Mbadi-nomics in Kenya
I watched and listened to Kenya’s Cabinet Secretary John Mbadi on Monday the 2nd of February, 2025 on Nation TV and he impressed me with some accounting calculations and economics phrases and terms such as inflation, pay slip etc.
This reminded me of Mark Twain who wrote that, ‘There are three kinds of lies: lies, damned lies, and statistics.” It has also been said that there are white lies, black lies and statistics (or statistical lies). The claim that statistics can be lies is also captured in the following joke:
Three professors went hunting, each with a gun loaded with a single bullet. At a distance they saw an antelope grazing. The first professor aimed and shot but missed by an inch to the left. The second professor aimed and shot but missed with the same margin but now to the right. The third professor did not shoot but threw up his hands in joy and shouted, “hurray, on average we shot it.” The antelope hearing the professor’s noise (well the guns must have had silencers!) sped to safety as the professors’ families went without game meat on their dinner tables that evening.
The issue of averages being lies can be demonstrated by the concept of GDP per capita which is calculated by dividing a country’s gross domestic product (GDP) or total earnings by its population. GDP per capita is used by economists as a primary indicator to measure the average economic output per person in a country, sometimes used by economists to measure the standard of living of a people.
Allow me go a bit hypothetical. Take imaginary country A and B each with a population of 10 people. In country A five people earn between them a total of Sh. 100 (say 30, 30, 25, 10 and 5) while 5 people live on the streets earning zero and scavenging. The total earnings in this country of 10 is sh. 100 working out at a GDP per capita of sh.10. In country B each of the ten people lives in a house and earns sh. 10 bringing the total earnings to sh. 100 which again works out at the same GDP per capita as in country A. The impression given by the same GDP per capita is that the two countries have the same standard of living for their people which is obviously inaccurate.
Hypothetical figures aside. According to the International Monetary Fund (IMF) Singapore has a GDP per capita of US$ 95 000 and Japan has it at US$33 000 giving the impression that Singapore is about 300% better than Japan. However, in terms of poverty levels Singapore has a 15% poverty rate while Japan has it at 0.7%. Well, you may wish to make your own interpretations. Indeed, if we left statistics at the GDP per capita level we would erroneously conclude that people in Singapore live a much richer life than those in Japan.
Clearly GDP and GDP per capita are not best placed to assess welfare or the well-being of citizens. The Human Development Index (HDI) has been thought by some to be a good indicator in this case notwithstanding the challenges of its usage.
An anonymous blogger wrote that economists are very dangerous people. They are armed with an invisible hand given to them by Adam Smith. She went on to write that economics is a very dangerous science precisely because it empowers smart people with complex tools to make policy prescriptions that often end up imposed on everyone. Yes, in Kenya we have seen policies made by intelligent people such as the housing levy, university funding model and SHIF being imposed on people.
Jokes have been extended to econometricians who have been defined as people who can tell you only tomorrow why what they predicted yesterday did not happen today. Does it amaze you that whereas some of Kenya’s finest economists and econometricians in 2008 modelled a Vision 2030 promising the world that the country would be a middle-income economy in 2030 only for other equally fine economists and econometricians to play around with the country’s statistics in the name of rebasing the country’s GDP and bring forward the 2030 date and declare the country a middle-income economy in 2014!
And now back to minister Mbadi and what has been labelled Mbadi-nomics. The minister told the world that, “we have improved people’s pay slips” and went on to announce that inflation has come down implying that Kenyans are better off because inflation is bad for our economy when it is too high, as it erodes purchasing power, can lead to higher interest rates, and distorts economic decision-making.
Let us look at the purchasing power of Kenyans. We know that the key source of a people’s purchasing power is their income i.e. the amount of money they earn through wages, salaries, or other means, which allows them to buy goods and services.
In 2023, the World Bank’s assessment predicted that Kenya’s unemployment would worsen in 2024. In the same year of 2023 the Nation Media Group reported that the number of jobless Kenyans had risen to 2.97 million.
Today we know that young people below the age of 29, mainly secondary school and college graduates, are hard hit by joblessness. At the 2024 UNEP High Level Roundtable on Green Jobs & Skills Development in Kenya the Federation of Kenya Employers (FKE) reported the unemployment rate of Kenyan youth (15–34 years old) to be around 67%. The Kenya Institute of Public Policy Research and Analysis (KIPPRA) highlighted that over 31% of Kenyan youth are either unemployed or underemployed. Reports at the conference indicated that over one million young people enter the labour market annually, however, the Kenyan job market is not creating enough jobs to absorb this huge number of young people annually entering the workforce. Consider that more than 50% of the 2024 Kenya’s certificate of secondary education (KCSE) pupils scored grade D and below for the eighth year running and you will get a picture of how many young job seekers the country releases into the labour market annually.
And why is Kenya’s labour market not creating opportunities? In a gazette notice dated September 6, 2024, Kenya’s Registrar of Companies Joyce Koech listed a number of companies that faced dissolution. Over 100 companies closed shop.
In 2024, several companies announced their exit from the Kenyan market citing among other reasons the unfavourable business environment. Some of the notable examples of companies that have left or planned to leave Kenya include Procter & Gamble (P&G) and Base Titanium. The G4S Kenya did not completely leave the country but it announced significant job cuts between November 2024 and April 2025. Tile and Carpet Centre indicated plans for redundancies within its production department starting December 6, 2024, citing economic constraints and a decline in production demand as reasons for restructuring. I could go on listing more companies. Bottom line: Kenya’s labour market is shrinking one due to high taxation, increased operational costs, and an unfavourable investment climate among other reasons.
When Kenyans are retrenched or are not absorbed into wage employment they try their luck at entrepreneurship i.e. starting their own businesses. However, according to available data, the startup mortality rate in Kenya is up to 80% meaning that roughly 80% of startups in Kenya fail due to the above listed labour market shrinking reasons.
All the above statistics show that there is high unemployment in Kenya. More statistics show that the total employed population in Kenya is around 20 million but a significant portion (around 16.7 million) are employed in the informal sector and typically do not receive pay slips, the very slips minister Mbadi says have improved. In other words, very few Kenyans can enjoy the benefits of better pay slips. But have the pay slips actually improved? Why have we witnessed worker unrests and strikes among Kenyan workers including teachers, lecturers and nurses? I leave that for you my esteemed reader to guess.
All said and done, while inflation and GDP per capita may be valuable economic indicators, they should be considered alongside other economic metrics like GDP growth and distribution, unemployment rates, and consumer confidence for a comprehensive picture of our economic health. As for the pay slip, it reaches the hands of so few Kenyans that using it to “boast” of citizenry progress can easily be misleading and/or misinformation.
Case well argued Prof. I appreciate your mastery of economic concepts, especially the economics of the tyranny of numbers/statistics.
Very well argued Prof…I cannot agree more with your analysis. No wonder some people are promoting the ‘okoa payslip’ political dispensation.