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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. After experiencing moderately high growth rates during the 1960s and 1970s, Kenya's economic performance during the 1980s and 1990s was far below its potential. The economy grew by an annual average of only 1.5% between 1997 and 2002, which was below the population growth estimated at 2.5% per annum, leading to a decline in per capita incomes. The decline in economic performance was largely due to inappropriate agricultural, land, and industrial policies compounded by poor international terms of trade and governance weaknesses. Increased government intrusion into the private sector and import substitution policies made the manufacturing sector uncompetitive. The policy environment, along with tight import controls and foreign exchange controls, made the domestic environment for investment unattractive for both foreign and domestic investors. 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. In the mid-1990s, the government implemented economic reform measures to stabilize the economy and restore sustainable growth, including lifting nearly all administrative controls on producer and retail prices, imports, foreign exchange, and grain marketing. In spite of the economic reform measures, the Kenyan Government's failure to meet commitments related to governance led to a stop-start relationship with the International Monetary Fund (IMF) and World Bank, both of which suspended support in 1997 and again in 2001. During President Kibaki's first term in office (2003-2007), the Government of Kenya began an ambitious economic reform program and resumed its cooperation with the World Bank and the IMF. There was some movement to reduce corruption in 2003, but the government did not sustain that momentum. Economic growth began to recover in this period, with real GDP growth registering 2.8% in 2003, 4.3% in 2004, 5.8% in 2005, 6.1% in 2006, and 7.0% in 2007. However, the economic effects of the violence that broke out after the December 27, 2007 general election, compounded by drought and the global financial crisis, brought growth down to less than 2% in 2008. In 2009 there was modest improvement with 2.6% growth. In May 2009, the IMF Board approved a disbursement of approximately $200 million under its Exogenous Shock Facility (ESF), which is designed to provide policy support and financial assistance to low-income countries facing exogenous but temporary shocks. The ESF resources were meant to help Kenya recover from the negative impact of higher food and international fuel and fertilizer costs, and the slowdown in external demand associated with the global financial crisis. The government's ability to stimulate economic demand through fiscal and monetary policy remains fairly limited, while the pace at which the government is pursuing reforms in other key areas remains slow. The Privatization Law was enacted in 2005, but only became operational as of January 1, 2008. Parastatals Kenya Electricity Generating Company (KenGen), Telkom Kenya, and Kenya Re-Insurance have been privatized. The government sold 25% of Safaricom (10 billion shares) in 2008, reducing its share to 35%. Accelerating growth to achieve Kenya's potential and reduce the poverty that afflicts about 46% of its population will require continued de-regulation of business, improved delivery of government services, addressing structural reforms, massive investment in new infrastructure (especially roads), reduction of chronic insecurity caused by crime, and improved economic governance generally. The government's Vision 2030 plan calls for these reforms, but implementation will be delayed by the reconstruction effort, coalition politics, and line ministries' limited capacity. In June 2008, the government introduced a revised but still ambitious Vision 2030 plan that seeks to address the economic challenges stemming from the political crisis while still striving to meet growth benchmarks. Economic expansion is fairly broad-based and is built on a stable macro-environment fostered by government, and the resilience, resourcefulness, and improved confidence of the private sector. Despite the post-election crisis, Nairobi 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. In 2009, fresh horticulture exports rose to $947 million from $838 million in 2008 (though still not to the level of a record high of U.S. $1.12 billion in 2007), while tea exports rose to $928 million from $850 million in 2008. Tourism has rebounded from the drop experienced in 2008 after the post-election violence, bringing in $807 million in 2009, an increase of 19% from 2008. In the first quarter of 2010, arrivals continued to increase, registering 19% growth compared to the same period in 2009. Africa is Kenya's largest export market, followed by the European Union (EU). Kenya benefits significantly from the African Growth and Opportunity Act (AGOA), but the apparel industry is struggling to hold its ground against Asian competition. Currently there are 19 apparel factories, 1 yarn/fabric company, and 6 accessory companies (labels, sewing supplies, hangers) operating in the