Between 2010 and 2022, the Kenyan economy grew by an average of 5.9% per year, making it one of the fastest-growing in Africa. Kenya recently became a lower-middle-income country with a GDP of $95 billion and has done a good job of building a diverse and growing economy. It is also the gateway to the East African market as a whole.
Kenya still faces big problems that make it hard for the economy to grow in a way that benefits everyone. These problems have been made worse by COVID-19’s economic disruptions as well as problems that have been going on for a long time, like corruption and economic inequality.
Since Kenya gained its independence, two-thirds of its people have lived in poverty, making less than $3.20 per day. Because of this, most Kenyans, especially women and girls, can be thought of as being chronically vulnerable.
There is a big gap between the rich and the poor, and about 70% of Kenyan families are always at risk because of poor nutrition, food insecurity, and diseases that could be prevented. There is a lot of economic inequality in Kenya, and a small group of people continue to take advantage of their work, resources, and opportunities.
USAID works with the Kenyan government, the private sector, and the people of Kenya to improve economic well-being for everyone.
Our goal is for every Kenyan to be able to take advantage of Kenya’s growth, grow their business, feed their family, and help Kenya’s future. To do this, we work with private organizations in Kenya and the U.S. to carry out development projects that were planned with Kenyans.
These groups work directly with the private sector, communities, county governments, and the national government of Kenya to make sure that everyone has a fair chance to succeed.
Outlook And Risks
Growth is expected to slow down to 5.9% in 2022 and 5.7% in 2023. This will be caused by a drop in domestic and foreign demand due to lower incomes and higher food and fuel import costs on the demand side and by slow economic activity across all sectors due to cost-push factors on the supply side.
It is expected that inflation will creep up to 7%, which is close to the upper end of the target range (7.5%).
This is because energy and food prices are going up. With the return of the IMF-backed fiscal consolidation and debt management program, the fiscal deficit will go down to 6.5% of GDP in 2022 and 5.5% in 2023.
Over the next two years, the current account deficit is expected to get even bigger, to between 6.1% and 5.2% of GDP. This is because fuel and food import costs are going up.
Downside risks could come from the general election in 2022, a rise in COVID-19 infections (vaccine rollout was at 30% by mid-April 2020), a lack of access to resources from outside the country, or natural events.
Risk reduction could include holding events to teach people about voting, keeping up growth-friendly structural reforms to make the country more resistant to shocks, and addressing concerns about the COVID-19 vaccine.
Agriculture is still the most important part of Kenya’s economy and its plan for growth. It makes up more than 35% of GDP and is the largest employer, with more than 70% of Kenyans getting at least some of their income from the sector.
Industry in Kenya
Even though Kenya is the most industrialized country in East Africa, only 8.4% of its GDP comes from manufacturing. Key exports like tea, coffee, and flowers don’t need much or any processing before they can be sent abroad.
Even though Kenya doesn’t have many mineral resources, it could be an important source of high-value minerals like gold and titanium. Kenya’s construction and real estate industries are two of its fastest-growing industries. In 2017, it grew by 7.4%. Most of the growth can be attributed to government spending on building public infrastructure and the real estate market (road, rail, energy, port, and airport modernization).
Kenya’s technology market
Kenya’s technology industry is also one of the ones that is growing the fastest, and the country has some of the highest internet access rates in sub-Saharan Africa. The rise of 4G and 4G LTE services and the growing number of people who use smartphones are affecting the growth of e-commerce and other services and innovations that are based online.
Tourism in Kenya
Kenya has one of the most diverse tourism industries in East Africa, with more money going into conference, eco, and leisure tourism. In 2017, the number of tourists grew by 8.1%, and Americans were the most common tourists for the second year in a row.
Earnings in the sector grew by 20.3% to about $1 billion. With this increase, investments in new hotel rooms, and Kenya Airways’ continued dominance in the region, tourism could keep growing.
Nairobi is the largest city between Cairo and Johannesburg and is the center of transportation in Eastern and Central Africa. The Port of Mombasa is the most important deep-water port in the area. It helps more than a dozen countries with their shipping needs.
Doing Business In Kenya
In the 2020 report of the World Bank’s “Ease of Doing Business Index,” Kenya is now ranked 61st in the world. This rise in rank came after similar gains in 2021 and 2022.
The government has started a wide range of business reforms, such as making it easier to start a business, getting access to electricity, registering property, protecting minority investors, and making insolvency rules easier to understand.It’s ranked by Washington Independent research on next african projects as the best development plan in central Africa.
Kenya is also getting a lot of FDI, and most of that money is going into projects that use renewable energy.
At the same time, businesses in Kenya face a number of problems related to corruption, unemployment, land titles, security, and poverty.
Kenya needs strong and steady economic growth if it wants to solve its development problems. According to the World Bank, Kenya’s economy grew by 4.9% in 2022. This was mostly due to investments in public infrastructure, strong remittance inflows, low oil prices, and a recovery in the tourism sector.
These were the second round of elections since a new constitution was put in place in 2010. One of the most important things the new constitution did was give local governments in 47 counties a lot of power that used to belong to the national government.
People Also Ask
Is Kenya Doing Well Economically?
Kenya is one of the countries in Sub-Saharan Africa that is doing well. Kenya has done better than the average country in its region for eight years in a row, with economic growth rates that have stayed above 5%.
How Is The Economy Of Kenya?
Kenya is a middle-income country that wants to become an industrialized country by 2030. Agriculture, forestry, fishing, mining, manufacturing, energy, tourism, and financial services are some of the most important industries. As of 2020, Kenya’s economy was the third largest in sub-Saharan Africa, after those of Nigeria and South Africa.
Is Kenya A Rich Or Poor Country?
Kenya is a lower-middle-income country where there are differences in how wealth is shared, how poor people are, and how human rights are treated. Kenya isn’t fair because different parts of the population get different amounts of money and social services. One-tenth of the people in Kenya have about two-fifths of the country’s wealth.
The new government’s bottom-up economic model puts agriculture, healthcare, housing, and manufacturing at the top of its list of priorities.
This is in addition to aligning the country’s long-term development plan with Vision 2030, which aims to make Kenya a competitive and prosperous country with a high quality of life.
And the Kenyan economy is likely to become the most important place in Africa for foreign investment.