of certain fruits and vegetables could strain household budgets, particularly for low-income families who allocate a significant portion of their income to food.

For the economy, the easing of inflation can lead to a more stable environment for businesses. Lower transportation and utility costs can reduce operational expenses, potentially leading to increased investment and expansion opportunities. Furthermore, a stable inflation rate can influence monetary policy decisions, affecting interest rates and overall economic growth.

The Role of Government Policy

Government policy plays a crucial role in managing inflation and ensuring economic stability. In response to rising inflation, the government may implement measures aimed at stabilizing prices, such as adjusting taxes on fuel or providing subsidies for essential goods. Monitoring price changes and understanding consumer behavior is vital for policymakers to make informed decisions.

In Kenya, the government has been proactive in addressing inflationary pressures, particularly in the energy sector. Initiatives to enhance energy efficiency and promote alternative energy sources could help mitigate future price volatility in fuel and electricity.

Conclusion

The decline in Kenya’s inflation rate to 2.7% in October 2024 reflects positive trends in housing, utilities, and transportation. While consumers may experience some relief from rising costs, challenges remain in the food sector, underscoring the complexities of inflation management.

As Kenya navigates these economic dynamics, continuous monitoring and adaptive policies will be essential to sustain this positive trajectory. By fostering a stable economic environment, the government can help ensure that the benefits of lower inflation reach all sectors of society, ultimately contributing to the country’s long-term growth and prosperity.

As we look ahead, it will be crucial to observe how these trends evolve and how both consumers and policymakers respond to the ever-changing economic landscape in Kenya.

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Financial Deficit and Decreasing Revenue Reserves

In the year ending June 30, 2023, KNBS recorded a budget deficit of KSh 350 million, adding to the concerning trend of financial shortfalls experienced by the Bureau over the past few years. The organization’s deficits have shown little improvement, with previous figures standing at KSh 1.4 billion in 2022, KSh 1.7 billion in 2021, and KSh 3.6 billion in 2020. Gathungu’s report shows that KNBS’s revenue reserves have shrunk drastically over five years, from KSh 8.7 billion in 2019 to KSh 1.3 billion in 2023.

The steep reduction in reserves, coupled with persistent deficits, places KNBS in a precarious financial position, suggesting that without urgent intervention, the organization may lack the resources to continue operations in the near future. The deficit crisis is compounded by the fact that KNBS’s income sources and cost management have not been sufficient to cover the ongoing expenses needed to deliver on its mandate. According to the Auditor General, if the trend continues, KNBS will likely face severe operational challenges, calling for a restructuring or alternative support to prevent collapse.

Auditor General’s Warning and KNBS’s Response

Auditor General Gathungu’s recent audit paints a stark picture, warning that if proactive strategies are not implemented immediately, KNBS’s situation could deteriorate irreversibly. Her concerns align with the going concern principle in accounting, which assumes that an organization will continue its operations for an indefinite period unless there is evidence to the contrary. According to KNBS, depreciation is computed based on the expected economic life of assets rather than their current market value, indicating an assumption that the organization will continue its activities uninterrupted. KNBS asserts that it has the necessary resources to operate, stating that funds held in bank accounts constitute a reserve that it can rely on for continuity.

However, the Auditor General has downplayed this response, maintaining that the Bureau’s financial steps are inadequate to address the deficit. “My opinion is not modified in respect of this matter,” Gathungu declared, underscoring that the situation remains a critical issue despite the agency’s confidence. This persistent deficit, coupled with unresolved past financial discrepancies, indicates that KNBS’s financial challenges are deep-seated and require more than superficial fixes.

Key Financial and Operational Responsibilities of KNBS

The financial instability of KNBS raises significant concerns because the Bureau plays an indispensable role in Kenya’s economy and governance. As the national agency responsible for collecting, analyzing, and disseminating statistical data, KNBS provides essential information for government decision-making, policy planning, and economic forecasting. Its reports cover crucial aspects of Kenya’s economy and society, such as inflation rates, gross domestic product (GDP) figures, employment data, and the balance of payments.

Among KNBS’s most critical tasks is conducting the national census, a responsibility that demands extensive resources and planning. The next national census is scheduled for 2029, but given the Bureau’s financial challenges, the feasibility of this census could be in jeopardy. Beyond the decennial census, KNBS also publishes the annual Economic Survey, monthly Consumer Price Index (CPI), and quarterly GDP reports, all of which are essential for understanding the nation’s economic health.

The Bureau’s data is widely used by government ministries, policymakers, researchers, businesses, and international organizations. A failure to produce these reports due to financial constraints would impact both public and private sectors, leading to a lack of reliable data for informed decision-making.

