by Herald Aloo

Kenya is still banking on the Sh53.7 billion economic stimulus package to fast-track recovery, the latest Kenya Economic Report for 2021 says, but the government has been advised to cushion key growth areas.

The report released by the Kenya Institute of Public Policy Research and Analysis (Kippra) says the eight-point stimulus package launched in May 2020 played a major redistribution role in revitalising the pandemic ravaged economy which saw the gross domestic product (GDP) dip by 9.2 per cent within the second lockdown in 2020.

Pandemic knocks

But with Covid-19 shocks here to stay, the report says key sectors that were adversely affected by the pandemic still require among others state protection, diversification, and partnerships to sustain economic growth.

The reports says supporting manufacturing to realise its unexploited capabilities, improve productivity of smallholder farmers and diversifying tourism and trade will boost growth further.

The manufacturing sector was adversely affected by the pandemic and contracted by 0.1 per cent in 2020.  “Safeguard manufacturing firms by sealing loopholes for counterfeit goods by strengthening and increasing inter-agency collaboration of institutions such as Anti-Counterfeit Authority, Kenya Revenue Authority, and Kenya Bureau of Standards,” Kippra advises.

For local products to compete internationaly, the government must strengthen policies aimed at embracing and implementing international productivity standards. It calls for the government to enhance local production capacity for micro-enterprises engaged in production of essential goods.

‘A decline in import of capital goods, if sustained, could pause a major challenge to the long-term economic growth if they are not substituted with local production,” Kippra said. The pandemic had a pronounced impact on trade flows globally, and Kenya was not an exception, but key exports were resilient as tea, coffee and horticulture exports in 2020 surpassed their levels in 2019.

Involve private sector

The agriculture sector further got Sh3 billion from the stimulus package, but Kippra says despite continued investments in the sector and the huge contribution the sector makes to GDP, the country still suffers food insecurity.

Kippra suggests that the government should promote private sector involvement, increase funding, and promote pluralism in agriculture service delivery.

“There is potential to exploit the co-operative sub-sector to spur the development of this marketing infrastructure and, at the same time, attract the youth to participate in agriculture,” the report says.