African business, politics and lifestyle
Is Kenya’s economy on the mend?
This past holiday season in Kenya was quite a contrast to the preceding year.
While in 2008 December was dry and dusty, last month was marked by heavy rains across the country, making for soggy barbecues and muddy cars for the many urban Kenyans who usually like to spend Christmas with their families in the rural areas.
The rains have killed 20 people and displaced many more through flooding. But they are vital, given the country’s reliance on agriculture, which accounts for nearly a quarter of the country’s GDP and employs about two thirds of the entire population.
A prolonged drought had cut agricultural output, forced the government to appeal for funds to
feed about 10 million starving people and to liberalise imports of the staple maize crop.
Together with the emerging recovery of the global economy, the rains are giving rise to
optimism that the economy could grow by 3-4 percent in 2010 from an expected 2-2.5 percent in 2009.
The optimists also point to various government projects aimed at stimulating the economy, a
resurgent tourism sector and sustained monetary easing by the central bank as proof of a
possible rise in growth this year.
They also point to the feel-good factor surrounding the first ever football world cup final to
be staged on the African continent in South Africa in June as further evidence.
But risks still abound.
Apart from the fact that Kenya’s growth economic prospects are tied to the fortunes of the
global economic recovery, the country is on the threshold of a new constitution this year.
A final draft of the document is expected to be unveiled and a referendum held on its adoption
by the country. The last time a yes or no vote was held on a proposed new constitution in
2005, the exercise was a highly divisive affair that set off a chain of political events,
which ultimately led to the violence that erupted after the disputed elections in December
The post-election violence, combined by the global financial crisis and the drought, set back
growth in a big way. The economy grew by just 1.7 percent in 2008 compared with 7 percent in
the previous year.
Another consequence of the post-poll chaos is that possible prosecutions at the International
Criminal Court of suspected masterminds of the violence, including some cabinet ministers,
hang over the nation’s political class.
The president’s New Year party held in the coastal city of Mombasa had a tinge of a
self-congratulation as the politicians and bureaucrats looked back at 2009, a year of
unprecedented economic difficulties for the country
President Mwai Kibaki told guests the country had fared much better than had been expected and it had emerged as a stronger nation.
But is the Kenyan economy really recovering? Is such optimism justified?