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Kenya’s Economy Continues to Grow in a Challenging Environment

Latest Issue: 
  • June 2014


  • On June 26, 2014, the World Bank launched the 10th Kenya Economic Update, which forecasts a growth rate of 4.7% in 2014 and a higher growth of 5% in the next two years if Kenya maintains macroeconomic stability
  • The KEU highlights the World Bank Group’s new Country Partnership Strategy (CPS), which will provide $4 billion in the next four years to support growth, jobs, infrastructure and devolution to increase prospects for ending poverty and improving shared prosperity
  • Deepening healthcare reforms and devolution are expected to raise prospects for better access and equity in health services

NAIROBI, July 18, 2014—The World Bank’s latest economic analysis for Kenya forecasts a growth rate of 4.7% in 2014, and says the economy has the potential to achieve a higher growth rate of 5% in the next two years.

The economic update Take off Delayed? Kenya’s Economy Facing Headwinds in 2014 with a Special Focus on Delivering Primary Health Care Services, indicates that a higher growth rate will depend on macroeconomic stability and credible policies, which have underpinned Kenya’s growth in the past. The June 2014 report, the tenth in a bi-annual series, says current growth is powered by aggregate demand, fuelled by strong consumption and investment.

Diarietou Gaye, World Bank country director for Kenya, said the country’s economy remains fairly resilient, and increasing investments in infrastructure and human capital will strengthen prospects for higher growth and regional competitiveness.   

The World Bank Group has launched a $4 billion program under its new Country Partnership Strategy 2014-2018 (CPS) to support Kenya’s development in the next four years. The strategy will enable Kenya to improve its potential for growth, create more jobs for the youth, build vital infrastructure and deepen devolution—which has devolved power and accountability to regional communities and increased prospects for ending extreme poverty and improving shared prosperity among all Kenyans.

The growth remains broad-based, with all sectors making a contribution to the Gross Domestic Product (GDP), says John Randa, the World Bank Group’s senior economist for Kenya and lead author of the report.

Even then, the report highlights, the government needs to deal with emerging pressures on GDP for the economy to remain resilient, and also to strengthen medium term prospects for better growth and shared prosperity. Key challenges include drought, insecurity, fiscal expansion and implementation of devolution.

Achieving higher healthcare efficiency

The report also focuses on the impact of healthcare reforms in improving access and equity in the health sector, and notes that devolution provides an opportunity for Kenya to provide better healthcare to support its progression towards middle income status.

The challenge for Kenya is to build on the devolved system of delivering health services to realize its goal of universal health coverage, according to G. N. V. Ramana, the World Bank Group’s lead health specialist for Kenya.

Some of the health issues facing Kenyans include high maternal mortality, stunting among children and the burden of non-communicable diseases. The report underlines the need to fast track strategies and evidence-based interventions for improving health outcomes, complemented with improvements in women's education, access to water and sanitation, roads and transport.

Strategic Partnership

The Kenya Economic Update brings together a host of important partners under the Economic Roundtable to discuss emerging economic trends. They include the National Treasury, the Ministry of Devolution and Planning, the Ministry of Health, the Central Bank of Kenya, the Kenya National Bureau of Statistics, the Kenya Revenue Authority, the National Economic and Social Council, the Kenya Institute for Public Policy Research and Analysis, and the International Monetary Fund.


Peter Warutere