Unresolved Debts and Outstanding Issues

The audit reveals that KNBS also faces significant unresolved financial issues, including an outstanding KSh 55 million in uncollected receivables. This figure includes various types of debts, such as KSh 4.4 million in staff imprest from the 2009 Kenya Population and Housing Census, KSh 23.4 million related to an Enterprise Resource Programme (ERP) development debt that is currently under litigation, and KSh 2.9 million in staff debtors, part of which is owed by former employees who resigned or retired.

The Auditor General noted that the “accuracy, recoverability and fair statement” of these receivables could not be confirmed, adding further strain to KNBS’s financial situation. The issue of uncollected debts highlights weaknesses in the Bureau’s financial management practices, which have been unable to secure repayments and resolve historical financial liabilities effectively.

In response to Gathungu’s findings, KNBS stated that it has made improvements in handling and processing imprest surrenders, claiming that monthly payroll deductions are being made to recover funds. The agency has also sought assistance from the Interior Ministry to retrieve the outstanding imprest from former district commissioners. However, these efforts have yet to yield satisfactory results, as evidenced by the unresolved KSh 4.4 million from 2009.

Broader Implications for Public Finance and Accountability

The financial plight of KNBS serves as a case study of the broader challenges facing public institutions in Kenya regarding financial accountability and sustainability. Public agencies are often at risk of inefficiency and budget mismanagement, issues that can become entrenched without rigorous oversight and a culture of accountability. KNBS’s inability to address its deficits, combined with unresolved financial issues, underscores the need for structural reforms and better financial management within public agencies.

Gathungu’s audit also brings attention to the wider issue of how public resources are utilized and managed. Previous audits have raised similar concerns regarding KNBS’s use of funds, but these issues remain largely unaddressed. This raises questions about the effectiveness of KNBS’s leadership and its commitment to transparency and accountability in financial management.

The management’s assurance that the organization has sufficient resources to continue operations may provide short-term relief but does not address the underlying issues driving the deficits. To ensure KNBS’s long-term viability, the government may need to consider financial restructuring, budget support, or operational changes to help the Bureau meet its obligations without falling into further debt.

The Path Forward: Possible Solutions to Revive KNBS

To address its current challenges, KNBS must adopt a proactive approach and establish a robust financial recovery plan. One option could be a government bailout, which would allow KNBS to clear its outstanding debts and stabilize its financial reserves. Additionally, the Bureau could explore revenue-generating avenues, such as partnerships with private companies or international organizations that require reliable statistical data.

Another option is to streamline operations and cut costs, focusing on core functions while limiting non-essential expenses. This could include adopting more efficient data collection methods, such as digital platforms for surveys and censuses, which can reduce labor and logistical costs.

Moreover, KNBS may need to strengthen its financial management practices by implementing stricter controls over imprest accounts and enforcing accountability mechanisms for debt collection. Engaging external financial advisors to review the Bureau’s budget and suggest cost-cutting measures could also improve its financial health.

Finally, increased transparency and regular audits will be critical in restoring public and governmental trust in KNBS. By addressing past discrepancies and adopting a transparent approach to future financial management, KNBS can work toward becoming a financially sustainable institution that can fulfill its mandate effectively.

Conclusion

The financial crisis facing KNBS is a wake-up call for Kenya’s public institutions regarding the importance of fiscal responsibility and accountability. KNBS’s ongoing deficits and unresolved financial issues have not only put its future operations at risk but also cast doubt on its ability to fulfill its essential role in providing reliable data to the nation. If left unaddressed, the Bureau’s financial instability could disrupt key government functions and hinder Kenya’s economic planning and policy formulation. Immediate intervention and a comprehensive financial recovery plan are needed to prevent the collapse of KNBS and to secure its role as a critical data provider for the country.

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Understanding the Importance of the National School Census

The National School Census serves as a foundational tool for collecting vital data on all educational institutions across Kenya. The exercise targeted a wide range of basic learning institutions, including pre-primary, primary, junior secondary, and secondary schools, covering both public and private entities as well as international and special schools. By employing face-to-face data collection methods across all 47 counties, the census ensured accuracy and depth in the information gathered.

Dr. Belio Kipsang, the Principal Secretary for Basic Education, highlighted the pivotal role of the census data once analyzed. He stated that it would be instrumental in monitoring progress in the education sector, particularly during transition periods between various levels of education. He remarked, “The reports generated will assist the education sector to close data gaps while it also assists in boosting the existing data. Our future decisions will be based on the data analyses and reports of this exercise.” This assurance signifies a commitment to data-driven decision-making in educational policy and management.

Addressing Data Gaps in Education

Historically, the education sector in Kenya has faced challenges related to data management and accessibility. With varying definitions and parameters for measuring success across different educational levels, the need for a standardized approach to data collection has become increasingly urgent. The National School Census aims to address these gaps by providing a clear and comprehensive overview of the current state of education in the country.

