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Read the passage below and answer the questions that follow: Kenya rebased its economy last year, which in layman's..

      

Read the passage below and answer the questions that follow.
Kenya rebased its economy last year, which in layman's language means recalculating the Gross Domestic Product (GDP) - the total value of goods produced and services provided in a country in one year. The recalculation saw Kenya?s GDP expand by more than a quarter, ranking the country among the top ten largest economies in Africa.
To ordinary Kenyans, this should translate to increased school enrolment, better housing and healthcare and access to clean water and food security. But this will not be the case. The World Bank says that even as Kenya becomes a middle-income country, an estimated four out of ten Kenyans are living below the poverty line. To most Kenyans, not much difference will be noted other than the feel good effect.
While Kenyans might not see an improvement in their incomes, the release of the new numbers gives Kenya a unique international standing in the eyes of investors and development partners. It also gives, Kenya a positive outlook in terms of economic size, the debt - to GDP ratio and the country?s per capita income, in most cases, governments aim for a low debt toGDP ratio, usually below 50 per cent, as an indication that the country produces and sells goods and services in sufficient quantities to pay back debts.
Therefore, the new statistics raise Kenya?s profile as a creditworthy economy. Crucially, it gives the country a positive image among potential investors. The elevation means that some of indicators of economic sustainability that Kenya has been using, such as wage bill to GDP, will now have a different meaning. For instance, the ongoing debate on the Public Wage Bill is hinged on the GDP ratio, the much lower than the current 13 per cent.
On the flip side though, the much sought after middle-income tag would translate to an improved-capacity indicator for Kenya. As such, the country might not qualify for interest free loans and grants from the World Bank, yet these have been key financial services from the Breton Wood institution to boost education, health, infrastructure and agriculture.
Also, this could create an illusion that could see Kenya underestimate its liabilities. The rebasing will make the debt levels look small. This could entice the government to borrow more, thus exerting massive inflationary pressure on the economy if the tax base is not expanded.
The revision would not take away the country?s infrastructural, insecurity and high cost of production challenges. What are the figures for if they cannot transform people?s lives?
However, at a time when notable brands like Cadbury are leaving the country and moving their operations elsewhere, attracting investment is paramount.
There is nothing unique about rebasing. Nigeria and Ghana have recently done so. Tanzania early this week promised to do the same. The country may now be tagged middle-income economy, but this does not translate into a better life for the millions of Kenyans living below the poverty line.
This process should at best be exploited by the jubilee administration in its resolve to tackle poverty. Solid and long-term plans must be laid out to fight for the welfare of Kenyans.
The starting point should be making agriculture cheap. Today, this crucial economic activity suffers from high cost of inputs and the government has done little to commercialise the sector. A hungry nation will no doubt be a burden to growth.
Second, the cost of doing business in Kenya must be reduced. More infrastructural investments are needed in roads, railways and, most importantly, energy. The cost of power is way too high to sustain sound manufacturing - making Kenya uncompetitive in the region. Third, to arrest disappointments from expectant wananchi, the government needs to boost their purchasing power by ruthlessly taming prices of basic commodities.
It is, therefore, our desire that the rebasing will re-energise the government to improve the economy that is now at the mercy of a weakening currency and a relatively high inflation rate. Other-wise, Kenyans will continue to suffer as social iniquities trigger more crime, disease and poverty.

(a) What is the effect of recalculating Kenya's GDP? (2 Marks)

(b) Explain the irony behind Kenya becoming a middle income country. (2 Marks)

(c) According to the writer of this passage what challenges could Kenya encounter as a result of the middle-income economy
status?

(d) In not more than 45 words explain what the Kenyan government should do to reduce poverty levels. (6 Marks)

(e) What is the attitude of the writer towards Kenya?s elevated middle-income status? (2 Marks)

(f) How has Kenya benefited in its elevation to a middle-income status? (2 Marks)

(g) There is nothing unique about re basing. Nigeria and Ghana have recently done so. Tanzania early this week promised to do
the same. Combine the sentences to form a compound, complex sentence) (1 Mark)

(h) Explain the meaning of the following expressions as used is the passage.

(i) Flip side. (1 Mark)

(ii) Attracting investment is paramount

  

Answers


Martin
(a) The recalculating expands Kenya's GDP by more than a quarter (1 Mk)

Ranking the country among the ten largest economies in Africa. (1 Mk)Total 2
Mks)

(b) Though Kenya has become a middle income country the World Bank says that an estimated four in ten Kenyans are living
below the poverty line. (1 Mk)

There is no difference noted by most Kenyan?s except the feel good effect. (1 Mk) Total (2 Mks)
(c) The challenges are;

(i) It might not qualify for interest free loans from the World Bank (1 Mk)

(ii) It could create an illusion that could see Kenya underestimate its liabilities making debt levels look small. (1 Mk)

(iii) The countries infrastructural, insecurity and high cost of production challenges will not be erased. (1 Mk)
Total 3 Mks

(d) - The government should make agriculture cheap in terms of the cost of inputs. (2 Mks)

- And reduce the cost of doing business in Kenya through low cost power. (2 Mks)

- As well as controlling the prices of basic commodities to arrest disappointments among expectant Wananchi (2 Mks)

(if the number of words exceeds 45 deduct 1 Mk) Total (6 Mks)

(e) The attitude of the writer is critical. (1 Mk)

He says even as Kenya becomes a middle status economy, Kenyans may not see an improvement in their incomes. (1 Mk)
Total (2 Mks)

(f) The middle income status has given Kenya a unique international standing in the eyes of investors and development partners.
(1 Mk)

It has also given Kenya a greater positive outlook in terms of economic size, the debt to GDP ratio and the country?s per
capita income. (1 Mk) Total (2 Mks)

(g) There is nothing unique about re basing since Nigeria and Ghana have recently done so while Tanzania early this week
promised to do the same. (1 Mk)

(h) (i) Flip side - negative or less welcome aspects of an idea.

(ii) Attracting investment is paramount - creating interest to provide goods and services to better the economy are more
important than anything else.
marto answered the question on April 8, 2019 at 12:21


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