The East African nation of Kenya has a population estimated at 45.5 million, which increases by one million a year. With support of the World Bank Group (WBG), International Monetary Fund (IMF) and other development partners, Kenya has made significant structural and economic reforms that have contributed to sustained economic growth in the past decade. Development challenges include poverty and inequality, and vulnerable of the economy to internal and external shocks.
Devolution is rated the biggest gain from the August 2010 constitution, which ushered in a new political and economic governance system. It is transformative and has strengthened accountability and public service delivery at local levels. The government’s agenda is to deepen implementation of devolution and strengthen governance institutions, while addressing other challenges including land reforms and security to improve economic and social outcomes, accelerate growth and equity in distribution of resources, and reduce extreme poverty and youth employment.
Kenya’s economy grew by an estimated 4.9% in the first quarter of 2015, compared to 4.7% in the same period in 2014, according to Kenya National Bureau of Statistics. Agriculture, infrastructure, financial services and ICT contributed to the growth, but manufacturing and tourism declined. The economy grew by 5.4% in 2014 and the World Bank, in its Kenya Economic Update for March 2015,projected the economy will grow by 6% in 2015, supported by lower energy costs, investment in infrastructure, agriculture, manufacturing and other industries. A stable macroeconomic environment, continued investment in infrastructure, improved business environment, exports and regional integration will help sustain the growth momentum.
The government has also maintained fiscal and monetary discipline, despite increasing pressure from the devolution process and rising public sector wage bill. Total public debt has increased but remains sustainable, according to Central Bank figures, while inflation and interest rates remained stable. The stock exchange weakened due to net foreign investor sales, while the Kenya shilling weakened against the US dollar and other major currencies.
With the increased competitiveness of the manufacturing sector which will be a key driver of growth, exports and job creation, Kenya is emerging as one of Africa’s key growth centers and is also poised to become one of the fastest growing economies in East Africa.
Kenya has met a few of the Millennium Development Goals (MDG) targets, including reduced child mortality, near universal primary school enrolment and narrower gender gaps in education. Interventions and increased spending on health and education are paying dividends. Devolved health care and free maternal health care at all public health facilities will improve health care outcomes and develop a more equitable health care system.
Kenya has the potential to be one of Africa’s great success stories from its growing and youthful population, a dynamic private sector, a new constitution, and its pivotal role in East Africa. Addressing challenges of poverty, inequality, governance, low investment and low firm productivity to achieve rapid, sustained growth rates that will transform the lives of ordinary citizens, will be a major goal for the country.
Last Updated: Oct 01, 2015