Business
Kenya becomes a middle income nation – now 9th largest economy in Africa
Kenya’s gross domestic product 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 continent’s top 10 economies.
The country’s economic output was calculated to be US$53.4 billion in 2013 after the rebasing, up from US$42.6 billion, the Cabinet Secretary for Devolution and Planning, Anne Waiguru, told a news conference on Tuesday.
That takes Kenya up to ninth in Africa’s GDP rankings from 12th, above Ghana, Tunisia and Ethiopia but below oil-producing Sudan based on a World Bank table for 2013.
The rebasing exercise means debt levels fall as a proportion of GDP, a closely watched ratio, and could give the Kenyatta administration some leeway for more borrowing to help finance its plans to build new transport links and repair infrastructure.
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. It provides the country a little bit of breathing space and “not an opportunity to open the cash register,” said public policy and economic analyst Robert Shaw.
As with other rebasings in Africa, the move takes into account structural and other economic changes, such as new technology, and updates the base year for prices.
Kenya’s GDP revision follows the rebasing earlier this year of Nigeria’s economy when it changed the base year from 1990 to 2010 and, as a result, vaulted above South Africa to become Africa’s biggest economy.
