By IPS Correspondents
NAIROBI, May 8 2007 (IPS)

In an election year, it’s undoubtedly something that Kenyan officials hoping to regain power will be pointing to: steady economic growth during President Mwai Kibaki’s first term in office.

Government figures indicate that growth increased from 0.3 percent in 2002 – when Kibaki came to power – to 5.8 percent in 2005, and six percent last year.

But, is this translating into benefits for the population at large?

Certainly, industrialist Manu Chandaria is not complaining: he says growth rates have seen his companies’ exports increase substantially. Chandaria is the chairman of Mabati Rolling Mills (MRM), which manufactures iron roofing sheets.

“Following the growth we have invested heavily in new equipment, and we are just about to negotiate another investment worth 30 million dollars. If we thought that the economy was not good enough, we would not be thinking about a new investment,” he told IPS. MRM also claims to have taken on many more employees; but figures on the number of jobs created at the company were not available.

Samuel Ochieng, chief executive officer of the Consumer Information Network, a non-profit that provides education about consumer rights, is less optimistic.

“Those who are enjoying economic growth are not the lower class but the few (members of the) upper class…who control the economy,” he told IPS.

According to ‘Pulling Apart: Facts and Figures of Inequality in Kenya’, the wealthiest 10 percent of households in Kenya control more than 42 percent of income, while the poorest 10 percent control less than one percent of income. The publication was launched in the capital of Nairobi last year by the Society for International Development, a global organisation that focuses on a range of development programmes.

Havi Murungi, associate research director of private firm Consumer Insight, echoes the views expressed by Ochieng.

“The purchasing power (of consumers) is still very limited in my estimation; there seems to be little trickle down. Indeed, my view is that more goods and services are competing for very much the same amount of disposable household income,” he told IPS.

“One of the main findings in our studies is that mobile phone airtime is now taking a significant share of wallet. If incomes were truly up, other normal purchases would not go down as airtime purchases go up. The fact that consumers are now very price-sensitive is a pointer to limited purchasing power.”

Notes Ochieng: “The poverty levels are still intact. We have spoken to people in the streets and they say nothing is changing.”

According to the 2006 United Nations Human Development Report, almost 23 percent of Kenya’s population lives on less than a dollar a day, and some 58 percent on less than two dollars a day.

For its part, government insists that matters are improving. The latest Kenya Integrated Household Budget Survey, released last month, notes that 46 percent of people are estimated to live in poverty now, compared to 52.3 percent a decade ago. These figures are based on the percentage of persons living on less than about 74 U.S. cents a day in rural areas, and on less than some 1.4 dollars a day in urban areas, according to a source in the Kenya National Bureau of Statistics.

If the benefits of economic growth are disputed, there is less controversy about what is needed to sustain growth.

The Institute of Economic Affairs, a non-governmental organisation that promotes debate on economic reform, says infrastructure needs attending to – also insecurity. Government itself admits that armed robberies, carjackings and muggings are commonplace, and worrying to the business community.

Then, there is the ever-present problem of graft.

“Corruption taxes the private sector, raising the costs of doing business, thus leading to disinvestment. The high costs and disincentives created by corruption discourage new investment – both local and from abroad – that is vital to Kenya’s economic growth,” said U.S. ambassador Michael Ranneberger during a recent address to the American Chamber of Commerce in Kenya.

While Kibaki swept to power on promises to root out corruption, his government has been haunted by graft – notably the scandal involving Anglo Leasing and Finance Limited. This fictitious company was awarded contracts to supply a system for producing passports that could not be forged, and to construct police forensic laboratories.

Millions of dollars were paid to the firm, but returned shortly after the scam came to light in 2004.

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