NationMaster - Encyclopedia: Economy of Kenya

After independence, Kenya promoted rapid economic growth through public investment, encouragement of smallholder agricultural production, and incentives for private (often foreign) industrial investment. Gross domestic product (GDP) grew at an annual average of 6.6% from 1963 to 1973. Agricultural production grew by 4.7% annually during the same period, stimulated by redistributing estates, diffusing new crop strains, and opening new areas to cultivation. Kenya is the largest exporter of tea in the world (2005)¹. Image File history File links Question_book-3. ... Image File history File links Size of this preview: 800 Ã— 351 pixelsFull resolution (1425 Ã— 625 pixels, file size: 61 KB, MIME type: image/png) This bubble map shows the global distribution of Kenyan exports in 2006 as a percentage of the top market (Uganda - $661,007,000). ... Image File history File links Size of this preview: 800 Ã— 351 pixelsFull resolution (1425 Ã— 625 pixels, file size: 61 KB, MIME type: image/png) This bubble map shows the global distribution of Kenyan exports in 2006 as a percentage of the top market (Uganda - $661,007,000). ... World GDP/capita changed very little for most of human history before the industrial revolution. ... Invest redirects here. ... The examples and perspective in this article may not represent a worldwide view. ... In economics, an incentive in anything that provides a motive for a particular course of action — that counts as a reason for preferring one choice to the alternatives. ... This article is about GDP in the context of economics. ...

Macro-economic trend

This is a chart of trend of gross domestic product of Kenya at market prices estimated by the International Monetary Fund with figures in millions of Kenyan Shillings.

Government intervention

Between 1974 and 1990, however, Kenya's economic performance declined. Inappropriate agricultural policies, inadequate credit, and poor international terms of trade contributed to the decline in agriculture. Kenya's inward-looking policy of import substitution and rising oil prices made Kenya's manufacturing sector uncompetitive. The government began a massive intrusion in the private sector. Lack of export incentives, tight import controls, and foreign exchange controls made the domestic environment for investment even less attractive. Import substitution industrialization (also called ISI) is a trade and economic policy based on the premise that a developing country should attempt to substitute products which it imports, mostly finished goods, with locally produced substitutes. ...

Aid suspension

From 1991 to 1993, Kenya had its worst economic performance since independence. Growth in GDP stagnated, and agricultural production shrank at an annual rate of 3.9%. Inflation reached a record 100% in August 1993, and the government's budget deficit was over 10% of GDP. As a result of these combined problems, bilateral and multilateral donors suspended program aid to Kenya in 1991.

By early 2005 Kenya was excluded from debt relief by a joint committee of the bank and the International Monetary Fund (IMF). IMF redirects here. ...

Later that year Kenya was also removed from the Highly Indebted Poor Countries (HIPC) initiative and is today classified as a developing nation. The Heavily Indebted Poor Countries (HIPC) initiative aims at assisting the worlds poorest countries by bringing their external debt to sustainable levels, conditional on their governments showing satisfactory performance levels. ...

Liberalisation

In 1993, the Government of Kenya began a major program of economic reform and liberalization. A new minister of finance and a new governor of the central bank undertook a series of economic measures with the assistance of the World Bank and the International Monetary Fund (IMF). As part of this program, the government eliminated price controls and import licensing, removed foreign exchange controls, privatized a range of publicly owned companies, reduced the number of civil servants, and introduced conservative fiscal and monetary policies. From 1994-96, Kenya's real GDP growth rate averaged just over 4% a year. In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. ... The World Bank logo The World Bank (the Bank) is a part of the World Bank Group (WBG), is a bank that makes loans to developing countries for development programs with the stated goal of reducing poverty. ... IMF redirects here. ... In economics, incomes policies are wage and price controls used to fight inflation. ... Various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents. ... This article does not adequately cite its references or sources. ... Wikipedia does not yet have an article with this exact name. ...

In 1997, however, the economy entered a period of slowing or stagnant growth, due in part to adverse weather conditions and reduced economic activity prior to general elections in December 1997. In 2000, GDP growth was negative.

Alleged Corruption

In July 1997, the Government of Kenya refused to meet commitments made earlier to the IMF on governance reforms. As a result, the IMF suspended lending for 3 years, and the World Bank also put a $90 million structural adjustment credit on hold. Although many economic reforms put in place in 1993-94 remained, Kenya needed further reforms, particularly in governance, in order to increase GDP growth and combat poverty among the majority of its population. Lack of progress in the Goldenberg scandal marked an unwillingness to deal with corruption. Structural adjustment is a term used to describe the policy changes implemented by the International Monetary Fund (IMF) and the World Bank (the Bretton Woods Institutions) in developing countries. ... The Goldenberg scandal was a scam where the Kenyan government subsidised exports of gold, paying exporters in Kenyan Shillings 35% over their foreign currency earnings. ...

The Government of Kenya took some positive steps on reform, including the 1999 establishment of the Kenyan Anti-Corruption Authority, and measures to improve the transparency of government procurements and reduce the government payroll. In July 2000, the IMF signed a $150 million Poverty Reduction and Growth Facility, and the World Bank followed suit shortly after with a $157 million Economic and Public Sector Reform credit. By early 2001, however, the pace of reform appeared to be slowing again, and the IMF and World Bank programs were in abeyance as the government failed to meet its commitments under the programs.

