The Kenyan Economy
The Kenyan economy is the largest in East Africa. After independence, Kenya promoted rapid economic growth through public investment, encouraged smallholder agricultural production and provided incentives for private (often foreign) industrial investment. Additionally, Kenya is a regional transportation and financial hub.
Kenya has experienced continued growth in GDP over the last few years, supported by ongoing public infrastructure projects, strong public and private sector investment and appropriate economic and fiscal policies, reflecting the broad-based and diversified nature of the Kenyan economy.
Kenya’s financial sector is vibrant, well developed and diversified in the region and has highest financial inclusion in the region and globally. Banking sector is well capitalized, profitable with capital adequacy and liquidity ratios above the recommended thresholds.
Macroeconomic stability has been preserved over the last few years with inflation, interest rates and exchange rates remaining largely stable, thanks to the prudent monetary and fiscal policies.
In 2007, the Government of Kenya pronounced “Vision 2030” as its long‑term plan for attaining middle income status as a nation by 2030. To ensure implementation of the Vision 2030, the government prepares successive medium-term plans (“MTPs“) that outline the policies, programmes and projects that the government intends to implement over a five-year period.
The Medium Term Plans
The first MTP covered the period from 2008 to 2012. A number of projects aimed at national healing and reconciliation following the post-election violence were implemented. Repair of damaged infrastructure, assistance to affected small scale businesses and resettlement of internally displaced persons were all undertaken in order to raise GDP growth (which fell to 1.5 per cent. in 2008) and to promote national reconciliation.
The second MTP of Vision 2030 was unveiled in October 2013 covering 2013 to 2017. The second MTP gave priority to devolution as specified in the Constitution. It aimed at transforming the economy focused on rapid economic growth on a stable macro‑economic environment. The second MTP intended to achieve modernisation of infrastructure, diversification and commercialisation of agriculture, food security, a higher contribution of manufacturing to GDP, wider access to African and global markets, wider access for Kenyans to better quality education and health care, job creation targeting unemployed youth, provision of better housing and provision of improved water sources and sanitation to Kenyan households.
The third MTP unveiled in March 2017 carried forward completion of the programmes and projects initiated during the second MTP. The MTP aims to achieve high inclusive, broad based economic growth, increasing the share of manufacturing and industrial sectors and increasing the share of exports to GDP, especially manufactured exports, as a means to generate employment and higher economic growth and to ensure a sustainable balance of payments position.
The “Big Four” Agenda
In line with the strategies outlined in the third MTP and building on the progress made so far under Vision 2030, the Government has been implementing the “Big Four” Agenda over the past three years. The Agenda is designed to help achieve the social and economic pillars of our Vision 2030 and the development aspirations espoused in the Kenyan Constitution. Actualization of policies and programmes under each pillar is expected to accelerate and sustain inclusive growth, create opportunities for decent jobs, reduce poverty and income inequality and ensure that we create a healthy and food secure society in which Kenyans have access to affordable and decent housing.
The Quarterly Economic and Budgetary Review