Kenya Economy

By | May 21, 2021

Estimated GDP: approx. 95.5 billion US $ (World Bank, 2019)

Per capita income (adjusted for purchasing power): US $ 1750 (World Bank, 2019)

Human Development Rank (HDI): Rank 147 of 189 in 2018 (2016: 143, 2017: 142)

Distribution of income (Gini coefficient): 40.8 (HDR 2018. 2017: 48.5)

Proportion of population below the poverty line $ 1.9: 36.8% (HDR 2018)

Economic Transformation (BTI 2020): Rank 71 of 137 (2018: 72)


Kenya Economy

Kenya Economy

Economic system and economic sectors

Tea fields in Limuru

Tea fields in Limuru

As a major country in African continent according to militarynous, Kenya has relied on a capitalist economic model since independence, which, however, was subject to strong state control. In particular, the system of so-called parastatals, semi-public companies that were actually state-owned companies, as well as state import monopolies created gateways for mismanagement, nepotism and corruption. Charles Hornsby provides an overview of the political and economic history since independence in “Kenya. A History since Independence”.

At the beginning of the 1980’s, Kenya was one of the first countries to agree a structural adjustment program with the World Bank. In the 1990’s, the Moi government, under pressure from donor countries, implemented extensive economic liberalization faster than political liberalization. State marketing companies for agricultural products were partly dissolved, and the Kenyan domestic market was opened up for foreign goods.

After the initial enthusiasm in the population about new consumer offers and the dissolution of corrupt state-owned companies, it became clear that many people were among the ‘market losers’. Despite considerable economic growth rates of 5-6 percent in non-Corona years, the gap between rich and poor is only minimally closed.

In terms of added value, the service sector, with tourism as a source of foreign exchange, is the leader with a share of almost two thirds of GDP. However, around two thirds of the population still make a living from agriculture, which produces important export goods such as tea, flowers and vegetables, including French beans, which are hard to imagine a German supermarket without. Industrial production is the third largest sector at around 16 percent.

The most important trading partners are the African neighbors, followed by Europe. The strategy of diplomacy oriented towards economic goals includes intensifying regional integration and positioning Kenya as a location for direct investments. Since the turn of the millennium, especially the exchange with China – especially in the field of construction and consumer goods import – has massively increased in importance, to the detriment of the Kenyan trade balance. It is criticized in the context that there are apparently noticeable privileges for Chinese contractors * in tenders for construction contracts, and counterfeit imported products from China and their poor quality were criticized.

East Africa’s lifelines – transport from KQ to Mkokoteni

East Africa's lifelines

East Africa’s lifelines

“If Kenya coughs, Uganda gets pneumonia,” is a local saying. It primarily refers to Kenya’s leading role as a transit country for goods and passengers from Mombasa to Kisangani in eastern Congo.

The railway, which has been in operation for more than 100 years, has been overhauled and, with investments of billions from China, expanded to include a broad-gauge railway based on the European model, which is controversial and may not be refinancing. The railways are particularly important for long-distance freight transport, which is also handled by numerous freight forwarders who are not happy about the competition with the railways. However, road traffic created endless queues of trucks on the slopes of the Mombasa Highway towards Nairobi and contributed to the traffic gridlock even in the center of Nairobi. The magic word, on the other hand, is bypass, Bypass. After decades, corresponding plans are currently being implemented. But since Nairobi’s SMEs are increasingly discovering the car for themselves, long periods of time have to be taken into account at peak times in rush hour traffic, even for short distances.

Long-distance and local passenger transport is dominated by buses, including thousands of shared buses, Matatus, which are regularly at odds with the authorities. As the backbone of local transport, similar to Cairo, they are indispensable. However, the Nissan Bullis used are not very roadworthy and prone to accidents. The tempo rates enforced in 2004 seem to be out of order; The touts, the conductors, seem to hold up to the permitted number of 14 passengers, at least in Nairobi.

On the coast, tuktuks, open motor rickshaws, compete with taxis; in Malindi these flexible and comparatively more affordable means of transport have established themselves. In local freight transport, handcarts pulled by a man, the mkokotenis, are common in many places, as they have been for decades. They transport vegetables, scrap or water and – unlike cyclists – are evidently respected by motorized road users.

Kenya Airways stands for one of the African success stories in air traffic. KQ is Africa’s fifth largest airline. In association with KLM and Air France, the company defied all crises for a long time. It flies to more African destinations than any other airline on the continent. Increased kerosene prices, airport taxes and competitive pressure are currently causing problems for KQ, but the carrier complies with international standards in every way and continues to have good growth prospects, as double-digit growth is predicted for air traffic in Africa.

KQ made Nairobi the hub of East Africa. The importance of Jomo Kenyatta International Airport as a hub between West Africa and East Asia can hardly be overestimated. It was expanded and made fit for the A380, among other things. How the airline that calls itself “Pride of Africa” will emerge from the Corona crisis is difficult to predict.

Transport from KQ to Mkokoteni

Transport from KQ to Mkokoteni