Kenya to update base year for GDP data

by Reuters 0

This was announced by the country’s statistics office said, in a move that is expected to increase the size of the economy.

The process, known as rebasing, allows statisticians to update their estimates of economic activity and include estimates for new areas to keep pace with technological innovations, giving investors a clearer view of the amount and types of activity in the economy.

Nigeria vaulted past South Africa to become the largest economy in Africa earlier this year when it updated the base year it uses to calculate the size of its economy to 2010 from 1990. More frequent rebasing should in theory lead to more accurate data.

(READ MORE: A closer look at Nigeria’s GDP rebasing)

It was not immediately clear what impact rebasing Kenya’s economic activity data would have, but the National Treasury said in its prospectus for a debut Eurobond in June that it expected the size of the 37 billion US dollar/year economy to go up by 20.6 per cent.

“It is going to be quite a jump,” said Robert Shaw, a Nairobi-based economist, citing the informal sector, like small trading, which is usually left out of official data in many African economies.

“We spend too much time assessing the formal sector and most of the growth is actually being driven by the informal sector… To get a more detailed breakdown I think it is going to be a real eye-opener,” he said.

Shaw however cautioned against expectations that the exercise could change the day-to-day economic circumstances of most people in Kenya, who have to bear high costs of living.

“It is just going to mean that in reality we are a much bigger economy. It is not going to make people richer; all the realities are still going to be there,” he said.

Chris Muiga, a currency trader at National Bank, said the rebasing had already been priced in by markets.