Last week, I accompanied my wife to a supermarket, part of a foreign owned large chain. When I go grocery shopping by myself, I find the big outlet daunting and usually take refuge in a smaller locally owned one in my neighbourhood.
There, staff immediately volunteer to assist, and don’t mind that I sometimes have to call the main household shopper to seek directions on some items on the list. On a couple of occasions, and to avoid broken telephone, the staff have simply taken over the phone call.
On lighter duties of pushing the trolley, I had plenty of time to notice things I might not have. Running into a former parliamentary colleague with his grandchildren was nice but reminded me that I am no spring chicken myself! Then I noticed the South African beef and apples.
That the beef is delivered chilled to Kenyan supermarkets is testament to the depth of logistics between Johannesburg and Nairobi.
You might conclude that it is the effect of the Tripartite Free Trade and Africa Continental Free Trade Areas, except customs tariffs for beef and fruits are 35 and 25 percent respectively.
So it is indicative of the high beef prices in Kenya, relative to other markets. That is why Kenya sells mutton to the Middle East market but not beef.
The country has been a net importer of beef, but on hoof. Cattle are usually walk to terminal markets. You will find animals from Tanzania, Somalia and Ethiopia in key weekly auctions at Bisil, and Garissa.
Importing meat and fruits is symptomatic of the larger economic difficulties that the nation is facing. Resolving them will require every good idea that we can find.
Raila Odinga has called for a national conclave to discuss political and economic reform. I support such a move, because as things stand now, negative politics is drowning economics.
Political leaders should not just focus on political issues as they did during the national dialogue in 2023. To paraphrase Clinton’s now famous 1992 campaign message, “it is the economy, stupid”.
And, whereas the cost of living crisis is global – a December 2022 study by Friedrich-Ebert-Stiftung found it being the cause of demonstrations in 142 countries over the previous 12 months - each country must find its own home-grown solutions.
Real wages data by the Kenya National Bureau of Statistical show that between 2019 and 2024, the average private sector worker lost nine percent of their purchasing power. Their public sector colleagues were more devastated, losing 20 percent of their purchasing power in the same period.
The declines are worse in key sectors of construction, and agriculture, where real wages dropped 10 and 16 percent respectively. That is why citizens are no longer impressed with infrastructure. While they don’t deny the progress on that front, it has not translated into their pockets, eliciting much frustration.
Counties have in part responded with regional economic and investment forums, as they seek a new mojo. Muranga Investment Conference is one recent effort. And just last week, Kenya’s premier development finance institution, the Kenya Development Corporation (KDC) held a summit, Next Frontier Africa 2025, at the KICC.
I was particularly pleased because one of my favourite products – the BJ50, a four-wheeler tuk tuk made in Nyahururu, was on display. It is by scaling up such production that the republic will overcome the decline in real wages.
Economists use the purchasing managers index (PMI) to track the economic pulse. Derived from a monthly survey of 400 companies in agriculture, mining, manufacturing, construction, wholesale, retail and services, it is an excellent indicator of economic conditions.
Managers respond to questions on their firms output, new orders and growth outlook. They also report on whether they are hiring or firing staff, backlogs of work, quantity of purchases and suppliers' delivery times.
The results for both May and June show worsening economic conditions. Total business output contracted in both months. Declines were driven by the construction, wholesale and retail and services sectors, while output increased slightly in agriculture and manufacturing. These results indicate that the expected economic recovery has been cut short.
Further afield, global conditions are looking increasingly ominous. The US projects a large FY2025 deficit, which will prompt interest rate hikes. Then there are the tariff and shooting wars. All these make domestic recovery more difficult.
The political elite should prioritise the economy. It is urgent!
The writer is an economist and Partner at Ecocapp Capital, the advisory firm.
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