East African Cooperation

Nairobi continues to be the primary economic hub of East Africa. It enjoys the region's best transportation linkages, communications infrastructure, and trained personnel. A wide range of foreign firms maintain regional branch or representative offices in the city. In March 1996, the Presidents of Kenya, Tanzania, and Uganda re-established the East African Cooperation (EAC). The EAC's objectives include harmonizing tariffs and customs regimes, free movement of people, and improving regional infrastructures. Nairobi (pronounced IPA: ) is the capital and largest city of Kenya. ...

China signs oil exploration in Kenya

During his short state visit to Kenya in 2006 , Chinese President Hu Jintao found time to sign several bilateral agreements with his Kenyan counterpart, President Mwai Kibaki. Of an outstanding interest was however a deal allowing oil-hungry China to dominate the promising Kenyan onshore oil exploration.

President Hu was received at State House in Nairobi by a Kenyan counterpart eager to bind the eastern power up in as many development deals as possible. President Kibaki after the ceremony announced that Kenya had secured Chinese grants worth several hundred million shillings in the sectors of economic and technical cooperation, health research and the urban development of Nairobi. Also cultural cooperation would be strengthened.

The Kenyan-Chinese deal that caused most attention nevertheless was signed between Kenyan Energy Minister Henry Obwocha and the state-controlled company China National Offshore Oil Corporation (CNOOC). The oil agreement secures China a leading role in the promising but under-developed petroleum sector in Kenya. China National Offshore Oil Corporation (CNOOC) HKEx: 0883 (ä¸å›½æµ·æ´‹çŸ³æ²¹æ€»å…¬å¸) is the third-largest National Oil Company (NOC) in the Peoples Republic of China next to CNPC, Sinopec. ...

CNOOC was allowed to head the exploration of six onshore blocks covering 115,343 square kilometres in the northern and southern of part of Kenya. There have still not been made any exploitable oil or gas discoveries on these six blocks, but several international companies have demonstrated their interest lately, indicating that there is a large potential of finding major reserves.

Exploration investments in the six blocks, located in the basins of Lamu, Anza and Mandera, would commence within short, CNOOC indicated in a statement today. The Chinese state company emphasised its optimism ahead of operations: "This vast area has attractive untapped exploration potential, although it is not yet a mature oil and gas producing area," the CNOOC statement said. The signing indicated CNOOC had successfully extended its overseas exploration activities to East Africa, it added.

The Kenya Energy Minister added that the deal had been very favourable to the Chinese state company. CNOOC would not have to pay any other costs than its wn exploration costs during the 20-year deal, Mr Obwocha explained. Only if oil really was found, new agreements would be signed, aiming at production-sharing between CNOOC and a Kenyan state company.

Presidents Hu and Kibaki witnessed the signing of the oil deal between Minister Obwocha and the CNOOC President. The signing of the oil exploration agreement was widely seen as the climax of President Hu's two-day state visit to Kenya by the Chinese press. China is in desperate need of oil for its fast growing industry.

In Kenya, on the other hand, focus was on other bilateral agreements. President Hu promised to finance urban development schemes in Nairobi, including the rehabilitation of roads, street lighting and a sports stadium. Kenya further was to receive large amounts of anti-malarial medicine and a grant of half a billion shillings, which government is widely free to use as it seems fit - as contrasted to grants and loans from Western partners.

Economy - overview

Kenya continues to be the primary communication and financial hub of East Africa. It enjoys the region's best transportation linkages, communications infrastructure, and trained personnel, although these advantages are less prominent than in past years. A wide range of foreign firms maintain regional branch or representative offices in the city. In March 1996, the Presidents of Kenya, Tanzania, and Uganda re-established the East African Cooperation (EAC). The EAC's objectives include harmonizing tariffs and customs regimes, free movement of people, and improving regional infrastructures. In March 2004, the three East African countries signed a Customs Union Agreement.

Per capita income: $471. The per capita income for a group of people may be defined as their total personal income, divided by the total population. ...

Natural resources: Wildlife, land. Agriculture: Products--tea, coffee, sugarcane, horticultural products, corn, wheat, rice, sisal, pineapples, pyrethrum, dairy products, meat and meat products, hides, skins. Arable land--5%. Industry: Types--petroleum products, grain and sugar milling, cement, beer, soft drinks, textiles, vehicle assembly, paper and light manufacturing.

Trade (2002): Exports--$2.2 billion: tea, coffee, horticultural products, petroleum products, cement, pyrethrum, soda ash, sisal, hides and skins, fluorspar. Major markets--Uganda, Tanzania, United Kingdom, Germany, Netherlands, Ethiopia, Rwanda, Egypt, South Africa, United States. Imports--$3.2 billion: machinery, vehicles, crude petroleum, iron and steel, resins and plastic materials, refined petroleum products, pharmaceuticals, paper and paper products, fertilizers, wheat. Major suppliers--UK, Japan, South Africa, Germany, United Arab Emirates, Italy, India, France, United States, Saudi Arabia

See also

The economy of Africa consists of the trade, industry, and resources of the peoples of Africa. ... Political corruption in the post-colonial government of Kenya has had a history which spans the era of the Jomo Kenyatta and Daniel arap Mois KANU governments to the Mwai Kibakis NARC government. ... Kenya is the 17th largest producer of coffee in the world. ...

References

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