Main Messages from the people involved as per the full document…
• Kenya will need to navigate through another economic storm in 2011. This will reduce growth to a projected 4.8%, which is still substantially higher than the average of the last decade.
• The decade started on a bullish note for Kenya. In 2010, growth was higher than expected at 5.6 percent. If growth accelerated to 6 percent, Kenya could reach Middle Income Country status by 2019.
• Kenya is at the threshold of a major demographic transition and is urbanizing rapidly. Each year, Kenya will continue to grow by more than one million people, who will live longer, be better educated, and increasingly live in cities. This social and economic transformation needs to be managed well to catalyze its development impact.
Key Recommendations to Respond to the Economic Turbulence
• Maintain macroeconomic stability, contain inflation and further increases in debt. This entails tighter monetary policies and a reduction of the fiscal deficit. If there is a need for additional expenditures in response to external shocks, reallocations seem to be the most appropriate response.
• If high food prices persist and it becomes necessary to cushion the most vulnerable, distribute cash rather than food, if poor families in need can be identified. Given Kenya’s success with ‘mobile money’, this is a more effective approach and one that would also help to build a more robust social protection system.
• Enhance export competiveness. Kenya can leverage its auspicious location and its role as a hub for the larger East African region by upgrading its infrastructure, creating a good business environment, and continuing with regional integration. This would also position Kenya globally and generate additional exports in services and manufacturing. The best way to start making Kenya more competitive is to strengthen its coastal hub and to modernize the port of Mombasa. Key Recommendations to Help Manage Kenya’s Demographic and Geographic Transitions
• Invest in people rather than places. Economic activity will always be uneven, but development can still beinclusive if the government adopts “spatially blind” social policies and provides access to basic services for all Kenyans. As people move to urban areas they will then be in a position to find or to create better jobs.
• Let cities grow and thrive. Kenya will become a predominantly urban country by 2033. Cities are the world’s growth poles. To allow its cities to thrive, Kenya needs to further upgrade infrastructure in and between cities. The more determined Kenya will be in establishing this “connecting infrastructure”, the more likely it will succeed in its development efforts.
• Manage devolution to empower cities, and to provide basic services to rural Kenyans. Even though Kenya is rapidly urbanizing, 42 out of the 47 new counties will be predominantly rural. Devolution will provide opportunities for better accountability and local service delivery. At the same time, there is a risk that Kenya’s medium-sized cities with 100,000 to 400,000 people, will not receive the autonomy and resources they need.
Kenya needs a separate urban tier to help manage rapid urbanization successfully.
Please download the full report here Kenya Economic Update 4