Kenya has put the catastrophic political events of late 2007 and early 2008 that pushed the country to the precipice of economic collapse behind it.
All indications are that Kenya is on track towards the creation of wealth and prosperity in line with its long- term development blueprint commonly known as Vision 2030.
On the economic front, Vision 2030 aims to maintain a sustained growth of 10 per cent per annum over the next two decades.
Socially, the Vision seeks to build a just and cohesive society enjoying equitable social development in a clean and secure environment.
The political objective of Vision 2030 is to build an issue-based, people-centred, resultoriented and accountable democratic system.
| New Constitution
There is a new enthusiasm among the Kenyan people occasioned by the promulgation of a new constitution in August of 2010.
President Mwai Kibaki and Prime Minister Raila Odinga, accredited diplomats and captains of industry have welcomed the basic law as a fine document that will spur economic growth.
The management of the plebiscite by the Independent Interim Electoral Commission and the successful conclusion of the poll helped restore the confidence of Kenyans in the ballot.
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The Grand Coalition Government, hastily put in place in 2008 to stop the country from bleeding from what has come to be called post-election violence (PEV), appears to have overcome the teething problems of 2009 and early 2010.
Tenth Parliament
Kenya’s Tenth Parliament is easily the most assertive the country has seen. Its televised live debates have grabbed the people’s imagination and renewed their confidence in the institution of Parliament as a check on the Executive and custodian of democracy.
Parliament and the Kenya Anti-Corruption Commission as well as civil society with the support of diplomats in Nairobi and media scrutiny have brought fresh impetus and urgency to the fight against corruption.
This has delighted trade partners, donors, the World Bank, International Monetary Fund, businesses and ordinary people alike.
Kenya’s banking system, which was saddled with a high level of non-performing loans in the 1990s and early 2000s and witnessed heightened disruption and serial crises, has, under the guidance of the Central Bank, stabilised.
| Credit Risk Management
The Credit Risk Management Guidelines issued by the Central Bank in 2005 and the Risk Classification of Assets and Provisioning of 2006, have facilitated the strengthening of credit risk standards by banks.
This is evidenced in the ratio of gross nonperforming loans, which stood at 7 per cent at the end of September of 2010.
A notable and welcome feature in most parts of the country, and especially in the capital Nairobi, is the construction, rehabilitation and expansion of the road network. Survey after survey by reputable opinion pollsters gives the coalition government high marks for road building.
In its strategy for Kenya titled The World Bank in Kenya: Challenges and Opportunities, the World Bank states that correcting major infrastructure bottlenecks will help boost growth.
Monetary Fund
In October of 2010, the International Monetary Fund projected that Kenya would register a 5.5 per cent economic growth where the government had itself projected a growth of between 4.5 per cent and 5 per cent in 2010 in the Budget Strategy Paper of June 2010.
The IMF’s report was confirmation that the managers of Kenya’s economy, led by the Ministry of Finance, had put their act together with
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a view to attaining the goals of Vision 2030, the government’s blueprint for transforming Kenya into a Middle Income Country by 2030.
As per the articles of association, Kenya, as a member of the IMF, has agreed to subject its economic and financial policies to the scrutiny of the international community.
The IMF provides country surveillance for the Central Bank of Kenya and visits the country twice a year to review its economic programme and policies.
Managers of Economy
The report was also a source of great encouragement and inspiration for the managers of the economy because, in his foreword to the Ministry of Finance’s 2009-2012 Strategic Plan, Deputy Prime Minister and Minister for Finance Uhuru Kenyatta wrote thus of the effects of the post-election violence:
“Since then, performance has been sluggish as witnessed by the decline in growth of GDP to a mere 1.7 per cent in 2008. The country is now faced with the challenge of restoring the economy back to the growth path that had been realised before the crisis.”
The Governor of Kenya’s Central Bank, Prof Njuguna Ndung’u, said in an interview in November of 2010 that the economy is “still on a recovery path, retracing its previous growth trajectory when it peaked 7.1 per cent in 2007”.
| Global Competitiveness Report
In November of 2010, the Global Competitiveness Report prepared by the World Economic Forum named Kenya the second most competitive economy among the five East African Community member countries.
From the report, Kenyan businesses and entrepreneurs emerge as beneficiaries of greater business sophistication and innovation in product delivery. It also gives Kenya high marks in efficiency enhancers such as labour market efficiency and developed financial markets.
This was followed up the same month by the New York-based rating agency Standard & Poors, which raised Kenya’s sovereign rating from B to B+ because it said the country’s political risk had fallen considerably since the upheaval of late 2007 to early 2008.
Standard & Poors
Specifically, Standard & Poors said: “The stable outlook reflects our expectation that the ruling coalition will continue working together on political and macroeconomic issues, and that political instability will not significantly hinder our projections of economic growth.’’
Standard & Poors also gave high marks to Kenya’s new constitution, especially because it makes clear the demarcation of power between the presidency, Parliament and other pillars of government.
