Kenya

IV

Economy

In 2004 Kenya’s GNP was about US$16,063 million (World Bank estimate), equivalent to US$540 per head. After services, agriculture, including forestry and fishing, is the most important economic sector, accounting for 27 per cent of gross domestic product (GDP) in 2005. Tourism is a vital part of the economy; mining activity is on a relatively small scale. Kenya’s estimated national operating budget in 2002 included expenditure of US$2,717 million and revenue of approximately US$2,401 million.

After World War II Kenya experienced one of the highest rates of economic growth in the world because of large-scale foreign investments and the influx of European management and technical personnel. The colonial government’s policy was to leave economic growth to private enterprise. After independence, Kenya joined with Tanzania and Uganda in 1967 to form the East African Community, which aimed to further the development of a common market in goods and services among the member states; the community was dissolved in 1977 but revived again in 2001.

Following a 3.3 per cent increase in output in 1994, the economy continued to grow in 1995 with decreasing inflation and a 5 per cent growth in GDP. Chief factors hindering prosperity are one of the world’s highest rates of population growth and withdrawal of donor aid from 1991 until 1993, pending economic and political reforms. In February 1996 the World Bank (see International Bank for Reconstruction and Development) approved a loan of US$216 million that had been withheld since 1994, in response to the beginnings of economic reforms made prior to elections in 1997.

A

Agriculture, Forestry, and Fishing

Although only about 4 per cent of the land is suitable for arable production, the Kenyan agricultural system is highly diversified, producing almost every basic foodstuff. Potatoes, coffee, tea, cotton, cereal grains, beans, peanuts, and tobacco are grown in the highlands, the prime agricultural area, while sugar cane, maize, cassava, pineapples, sisal, cotton, and cashew nuts are grown on the coast and in the lowlands. Coffee, tea, pyrethrum, sisal, and horticultural products are the most important export crops.

Livestock breeding and dairy farming are important to the Kenyan economy; in 2005 Kenya had about 13 million head of cattle, 13.9 million goats, 10 million sheep, and 26 million chickens. In 1995 dairy production included about 4,000 tonnes of butter (including ghee, a semi-fluid clarified butter) and about 1.9 million tonnes of cow’s milk.

Kenya’s forests produce mostly hardwoods (musheragi, muiri, mukeo, camphor, musaise) and some softwoods (pids, cedar, cypress). Wattle bark, used in tanning, is an important export item. Output of timber was 27.7 million cu m (978 million cu ft) a year in 1994. Commercial fishing, primarily on inland waterways and lakes, is sufficient to satisfy the local market. The annual catch in 2004 was about 127,902 tonnes.

B

Mining

Kenya has few developed mineral resources, and mining plays only a small role in its economy. Mineral production in Kenya includes soda ash, salt, fluorspar, iron ore, gold, garnets, and limestone. Large deposits of lead and silver have been discovered near Mombasa.

C

Manufacturing

Kenya has one of East Africa’s most diversified manufacturing sectors. However, it is still on a small scale and consists mainly of food- and raw-material-processing for local consumption. Manufacturing amounts to around 12 per cent of GDP. Flour-milling, cement-manufacturing, and oil-refining are among the country’s leading industries.

D

Tourism

Kenya relies on tourism as its greatest source of foreign exchange earnings. In 1994 Kenya attracted over 800,000 visitors annually, yielding revenue of more than US$421 million. Earnings from tourism dipped in 1993 and 1995 because of growing violence and unrest. Tourists primarily visit Kenya’s national parks and game reserves to see and photograph the wildlife; many also enjoy the beaches along the Indian Ocean coastline. Tsavo National Park and Marsabit National Reserve are the country’s two largest parks; the Maasai Mara park, in south-west Kenya, is probably the best known.