Grass wars that delayed the economic data report

LR and Tobias Rasmussen – IMF Representative for Africa Management, CAS Treasurer Eric Simeu Wafuku, CS Ukur Yatani, PS Saitoti Torome. [Wilberforce Okwiri, Standard]

Before the Kenya National Bureau of Statistics (KNBS) moved to Upper Hill in Nairobi, their offices were in a wretched one-story building along Lt Tumbo Street that resembled a high school administration building.

The House of Herofi – Kenya’s longtime data analytics center – is shrinking and dwarfing the towering edifices of the Treasury Building on one side and the headquarters of the Central Bank of Kenya on the other.

Overlooking the building across the road, the Times Tower is the blue-eyed home of the National Treasury – the Kenya Revenue Authority (KRA).

If the buildings were trees and the center of Nairobi was a forest, Hirufi’s house would have died from lack of sunlight.

This is due to the dark canopy that the three buildings ominously cast over Hirufi’s house, leaving very little room for life-giving sunlight.

Likewise, the inhabitants of the House of Herovi cannot breathe. They seem to bear the pain of bullying from sister government agencies – the KRA and CBK – under the watchful eye of their parent ministry, the National Treasury.

The persecution appears to have been exacerbated by the devastating effects of the Covid-19 pandemic.

A debiting jobs report released by KNBS showed that as many as 1.7 million Kenyans lost their livelihoods between April and June last year only to make matters worse for the state statistician.

In what appears to be a coup against KNBS, the parent ministry has taken over the edition of the 2021 Economic Survey, long defended by the Herovi House.

The brief invitation sent to journalists indicated that the survey would be published in the Treasury Building and not at the Kenyatta International Conference Center (KICC) as was the custom.

Moreover, the highlights of the survey, which in the past five years have been read by the Director General of KNBS, would have been read by Treasury Secretary Ukur Yatani.

Earlier, there was no convincing explanation as to why the survey was postponed.

KNBS just provided a quick explanation that due to the challenges of the Covid-19 pandemic, they had problems receiving feedback from some respondents.

But the public soon learned that the five-month delay in the release of the 2021 Economic Survey was due to a rift between the national statistician and two economic policymakers, highlighting the weak relationship between state agencies.

Appearing before the Public Investment Commission (PIC), KNBS’ new general manager, MacDonald Obudo, said the survey was ready as early as March.

KNBS General Manager MacDonald Obudo. [Stafford Ondego, Standard]

However, Mr. Abboud told the committee chaired by MP Abdel-Samad Nasser, chaired by Mvita, that when they shared their findings with “stakeholders”, “it appears that there are some errors that have not been taken into account and must be corrected.”

“Because of what happened in March, we have been asked to reconsider our work by the Central Bank of Kenya, the Kenya Revenue Authority and the Kenya Institute of Public Policy Research and Analysis (KIPPRA),” Obudho told the monitoring committee.

But it turns out that the errors may also have been for different people using different lenses.

While policy makers were keen to have a positive role, KNBS wanted to stick to its role in collecting, analyzing and disseminating data.

A source from the Central Bank of Kuwait and the National Treasury said in a statement Financial StandardHe was sweating because of the dismal numbers.

The source, who declined to be named for fear of reprisals, said that the problem with the Central Bank of Kuwait and the National Treasury, is that they refused to move away from the models they use to simulate the performance of the economy.

The source said these forms need to be changed as new information from KNBS becomes available.

But they don’t want to modify their models. The source explained that even the World Bank and the International Monetary Fund (IMF) change their models whenever they get new data.

In July, during the Monetary Policy Committee (MPC) press conference, Central Bank of Kuwait Governor Patrick Njoroge criticized KNBS for providing “half-baked data”.

Dr. Ngorog, taking journalists through what he saw as the bright spots of the economic recovery, insisted that GDP had started to climb steadily out of the downturn, with several leading economic indicators sending positive signals about a bullish business environment.

He specifically referred to information and communication technology, which he described as a “tailwind” during the pandemic because it helped a lot of economic activities stay afloat.

“And that’s why we were a little curious when we saw indications of, let’s say, that KNBS has put up some kind of flatness,” said the head of the Central Bank of Kuwait, noting that they started seeing this trend as early as six months ago.

“So we inquired about these things, and we’re supporting them in terms of providing the information they need to complete and giving us some good pointers.”