Export Processing Zones. Ninety-four percent of AGOA exports are garments, and Kenya’s garment exports under AGOA fell from U.S. $265 million in 2006 to U.S. $195 million in 2009. Kenya does not systematically collect foreign direct investment (FDI) statistics and its historical performance in attracting FDI has been relatively weak. The stock of FDI in 2005 was estimated to be about $1.04 billion, less than half of that in neighboring Tanzania. Net foreign direct investment was negative from 2000-2003, but started trickling back in 2004. U.S. FDI was estimated to be about U.S. $193 million as of 2007. Remittances are Kenya’s single largest source of foreign exchange and a key social safety net. According to the Central Bank of Kenya, recorded remittances totaled $609 million in 2009; however, the actual number may be as high as $1 billion. Kenya faces profound environmental challenges brought on by high population growth, deforestation, shifting climate patterns, and the overgrazing of cattle in marginal areas in the north and west of the country. Significant portions of the population will continue to require emergency food assistance in the coming years. Kenya is pursuing regional economic integration, which could enhance long-term growth prospects. The government is pursuing a strategy to reduce unemployment by expanding its manufacturing base to export more value-added goods to the region while enabling Kenya to develop its services hub. In March 1996, the Presidents of Kenya, Tanzania, and Uganda re-established the East African Community (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 paving the way for a common market. The Customs Union and a Common External Tariff were established on January 1, 2005, but the EAC countries are still working out exceptions to the tariff. Rwanda and Burundi joined the community in July 2007. In May 2007, during a Common Market for Eastern and Southern Africa (COMESA) summit, 13 heads of state endorsed a move to adopt a COMESA customs union and set December 8, 2008 as the target date for its adoption. On July 1, 2010, the EAC Common Market Protocol, which allows for the free movement of goods and services across the five member states, took effect. In October 2008, the heads of state of EAC, COMESA, and the Southern African Development Community (SADC) agreed to work toward a free trade area among all three economic groups with the eventual goal of establishing a customs union. If realized, the Tripartite Free Trade area would cover 26 countries. Media
 The key independent print media in Kenya are the Nation Media Group, the Standard Group, People Limited, and the Times Media Group. The Nation Media Group publications, which include the Daily Nation, the Sunday Nation, the Business Daily, the weekly East African, and the only Swahili publications, Taifa Leo and Taifa Jumapili, have the largest circulations. The Standard and the Sunday Standard, published by the Standard Group, are also popular newspapers, although with smaller circulations. Approximately 120 foreign correspondents representing 100 media organizations report from Nairobi. There is no government-owned or controlled newspaper. Major independent radio and television media are the Kenya Television Network (KTN), the broadcast media arm of the Standard Group; Nation Radio/TV, owned by the Nation Media Group; and Citizen Radio/Television, owned by Royal Media Services. The government owns and controls the Kenya Broadcasting Corporation (KBC) and its subsidiaries. KBC is the only national radio and television network. Kenya also has hundreds of FM radio stations, some broadcasting in Swahili or in local languages. Radio has a wide reach in Kenya, especially in rural areas. Some major international broadcasters, including British Broadcasting Corporation (BBC), Voice of America (VOA), and Radio France Internationale (RFI), rebroadcast their programming in Kenya. GDP (2009): $29.5 billion. Annual growth rate (2009): 2.6%. Gross national income per capita (2008): $770 (Atlas Method). Natural resources: Wildlife, soda ash, land. Agriculture: Products --tea, coffee, sugarcane, horticultural products, corn, wheat, rice, sisal, pineapples, pyrethrum, dairy products, meat and meat products, hides, skins. Arable land --17%. Industry: Types --petroleum products, grain and sugar milling, cement, beer, soft drinks, textiles, vehicle assembly, paper and light manufacturing. Structure of economy (% of GDP): Services --59.5%; industry and commerce --16.7%; agriculture --23.8%. Work force: Formal sector wage earners --1.95 million (public sector 30%; private sector 70%). Informal sector workers --6.4 million. Trade (2008): Exports --$4.4 billion: tea, coffee, horticultural products, petroleum products, cement, pyrethrum, soda ash, sisal, hides and skins, fluorspar. Major export markets --Uganda, United Kingdom, Tanzania, Netherlands, United States, Pakistan. Imports --$9.9 billion: machinery, vehicles, crude petroleum, iron and steel, resins and plastic materials, refined petroleum products, pharmaceuticals, paper and paper products, fertilizers, wheat. Major suppliers --United Arab Emirates, India, China, South Africa, Japan.

