Restoring African Economies: A Kenyan Outlook

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For the longest time, Africa has been regarded as a hub of extraction, with a history of colonialism that resulted in colonialists exporting raw materials and labor from the continent at little or no fee at all. However, Africa is rewriting the pages of history, and taking charge of its economic well-being. 

No longer are African leaders basing their economies solely on the extractive industries, they are spreading their wings to different sectors that will benefit the continent’s economic status. To date, Africa has been said to be the second-fastest-growing economic region after Asia, and forecasts predict the momentum to be maintained as the continent has many factors working in its favor.

Although the continent’s economic status is on the rise, the rate at which different countries on the continent are growing economically is not at par. One country that has seen remarkable growth and is implementing economic policies that will assert its economic dominance is Kenya.

Kenya in history

Strategically situated to the east of the continent with access to the Indian Ocean, the country long enjoyed trade relations with the Arabs due to its proximity to the Arabian Peninsula. The advent of Portuguese settlers in the territory resulted in diminishing Arab influence. During this period, the port of Mombasa became a crucial restocking stop for ships bound for the Far East. The region was at one time under the leadership of the Iman of Oman, and finally under the British until the country attained independence.

Key economic drivers

Kenya has many factors working to establish its status as the leading economy in East Africa. The country has a skilled labor force, an organized port that ensures the entry of goods into East and Central Africa, fertile land as well as natural features that make it an attractive tourist destination. Above all, the Kenyan government is dedicated to implementing economic policies aimed at economic growth and development.

Read also: Why Kenya will reap big from blue economy

Significance of Port of Mombasa

The Port of Mombasa is the gateway of goods to Eastern and Central Africa, which boosts economic activity for Kenya. The port is increasingly becoming busier, with more shippers transporting to the port. To keep up with the increase in traffic at the port, the Kenyan Port Authority is investing in infrastructural and technological development, which will have a direct impact in increasing the volume of goods that will arrive through this port. To date, there is a 25-year plan being implemented in significant expansion for the port.

Vibrant farming community

Agriculture

The majority of African economies are agriculture-based, and Kenya is no exception. With vast arable lands, the country is a world-renowned exporter of tea, coffee and fresh flowers. Kenya’s agriculture sector employs about 40% of the Kenyan population and contributes about 26% of the country’s GDP. The East African country is recorded to be the world’s largest producer of black tea and cut flowers, with the major market for these being Europe. 

Being such a significant exporter helps with the balance of trade in the country’s economy and makes it a force to reckon with on the international agriculture domain. Although food security remains a concern for the country, the government is invested in implementing solutions to curb challenges in the agricultural sector.

Tourism

Boasting a rich cultural heritage, white sandy beaches, clear blue sky, the warm current of the Indian Ocean and a variety of wildlife, Kenya is a much-enjoyed tourist destination. In 2019, tourism rose in the country by 3.9% with earnings amounting to $1.6 billion. The country is said to come behind South Africa and Nigeria in tourist visits, which is a significant portion of the Sub-Saharan tourism market share. 

Although the Covid-19 pandemic has affected tourism in the country, the situation is expected to improve once this crisis has ended. As the Kenyan government continues to implement policies favorable for tourists and investors, this sector is set to be of greater commercial importance to the economy.

Supporting ICT

ICT and e-commerce

Kenya has quickly adapted to the ICT revolution, with significant investment in ICT solutions throughout the country. One of the revolutionary e-solutions adopted by the country is the mobile money wallet, MPesa, which was a pioneer of its kind on the continent. 

The widespread use of this mobile money platform in Kenya has resulted in ease of transacting, thereby directly influencing business in the country. AliExpress, one of the largest e-commerce companies in the world, adopted the MPesa as a payment method for Kenyan customers as it realized the financial benefits of utilizing a platform that has over 21 million customers.

 Tech hubs, which are innovation and business domains, are also finding establishment in Kenya. As a result, Kenya is realizing creative tech solutions whilst also attracting investments from big tech investors from Silicon Valley.

Strategic membership to economic blocs

It is without a doubt that economic alliances are crucial to the growth of any economy. As such, Kenya’s membership in the East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) has a direct positive impact on commerce in the country. With the easing of trade as a member of these economic blocs, Kenya has a market of over 400 million consumers at its disposal.

Kenya boasts of a young innovative population

Advantages of a young and skilled population

The Kenyan labor force is filled with a young, educated and enthusiastic population. The benefits associated with the creation of a young middle-class population are the availability of consumers for goods and services (which in turn boosts the country’s economy) and innovative, creative minds that will come up with solutions to problems common to the society. With most of the developed world facing a drastic population gap, Kenya is at a competitive economic advantage with a youthful population.

Government policies

As the Kenyan government has been on a reformative journey to grow the economy, it has implemented policies that ease business investment and grow the relevant sectors of the economy. This has resulted in increased foreign direct investments as there is renewed trust in the government. 

There has also been significant infrastructural development which is beneficial for the Kenyan economy as a whole. Not to be left out of the green revolution, the government has also invested in geothermal power stations, which supply about 38% of the country’s power. With the country already being the leading economy in East Africa, Kenya is a powerhouse to watch out for.

 Read also: How Kenya managed to grow its economy by 6.3%

 

 

 

 

 

 

 

 

 

 

Evelyn is a finance and business content writer with a passion for business news in Africa. Her expertise is in analyzing African equities and telling the truth when it comes to doing business on the continent!

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