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Economy

Kenya’s Economy

Kenya’s economy is market-based, with a few state-owned infrastructure enterprises, and maintains a liberalized external trade system. The country is generally perceived as Eastern and Central Africa’s hub for Financial, Communication and Transportation services. As at May 2010, economic prospects are positive with 4-5% GDP growth expected, largely because of expansions in tourism, telecommunications, transport, construction and a recovery in agriculture. The World Bank predicts growth of 4% in 2010 and a potential of 4.9% growth in 2011. These improvements are supported by a large pool of English speaking professional workers. There is a high level of Computer literacy, especially among the youth.
The government is generally perceived as investment friendly and has enacted several regulatory reforms to simplify both foreign and local investment. An increasingly significant portion of Kenya’s foreign inflows is from remittances by non-resident Kenyans who work in the US, Middle East, Europe and Asia. Compared to its neighbors, Kenya has a well developed social and physical infrastructure making it an attractive alternative location to South Africa, for major corporations seeking entry into the African continent.
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.
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.
A wide range of foreign firms maintain regional branch or representative offices in the city.

Finance and Investment in Kenya

Kenya is East and Central Africa’s hub for Financial services. The Nairobi Stock Exchange (NSE) is ranked 4th in Africa in terms of Market capitalization.
The Kenya banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus.
•The exchange rate of the Kenya shilling between 2003 and 2010 has averaged at about KSh74-78 to US$1.
•As at April 2010 Kenya’s inflation rate is 3.65%.

Tourism in Kenya

Kenya’s services sector, which contributes about 63 percent of GDP, is dominated by tourism. The tourism sector has exhibited steady growth in most years since independence and by the late 1980s had become the country’s principal source of foreign exchange. Tourists, the largest number from Germany and the United Kingdom, are attracted mainly to the coastal beaches and the game reserves, notably, the expansive Tsavo National Park (20,808 square kilometers) in the southeast. Tourism has seen a substantial revival over the past several years and is the major contributor to the pick-up in the country’s economic growth.
Tourism is now Kenya’s largest foreign exchange earning sector, followed by flowers, tea and coffee. In 2006 tourism generated US$803 million, up from US$699 million the previous year.

Agriculture in Kenya

Agriculture is the second largest contributor to Kenya’s gross domestic product (GDP), after the service sector. In 2005 agriculture, including forestry and fishing, accounted for about 24 percent of GDP, as well as for 18 percent of wage employment and 50 percent of revenue from exports. The principal cash crops are tea, horticultural produce, and coffee; horticultural produce and tea are the main growth sectors and the two most valuable of all of Kenya’s exports. The production of major food staples such as corn is subject to sharp weather-related fluctuations. Production downturns periodically necessitate food aid – for example, in 2004 aid for 1.8 million people – because of one of Kenya’s intermittent droughts.
Tea, coffee, sisal, pyrethrum, corn, and wheat are grown in the fertile highlands, one of the most successful agricultural production regions in Africa. Livestock predominates in the semi-arid savanna to the north and east. Coconuts, pineapples, cashew nuts, cotton, sugarcane, sisal, and corn are grown in the lower-lying areas.

Industry and Manufacturing in Kenya

Although Kenya is the most industrially developed country in East Africa, manufacturing still accounts for only 14 percent of gross domestic product (GDP). Industrial activity, concentrated around the three largest urban centers, Nairobi, Mombasa, and Kisumu, is dominated by food-processing industries such as grain milling, beer production, and sugarcane crushing, and the fabrication of consumer goods, e.g., vehicles from kits. There is a vibrant and fast growing cement production industry. Kenya has an oil refinery that processes imported crude petroleum into petroleum products, mainly for the domestic market. In addition, a substantial and expanding informal sector engages in small-scale manufacturing of household goods, motor-vehicle parts, and farm implements.

Kenya’s inclusion among the beneficiaries of the U.S. Government’s African Growth and Opportunity Act (AGOA) has given a boost to manufacturing in recent years. Since AGOA took effect in 2000, Kenya’s clothing sales to the United States increased from US$44 million to US$270 million (2006). Other initiatives to strengthen manufacturing have been the new government’s favorable tax measures, including the removal of duty on capital equipment and other raw materials.

Energy in Kenya

The largest share of Kenya’s electricity supply comes from hydroelectric stations at dams along the upper Tana River, as well as the Turkwel Gorge Dam in the west. A petroleum-fired plant on the coast, geothermal facilities at Olkaria (near Nairobi), and electricity imported from Uganda make up the rest of the supply. Kenya’s installed capacity stood at 1,142 megawatts a year between 2001 and 2003. The state-owned Kenya Electricity Generating Company (KenGen), established in 1997 under the name of Kenya Power Company, handles the generation of electricity, while the Kenya Power and Lighting Company (KPLC), which is slated for privatization, handles transmission and distribution. Shortfalls of electricity occur periodically, when drought reduces water flow.
Kenya has yet to find hydrocarbon reserves on its territory, despite several decades of intermittent exploration. Kenya currently imports all crude petroleum requirements. Petroleum accounts for 20 to 25 percent of the national import bill.
Other industries include forestry, fishing, and mining. Kenya has few discovered minerals and the mining industry is relatively minor. There is an informal sector which – though not included in statistics – is becoming an important contributor to the Kenya economy.
Vision 2030
In 2007, the Kenyan government unveiled Vision 2030, which is an economic blueprint which is believed to have the potential of putting the country in the same league as the Asian Economic Tigers.

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Source Citation
Wikipedia website: http://en.wikipedia.org/wiki/Kenya#Politics
cia.gov website:https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html
Foreign & Commonwealth Office website: http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/sub-saharan-africa/kenya1