Geography of Kenya

Cities: Capital- -Nairobi (pop. 1.2 million in 1991). Other cities--Mombasa (450,000), Kisumu (150,000), Nakuru (150,000). Terrain: Kenya rises from a low coastal plain on the Indian Ocean in a series of mountain ridges and plateaus which stand above 3,000 meters (9,000 ft.) in the center of the country. The Rift Valley bisects the country above Nairobi opening up to arid plain in the north. Mountain plains cover the south before descending to the shores of Lake Victoria in the west. Climate: Varies from the tropical south, west, and central regions to arid and semi-arid wasteland in the north and the northeast. Location: Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania Map references: Africa Area: total area: 582,650 sq km land area: 569,250 sq km comparative area: slightly more than twice the size of Nevada
Land boundaries: total 3,446 km, Ethiopia 830 km, Somalia 682 km, Sudan 232 km, Tanzania 769 km, Uganda 933 km Coastline: 536 km Maritime claims: continental shelf: 200-m depth or to the depth of exploitation exclusive economic zone: 200 nm territorial sea: 12 nm International disputes: administrative boundary with Sudan does not coincide with international boundary; possible claim by Somalia based on unification of ethnic Somalis Climate: varies from tropical along coast to arid in interior Terrain: low plains rise to central highlands bisected by Great Rift Valley; fertile plateau in west
Natural resources: gold, limestone, soda ash, salt barytes, rubies, fluorspar, garnets, wildlife
Land use: arable land: 3% permanent crops: 1% meadows and pastures: 7% forest and woodland: 4% other: 85% Irrigated land: 520 sq km (1989) Environment: current issues: water pollution from urban and industrial wastes; degradation of water quality from increased use of pesticides and fertilizers; deforestation; soil erosion; desertification; poaching natural hazards: NA international agreements: party to - Biodiversity, Climate Change, Endangered Species, Law of the Sea, Marine Dumping, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling; signed, but not ratified - Desertification Note: the Kenyan Highlands comprise one of the most successful agricultural production regions in Africa; glaciers on Mt. Kenya; unique physiography supports abundant and varied wildlife of scientific and economic value.

Government of Kenya

The unicameral National Assembly consists of 210 members elected to a term of 5 years from single-member constituencies, plus 12 members nominated by political parties on a proportional representation basis. The president appoints the vice president; under the power-sharing agreement, the president with the agreement of the prime minister makes the initial appointment of cabinet members from among those elected to the assembly. Subsequent cabinet appointments are made by the president in consultation with the prime minister, in accord with the power-sharing agreement's proportional division of cabinet positions. The attorney general and the speaker are ex-officio members of the National Assembly. The judiciary is headed by a High Court, consisting of a Chief Justice and High Court judges and judges of Kenya's Court of Appeal, all appointed by the president. Local administration is divided among 140 rural districts, each headed by a commissioner appointed by the president. The President has announced additional districts, but these are not yet legally constituted. The districts are joined to form seven rural provinces. Nairobi has special provincial status. The Ministry of State in charge of Provincial Administration and Internal Security supervises the administration of districts and provinces. Once implemented, the new constitution that was approved on August 4, 2010 will result in significant changes to this structure, including greater devolution of power to 47 counties and creation of a second legislative chamber with responsibility for representing the interests of the counties and regions. Implementation of the new constitution will take several years. POLITICAL CONDITIONS Until post-election political unrest struck in early 2008, Kenya had, since independence, maintained considerable stability despite changes in its political system and crises in neighboring countries. This had been particularly true since the re-emergence of multiparty democracy and the accompanying increase in freedom (including freedom of speech, the press, and assembly). In December 2002, Kenyans held democratic and open elections, which were judged free and fair by international observers. The 2002 elections marked