Kenya is one of the fastest growing economies in Sub-Saharan Africa, with the support of a stable macroeconomic environment, low oil prices, an increase in tourism, remittance inflows from expatriate workers and a government-led infrastructure development programme.
The country has made reforms in the political and economic arenas which have driven sustained economic growth and a level of social and political development over the past decade.
However, its key development challenges still include poverty, inequality, the effects of climate change and the vulnerability of the economy to internal and external disruption.
Following the 2008 global economic recession, growth increased in the last five years reaching 5.7% in 2018.
Looking ahead, near-term gross domestic product growth (GDP) is expected to rise to 5.8% in 2019 underpinned by recovery in agriculture, better business sentiment, and easing of political uncertainty. This is expected to increase to 6.0% in 2020, but this forecast is dependent on growth in private sector credit, continued strong remittance flows, management of public debt and expenditure and global oil prices.
In the long-term, the adoption of prudent macroeconomic policies will be necessary to help safeguard Kenya’s improving economic performance. This includes implementation of fiscal and monetary prudence and lowering its deficit down to 4.3% by Fiscal Year 19/20.
However, this consolidation needs to avoid compromising public investments in critical infrastructure projects which are a key to unlocking the economy’s productive capacity.
In 2008 President Mwai Kibaki launched Vision 2030, an initiative to transform Kenya into a newly industrialised middle-income nation. This programme is still in place and was complemented by President Uhuru Kenyatta’s plans for development of the “Big Four” – manufacturing, universal healthcare, affordable housing and food security.
In the 2018-2019 financial year, the government allocated 400 billion Kenyan Shillings (KSh) (US$ 3.9 billion) to the four development pillars. The health coverage programme was allocated KSh 44.6 billion (US$ 441 million) while KSh 6.5 billion (US$ 64.3 million) went to the housing project. Food security was allocated KSh 20.25 billion (US$ 200 million) and KSh 2.4 billion (US$ 23.7 million) was set aside to support value addition and raise the manufacturing sector’s contribution to the GDP to 15% by 2022.
The Big Four agenda will be enabled through:
Targeted infrastructure investments to expand the:
- Feeder roads network (linked to trunk roads) and the rehabilitation of 10,000 km of roads
- Passenger handling capacity and construction of new runways at airports
- Port infrastructure and facilities
- Rail infrastructure to link Kenya with the wider East Africa region
Improvements in security:
- Embark on a ‘Citizen-centric’ police reforms programme that supports a 24-hr economy
- Enhance security infrastructure modernisation and improve staff welfare
- Improve data management through the Integrated Population Registration System (IPRS) and National Identity Management System (NiMS)
Improve governance by putting in place:
- Policy measures to address capital flight and government procurement reforms
- Political and legislative measures to plug revenue leaks at national and county levels
- Administrative measures to drive transparency and accountability in the public service
- Fiscal measures to streamline tax breaks and plug revenue leakages
- Law enforcement measures to strengthen the anti-corruption campaign
Technology and innovation measures:
- Digitise land titles and expand e-Government services system
- Expand the National Fibre Optic infrastructure to cover the entire country
- Establish National Science Technology and Innovation parks
Stable and competitive cost of power:
- Increase Kenya electricity generation capacity from 2,699 MW to 5,221 MW
- Reduce commercial & industrial electricity tariffs
- Modernise electricity dispatch optimisation, favouring low cost plants
Technical and Vocational Education and Training (TVET) to place young people in jobs through by:
- Re-positioning and strengthening the TVET Education System to support the Big Four pillars
- Implementing the Science, Technology, Engineering and Mathematics (STEM) education programme
- Developing a Labour Market Information System (LMIS) to support labour market actors and stakeholders
- Establishment of new industrial training centres and implementing the National Internship Programme
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