Kenya

Kenya is the economic and transport hub of East Africa. Kenya’s real GDP growth has averaged around 5% for the past several years. Nevertheless, Kenya is among the low middle income countries. While Kenya has a growing entrepreneurial middle class, faster growth and poverty reduction is hampered by corruption and by reliance upon several primary goods. Unemployment is high at around 40%.

Agriculture remains the backbone of the Kenyan economy, contributing 25% of GDP. About 80% of Kenya’s population of roughly 42 million work at least part-time in the agricultural sector, including livestock and pastoral activities. Over 75% of agricultural output is from small-scale, rain-fed farming or livestock production.

Inadequate infrastructure threatens Kenya’s long-term position as the largest East African economy, although the KENYATTA administration sought external investment in infrastructure development. International financial lenders and donors remain important to Kenya’s economic growth and development, but Kenya has also successfully raised capital in the global bond market. Kenya issued its first sovereign bond offering in mid-2014, generating $2 billion and continues to offer bonds to external investors at increasingly high interest rates. Nairobi has contracted with a Chinese company to begin construction of a new standard gauge railway, but the project allegedly has been beset by corruption and fraud. The country is in the process of devolving some state revenues and responsibilities to the counties. Inflationary pressures and sharp currency depreciation peaked in early 2012 but have since abated following low global food and fuel prices and monetary interventions by the Central Bank. Chronic budget deficits, including a shortage of funds in mid-2015, have plagued the government’s ability to implement proposed development programs.