an important turning point in Kenya's democratic evolution as the presidency and the parliamentary majority passed from the party that had ruled Kenya since independence to a coalition of new political parties. The government lost a referendum over its draft constitution in November 2005. This vote too was widely accepted as free, fair, and credible. Under the first presidency of Mwai Kibaki, the NARC coalition promised to focus its efforts on generating economic growth, improving and expanding education, combating corruption, and rewriting the constitution. The first two goals were largely met, but progress toward the second two goals was limited. President Kibaki's cabinet from 2002-2005 consisted of members of parliament from allied parties and others recruited from opposition parties who joined the cabinet without the approval of their party leaderships. In early 2006, revelations from investigative reports of two major government-linked corruption scandals rocked Kenya and led to resignations, including three ministers (one of whom was later re-appointed). In March 2006, another major scandal was uncovered involving money laundering and tax evasion in the Kenyan banking system. The government's March 2006 raid on the Standard Group media house conducted by masked Kenyan police was internationally condemned and was met with outrage by Kenya media and civil society. The government did not provide a sufficient explanation. No one has been held accountable. The December 2007 elections were marred by serious irregularities, and set off a wave of violence throughout Kenya. Following the February 2008 signing of a power-sharing agreement between President Kibaki and the opposition, a new coalition cabinet was sworn in April 2008, headed by Prime Minister Odinga. The 42-member cabinet is the largest in Kenya's history and includes new ministries for cooperative development, Northern Kenya development, and Nairobi metropolitan development. Several ministries were also subdivided, creating a number of new cabinet positions. Constitutional reform that addresses the structure of government to create a more effective system of checks and balances is a key element of the reform agenda agreed as part of the power-sharing agreement. Following the process for producing a new draft constitution that was set out in the December 2008 Constitutional Review Act, Kenyans went to the polls on August 4, 2010 to vote on a new constitution. Reflecting broad support for fundamental change, 66.9% of those who voted endorsed the new constitution. The new constitution retains Kenya's presidential system but introduces additional checks and balances on executive power and greater devolution of power to the sub-national level. Implementing the new constitution will require passage of several dozens of pieces of legislation over the next 5 years. Principal Government Officials President--Mwai Kibaki Vice President--Kalonzo Musyoka Prime Minister--Raila Odinga Minister of Foreign Affairs--Moses Wetangula Ambassador to the United States--Elkanah Odembo Ambassador to the United Nations--Zachary Muita-Muburi Consulate General Los Angeles--Wenwa Akinyi Odinga Oranga Kenya maintains an embassy in the United States at 2249 R Street NW, Washington, DC 20008 (tel. 202-387-6101). Type: Republic. Independence: December 12, 1963. Constitution: 1963. Branches: Executive--president (chief of state, head of government, commander in chief of armed forces), prime minister, and two deputy prime ministers. Legislative--unicameral National Assembly (parliament). Judicial--Court of Appeal, High Court, various lower and special courts, includes Kadhi (Sharia) courts. Administrative subdivisions: 69 districts, joined to form 7 rural provinces. The Nairobi area has special provincial status. The government has gazetted 37 new districts. The process of establishing these districts is ongoing. Political parties: Over 100 registered political parties. Two recently formed coalitions, the Party of National Unity (PNU) and the Orange Democratic Movement (ODM), dominate the political party scene. PNU membership is filled by parties representing Kikuyu and closely related ethnic groups; ODM membership ranks are filled by parties representing nearly everybody else. PNU and ODM agreed in February 2008 to form a grand coalition government in a power-sharing arrangement that ended the political crisis erupting after highly controversial national elections in December 2007. It is currently unclear whether an official opposition party will emerge in parliament. Suffrage: Universal at 18.