The significance of this data cannot be understated. It will facilitate targeted interventions, ensuring that resources are allocated effectively and equitably. With accurate information at hand, policymakers can identify areas in need of urgent attention, whether it be infrastructural development, teacher training, or curriculum improvements. By addressing these gaps, the education sector can work towards achieving its broader goals of inclusivity and accessibility.

Implications for Education Planning and Policy Formulation

The census data is not just a collection of numbers; it will serve as a cornerstone for informed policy formulation and strategic planning. Mr. James Muhati, the Principal Secretary for Economic Planning, praised the census in his remarks, describing it as a transformative exercise with the potential to change operations within the socio-economic sector. He noted, “The school census data will provide up-to-date information for education planning, policy formulation, decision-making, and international reporting and comparisons.”

This data-driven approach will benefit not only the education sector but also align with broader economic planning goals. A better understanding of the educational landscape will enable the government to create policies that support economic growth and social development. The interconnectivity between education and the economy is well-established; therefore, having reliable data is crucial for fostering a workforce equipped with the necessary skills for a rapidly changing job market.

Enhancing Monitoring and Evaluation

Monitoring and evaluating educational progress is critical for ensuring accountability and continuous improvement. The National School Census will enable a more effective monitoring framework, allowing stakeholders to assess the impact of various programs and initiatives in real time. By establishing clear benchmarks and indicators, the government can track progress and make necessary adjustments to its strategies.

Additionally, this data will support the transition of students through various education levels. By understanding where students are coming from and where they are heading, educators can implement tailored support mechanisms that facilitate smoother transitions. This is especially important in a country where educational inequities can significantly impact student outcomes. The data collected can help identify vulnerable groups, enabling targeted interventions that aim to level the playing field.

Engaging Stakeholders

The success of the National School Census is also attributed to the engagement of various stakeholders in the education sector. Parents, teachers, school administrators, and local communities were involved in the data collection process, ensuring that the information gathered reflects the realities on the ground. This inclusive approach fosters a sense of ownership among stakeholders, leading to greater commitment to improving the education sector.

Stakeholder involvement is essential for ensuring that the data collected is not only accurate but also relevant. By incorporating the perspectives of those directly impacted by educational policies, the government can create solutions grounded in the realities faced by students and educators alike. This collaborative approach enhances the likelihood that the findings of the census will be implemented effectively.

Future Directions and the Role of Technology

As the analysis of the census data begins, it is essential to consider how technology can further enhance the education sector. Digital platforms and tools can play a crucial role in the dissemination and utilization of the data collected. By leveraging technology, the government can ensure that information is easily accessible to all stakeholders, facilitating transparency and informed decision-making.

Moreover, technology can support ongoing data collection efforts. Implementing digital data management systems will allow for real-time updates and monitoring of educational metrics, enabling a more agile response to emerging challenges. This proactive approach can help the government stay ahead of potential issues and capitalize on opportunities for improvement.

In addition, the use of technology can help train educators on how to interpret and use the data effectively. Professional development programs can be established to ensure that teachers and administrators are equipped with the necessary skills to make data-driven decisions in their daily operations. This focus on capacity building will contribute to a more informed and responsive education system.

Addressing Challenges and Limitations

While the National School Census marks a significant step forward, it is crucial to acknowledge potential challenges and limitations. Data collection processes can be influenced by various factors, including local contexts, cultural differences, and resource constraints. Ensuring that the data collected is comprehensive and representative of all demographics requires careful planning and execution.

Additionally, there may be concerns regarding data privacy and security. Safeguarding the information collected during the census is paramount, particularly when dealing with sensitive data related to students and educational institutions. The government must establish clear protocols for data handling, storage, and sharing to maintain the trust of stakeholders.

Conclusion

The conclusion of the National School Census marks a pivotal moment for the education sector in Kenya. By prioritizing data collection and analysis, the government is taking significant steps towards addressing the challenges faced by the education system. The insights generated from this exercise will inform policy formulation, resource allocation, and monitoring efforts, ultimately contributing to a more equitable and effective education system.

As Kenya moves forward, the commitment to data-driven decision-making will be crucial in shaping the future of education. By harnessing the power of accurate and up-to-date information, the government can create a learning environment that supports the aspirations of every student, preparing them to thrive in an increasingly complex world. The National School Census is not just a data collection exercise; it is a blueprint for the future of education in Kenya.

This initiative serves as a reminder of the importance of continuous assessment and improvement in the education sector, ensuring that the needs of students and communities are met in an evolving landscape. As the analysis of the data unfolds, it will be exciting to witness how this census reshapes the educational experience for future generations in Kenya.

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While certain sectors showed resilience, such as tea and apparel exports, the overall trajectory underscores the vulnerabilities in Kenya’s export structure and highlights the need for diversification and strategic responses to global demand fluctuations. The mixed performance reflects broader trends in both domestic and international markets that are influencing Kenya’s trade activities.

