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Kenya Economy - The Economy of Kenya is Vibrant and Fully LiberalizedThe Kenya economy is classified as a developing but stable one. It has undergone extensive liberalization over the last 2 decades and is now is fully liberalized with a heavy private sector presence. The Kenya economic growth has averaged around 3 percent per annum over the last couple of years. The Gross Domestic Product (GDP) stood at an estimated US$ 31.4 billion in 2008. The key sectors of the economy of Kenya are agriculture, manufacturing, tourism, fisheries, mining, energy, telecommunications and finance. AgricultureThe Kenya economy is heavily dependent on agriculture which accounts for nearly a quarter of the GDP.
Coffee and tea are the principal exports. However, flowers and horticulture are playing increasingly important roles as foreign exchange earners. Agriculture plays a key role in the country's economy despite the fact that upwards of 85 percent of Kenya is classified as arid or semi-arid, leaving arable land at a mere 15 percent of the total land area. Nevertheless, over-dependence of the country on rain-fed agriculture sector leaves the country vulnerable to the vagaries of weather. ManufacturingAlthough Kenya is the industrial giant of the region, manufacturing only accounts for about 14 percent of GDP. This underlines the enormous untapped potential of this sector of the economy of Kenya. The sector is dominated by food processing industries such as grain milling, sugarcane processing and beer production. Enactment of the African Growth and Opportunity Act (AGOA) by the US Congress helped stimulate exports in new areas such as textiles. Exports of these to the US alone increased more than six-fold from US $44 million in 2000 to US$270 million in 2006. Tourism
In 2007, the sector's earnings topped US$ 1 billion, making the sector Kenya's largest foreign exchange earner. 2 million tourists came to the country in 2007, an increase of 12.5 percent over the 2006 figure. The main tourist attractions are the country's world renowned national parks and beaches. FisheriesThere is a thriving fisheries sector in Kenya, particularly along the Indian Ocean coast and lake Victoria. Although this is mostly used to satisfy local protein requirements, there are substantial exports of Nile Perch to the EU. MiningKenya has no significant mineral endowments. In fact, this sector's contribution to the country's GDP is estimated to be less than 1 percent and is mostly attributable to the soda ash extraction operations around Lake Magadi. Other minerals that occur in nominal quantities are gold, fluorspar, limestone, salt and a number of semi-precious stones such as rubies, sapphires, amethyst, topaz and kyanite. EnergyAs in other countries, energy under-girds the Kenya economy. Kenya Electricity Generating Company (KenGen) enjoys a virtual monopoly over power generation in the country... It generates 80 percent of the electricity consumed in Kenya with the rest either supplied by independent power producers or imported from neighboring Uganda. KenGen produces power from a variety of sources namely; hydro, geothermal, thermal and wind although the former is main one. Kenya has no proven hydrocarbon reserves and imports all its crude petroleum requirements from the Middle East. Upwards of 25 percent of the national import bill is attributable to petroleum imports. TelecommunicationsIn recent years, the telecommunications sector has become one of the vibrant facets of the economy of Kenya. The country's telecommunications sector has witnessed an exponential growth since it was liberalized about a decade ago. The major actors in this market are Safaricom, Zain, Telkom Kenya and Econet Wireless. Safaricom, headed by South African business guru Michael Joseph, is the country's leading mobile telephony operator and commanded a market share of 84 percent as at March 31, 2008. Financial SectorThe financial sector is also a major driver of the Kenya economic growth. The biggest banks in the country are Kenya Commercial Bank and Equity, Standard Chartered and Barclays. Other players in the financial sector include 83 foreign exchange bureaus, mortgage companies and a plethora of micro finance institutions. Exports and ImportsIn 2008, it is estimated that fob value of the Kenya's exports amounted to US$ 4.7 billion. The main exports are tea, horticultural products and coffee. In 2008, the country's import bill is estimated to have amounted to US$ 9.5 billion. The chief Kenyan imports are crude oil, transport equipment, machinery, motor vehicles, chemicals and steel. Foreign Direct InvestmentForeign direct investment (FDI) is one of the major facets of the Kenya economy. The major sources of FDI are UK and the USA. To stimulate investment and the growth of the Kenya economy, the government has created a one-stop shop, the Kenya Investment Authority and implemented a series of regulatory reforms. It has also put in place a number of fiscal incentives such as waiving duty on raw materials and capital equipment as well as tax holidays.
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In addition, upwards of 75 percent of the population are directly or indirectly employed in this sector.
Tourism accounts for 10 percent of the country's GDP and is the third largest contributor to the country's GDP after agriculture and manufacturing.