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History of Kenya

Fossils found in East Africa suggest that protohumans roamed the area more than 20 million years ago. Recent finds near Kenya's Lake Turkana indicate that hominids lived in the area 2.6 million years ago. Cushitic-speaking people from what is now Sudan and Ethiopia moved into the area that is now Kenya beginning around 2000 BC. Arab traders began frequenting the Kenya coast around the first century AD. Kenya's proximity to the Arabian Peninsula invited colonization, and Arab and Persian settlements sprouted along the coast by the eighth century. During the first millennium AD, Nilotic and Bantu peoples moved into the region, and the latter now comprise two thirds of Kenya's population. The Swahili language, a Bantu language with significant Arabic vocabulary, developed as a trade language for the region. Arab dominance on the coast was interrupted for about 150 years following the arrival of the Portuguese in 1498. British exploration of East Africa in the mid-1800s eventually led to the establishment of Britain's East African Protectorate in 1895. The Protectorate promoted settlement of the fertile central highlands by Europeans, dispossessing the Kikuyu and others of their land. Some fertile and well watered parts of the Rift Valley inhabited by the Maasai and the western highlands inhabited by the Kalenjin were also handed over to European settlers. For other Kenyan communities, the British presence was slight, especially in the arid northern half of the country. The settlers were allowed a voice in government even before Kenya was officially made a British colony in 1920, but Africans were prohibited from direct political participation until 1944 when a few appointed (but not elected) African representatives were permitted to sit in the legislature. From 1952 to 1959, Kenya was under a state of emergency arising from the "Mau Mau" insurgency against British colonial rule in general and its land policies in particular. This rebellion took place almost exclusively in the highlands of central Kenya among the Kikuyu people. Tens of thousands of Kikuyu died in the fighting or in the detention camps and restricted villages. British losses were about 650. During this period, African participation in the political process increased rapidly. The first direct elections for Africans to the Legislative Council took place in 1957. Kenya became independent on December 12, 1963, and the next year joined the Commonwealth. Jomo Kenyatta, a member of the large Kikuyu ethnic group and head of the Kenya African National Union (KANU), became Kenya's first President. The minority party, Kenya African Democratic Union (KADU), representing a coalition of small ethnic groups that had feared dominance by larger ones, dissolved itself voluntarily in 1964 and joined KANU. A small but significant leftist opposition party, the Kenya People's Union (KPU), was formed in 1966, led by Jaramogi Oginga Odinga, a former Vice President and Luo elder. The KPU was banned shortly thereafter, however, and its leader detained. KANU became Kenya's sole political party. At Kenyatta's death in August 1978, Vice President Daniel arap Moi, a Kalenjin from Rift Valley province, became interim President. By October of that year, Moi became President formally after he was elected head of KANU and designated its sole nominee for the presidential election. In June 1982, the National Assembly amended the constitution, making Kenya officially a one-party state. Two months later, young military officers in league with some opposition elements attempted to overthrow the government in a violent but ultimately unsuccessful coup. In response to street protests and donor pressure, Parliament repealed the one-party section of the constitution in December 1991. In 1992, independent Kenya's first multiparty elections were held. Divisions in the opposition contributed to Moi's retention of the presidency in 1992 and again in the 1997 election. Following the 1997 election Kenya experienced its first coalition government as KANU was forced to cobble together a majority by bringing into government a few minor parties. In October 2002, a coalition of opposition parties formed the National Rainbow Coalition (NARC). In December 2002, the NARC candidate, Mwai Kibaki, was elected the country's third President. President Kibaki received 62% of the vote, and NARC also won 59% of the parliamentary seats. Kibaki, a Kikuyu from Central province, had served as a member of parliament since Kenya's independence in 1963. He served in senior posts in both the Kenyatta and Moi governments, including Vice President and Finance Minister. In 2003, internal conflicts disrupted the NARC government. These conflicts came into the open when