The Impact of Declining Coffee Exports

Coffee has historically been one of Kenya’s flagship exports, revered for its high quality and commanding strong demand globally, particularly in European and Middle Eastern markets. However, the KNBS report reveals a significant drop in coffee export earnings during the period between April and June 2024, falling to Ksh 11.7 billion from Ksh 13.6 billion in the same period in 2023. This represents a 14% decline, which is attributed not only to lower global coffee prices but also to a decrease in the volume of coffee exported.

The volume of coffee shipped during the quarter dropped to 15,913.3 metric tonnes, compared to 18,874.7 metric tonnes in the previous year’s second quarter. Several factors contribute to this reduction, including unfavorable weather conditions that affected coffee yields, ongoing supply chain disruptions, and shifting demand patterns in key export markets. Furthermore, coffee growers in Kenya have been grappling with rising input costs, making it increasingly difficult to maintain production levels, which in turn affects export volumes.

Industrial Goods: Iron, Steel, and Machinery Exports Decline

In addition to coffee, Kenya’s industrial sector exports also suffered a significant blow. KNBS data shows that export earnings from iron and steel fell sharply to Ksh 6.8 billion in the second quarter of 2024, down from Ksh 8.3 billion during the same period in 2023. The decrease reflects both reduced global demand and heightened competition from other regions that offer similar products at more competitive prices.

Export earnings from industrial machinery and paper and paperboard also dropped, recording Ksh 1.9 billion and Ksh 1.1 billion, respectively. These sectors, while not as dominant as agriculture in Kenya’s export portfolio, play a crucial role in the country’s overall trade balance. The decline suggests a slowdown in industrial output, which could be a result of reduced manufacturing capacity, logistical challenges, and limited access to high-quality raw materials.

Kenya’s industrial goods export sector has traditionally faced challenges related to infrastructure, production costs, and competition. However, recent declines, particularly in iron and steel, highlight the vulnerability of this sector to external shocks, such as shifts in demand from key markets like China and India, as well as internal economic factors that affect production efficiency.

Bright Spots: Tea and Apparel Exports Show Growth

While the broader export landscape for Kenya has been challenging, certain sectors have demonstrated resilience, offering a glimmer of hope amid the downturn. Export earnings from tea, which remains one of Kenya’s top export commodities, rose by 2% during the second quarter of 2024. KNBS reported that tea export earnings increased to Ksh 44.8 billion from Ksh 43.8 billion during the same period in 2023.

The growth in tea exports is largely driven by an increase in the quantity of tea exported, even as global tea prices have remained relatively stable. Kenya’s position as a leading global tea producer, combined with strong demand from markets such as Pakistan, Egypt, and the UK, has helped sustain this growth. Additionally, the diversification of tea products, including specialty teas and value-added products, has enhanced Kenya’s competitiveness in international markets.

Similarly, the apparel and clothing accessories sector has shown notable growth, with export earnings increasing by 7.5% over the same period. Earnings rose from Ksh 11.8 billion in 2023 to Ksh 12.7 billion in 2024. This growth can be attributed to the increased demand for Kenyan-made clothing in key markets like the United States, where trade agreements such as the African Growth and Opportunity Act (AGOA) provide preferential access for Kenyan exports.

The apparel sector’s growth also reflects the global trend of sourcing garments from African countries due to the competitive labor costs and rising production costs in traditional manufacturing hubs in Asia. However, maintaining this momentum will require continuous investment in technology, innovation, and worker training to ensure that Kenyan apparel producers can meet evolving global demands.

Rising Imports Exacerbate Trade Imbalance

While Kenya’s export performance showed a mixed picture, the country’s import bill continued to rise during the second quarter of 2024. KNBS data indicates that spending on imports increased by Ksh 7.7 billion, bringing the total to Ksh 659.5 billion for the period. This increase was driven largely by higher expenditures on industrial machinery, aircraft, and associated equipment and parts.

The import of unmilled wheat, telecommunication equipment, and chemical fertilizers also saw significant increases, with wheat imports rising by 24.6%, telecommunication equipment by 83.1%, and chemical fertilizers by 41.7%. These increases reflect Kenya’s growing demand for inputs to support its industrial, technological, and agricultural sectors, as the country continues to pursue modernization and infrastructure development.

The rise in imports, however, has contributed to an increasing trade imbalance, as the growth in export earnings has not kept pace with the higher import bill. The imbalance places pressure on Kenya’s foreign exchange reserves, potentially leading to currency depreciation and inflationary pressures. It also highlights the need for a strategic approach to boost exports while managing imports to ensure sustainable economic growth.

Declining Imports of Rice and Iron and Steel

Not all imports saw increases, as the value of imported iron and steel, as well as rice, experienced significant declines. KNBS data shows that the value of imported iron and steel dropped from Ksh 39.3 billion in the second quarter of 2023 to Ksh 22.5 billion in 2024, a reduction of 42.7%. Similarly, the value of rice imports declined from Ksh 27 billion to Ksh 11.6 billion, representing a 57% decrease.

