Reuters Nairobi
KENYA’S gross domestic product (GDP) was estimated to be 25 percent bigger after the authorities changed the base calculation year to 2009 from 2001, sending the east African nation into the top 10 of Africa’s economies by size.
Economic output was calculated to be 4.76 trillion shillings (R593 billion) last year after rebasing, up from 3.8 trillion shillings, Anne Waiguru, the cabinet secretary in the ministry for devolution and planning, said yesterday.
Growth last year was calculated to have been 5.7 percent after rebasing, up from the previous estimate of 4.7 percent.
The rebasing exercise means debt levels will fall as a proportion of GDP, a closely watched ratio. This could give the government some leeway for more borrowing to help finance its plans.
But revising the estimated size of GDP does not change Kenya’s ability to repay additional loans nor does it mean it has more income to spend on development in a nation where many live in villages with dirt roads and without power.
“Debt service capacity and export growth, neither of which are expected to be substantially revised, are much more important when it comes to being able to take on more debt,” Razia Khan, the Africa economist at Standard Chartered Bank, said ahead of yesterday’s announcement.
Kenya’s move follows the more dramatic rebasing earlier this year of Nigeria’s economy. It changed the base year from 1990 to 2010 and, as a result, vaulted above South Africa to become Africa’s biggest economy.
Kenya’s rebasing was less pronounced because the gap between 2001 and the new base year of 2009 was much shorter. But it still meant Kenya rose from 12th to 9th, above Ghana, in Africa’s GDP rankings, based on a World Bank table for last year.