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Kenya

Kenya Economy

Kenya’s economy has been traditionally depending on agriculture. Albeit during the past decades the rehabilitation of industry and tourism has made agriculture’s dominance to decline, farming activity continue to account for the biggest part of the country’s economy.

Basics:
Since 1998, the government has brought up a liberalisation and economic reform plan involving the reduction of import hindrances, the stopping of control of foreign exchange and the decease of the public sector by selling away state industries and rationalising public services. With the help of the World Bank, the International Monetary Fund (IMF) and other donors, reforms have resulted into the rehabilitation of the economy, which has somehow relieved the negative repercussions in the early 1990’s. GDP rose up to 5% in 1995 and 4% in 1996, with a moderate rise in prices of services and goods in the country, which led to a moderate loss of money value. The inflation rate changes frequently through the years, for example, 19.6% in 1991,27.5% in 1992, 46% in 1993, 28% in 1994, 1.6% in 199, 9% in 1996, 11.2% in 1997 and 6.6% in 1998.

The economic growth declined in 1997 and 1998, mostly because of the uncertainty in agriculture and tourism. Agriculture was influenced by the torrential El Nino rains in 1997 and 1998, which damaged some of the crops and also damaged infrastructures.
On the other hand, tourists were sent away by terrorist violence (bombing of th US Embassy in 1998), ethnic riots and the upswing of crime.
Because of the failure of the government to put into practice the reform conditions and eradicating corruption in the public sector, the International Monetary fund allowed for
a lapse in the Enhanced Structural Adjustment Program.

Currently, major problems of the Kenyan economy constitute the negative commercial balance (external debt in 1997 was $ 6,450 million), inadequate power, the prolonged and inefficient government’s control on the major sectors, including endemic corruption, increased population rates (reduced from 4% to 1.5% in 1999) and unemployment influencing half of the employed population in 1998.

In 1992, 42% of the population was below poverty line. The external economic help got by Kenya in 1995 was 642.8 million dollars.

Agriculture and livestock:
Agriculture has been decreasing its contribution to GDP over the past decades, because of the development of other sectors. Thus, its weight in GDP reduced from 38.4% to 30% in 1990 then to 29% in 1997. Its main aim in Kenyan economy is still supported by the fact that 75-80% of the active population is employed in agriculture. This activity accounts for half of income due to exports.
And all this despite the fact that three fifths of the country’s land are not productive.

Agriculture in Kenya can be grouped in two types, including industrial or colonial and indigenous or subsistence farming. The first one shows the heritage of the big colonial plantations, committed to the culture of coffee, tea, cotton, sugarcane, potatoes, tobacco, wheat, peanuts, sisal and sesame. Coffee with 53.400 tons and tea with 294,200 tons in 1998, were the main crops produced for export.

Subsistence farming, done by local owners in small plots, has been traditionally based on crops like corn, which is a main local food, manioc, beans m sorghum and fruit. However, the co-operative movement has developed over the past years, and also the adoption of new crops monopolised in the past by large plantations and the increased production because of the technical advancement. This showed that, at the end of the 1990, two thirds of the coffee crops, and half of the tea crops and the entire production of sugarcane came from the small local farmers.

Irregular climatology greatly influences the crops. The El Nino rains in 1998 seriously affected infrastructures and some crops, whereas the subsequent La Nina droughts damaged the sector as a whole.

Raising cattle in Kenya is done basing on bivine and wine. Similar to agriculture, the large colonial estates and the small local owners share the livestock. The nomad tribes carry on subsistence cattle keeping, and this explains why cattle are their most honoured goods. The largest productions of meat, milk, and dairy products together with leather and wool, match to the big European estates. A portion of this produce is given fpr export.

Industry and energy:
Since the country attained independence in 1963, the government has acquired policies for import substitution, export enhancement and promotion of foreign investment. Manufacturing has had a slow growing rate to account for a percentage of GDP over 15% (17% in 1997) and to give jobs to 10% of the people. The main industrial plants are found near the big towns, mostly Nairobi, Mombasa and Kisumu.

The major industries include food (crop processing and canning), beverages, tobacco, chemicals, petroleum derivatives, metals, textiles, leather, rubber, construction materials (cement, clay, glass), motorcar assembling and pharmaceutical production. Some other consumer goods are also made, for example, plastics, furniture, batteries and crop.

For many years back, the government has ensured the growth of Jua kali, a manufacturing sub sector or crafting small-scale products, which came a result of the high unemployment rates. These small workshops make a wide variety of products, for example machines and tools, steel frames for doors and windows, crates, coal stoves and furniture.

In Kenya, energy resources are rare, explaining why most of the energy must be got from other countries, mostly from Saudi Arabia or the United Arab Emirates. In 1997, the levels of imported energy fell from 75% to 56.6%. Energy is mainly got (1996), from hydroelectric plants (81.63%), coal and petroleum (10.5%). The major hydroelectric plants are found in River Tana (Kindaruma dam, 1968), and in Turkwei river gorge, in Lake Turkana, within the limit of the Seven Fork Hydro project.
However, hydroelectric power is still rare and inadequate, becoming a barrier to industrial production.

The fluoride beds north of Nairobi, extraction of soda and salt from natural deposits at lake Magadi, gold mines at Kakamega, and lead and silver mines at Kinangoni, all represent mining. There is a processing plant for mineral in Kilifi. A big portion of the 100,000 tons of soda mined each year is made fro export. However, considering the whole, the contribution of mining to Kenya’s GDP is so little.

Infrastructures, transport and communication:
Out of the total 63,800km (1996), only 8,868km of roads are covered. The railroad network constitutes 2,652km. The most valued port is Mombasa, having a petroleum refining plant, next to Mombasa are Lamu and Kisumu, which is in lake Victoria. The domestic telephone network is based on microwave radio relay. There are 232 taking off and landing grounds for aircrafts and also the runways. Of these, 21 have got covered runways (1998). The multiplication of airstrips in parks and reserves has been a positive factor for the growth of tourism.

Exports:
Traditionally, the exports of Kenya were restricted to a small range of products, mostly coffee, tea, sisal and pyrethrum. This circumstance exposed the country to the swings of
a small group of markets. For many years, the endeavours of the government have culminated into the development of non-traditional exports, for example, consumer goods, fruits and vegetables.

However, tea having 18% and coffee having 15% (1998), continue to be the main export products. All the exports account for 2,000 million dollars (1998), and they are mostly taken to Uganda (16.1%), Tanzania (12.8%), United Kingdom 910.4%) and Germany (7.5%) (1996).

Imports:
Ever since Kenya attained independence, imports of consumer goods have been replaced by products produced domestically, because of the rehabilitating industry. These imports have therefore fallen from 27% of total imports in 1963 to 13% in 1995.

Inspite of this, Kenya’s commercial balance is not positive, with imports valuing 3,050 million US dollars (1998). This amount matches mostly to machinery, equipment and transport goods (31%), consumer goods (13%) and petroleum products (12%) (1995). Most of the imports are exported by United Kingdom (13.2%), the United Arab Emirates (8.2%), South Africa (7.6) and Germany (7.4%) (1996).

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