The decline in rice imports may be attributed to increased local production efforts and changes in global rice markets, while the drop in iron and steel imports could reflect reduced demand from the construction and manufacturing sectors in Kenya.

The Way Forward: Addressing Structural Challenges and Export Diversification

Kenya’s export sector, while facing several headwinds, holds potential for recovery and sustained growth. The challenges posed by declining earnings from coffee and industrial goods underscore the need for a diversified export base that can withstand global market fluctuations. Coffee, while a traditional export, must evolve to adapt to changing market dynamics, including shifts in consumer preferences toward specialty and sustainably sourced products.

The Kenyan government, alongside industry stakeholders, must also focus on improving productivity in the agricultural and industrial sectors by investing in modern technology, enhancing supply chains, and supporting value addition. Efforts to diversify export markets and products will be critical to reducing the country’s reliance on a few key commodities and markets.

Additionally, addressing infrastructure bottlenecks, improving access to finance for small and medium-sized enterprises (SMEs), and fostering innovation within the manufacturing sector will be essential to boosting industrial goods exports. Kenya must also continue to leverage trade agreements such as AGOA to expand its apparel exports and build on the success seen in the tea and garment industries.

In conclusion, while Kenya’s export performance in the second quarter of 2024 highlights significant challenges, it also offers opportunities for growth and transformation. By addressing structural issues and capitalizing on its competitive advantages in agriculture and apparel, Kenya can build a more resilient and diversified export economy capable of withstanding global economic shocks and driving long-term development.

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In this article, we delve into the performance of the key sectors driving the Kenyan economy in Q2 2024 and analyze the factors behind the observed trends. We will also explore the challenges and opportunities that lie ahead for the country’s economic growth in the coming quarters.

Agriculture: A Pillar of Economic Resilience

Agriculture, one of Kenya’s most vital economic sectors, expanded by 4.8% in the second quarter of 2024, contributing significantly to overall GDP growth. The sector’s robust performance was bolstered by favorable weather conditions and increased output of key agricultural products such as sugarcane, milk, and fruit exports.

Sugarcane Production

One of the most notable highlights in the agricultural sector was the significant increase in sugarcane production. According to KNBS, sugarcane deliveries surged by an impressive 81.5%, rising from 1,250.3 thousand metric tonnes in Q2 2023 to 2,269.3 thousand metric tonnes in the corresponding quarter of 2024. This surge in output can be attributed to improvements in farming practices, expansion in acreage under sugarcane, and favorable weather conditions in key growing regions.

The increased sugarcane production has had a positive impact on related industries, such as sugar manufacturing and processing, while also providing a boost to employment in rural areas. However, challenges such as fluctuating global sugar prices, rising production costs, and competition from imported sugar remain potential risks to the sector’s continued growth.

Milk and Dairy Products

The dairy industry also contributed to the growth of the agriculture sector, with milk deliveries to processors expanding by 7.9% to 221.1 million liters in Q2 2024. The increase in milk production can be attributed to favorable climatic conditions that improved pasture availability, as well as investments in modern dairy farming techniques. This growth in the dairy sector not only supports rural livelihoods but also enhances food security by ensuring a steady supply of dairy products to the domestic market.

Despite the positive performance, the dairy sector faces challenges such as fluctuating milk prices, high costs of inputs like animal feed, and the need for better infrastructure to improve cold chain logistics and milk collection systems.

Fruit Exports

The export of fruits, another critical component of Kenya’s agricultural output, grew by 4.3% during the second quarter of 2024, reaching 71,787.0 metric tonnes. This growth reflects Kenya’s continued efforts to expand its agricultural export base, with fruits such as avocados, mangoes, and pineapples driving the increase in export volumes.

The steady rise in fruit exports underscores the importance of Kenya’s horticultural sector in supporting the country’s foreign exchange earnings and providing a source of livelihood for small-scale farmers. However, the sector is exposed to challenges related to global market access, stringent export standards, and the impact of climate change on crop yields.

Real Estate, Finance, and Wholesale Trade: Key Drivers of Growth

Several other sectors of the economy also played a critical role in driving Kenya’s economic growth in Q2 2024. Notably, real estate, financial services, and wholesale and retail trade performed well during the period, helping to offset contractions in other industries.

Real Estate

The real estate sector continued to show resilience, expanding by 6% during the second quarter. The sector’s performance was supported by increased demand for housing, commercial properties, and infrastructure development. Ongoing government projects in affordable housing and urban regeneration have also contributed to the growth of the real estate industry.

However, the real estate sector faces challenges such as high construction costs, limited access to financing for developers, and a slowdown in private sector investments in commercial real estate due to economic uncertainties. The construction sector’s contraction during the same period, which we will discuss later, highlights some of the hurdles facing the industry.