the government put its draft constitution to a public referendum. Key government ministers organized the opposition to the draft constitution, which was defeated soundly. Two principal leaders of the movement to defeat the draft constitution, Raila Odinga and Kalonzo Musyoka--both former Kibaki allies--were presidential candidates for the Orange Democratic Movement (ODM) party and the Orange Democratic Movement-Kenya (ODM-K) party, respectively. In September 2007, President Kibaki and his allies formed the coalition Party of National Unity (PNU). KANU joined the PNU coalition, although it serves in parliament as the official opposition party. On December 27, 2007, Kenya held presidential, parliamentary, and local government elections. While the parliamentary and local government elections were largely credible, the presidential election was seriously flawed, with irregularities in the vote tabulation process as well as turnout in excess of 100% in some constituencies. On December 30, the chairman of the Electoral Commission of Kenya declared incumbent Mwai Kibaki as the winner of the presidential election. Violence erupted in different parts of Kenya as supporters of opposition candidate Raila Odinga and supporters of Kibaki clashed with police and each other. The post-election crisis left more than 1,000 Kenyans dead and about 600,000 people became refugees or were internally displaced. In order to resolve the crisis, negotiation teams representing PNU and ODM began talks under the auspices of former UN Secretary General Kofi Annan and the Panel of Eminent African Persons (Benjamin Mkapa of Tanzania and Graca Machel of Mozambique). On February 28, 2008, President Kibaki and Raila Odinga signed a power-sharing agreement, which provided for the establishment of a prime minister and two deputy prime minister positions, as well as the division of cabinet posts according to the parties' proportional representation in parliament. On March 18, 2008, the Kenyan parliament amended the constitution and adopted legislation to give legal force to the agreement. Negotiations are ongoing regarding longer-term reform issues, including constitutional reform, land tenure reform, judicial reform, and the need to address poverty and inequality.

People of Kenya

Kenya has a very diverse population that includes three of Africa's major sociolinguistic groups: Bantu (67%), Nilotic (30%), and Cushitic (3%). Kenyans are deeply religious. About 80% of Kenyans are Christian, 10% Muslim, and the remainder follow traditional African religions or other faiths. Most city residents retain links with their rural, extended families and leave the city periodically to help work on the family farm. About 75% of the work force is engaged in agriculture, mainly as subsistence farmers. The national motto of Kenya is Harambee , meaning "pull together." In that spirit, volunteers in hundreds of communities build schools, clinics, and other facilities each year and collect funds to send students abroad. Kenya has six full-pledged public universities: University of Nairobi, Jomo Kenyatta University of Agriculture and Technology, Egerton University, Moi University, Maseno University, Masinde Muliro University (most of these universities also have constituent colleges); and approximately 13 private universities, including United States International University. Public and private universities have a total enrollment of approximately 50,000 students with about 80% of these being enrolled in public universities (representing 25% of students who qualify for university admission). In addition, more than 60,000 students enroll in middle-level colleges where they study career courses leading to certificate, diploma, and higher diploma awards. International universities and colleges have also established campuses in Kenya where students enroll for distance learning and other flexible programs. Other Kenyan students pursue their university education abroad. Nationality: Noun and adjective --Kenyan(s). Population (August 2010 est.): 39 million. Major ethnic groups: Kikuyu 6.6 million, Luhya 5.3 million, Luo 4 million, Kalenjin 5 million, Kamba 3.9 million, Kisii 2.2 million, Mijikenda 1.9 million. Religions: Christian 82.6%, Muslim 11.2%, traditional African religions 5%, Hindu/Sikh/Baha'i/Jewish 1%. Languages: English (official), Swahili (national), over 40 other languages from the Bantu, Nilotic, and Cushitic linguistic groups. Education: First 8 years of primary school are provided tuition-free by the government. In January 2008, the government began offering a program of free secondary education, subject to some restrictions. Attendance --92% for primary grades. Adult literacy rate --74%. Health: Infant mortality rate --57.4/1,000. Life expectancy --55.3 yrs (2007 est.).