KIPPRA-Treasury Macro Model Supply-Side Macro Modeling

KIPPRA is collaborating with Statistics Norway (SSB) to develop a supply-side macroeconomic model toolkit for Kenya, encompassing different economic sectors including the petroleum sector as well as the blue economy. This is part of the wider Oil for Development (OfD) programme that has been ongoing since 2014 between the Kenyan government (represented by Ministry of Energy) and Norwegian government institutions (Represented by the Ministry of Petroleum – Norway). The programme is based on a multi-sectoral approach involving several Kenyan government institutions including Ministry of Energy, its state department and agencies, The National Treasury and Planning, Kenya Revenue Authority (KRA), Central Bank of Kenya (CBK), Kenya National Bureau of Statistics (KNBS), Kenya Institute for Public Policy Research and Analysis (KIPPRA), Ministry of Environment and Natural Resources, among others. A programme document between Kenyan and Norwegian governments, meant to allow the complete roll-out of the program, is finalised but yet to be signed by both Governments.

For KIPPRA, the key objective of this collaboration is to establish modelling tools that meet the requirements for the supply side of the Kenyan economy. This will help to introduce supply side equations for production factors (mainly labour, capital stock and productivity) to simultaneously determine the value added by industry/sectors and the demand side components anchored in the existing KIPPRA-Treasury Macro Model (KTMM). When complete, the model will provide accurate forecasting for the Kenyan economy as well as agility in providing sectoral forecasts and estimates which are integral in macro-fiscal policy space.

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