Financial and Insurance Services

The financial and insurance sector grew by 5.1% in Q2 2024, driven by increased activity in banking, mobile financial services, and insurance. The adoption of digital banking and fintech solutions has revolutionized the financial landscape in Kenya, allowing greater access to financial services, particularly in rural and underserved areas.

The sector’s growth reflects the ongoing digital transformation in Kenya, which has seen financial institutions leverage technology to offer more efficient and accessible services. Mobile money platforms such as M-Pesa continue to be a driving force in the economy, with increasing usage in transactions, savings, and lending.

Despite this growth, the financial services sector is not without challenges. Rising inflation and interest rate fluctuations pose risks to lending activity, while increasing competition among financial institutions puts pressure on profit margins. Additionally, the sector must navigate evolving regulatory requirements and ensure cybersecurity in the face of rising digital transactions.

Wholesale and Retail Trade

Wholesale and retail trade grew by 4.4% in Q2 2024, reflecting improved consumer spending and increased activity in both formal and informal markets. The sector’s growth was supported by stable supply chains, increased e-commerce activity, and consumer demand for fast-moving consumer goods (FMCGs).

However, the sector’s growth has been tempered by rising inflation, which affects the purchasing power of consumers. Retailers are also grappling with increasing operating costs, particularly in logistics and distribution, as well as competition from online retailers.

Sectors Facing Contraction: Mining, Quarrying, and Construction

While several sectors of the economy recorded positive growth, others faced significant challenges during the second quarter of 2024. In particular, the mining, quarrying, and construction sectors experienced contractions, contributing to the overall slowdown in economic growth.

Mining and Quarrying

The mining and quarrying sector contracted by 2.7% in Q2 2024, a reversal from the 2.7% growth recorded in the same period in 2023. The decline in this sector can be attributed to reduced global demand for minerals, fluctuating commodity prices, and operational challenges in mining operations. Additionally, environmental regulations and the need for sustainable mining practices have increased compliance costs, further affecting the profitability of the sector.

Kenya’s mining sector remains underdeveloped compared to other industries, and there is potential for growth if the government can create a conducive environment for investment, improve infrastructure, and streamline regulatory processes.

Construction

The construction sector, which contracted by 2.9% in Q2 2024, was another area of concern. This contraction marks a significant downturn from the 2.7% growth observed in Q2 2023. The slowdown in construction activity can be attributed to high costs of building materials, labor shortages, and a reduction in government spending on infrastructure projects. Rising inflation and interest rates have also made it more difficult for developers to access financing for construction projects.

The contraction in the construction sector has broader implications for employment and economic growth, as the industry is a major employer and contributor to the economy. To reverse this trend, the government may need to provide incentives for developers, reduce the cost of building materials, and increase investments in public infrastructure projects.

Inflation: Slowing but Still a Concern

One of the positive developments during the second quarter of 2024 was the decline in the inflation rate. Inflation averaged 4.87% in Q2, down from 7.94% in the same period last year. The slowdown in inflation was primarily driven by lower prices for transportation, food, and non-alcoholic beverages. Lower fuel prices, improved agricultural output, and stable supply chains helped ease inflationary pressures.

While the decline in inflation is a welcome relief for consumers and businesses, inflationary risks remain. Global oil price volatility, climate-related disruptions to agricultural production, and exchange rate fluctuations could lead to renewed inflationary pressures in the coming months.

Conclusion: Navigating Economic Headwinds

Kenya’s economy showed resilience in Q2 2024, growing by 4.6% despite facing several challenges. Strong performances in the agriculture, real estate, financial services, and wholesale and retail trade sectors helped offset contractions in mining, quarrying, and construction. The agriculture sector, in particular, remains a key driver of growth, while the real estate and financial services sectors benefit from digital innovation and ongoing infrastructure development.

However, economic growth has slowed compared to the previous year, reflecting the impact of rising inflation, high production costs, and sectoral contractions. Moving forward, Kenya will need to address the structural challenges in its economy, support key sectors through policy interventions, and maintain macroeconomic stability to ensure sustainable growth.

As the government continues to focus on economic diversification, digital transformation, and infrastructure development, there are opportunities for Kenya to unlock new sources of growth and navigate the headwinds facing its economy.

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The CPI measures the average change in prices over time for a basket of goods and services commonly purchased by households, serving as a key indicator of inflation. It reflects how much the cost of living is rising or falling by comparing the current price of this basket to the price in the previous base year. The rise in the CPI over the last year, despite the drop in inflation, indicates that prices have not eased in tandem with the overall inflation rate.

In practical terms, this means that the purchasing power of Kenyans has diminished even with lower inflation. A product that cost Sh100 in August 2023 would now cost Sh105.85, an increase of 5.85 percent, despite the reported decline in inflation. This highlights the disconnect between the statistical inflation rate and the real-world experiences of consumers.

