Context

Kenya is one of the fastest-growing economies in the region and has a reputation for pioneering innovative business ideas in financial services, telecoms, digital and renewable energy. Kenya’s success in these areas has had a significant impact on the lives of millions of people across the region. Despite progress, nearly 20 million Kenyans still live on less than $1.25 a day. Whilst Kenya’s growth is positive, political, climatic and security shocks affect its ability to grow, and keep the poorest and most marginalised in extreme poverty. Inequality is growing: 600,000 young people enter the labour market each year with few job opportunities. The social and political causes of conflict have not been addressed and there is a growing risk of radicalisation, especially in the north and along the coast. Regional instability has an impact within Kenyan’s own borders and stirs up internal grievances.

According to the African Development Bank real GDP growth was a robust 5.8% in 2016, driven mainly by services (which accounted for 66% of growth) and industry (which accounted for 19% of growth). Agriculture accounted for 15% of growth, the lowest in recent years. Growth in services was driven by real estate (which grew 12%) and transport and storage (which grew 10%), and growth in industry was driven by construction (which grew 8.2%) and manufacturing (which grew 6.2%). Real GDP growth declined to an estimated 5% in 2017, due to subdued credit growth caused by caps on commercial banks’ lending rates, drought, and the prolonged political impasse over the presidential election. The half-year estimates show that the economy remained fairly resilient, growing 4.8%. Services accounted for 82% of that growth, and industry accounted for 17%; agriculture’s poor performance continued. The economy is projected to rebound to GDP growth of 5.6% in 2018 and 6.2% in 2019.

BERF work in Kenya

DFID Kenya has been an important focus for BERF.  Following a scoping study early in 2016, it was proposed to undertake a public private dialogue in the creative economy and an export strategy study which have been completed.   Kenya was a focus case study of the Youth Labour Markets research study, along side Sierra Leone and Nigeria.

BERF Kenya Projects

  1. BERF Youth Labour Markets Research Sept 2017
  2. Kenya – Business Environment Diagnostic and Export Strategy May 2017
  3. Kenya Business Environment Reform Diagnostic for the Creative Economy March 2017
  4. Kenya Investment Climate Reform Scoping Study May 2016

 

 

 

World Bank Doing Business

In 2018 the upward trend in the business environment continued as Kenya reached a rank of 80.  The distance to frontier score of 65.15 was also significantly above the level of 2017 (62.56).  Kenya made progress on a wide range of reforms in the past year. Kenya was flagged in Doing Business 2017 as the third most improving countries in the world in 2016/17.

 

DFID Kenya Strategy

Economic development: The UK will help Kenya create good quality jobs and stimulate investment through our work on urbanisation and improving the business environment. The UK will reduce the costs of trade in Kenya and the region, helping businesses reach a market of over 200 million people, creating jobs and economic opportunities and contributing to long-term prosperity and security.

Basic services and building resilience to crises: The UK will help the government invest in essential health services to stop young women dying in pregnancy and child birth, and make sure 450,000 women and girls can take control of decisions about when they have children and how many. The UK will help over 1 million people cope with drought and conflict, and improve the government’s ability to respond to humanitarian crises when they happen. The UK will work with partners to find long-term solutions for refugees in Kenya who have fled their homes in neighbouring countries.

Building stability and institutions: The UK will use its diplomatic and development expertise and influence to improve government systems and accountability, tackle corruption and reduce conflict and the risks of radicalisation. The UK will continue to build the systems that will ensure the government can take on financing and management of poverty reduction programmes.