The Kenyan Industrial Revolution Story

The largest Economy in East Africa is the Kenyan economy. Through public investment, Kenya has been able to stimulate rapid economic growth, which has been sustained since their independence. By providing incentives for private industrial investment, Kenya has been able to experience a persistent growth in their GDP over the last few years. Incomes, as a result, have been able to rise, contributing significantly to alleviating poverty in the more impoverished wilds of the relatively large African nation. In 2019, Kenya's average wage earnings were recorded at nearly 780,000 Kenyan Shillings (KES), approximately 7200 US Dollars. This shows not just an increase over the past year, which recorded the average earnings at 720,000 KES, but over the past decade; indeed, in 2008, the average earnings were just over 365,000 KES.

Despite its decline by 1% in 2020 due to the COVID-19 pandemic, the GDP of Kenya is expected to rise sharply, by nearly 7% in 2021, hence reviving the economy. Over the course of the last year, the World Bank Organisation provided COVID-19 relief to Kenya, including emergency finance to enhance medical services and spread awareness on the virus, as well as budget support to address the fiscal financing gap and support reforms that help the government achieve its inclusive economic goal in the next few years.

So, how has Kenya been able to spur such exponential growth? The answer lies in its industry - telecommunications, healthcare, and transportation are chief among the services of the tertiary sector which Kenya has mastered over the last twelve years. Moreover, a major economic development has been viewed in the energy industry, primarily due to the advancement of technology to harness new forms of renewable energies. Geothermal power was highlighted as a cost-effective power alternative in Kenya's Least Cost Power Development Plan, and the Geothermal Development Company (GDC) was established to expedite tapping Kenya's enormous resources. Additionally, Kenya has flourished under the guiding hands of entrepreneurs - of the 1000 continental start-ups that benefited from the Tony Elumelu Foundation Entrepreneurship Initiative (TEEP), a US$100 million program to promote entrepreneurship in Africa, 75 were Kenyans.

The government alone is not responsible for the management and regulation of this growth - indeed, Kenya’s remarkably developed financial sector was critical in developing the economy at a sustainable rate. Over just the past year, the country has seen a threefold increase in the number of commercial banks! Indeed, Kenya’s economy is recognized globally as being highly monetized, with the monetary sector, including both banks and non-bank financial institutions, accounting for nearly 95% of its GDP.

Over the last decade, Kenya has implemented substantial political and economic reforms that have resulted in sustained economic growth. Kenya's economy grew at an annual rate of 5.7% from 2015 to 2019, making it one of the fastest-growing economies in Sub-Saharan Africa. A stable macroeconomic climate, good investor confidence, and a healthy services sector have all aided the country’s economic success.

Bibliography:

• Kenya: impact of coronavirus on GDP growth 2020-2022 | Statista

• Kenyan Economy – The National Treasury

• Economic Growth and Trade | Kenya | U.S. Agency for International Development (usaid.gov)

• Kenya - Market Overview (trade.gov)

• Kenya Average Wage Earnings | Economic Indicators | CEIC (ceicdata.com)

• Kenya Energy Situation - energypedia.info

• Kenya: monthly inflation rate 2019-2021 | Statista

• Demographic Transition and Growth in Kenya (worldbank.org)

• Kenya Overview (worldbank.org)

• Kenya's financial sector : institutional structure, evolution and resource mobilization, mobilization of development (uneca.org)

Report Written By: Rajit, Jivika, Shreshta, Harini

Edited By: Yashas Ramakrishnan