Economy
From The Report: Kenya 2014
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Kenya has a liberalised economy with a GDP of $55.2bn, which grew at 5.7% in 2013. Much of the 2013 growth was attributable to relatively low and stable inflation, and the establishment of county governments as public expenditure rose in line with the devolved system of government, according to an economic survey from 2014. Agriculture, wholesale and retail trade, transport and communication, and manufacturing led growth. As an emerging market, Kenya benefits from a number of competitive advantages, not only within East Africa but also within the wider continental context. Kenya’s blueprint for development and future planning, called Vision 2030, serves as an overarching guide to the country’s goal of seeing annual GDP growth of 10% every year from 2012 to 2030.

This chapter contains interviews with Henry Rotich, Cabinet Secretary, National Treasury; James Mwangi, Chairman, Kenya Vision 2030 Delivery Board; Vimal Shah, Chairman, Kenya Private Sector Alliance (KEPSA); Moses Ikiara, Managing Director, Kenya Investment Authority; and Atul Shah, Managing Director, Nakumatt Holdings.

Articles from this Chapter

Overview

Implementing a devolved system of governance and making efforts to spur growth in key economic sectors
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As an emerging market, Kenya benefits from a number of competitive advantages, not only within East Africa but also within the wider continental context. The country has recently undergone a significant overhaul of its governmental system, devolving key powers to local counties, while a spate of underground discoveries have prompted new interest in the hydrocarbons sector. In recent decades, Kenya, which has long served as an entry point to the regional market, has earned a reputation as a business-friendly…

Interview

OBG talks to Henry Rotich, Cabinet Secretary, National Treasury
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Interview:Henry Rotich What will be the greatest challenges to financing the government’s spending plans? HENRY ROTICH: Our budget structure is fairly balanced as we normally fund our entire current budget, leaving about 5% for development partners and borrowing the rest. The KSh1.8trn ($20.5bn) budget includes some domestic debt, and we collect about KSh1.2trn ($13.7bn) in domestic revenue, including support from development partners and foreign-financed project funds. Of the eurobond…

Interview

OBG talks to James Mwangi, Chairman, Kenya Vision 2030 Delivery Board
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Interview:James Mwangi What sort of policies would help achieve the growth rates outlined by the Kenya Vision 2030? JAMES MWANGI: It is imperative that all capital expenditures for the Vision 2030 should focus around three strategic areas. Firstly, investment must go principally into infrastructure – including roads, rail, harbours and airports. In this way, the private sector will be able to make the country more competitive in terms of the cost and availability of key inputs. Indeed,…

Analysis

The government is focusing on balancing policy plans and fiscal targets
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In mid-2014 Kenya’s fiscal position was a mixture of positives and negatives, with the country benefitting from a position of comparative stability while facing up to a selection of potential future risks. The government’s task currently is to maintain fiscal discipline across both national and local balance sheets, while at the same time embarking on development initiatives that bring short-term spending commitments but promise long-term gains. The country’s primary fiscal challenges here…

Analysis

On the agenda: Regional integration continues towards the goal of a common market
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Kenya’s economy is partly tied to those of its neighbours through their shared history, its role as a port to serve landlocked countries to the west and north, and its membership in the East African Community (EAC). This is a regional integration organisation with an ambitious agenda including common markets, a common currency and ultimately a single federated state comprising the current five sovereign members. One of the driving ideas behind integration is that together these countries present…

Interview

OBG talks to Vimal Shah, Chairman, Kenya Private Sector Alliance (KEPSA)
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Interview:Vimal Shah How do you rate the level of dialogue between the government and the private sector? VIMAL SHAH: It used to be that every association would go directly to the government and officials would get different views from all of them. The government realised this and requested they speak with a united voice. This is KEPSA’s role today, engaging at the top levels, whether it be with the president, judiciary, parliament, senators or governors. However, associations still do…

Interview

OBG talks to Moses Ikiara, Managing Director, Kenya Investment Authority
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Interview:Moses Ikiara What can be done to maximise foreign direct investment in labour-intensive activities? MOSES IKIARA: By African standards, one of the biggest strengths of Kenya is its labour pool. Several companies locating to the country have said that coming to Kenya is a breath of fresh air. Kenya is therefore starting with a very strong advantage. A key foundation for this is education, which remains a top priority within our government, receiving the largest budget allocation…

Analysis

Efforts are under way to boost the tax intake
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Tax revenue is an area of growing focus in Kenya, with 2014 featuring new and increased levies, a new law covering value-added tax (VAT), enhanced compliance efforts, and strategies to move informal and unregulated activity into the formal and taxable economy. State revenue was 23.1% of GDP for both the 2011/12 and 2012/13 budgeting cycles. Tax revenues climbed, however, from 9.6% to 10.2%, according to a 2013 World Bank report on the Kenyan economy. The IMF praised tax collectors for doing a better…

Analysis

Implementing new measures to reduce the public sector wage bill
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As it is in so many other emerging markets, one of the main priorities for Kenya’s government is to tackle its large public sector wage bill. The public sector employs 681,000 people, which is roughly 32% of Kenya’s formal sector workforce of 2.1m, according to the Kenya National Bureau of Statistics. The associated payroll totalled 7.8% of GDP in 2012/13, as per IMF figures, and often requires redirecting resources away from infrastructure and other programmes that would help to foster economic…

Interview

OBG talks to Atul Shah, Managing Director, Nakumatt Holdings
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Interview:Atul Shah What advances have been made in recent years to ease Customs bureaucracy and import duties? ATUL SHAH: For us the most important steps rest with the efforts made to cut down on non-tariff barriers. It now takes just three days to reach Malaba from Mombasa whereas the same journey would previously have taken 10 days owing to numerous roadblocks and delays at weighbridges. As you can imagine, this also cuts down on the scope of corruption. With fewer roadblocks and police…