Economy
From The Report: Kenya 2016
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Kenya’s economic outlook for the years ahead looks robust, despite recent challenges such as a trade deficit and rising debt. Following 2014’s GDP rebasing, the country is now East Africa’s largest economy and boasts a prominent profile in the EAC. According to official forecasts, growth is expected to be around 6.5-7% in 2015 and to continue at a similar level for the coming years. This follows on from growth of 5.3% in 2014 and 5.7% in 2013. Agriculture was the biggest sector, at 27.3% of GDP by activity, in 2014 and it also accounts for roughly two-thirds of all exports and supports as much as 80% of the rural population directly or indirectly. The second-largest contributor to GDP in 2014 was manufacturing, at 11%.
This chapter contains interviews with Henry Rotich, Cabinet Secretary, National Treasury; Cecilia Malmström, EU Trade Commissioner; Moses Ikiara, Managing Director, Kenya Investment Authority; and Carole Kariuki, CEO, Kenya Private Sector Alliance.
Articles from this Chapter
Rising star: The economy is growing and moving full speed ahead
Come closer: A new FTA promises much if the initial hurdles can be clearedOBGplus
After seven years of negotiation, the signing of the Tripartite Free Trade Agreement (TFTA) in June 2015 is being heralded by many in Kenya as a turning point in regional integration. The TFTA is an integration initiative pursued by three of the continent’s regional economic communities – the EAC, the Common Market for Eastern and Southern Africa, and the Southern African Development Community. The agreement will create a 26-member integrated economic entity covering 17.3m sq km and creating…
Expanding market access: OBG talks to Henry Rotich, Cabinet Secretary, National TreasuryOBGplus
Interview:Henry Rotich What measures can be taken to broaden Kenya’s tax base without having an adverse effect on the country’s overall attractiveness to investors? HENRY ROTICH: In 2013 we modernised and rationalised our legislation on value-added tax to remove as many exemptions and loopholes from the tax code as possible. The list of exemptions has been reduced from about 430 items to 40, with a notable effect in terms of increasing revenues. At the same time, to maintain the attractiveness…
Meeting halfway: OBG talks to Cecilia Malmström, EU Trade CommissionerOBGplus
Interview: Cecilia Malmström What were the sticking points during the negotiation of the 2014 economic partnership agreement (EPA) with the EAC? CECILIA MALMSTRÖM: If I had to list the three main issues that the negotiations had to resolve, I’d say they all revolved around the development dimension of the partnership that we were seeking. First of all, the agreement had to be adapted to the ambitious regional integration project being pursued by the EAC. We also had to ensure that the timing…
Working together: Public-private partnerships (PPPs) may be the key to getting projects up and runningOBGplus
The country has a huge need to develop infrastructure and provide services, and the government acknowledges that it cannot succeed alone. Gabriel Negatu, the African Development Bank’s (AfDB) regional director for East Africa, told OBG that Kenya had a KSh206.7bn ($2.3bn) gap to fill in financing infrastructure for which the private sector will be needed. The government is therefore adopting a PPP model and encouraging more private firms to help finance, build and operate projects. Cabinet Secretary…
In the zone: A new plan for SEZs should help to shake up the country’s offering for investorsOBGplus
The pilot phase of Kenya’s special economic zones (SEZs) is expected to be in force in the first quarter of 2016, after President Uhuru Kenyatta signed the law in September 2015. The government aims to set up the first three zones in Kisumu, Mombasa and Lamu. In June 2015 Cabinet Secretary of the National Treasury Henry Rotich stated in his 2015/16 budget statement that the government had allocated KSh3bn ($33m) for industrial development, including SEZs. Diversifying manufacturing and creating…
Getting investor-ready: OBG talks to Moses Ikiara, Managing Director, Kenya Investment Authority (KenInvest)OBGplus
Interview:Moses Ikiara What is the biggest obstacle faced by prospective foreign investors in Kenya? MOSES IKIARA: The single biggest obstacle for foreign investors is the lack of enough investor-ready projects. Vision 2030 is transformative, and it has brought with it many investment opportunities across many sectors, including agriculture, agro-processing, tourism, manufacturing, mining and real estate. However, most of these projects have not been subjected to feasibility and bankability…
Open for business: OBG talks to Carole Kariuki, CEO, Kenya Private Sector Alliance (KEPSA)OBGplus
Interview:Carole Kariuki What would you identify as the main obstacles to doing business in Kenya? CAROLE KARIUKI: While significant progress has been made in terms of improving the business environment, there is still much work to be done, and making it easier to do business has been adopted as a central focus by both the government and the private sector. Some of the most pressing issues are the number of procedures, transaction costs and delays related to acquiring construction permits.…
Regional ties: The EAC is creating a range of new economic opportunitiesOBGplus
The EAC, which comprises the member states Burundi, Kenya, Rwanda, Tanzania and Uganda, is one of the most integrated economic blocs on the continent, with intraregional trade accounting for roughly 30% of overall trade volumes – three times as much as the Economic Community of West African States or the Arab Maghreb Union in North Africa. The community has been pushing forward with closer ties, however. In 2008 members agreed to an extended free trade area, and in 2010 it began the process of…
Staying busy: The 2015/16 budget is full of new proposals and plans for the year aheadOBGplus
Like much else in Kenya, the fiscal policy as outlined in the 2015/16 budget statement is focused on “fast-forward” development. Spending on infrastructure and support for businesses are aimed at driving growth, which the government has forecast at 6% in 2015 and the coming years. When Cabinet Secretary for the National Treasury Henry Rotich presented his 2015/16 budget statement to parliament in June 2015 – Kenya’s fiscal year starts on July 1 – he outlined plans for a big expected increase…
Safety first: An increased emphasis on security is set to reassure investors and bolster tourism arrivalsOBGplus
The government has made strengthening security and improving confidence a priority and it is not difficult to see why. Security concerns – a result of recent terrorist incidents, including the April 2015 Garissa University attack and the 2013 Westgate Mall attack – have had a noticeable impact on certain sectors of the economy. The most affected has been tourism, a key foreign exchange earner, with knock-on effects for airlines, banks and many others. Tourist numbers fell 11.1% year-on-year (y-o-y)…
Running a tight ship: With the shilling dropping and a high deficit, the central bank is pushing for new optionsOBGplus
The government has stepped up spending in a bid to push growth back up to 6.5-7% from the 2014 level of 5.3%. In his June 2015 budget statement for the 2015/16 fiscal year, Cabinet Secretary for the National Treasury Henry Rotich said the government also aims to maintain macroeconomic stability and counter challenges such as security, drought, lower tourism numbers and tea prices, and a weaker global economy. Low rainfall from October-December 2014 pushed up food prices and coupled with the declining…