Food Prices on the Rise

One of the significant drivers of the increased cost of living has been the rise in food prices. For instance, the price of a kilogram of tomatoes, which cost Sh74.18 in 2023, has jumped to Sh86.84 in August 2024, marking a significant increase that directly impacts households. Similarly, other essential items have seen price hikes, contributing to the strain on household budgets.

However, not all commodities have seen an upward trend in prices. A kilogram of sugar, which retailed at Sh218.25 last year, has dropped to Sh158.19 in August 2024, providing some relief to consumers. Despite this decrease, the overall trend indicates rising costs across most categories of goods and services.

Key Drivers of Price Increases

According to KNBS, the year-on-year inflation rate, as measured by the CPI, was 4.4 percent in August 2024. This figure represents the general price level being 4.4 percent higher than it was in August 2023. The main contributors to the price increase were commodities under Food and Non-Alcoholic Beverages (5.3 percent); Housing, Water, Electricity, Gas, and other fuels (4.2 percent); and Transport (3.9 percent) between August 2023 and August 2024. These three divisions alone account for over 57 percent of the weights of the 13 broad categories used in the CPI calculation.

Additionally, the year-on-year index for alcoholic beverages, tobacco, and narcotics rose by 8.2 percent, further contributing to the overall increase in living costs. These categories’ price rises have had a substantial impact, given their significant weighting in the overall calculation of the CPI.

Understanding the Data

The CPI and inflation figures are generated from data collected through a monthly survey of retail prices, which targets a representative basket of household consumption goods and services. Data collection is conducted in the second and third weeks of the month from a sample of outlets across 50 data collection zones nationwide. This approach ensures a comprehensive snapshot of the price trends affecting the average Kenyan consumer.

The disparity between the declining inflation rate and the rising CPI suggests that while the overall pace of price increases has slowed, the cost of living continues to climb, affecting household budgets. This discrepancy underscores the need for targeted measures to address the specific factors driving up prices, particularly in essential categories like food, housing, and transport.

Conclusion

The recent data from KNBS serves as a reminder that a lower inflation rate does not necessarily equate to lower prices. The rising cost of living, as evidenced by the increased CPI, continues to challenge Kenyan households. As prices for essentials like food and housing remain high, the economic burden on consumers persists, highlighting the complex dynamics of inflation and the cost of living.

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Ethiopia Emerges as Top Power Supplier

Ethiopia has solidified its position as Kenya’s leading external electricity supplier, contributing over 672 million kilowatt-hours (KWh) of power to the national grid in the first half of 2024. This marks an 88% increase compared to the same period in 2023, highlighting the growing importance of Ethiopia’s energy resources to Kenya’s power infrastructure.

The surge in imports from Ethiopia is largely attributed to a 25-year Power Purchase Agreement (PPA) that Kenya signed with Ethiopia in 2022. Under this agreement, Kenya secured electricity at a rate of Ksh8.6 per kilowatt, a price point that was notably lower than the tariffs charged by independent power producers (IPPs) within Kenya. The deal, which is set for review in 2027, was strategically timed to stabilize Kenya’s power supply, particularly during periods of severe drought, which have historically strained the country’s hydropower generation capacity.

Uganda’s Supply Declines Amid Rising Ethiopian Imports

While Ethiopia’s contribution to Kenya’s electricity supply has grown, Uganda’s role has diminished. In the first six months of 2024, Uganda supplied 106 million KWh of power to Kenya, a 24% drop from the 141 million KWh provided in the same period in 2023. Despite this decline, Uganda remains a crucial partner in Kenya’s power exchange program, which allows the two countries to support each other’s energy needs during periods of shortfall.

Total Power Imports Surge

In total, Kenya imported 778 million KWh of power from Ethiopia and Uganda between January and June 2024, a sharp increase from the 498 million units imported during the same period in the previous year. This rise in imports underscores Kenya’s growing reliance on external sources to meet its electricity demands, particularly as the country’s domestic power generation has shown minimal growth.

Between January and June 2024, Kenya generated over 6.098 billion KWh of power locally, a slight increase of just 0.2% compared to the same period in 2023. This stagnation in local generation has made Kenya a net importer of electricity, relying on neighboring countries to bridge the gap.

Government’s Efforts to Lower Consumer Bills

Kenya’s decision to increase power imports is part of a broader government strategy to lower electricity costs for consumers. By securing more affordable electricity from Ethiopia and Uganda, Kenya aims to reduce the overall cost of power, which has been a significant burden on households and businesses alike. The PPA with Ethiopia, in particular, was seen as a crucial step in achieving this goal, offering a more cost-effective alternative to the high tariffs imposed by IPPs.

However, the reliance on imported power also presents challenges, including the need for infrastructure upgrades to handle increased cross-border electricity flows and the potential for geopolitical tensions to impact supply. As Kenya continues to navigate these challenges, the government will need to balance its import strategy with efforts to enhance domestic power generation capacity.

