Kenya Economy

Kenya Economy



The Kenyan economy before the arrival of the British was based on agriculture and subsistence farming in the interior of the country and on trade with Asia and Arab markets in the coastal areas. At the end of the nineteenth century, Great Britain began to settle militarily and politically in the area and imposed a typically colonial economic structure on Kenya: plantations were created (coffee, tea, wheat and pyrethrum), the Ugandan railway line was built and small manufacturing businesses opened. The indigenous population was almost totally excluded from land ownership. Once independence (1963) was obtained, the government promoted initiatives aimed at encouraging local development: expansion of services to farms, extension of credit to farmers, approved a law on investment protection and the creation of some areas where businesses which destined most of their production to export enjoyed special privileges and incentives (Exporting Processing Zone, EPZ). In the period between 1963 and 1990 the growth rate of the economy was on average 6%, however above all the agricultural sector progressively worsened due to inadequate credit under unfavorable international trading conditions. Between 1991 and 1993 the situation worsened considerably, the GDP stopped growing, inflation reached 100%, the very high demographic push (the average increase index in the years from 1993 to 1998 was 1.7% annual), not accompanied by an adequate expansion of the labor market, made the phenomena of unemployment and underemployment very serious. The economic crisis became endemic, taking on dramatic characters in June-July 2000, due to the severe drought that hit the country. The two major dams were closed due to water shortages and electricity was rationed; the prices of food and gasoline multiplied and the value of the currency plummeted. In 2001, however, the East African Community (made up of Kenya, Tanzania and Uganda) with the aim of promoting the growth of free trade through the harmonization of customs duties. The Kenyan economy (GDP in 2008 amounted to US $ 30,236 million) showed at the beginning of the year 2000 its aspects of serious dependence on foreign capital which introduced typically colonial speculative elements, especially in industry. The same undoubted growth of the national product has in practice enriched the large US and European companies on which the investments made in the country depend, on the one hand, and a small band of already prosperous Kenyan entrepreneurs on the other. The result is an increased well-being of a few, paid for by a very strong deficit in the trade balance, a deficit aggravated by the enormous oil price increases, as Kenya largely depends on imports for its energy needs. The annual income per capita does not exceed US $ 857, international aid is struggling to support the recovery. Nor, finally, the modest process of modernization implemented by the government forces involved the country as a whole; on the contrary, the dualism has been accentuated, which sees the great peasant and pastoral masses opposed, most of the times anchored to the more traditional and scarcely profitable production methods, to the urbanized minorities, generally inserted in technically advanced and more profitable operational structures. On the other hand, social imbalances remain no less serious than economic ones.


More than internal exchanges, which are rather limited, international ones count in the Kenyan economy. A small number of goods are exported, almost all linked to agricultural production (coffee, tea, hides and leather) and petrochemical products, therefore hides and skins, cement, pyrethrum etc.; exports to Uganda and Tanzania and, outside Africa, to the European Union (UK). Imports mainly concern machinery, motor vehicles, consumer goods, crude oil, iron and steel, etc. Even with large fluctuations in the trend of the trade balance, always seriously passive, exports are generally equal to two thirds of imports.

Although there has been a certain improvement, the communication routes are still rather lacking, especially from a qualitative point of view. The main axis is the railway from Mombasa to Nairobi, which then reaches Kampala (Uganda), and which, with its short branches, reaches just 1900 km (2005). A relatively large road network, which extends for a total of 63,200 km (2004), of which only 8900 km are asphalted, connects all the main cities. Air transport ensures various internal connections and with Asian, African and European countries; main airports are Nairobi / Jomo, Kenyatta, Kisumu, Malindi, Mombasa / Moi.

Kenya has represented an atypical case, among underdeveloped countries, of environmental conservation, having created, starting from 1945, a system of restricted areas that has come to cover a high percentage of the entire territorial surface. Tourism has been the first source of currency since 1987, having brought in revenues higher than those of any single export commodity. Towards the end of the nineties of the twentieth century, the difficulties of reconciling the needs of the indigenous population with those of mass tourism fully emerged: the growth of accommodation facilities and the consequent increase in tourists led to an intensive presence and at times scarcely respectful of their own environmental values. Visit for Kenya a country of huge cities and magnificent national parks. The most popular tourist “packages” poured, in the winter season, thousands of people into Nairobi’s airports, Mombasa and Malindi and photographic safaris generated large flows of car transport in terms of number of vehicles and consequent environmental impact, directed towards the parks that have now become “classic” in Tsavo, Amboseli and Masai Mara (the latter also equipped with an airport), along the border with Tanzania, as well as Mount Kenyaand the Meru, further north and the Nakuru and Aberdare parks, in the central-western section of the country. After the crisis caused by the “risk of terrorism” in the years 2003-2004, the tourist flow resumed, registering an increase of 26% in the following year. Chinese visitors increased significantly (1,479,000 in 2005).

Kenya Economy