Central Bank of Kuwait Governor Patrick Njorouj. [David Gichuru, Standard]

The KBS source insisted that the Central Bank of Kuwait is not helping them because the statistician is the person authorized by law to collect, classify, analyze and publish official data. Earlier in April this year, Ngorog Wittani told the IMF that high unemployment figures and a manufacturing contraction were exaggerated.

According to them, employers and manufacturers may have taken advantage of the Covid-19 pandemic to exaggerate the negative impact of the crisis.

In a detailed report of Sh256 billion, the IMF said: “(The Kenyan authorities) have indicated the high level of uncertainty and difficulties in recognizing recent developments in economic statistics as traditionally compiled, noting that the reported contraction in manufacturing and employment may be exaggerated.” Kenya credit facility.

As a result, the two officials said they were more confident about the country’s growth outlook than IMF staff.

While the International Monetary Fund estimated that the economy contracted last year, government officials said they “expected growth in 2020 to be around 0.6-0.8 percent, supported by the agriculture and construction sectors and a strong recovery in trade and transport.”

Even before these remarks, Njoroge had already pointed to what he believed to be KNBS’ use of “false economic data” across several sectors.

He noted that this has led to a distorted view of the country’s recovery from the Covid-19 pandemic. Critics also blame the arrogance struggle of economists at the Central Bank of Kuwait and the National Treasury.

Rather than understanding the data provided by statisticians, economists at the Central Bank of Kuwait and the National Treasury also like to believe they can do a better job of collecting data, a job that is reserved by law for the KNBS.

Analyzing numbers – real numbers from real people – as KNBS does, can be unhelpful.

Those who don’t have jobs, or have jobs themselves but know a friend or two without a livelihood, for example, are quick to dismiss the numbers.

It can be more satisfying when the national statistician uses the strict definition of unemployment (a person is unemployed only if they have taken active steps to look for work or to start some form of self-employment in the four weeks prior to the interview), putting the country’s unemployment rate at around 7.2 percent .

Or when KNBS gives an average price of a product that differs from the price near you when calculating the cost of living index, also known as the Consumer Price Index (CPI).

From employment to population, and from cost of living to economic growth, many Kenyans believe the numbers coming from Herufi House have always been padded to drive a particular narrative.

The Central Bank of Kuwait and the National Treasury did not always stand on the side of the public, but this time they joined the lynching gang.

Treasury CS Ukur Yatani. [Wilberforce Okwiri, Standard]

However, the difference is that while the public believed that the inflated unemployment numbers had been underestimated, the two government agencies insisted that they had been inflated.

This is why KNBS has delayed the release of the 2021 Economic Survey for more than five months.

The report, released last week, showed that the size of the economy, adjusted for price and service inflation, shrank 0.3 percent last year.

Other than addressing the “mistakes”, KNBS also returned to the structure of the economy, which showed that the size of the national pie in monetary terms, or nominal GDP, was inflated by Sh515 billion.

“We didn’t want to provide data that people would have suspected… Now it is guaranteed,” CS Yatani said.

Critics note that the KNBS decision to reposition the economy was planned by the government to create room for maneuver for the national treasury to borrow more.

“The revised and reorganized national accounts led to an increase in the size of GDP, an increase in per capita income, a change in the production structure and revised GDP growth rates among other changes,” said KNBS President, Obudho.

The restructuring of the economy comes at a time when the national treasury is preparing to abandon the current legal ceiling of 9 trillion shillings for debt issuance and return to a cap linked to GDP.

Before the reestablishment, the debt-to-GDP ratio was estimated at 74 percent. But that has since fallen to less than 70 percent after the reestablishment.

The International Monetary Fund said the Kenyan authorities had proposed an amendment to the public financial management regulations to replace the current nominal legal limit on debt issuance of 9 trillion shillings.

Instead, they want to replace it with a core medium-term debt-to-GDP portion of 55 percent of GDP in present value terms, discounting the low interest.

“Staff welcome the new anchor and the introduction of the accountability clause – where the government explains to Parliament how planned policies will raise the debt ratio from the current high to target levels,” the IMF said.

However, Kwame Ueno, chief executive of the Institute of Economic Affairs, a public policy think tank, does not believe that the reestablishment gives the Treasury more room to borrow.

“We don’t see any evidence of the reestablishment and its timing to manipulate the country’s economic data,” Ueno said during a KTN talk show last week.

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