Conclusion

Kenya’s increased electricity imports from Ethiopia and Uganda reflect a strategic response to growing domestic power demands and challenges in local generation. While the move has helped stabilize supply and lower costs, it also underscores the need for continued investment in Kenya’s energy infrastructure to ensure long-term sustainability and security. As the country approaches the 2027 review of its PPA with Ethiopia, the terms of the agreement will likely play a critical role in shaping Kenya’s future energy landscape.

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In July 2024, the cost of tomatoes, a key ingredient in many Kenyan meals, rose by 28.7 percent. The price jumped from Sh76.7 per kilogram last year to Sh98 this year. Similarly, onions, essential for dishes like kachumbari, saw a significant price increase. The price per kilogram rose from Sh129.79 to Sh171.41, reflecting a notable hike that will likely impact household budgets.

Cabbages, another staple in Kenyan kitchens, recorded the sharpest price increase. The cost of a kilogram of cabbage surged by 46.1 percent, from Sh53.7 to Sh78.4. This sharp rise in vegetable prices is a notable concern for many households who rely on these basic ingredients for their daily meals.

Despite these increases, there is some relief for Kenyan consumers in other food categories. Sugar, for instance, experienced a substantial price drop of 22.3 percent, with a kilogram costing Sh164.42 compared to last year’s prices. White wheat flour also saw a decrease of 10.9 percent, now averaging Sh177.07 for a two-kilogram packet.

The most significant drop was observed in maize flour, a staple food for many Kenyans. The price of a two-kilogram packet of sifted maize flour fell by 35.8 percent, from Sh202.93 in July 2023 to Sh130.4 in July 2024. Fortified maize flour also saw a considerable reduction of 35.1 percent, costing Sh147.30 per two-kilogram packet. Additionally, the cost of loose maize grain decreased by 29.8 percent, averaging Sh60.16 per kilogram.

Overall, the general inflation rate for food items saw a modest increase of 5.6 percent year-on-year in July, consistent with the previous month’s rate. This stability in the broader food price index contrasts with the significant fluctuations seen in specific categories like vegetables.

In terms of other living costs, housing, water, electricity, cooking gas, and other fuels have risen by a modest 3.9 percent year-on-year. However, this category saw a slight decrease of 0.4 percent from the previous month. This minor adjustment suggests that while essential services and utilities have become somewhat more affordable, the increase in food prices, especially for vegetables, is having a more pronounced impact on household budgets.

In conclusion, the sharp rise in the cost of vegetables like tomatoes, onions, and cabbages is a significant concern for many Kenyan households, particularly those who rely on these staples for their daily meals. While there is some relief in the prices of other food items and a modest increase in living costs, the overall inflation in food prices underscores the need for ongoing attention to food security and cost-of-living adjustments.

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The drop in inflation is a positive development for Kenya’s economy, which has been grappling with varying inflationary pressures. The Kenyan government’s medium-term inflation target ranges between 2.5% and 7.5%, and the current rate of 4.3% places it comfortably within this target. This range aims to balance economic growth with price stability, ensuring that inflation remains manageable while supporting overall economic expansion.

The central bank of Kenya is closely monitoring these trends as it prepares to announce its latest lending rate decision on August 6. The central bank’s benchmark lending rate, which currently stands at 13.0%, was maintained at this level during the June meeting. At that time, the bank cited stable inflation within its near-term target range and emphasized the importance of exchange rate stability as key factors influencing its decision.

The central bank’s role in maintaining inflation stability is crucial for fostering a predictable economic environment. By holding the lending rate steady, the bank aims to provide a conducive atmosphere for economic growth while managing inflationary pressures. The decision to keep the rate unchanged reflects a cautious approach, balancing the need for economic stimulation with the necessity of controlling inflation and ensuring financial stability.

The recent decline in inflation could be attributed to various factors, including fluctuations in food and fuel prices, changes in global commodity markets, and domestic economic policies. Lower inflation can positively impact consumers by increasing their purchasing power and reducing the cost of living. It also creates a more favorable environment for business investments, as stable prices contribute to a more predictable cost structure.

Looking ahead, the central bank’s decision on the lending rate will be closely watched by economists and market participants. Any adjustments to the rate could influence borrowing costs, investment decisions, and overall economic activity. Given the current inflation trends and economic conditions, the central bank faces the challenge of navigating between stimulating growth and preventing inflation from rising beyond the target range.

In summary, Kenya’s inflation rate has shown a positive decline, moving from 4.6% in June to 4.3% in July. This decrease reflects a more stable inflationary environment, aligning with the government’s medium-term target. The central bank’s upcoming decision on the lending rate will be pivotal in shaping Kenya’s economic trajectory, as it seeks to balance growth and price stability in the coming months.

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