Why power is Kenya’s economic lifeline

Kenya, like all other developing countries, relies on electricity to underpin its sustained economic development.

For the vast majority of Kenyan industries, reliable supply of electricity has in recent years contributed massively to the growth of businesses while at the same time played an important role in the development of economy owing to continued efforts by industry players to increase power generation capacity to match market demand.

Power consumption is closely associated with national economy just as consumer staples are directly affected by rising costs in oil products because petroleum byproducts, for instance are regularly used in packaging materials and when rises in oil prices and electricity tariffs occur, duties are charged and passed on to the consumers in some food products consumed locally.

“Energy plays a key role in the economy from both the demand side and supply side. On the demand side, energy is one of the basic items that a consumer buys to maximize her utility. On the supply side energy is a key factor of production just as capital, labor, land and materials, a fact that is hardly included in the macroeconomic growth theories,” explains Kenyatta University’s economic researcher Susan Onuonga in her research paper.

The energy sector is expected to play a key role if President Uhuru Kenyatta’s Big Four Agenda is to succeed, this is because all the four sectors, Food security, affordable housing, manufacturing and healthcare are heavily reliant on the amount of electricity the country produces to the national grid.

With continued blackout brought by inadequate supply of power, the above mentioned sectors – which pay billions in power bills to Kenya Power, risk failing to meet their desired set targets.

In recent years, the country has embarked on ambitious plans to boost its power generation by embracing renewable sources such as geothermal, wind and solar among others to sustain the country’s demand.

Available figures show that Kenya’s total electricity generation grew by 3 per cent to 10,359.9 GWh last year, according to statistics b Economic Survey 2018, while Hydro generated power registered a significant drop of 29.9 per cent to 2,776.8 GWh compared to thermal and geo thermal generated power which both grew by 72.3 and 6.1 per cent, respectively during the period.

The latest data, further shows that total installed and effective electricity generation capacity, stood at 2,339.9 MW and 2,264.4 MW, respectively, in 2017, with domestic demand for electricity rising from 8,053.2 GWh a year earlier to 8,410.1 GWh in 2017 with sales to domestic and small commercial consumers increasing from 3,315.7 GWh to 3,528.3 GWh over the same period.

That annual growth in the sector strongly suggests how the businesses across all sectors and livelihoods heavily depend on power to sustain operations and boost earnings, a key component the government cannot hide from and hence the need to restore sanity at the electricity House.