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Why Kenya GDP Does Not Grow!

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All Economics scholars who did not sleep in their economic class know the formula C + I + T/GS + (X-M) = GDP (Gross Domestic Product). C stands for Consumption. I, investment. T Tax/G.S Government Spending. X, Exports and M, Imports. Today Kenyans are consuming more and more. If the increase of consumption was the only calculator of GDP, Kenya GDP would be growing at 20% per year.

The problem in Kenya GDP growth is the appetite for imported goods. Today the difference between Exports and Imports is close to Kshs 1 trillion every year ($10 billion.) This means that close to Kshs 1 trillion of Kenya consumption is from imports and continues to weaken the Kenya shilling. 

Unless this is corrected, Kenya will continue to increase the foreign borrowed amount that finances Imports. This could reach to a point where Kenyans have each consumed someone else’s good and services of even Kshs 100,000 ($1,000) per each Kenyan. Kenya at this point would owe close to $50 billion in borrowed money. 

To correct this Kenyans need to come up with a strategy that would see Exports increase and Imports reduced. If the Balance of Trade deficit that is now about 25% of GDP were to be reduce to 10% of Kenya GDP, the growth rate of Kenya GDP would reach the 10% as was projected by Vision 2030. 

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