Barely a week after Nigeria’s confirmation as Africa’s largest economy, following a rebasing of its Gross Domestic Product (GDP), Kenya has also done a statistical review of its economy, with the result expected to usher the East African country into middle income economy status.
The Kenya National Bureau of Statistics (KNBS) made this known on Friday, with the result of the rebasing expected to increase its GDP by one-fifth to be released in September. Its GDP is also expected to grow from $41.6 billion in 2013 to $50 billion. With that, per capita income would rise from $943 to $1,136, which is above the $1,036 benchmark set by the World Bank for middle-income countries.
According to KNBS, the outcome of the rebasing to be announced in September will earn Kenya a middle-income nation status, a great feat for the East African country whose projection for the attainment of the status was 2030.
As much as the country craves the middle-income status, analysts advise East Africa’s largest economy to be wary of the challenges it would face with the new status.
“A bigger economy means Kenya needs less support and will not be eligible to access key export markets on preferential terms,” local news platform, BusinessDaily quoted Robert Shaw, an independent analyst as saying.
He added that such is the price nations pay for growing an economy. “But it gives us an incentive to aggressively increase our trade and cut dependence on donor inflows and aid,” he enthused.
Kenya has enjoyed the East Africa’s largest economy label for years, but it still depends on loans and aids – all of which could be suspended once it attains middle-income economy status.
The International Development Association (IDA), a unit of the World Bank which funds poor developing countries, is one of the agencies that could stop giving loans to Kenya. A planned disbursement of $2.9 billion loan, which was scheduled for the East African country in the year, may also be suspended.
When Nigeria became Africa’s largest economy by attaining a GDP of $510 billion, citizens of the country lamented that the said economic growth did not improve acess to social amenities of infrastructure. Similar concern is expected to be raised by Kenyans as poverty remains high in the country.
According to a 2013 World Bank report titled Kenya Economic Update, although poverty is still quite high in the country. Howwever, Kenya has the opportunity to eliminate extreme poverty by 2030 in line with the World Bank’s global poverty target, if it reduces poverty by two percentage points each year.
The report added that Kenya’s “high rate of poverty reduction is only possible if growth is accompanied by reduction in inequality, to enable the poor benefit, to a disproportionate extent”.
Reduction in inequality is therefore what policy makers in Kenya should be aiming at as the big announcement in September draws nearer – it will ensure every Kenyan enjoy the benefit of the country’s new middle-income economy status.
