The biggest and most advanced economy in east and central Africa
Although Kenya is the biggest and most advanced economy in east and central Africa, and has an affluent urban minority, it has a Human Development Index (HDI) of 0.519, ranked 145 out of 186 in the world. As of 2017, 46% of Kenyans living below the poverty line. In 2017, Kenya ranks 80th in the World Bank ease of doing business rating from 113rd in 2016 (of 190 countries). The important agricultural sector is one of the least developed and largely inefficient, employing 75% of the workforce compared to less than 3% in the food secure developed countries. Kenya is usually classified as a frontier market or occasionally an emerging market, but it is not one of the least developed countries.
The economy has seen much expansion, seen by strong performance in tourism, higher education and telecommunications, and acceptable post-drought results in agriculture, especially the vital tea sector. Kenya’s economy grew by more than 7% in 2007, and its foreign debt was greatly reduced. But this changed immediately after the disputed presidential election of December 2007, following the chaos which engulfed the country.
East and Central Africa’s biggest economy has posted tremendous growth in the service sector, boosted by rapid expansion in telecommunication and financial activity over the last decade, and now contributes 62% of GDP. 22% of GDP still comes from the unreliable agricultural sector which employs 75% of the labour force (a consistent characteristic of under-developed economies that have not attained food security—an important catalyst of economic growth) A small portion of the population relies on food aid. Industry and manufacturing is the smallest sector, accounting for 16% of GDP. The service, industry and manufacturing sectors only employ 25% of the labour force but contribute 75% of GDP.
Privatisation of state corporations like the defunct Kenya Post and Telecommunications Company, which resulted in East Africa’s most profitable company—Safaricom, has led to their revival because of massive private investment.
Kenya is East and Central Africa’s hub for financial services. The Nairobi Securities Exchange (NSE) is ranked 4th in Africa in terms of market capitalisation. The Kenyan 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 core foreign-exchange bureaus.
Industry and manufacturing
The Kenya Commercial Bank headquarters at KENCOM House in Nairobi.
Although Kenya is the most industrially developed country in the African Great Lakes region, manufacturing still accounts for only 14% of the GDP. Industrial activity, concentrated around the three largest urban centres, 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 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 commonly referred to as jua kali engages in small-scale manufacturing of household goods, auto parts, and farm implements.
Kenya’s inclusion among the beneficiaries of the US 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 favourable tax measures, including the removal of duty on capital equipment and other raw materials.
Hedging & Refinancing Options
According to the Country Risk Classification published by the OECD, hedging and refinancing options are available.