KENYA: A look at Kenya's economic history as the country celebrates its 50th independence year

Record ID: 362799

  • Title: KENYA: A look at Kenya's economic history as the country celebrates its 50th independence year
  • Date: 11th December 2013
  • Summary: NAIROBI, KENYA (FILE) (REUTERS) VARIOUS OF HIGHWAY STREET SCENES
  • Embargoed: 26th December 2013 12:00
  • Keywords:
  • Location: Kenya, Netherlands
  • City:
  • Country: Netherlands
  • Topics: Politics
  • Reuters ID: LVAE4VND8NYV5GU3QXGC07IIFP65
  • Story Text: It was the dawn of a new era. In 1963, Kenya inaugurated its first African leader, Jomo Kenyatta after nearly seven decades of colonial rule.
    Expectations were high that Kenyatta would steer the East African nation towards economic and social development for the majority black population.
    But Kenyatta's reign was short-lived. He died in 1978. His then Vice President, Daniel Arap Moi took over as the country's new head of state.
    During Moi's 24 year tenure, however, Kenya slipped into deep levels of corruption and mismanagement. Moi also continued a one party state policy instituted by Kenyatta.
    Kenya's economy, which had experienced moderate growth rates during the 1960s and 70s, slumped to an all time low of 1.3 percent between 1997 and 2003.
    The country remained dependent on agricultural exports like tea, coffee and the tourism industry.
    Tourism is Kenya's second-largest source of foreign exchange after agriculture. It pumped 1.2 billion US dollars into the economy last year and employs 150,000 people.
    Economic analyst, Aly-Khan Satchu describes the Moi era as a period of stagnation for Kenya with the economy only starting to pick up after 2002.

    "I look at the Moi era as a period of no motion, there was no motion, you know. Unless you well connected you were able to navigate that sort of scenario, you weren't going to really get on. I don't think it was a system built on meritocracy and essentially now, I think we are much more meritocratic society and you need to be meritocratic. I think increasingly we are seeing that," he said.
    Kenya's economy has yet to return to the 7 percent plus growth pace it reached in 2007 before election violence slowed it down. The economy grew 4.5 to 5 percent in 2012.
    Still, the country boasts an 80 percent literacy level and despite stiff competition from neighbours like Tanzania, Kenya is still the region's economic leader.
    It is these factors that attracted make up artist and entrepreneur, Suzie Wokabi back home from the US where she had lived for nearly ten years.
    Wokabi developed the first Kenyan owned make-up range for black women called 'Suzie Beauty.' Suzie Beauty retails at small distribution kiosks like this one at high end malls across Nairobi.
    Suzie is part of an emerging middle class with a big consumer appetite driving growth in the country.
    In its first year in 2009, the make-up company made about 12 million Kenya shillings (about 138,000 US Dollars).

    "I've never used Kenyans. I usually use from Sweden, England but I've seen a difference and definitely we would want to promote our locals," said Esther Thuo, a Suzie Beauty customer.

    "We've touched a patriotism in our clients because they are like ninety-nine percent of them say, it's Kenyan, I'm going to try it. It's buy you for us, I'm going to definitely try it and they keep coming back. Once in a while I will hear my sale girls say, oh that's Kenyan that's why I won't try it, which is really sad," added Wokabi.
    Still, at an average 1,000 Kenya Shillings (about 11 US Dollars), Suzie's products remain out of reach for many Kenyans.
    Poverty is endemic in the country with an estimated 2 million people living in slums in Nairobi alone.
    The government says it has instituted a development plan dubbed 'Vision 2030' to turn Kenya into a middle-income country by the year 2030.
    But critics say, Kenya still struggles with top level corruption and inflated bureaucracy, making it difficult to implement development policies.

    "My concerns you know are around, can we create enough jobs? I don't see any job plan that's getting me interested. Are we going to be able to meet the expectations of our Kenyan people because their expectations today are not what their expectations were in the 90s, the 80s and the 70s and the 60s, totally different right and they want it now and I think this problem is going to now happen across the continent and the question is how does the government deal with that," said Satchu.
    Kenyan leaders have been leveraging China's expanding ties with Africa to help fund development, especially because countries like China have few conditions attached to their assistance, while the west holds ongoing cases at the International Criminal Court against President Uhuru Kenyatta and his Deputy, William Ruto over Kenya's head.
    Kenyatta and Ruto face charges related to the violence after Kenya's 2007 elections, in which 1,200 people died. Both deny the charges and have tried to have the cases adjourned or halted.
    But Satchu warns that shifting east is a boost but not an alternative for Kenya's economy.

    "We are very, very international facing. Thirty percent of our exports go to Europe. I think one percent goes to China. China is an irrelevance other than writing big cheques which is a good thing and I like it and they are building our roads but at the end of the day when you look at our trade relationships, you look at the stock market; there's not a single Chinese investor I know in the stock market and please find them for me, I'd love to know about them. There are UK investors, there are US investors, there are European investors not a single Chinese investor," he said.
    Like many African countries, however, Kenya continues to be regarded as an emerging frontier market.
    Kenya is one of the continent's leading players in the mobile and IT development market.
    The East African powerhouse also has proven deposits of titanium, gold and coal and is also estimated to hold significant deposits of copper, niobium, manganese and rare earth minerals.
    As the country marks its 50th year of independence, Kenya seems poised for an economic growth spurt but only if it can overcome the variety of challenges.
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