The structure of the Kenyan economy is changing in a slow, but sure way with sectors that in the past made little contribution to the national wealth now rising by the year.

Kenyans are investing more in talk, travelling, and money itself - in its various forms as shown by the growing portion of wealth being derived from communications, transport and financial services.

Agriculture, manufacturing, fishing, education, health and social work are contributing less to the national wealth compared to the past while transport, communications, financial intermediation, and mining and quarrying are contributing increasingly more.

While agriculture used to contribute more than 25 per cent of the total national wealth five or six years ago, this contribution is waning. By the end of 2007 it stood at just over 22 per cent.

According to the figures unveiled by Planning Minister Wycliffe Oparanya, the drop was mainly due to delayed long rains and low volume of short rains in 2007.The Economic Survey 2008 released yesterday showed the overall economy grew by 7.0 per cent, an all time high, pushed by continued expansion of sectors such as tourism, hotels, retail and wholesale.

The value of horticulture inputs grew from Sh43.1 billion to Sh65.2 billion in 2007.

Kenyans are threatened with food shortages as prices in both the local and global markets surge. Agricultural output is expected to slump this year, following the shortages, high cost of inputs and the disruptions of the post- election crisis.

For the third year running, the contribution of manufacturing - weighed down by costs and lack of competition on the international and local markets - has also gone down as is the case for electricity supplies.Manufacturing contributed 9.7 per cent of the national wealth in 2007 compared to 10.3 per cent in 2006 and 10.5 per cent in 2005. Electricity supply contribution was lower at 1.5 per cent compared to 1.8 per cent in the previous year and 2.0 per cent in 2005.

Manufacturing continues to be adversely affected by imports from cheaper investment destinations such as China and India - where the cost of labour is about half that of Kenya.

The cost and quality of power remains a major hindrance to manufacturing contribution to wealth. Power in Kenya is four times more expensive than in Egypt which is a major trading partner with Kenya within the Comesa bloc.

Key growth drivers in the manufacturing sector included food, beverages, tobacco, petroleum and chemicals.

"The volume of manufacturing output rose from Sh558 billion in 2006 to Sh603 billion in 2007," stated the economic survey produced by the Kenya National Bureau of Statistics.

Financial services saw its contribution to gross domestic product (GDP) increase to 4.7 per cent in 2007 compared to 3.9 per cent in 2006 and 3.4 per cent in the previous year. This includes the wealth generated by banks, insurance companies, fund management firms, stock brokers and investment banks, among others.

One of the major attractions to the cash sector has been the huge returns from the listed stocks at the Nairobi Stock Exchange especially after the launch of initial public offerings (IPOs).

In 2006, the stock market grew 42 per cent outperforming most sectors of the economy and leaving a string of millionaires within just one year. When proceeds of the Safaricom IPO - the largest ever in Kenya and sub-Saharan Africa - are included in 2008 GDP, it is expected that the financial services contribution will turn out to even bigger.

At the bourse, the NSE 20-Share Index recorded a drop of 201 points from 5,646 points in December 2006 to 5,455 points in December 2007. During yesterday's trading at the bourse, it closed at 5159.42 points.

Market capitalisation rose from Sh792 billion to Sh851 billion.

Thus, a veritable money economy is emerging centring around the increased cash people hold but with which they are yet to decide what to do and are therefore investing in money instruments such as shares and bonds.

While it remains true that agriculture, manufacturing, transport and communication, and trade remain the biggest contributors to wealth - the former two that have traditionally been the growth sectors for decades are being slowly eclipsed in terms of their contribution like two old animals that still produce the biggest portions but at a declining rate.

Also in decline include the fishing sector, whose contribution remains at 0.4 per cent for the third year running but which is a reduction from 0.5 per cent in 2004 and 2003.

Education contributed 8.0 per cent in 2003 but it has since declined to 6.9 per cent as at the end of 2007.

Tourism was the leading driver of economic growth, while agriculture has lost out as among the top contributors. The latter recorded a growth of 2.9 per cent last year compared to 4.4 per cent the previous year.

Tourism recorded 16.4 per cent growth, turning out to be the largest driver of growth on the back of 1.6 million tourist arrivals against 1.806 million in 2005. The sector fetched Sh65.4 billion last year compared to Sh56.2 billion the previous year.

The improvement was attributed to strategic marketing activities in the US, Germany, France, Italy and the UK.

Total international arrivals grew by 13.5 per cent compared from 1.6 million people to 1.8 tourists.

The concentration was on high-yield tourists, which involved branding Kenya as a high value market.

The economic growth saw the creation of close to half a million job mainly in the informal sector. A total of 474,700 new jobs were created last year with at least 1.28 million Kenyans working in the private sector last year, compared to a figure of 1.2 million in 2006.

Wage employment in the public sector declined by 3.8 per cent from 649,000 jobs in 2006 to 625,3000 jobs last year. The informal sector pushed employment in to 7.4 million from seven million in 2006.

However, inflation continued to eat heavily into workers' earnings.

Annual rate of inflation eased from 14.5 per cent in 2006 to 9.8 per cent last year while average earnings stood at 10 per cent from 12.4 per cent.

This means salaries across the labour market increased by an average faster than the rate of economic expansion, but slightly lower than inflation .

The economy is expected to grow at between 3.5 per cent and 4.5 per cent this year as informed by disruptions caused during the January post election crisis that left 1,000 and displaced close to half a million people.

Among the factors expected to spur growth this year is harmony within the Coalition Government which is still smarting from divisions caused during the post election crisis.

"Fast-tracking the rehabilitation and construction of infrastructure as well as banks easing access of credit for investment are expected to drive the growth," said Mr Oparanya.

The value of exports increased from Sh250 billion to Sh274 billion last year, while imports grew by 16 percent.

Consumption within the economy also grew compared to 2006, as it was the case with Government spending.

The presence of a strong consumer spending base in a market economy is a good sign that could also significantly alter the balance of power between the Government and its citizenry.

It is also a good sign for the economic future of the country.

Until five years ago when the first signs of a consumer-led economy started emerging, the plight of the country was determined by government spending.

The emergence of a consumer economy has coincided with the consolidation of the retail sector, with supermarket sales now accounting for slightly over a half of all household shopping.

The wholesale and retail trade as well as repair shops have been among the top three leading contributors to economic growth for the third year running.