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For the agency it was revealing that the referendum to adopt the new constitution was carried out peacefully, barely two years since the post-election violence of 2007- 2008.
The conduct of Kenyans in the lead-up to the referendum of August 2010 was an indicator that they were eager to maintain the peace that they enjoy and use the new constitution as a safeguard for their freedoms, civil rights and democratic governance.
Devolution of Power
The new constitution devolves power to the regions, which is meant to empower local communities to participate in their governance and help shape the direction of their economic development while maintaining Kenya as a unitary state.
Devolving power and decision-making processes to the regions has given rise to heightened search for development strategies for the regions. Professionals from Kenya’s new 47 counties have since the promulgation of the constitution held regular caucuses especially to identify the leadership competences necessary to help unlock the economic potential of their regions.
Putting in place a new constitution is a major and shining achievement of the coalition government for it was not only desired and fought for by Kenyans for about two decades, but was also integral to the healing process necessary to put Kenya back on course after the post-election violence.
| Migration and Remittances
It is not only foreign firms and international agencies that are giving Kenya and Kenyans something to smile about and a future to look forward to.
Still in October, the World Bank’s report titled Migration and Remittances Fact Book 2011 showed that Kenyans abroad — also known locally as Kenyans in the Diaspora — would have remitted Sh136 billion to the country by the close of 2010.
The significance of this figure lies in the fact that at Sh136 billion in 2010, the remittances of Kenyans overseas would overtake tourism (Sh100 billion), horticulture (Sh71 billion) and tea (Sh70 billion) as earners of foreign exchange for Kenya.
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It is also significant that the Government of Kenya in its proposed new foreign policy document by the Ministry of Foreign Affairs declares boldly that “Diaspora diplomacy recognises the importance of harnessing the diverse aspects, dynamics and potential of not only Kenyans living abroad but also Africans in the Diaspora which now encompasses the Sixth Region of the African Union”.
Kenya Tourism Board
Tourism figures as of July 2010 from the Kenya Tourism Board (KTB) showed that there were 600,227 arrivals, up from the 579,668 recorded in July of 2007, of which the Board says optimistically: “These current figures portend a bright future for us and we hope to record best arrivals towards the end of the year.”
The Governor of the Central Bank of Kenya said in November that these cumulative tourist arrivals had increased from 599,718 in July of 2010 to 701,182 in August 2010.
Tourism activities in Kenya are concentrated on wildlife, which accounts for 70 per cent of gross tourist earnings and 5 per cent of the Gross Domestic Product. Indeed, seven of Kenya’s parks receive about 80 per cent of visitors to the country.
According to KTB projections, and in line with Vision 2030, the tourism sector has immense investment opportunities for both local and foreign investors available, which include the development of three resort cities in Isiolo, Diani and Kilifi.
| New Desired Destination
Travel and Cuisine magazine gave Kenyans a promising start to 2011 when it voted Kenya the New Desired Destination 2010 in China. Kenya was awarded this new status alongside Spain, Turkey, Egypt and Italy.
The Travel and Leisure Awards is a prestigious accolade because it has only five categories of prizes. These are New Desired Destination, Best Hotels in China, Airliner of the Year, Most Popular Destinations and the Best Cruise Liner.
Kenya beat African rivals South Africa, Zimbabwe, Zambia, Tanzania, Uganda and Tunisia which were all eligible for selection by the veterans of travel, trade and internet browsing who voted in the competition.
World Heritage Sites
KTB is also keen on the development of the World Heritage Sites of Lamu, Mt Kenya and
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Sibiloi as tourist destinations as well as health spas at geothermal sites and business and conference tourism.
That the numbers of visitors picked up significantly so soon after the political upheaval of 2007 and 2008, and the global economic downturn, is a confidence booster not only for the tourism sector but also for the government and country because tourism is hardest hit by instability.
This boost is a godsend because tourism is one of the six economic pillars identified by the government as central in driving the economy to a 10 per cent per annum growth, crucial for the attainment of Vision 2030.
In this respect Kenya aims to be one of the top 10 long-haul tourist destinations in the world. The other economic pillars include agriculture, wholesale and retail trade, manufacturing, business process outsourcing and financial services.
Not surprisingly, the economy’s resurgence in the second quarter of 2010, says the Central Bank, was driven by a strong recovery in agriculture (5.8 per cent), building and construction (18 per cent), manufacturing (6.8 per cent) and financial intermediation (16 per cent).
These four sectors approximately accounted for 60 per cent of the GDP growth recorded for the second quarter.
Kenya is proud that the World Bank’s strategy report, The World Bank in Kenya: Challenges and Opportunities, declares that the country is not aiddependent.
Millennium Development Goals
The growth of the economy is crucial for the attainment of Millennium Development Goals (MDGs) whose target date is 2015.
According to the World Bank, Kenya is on track on three of the eight MDGs. These are free primary education (MDG 2), gender equality (MDG 3) and reduction of HIV/Aids, malaria and other diseases (MDG 6).