The recently concluded general elections have set the stage for Kenya’s next development chapter. The country has made significant political and economic reforms that have contributed to sustained economic growth, social development, and political stability gains over the past decade. However, its key development challenges still include poverty, inequality, youth unemployment, transparency and accountability, climate change, continued weak private sector investment, and the vulnerability of the economy to internal and external shocks.
Kenya’s economy achieved broad-based growth averaging 4.8% per year between 2015-2019, significantly reducing poverty (from 36.5% in 2005 to 27.2% in 2019 ($2.15/day poverty line).
In 2020, the COVID-19 pandemic shock hit the economy hard, disrupting international trade and transport, tourism, and urban services activity. Fortunately, the agricultural sector, a cornerstone of the economy, remained resilient, helping to limit the contraction in GDP to only 0.3%. In 2021, the economy staged a strong recovery, with the economy growing at 7.5% although some sectors, such as tourism, remained under pressure. GDP growth is projected at 5.5% in 2022 and the poverty rate has resumed its trend decline after rising earlier in the pandemic. Although the economic outlook is broadly positive, it is subject to elevated uncertainty, including through Kenya’s exposure (as a net fuel, wheat, and fertilizer importer) to the global price impacts of the war in Ukraine.
World Bank support to Kenya’s pandemic response includes emergency funding to strengthen medical services and reduce the spread of the virus, as well as budget support to help close the fiscal financing gap while supporting reforms that help advance the government’s inclusive growth agenda.
In addition to aligning the country’s long-term development agenda to Kenya’s Vision 2030−which aims to transform Kenya into a competitive and prosperous country with a high quality of life−the new government’s bottom-up economic model prioritizes agriculture, healthcare, housing, and manufacturing.
Last Updated: Mar 31, 2023