Kenya is the leading economy in East Africa. Its strategic location and its well developed business infrastructure make it a natural choice for investors and many international firms have made it their regional hub. With a free market economy, an active stock exchange and a regional hub for trade and finance in East Africa, Kenya’s economy is reasonably diversified, though dominated largely by agriculture, which contributes to around 25% of GDP. Export of flowers, fruits and vegetables, mainly to Europe, has become the top Kenyan agricultural activity recently, displacing exports of traditional products such as coffee and tea.
The economy has experienced considerable growth in the past few years driven by several factors key of which being the policies that have been put in place by the government. Kenya has become the regional hub for trade, communication and finance in East Africa. It enjoys the region’s best transportation linkages (road, rail, sea and air), communications infrastructure and trained personnel, with a wide range of foreign firms maintaining regional branches or representative offices in the capital.
Agriculture is the largest sector of the economy accounting for approximately 25 per cent of Kenya’s GDP. Horticulture, which comprises cut flowers and fresh vegetables has grown considerably and ranks among the country’s most sophisticated and best developed industries. The tourism sector is the second largest GDP contributor accounting for 12 per cent to the country’s GDP. The strong performance in the sector is attributable not only to continued demand for safaris and beach holidays from traditional European markets, but also from results of successful marketing in new tourist source markets such as China, India and Japan.
In October 2006, the Government unveiled Vision 2030 which is an economic development plan by the Kenyan government to develop several different economic zones in various parts of the country. The plan aims to produce annual economic growth rates of 10%. The overarching vision as stated in the Vision 2030 is to make Kenya a global and competitive and prosperous nation with a high quality of life in the next 25 years, hinged on three key pillars;
- Economic Pillar; Maintain a sustained economic growth of over 10 percent per annum over the next 25 years,
- Social Pillar: Achieve a just and cohesive society, enjoying equitable social development in a clean and secure environment,
- Political Pillar: Develop an issue-based, people-centered, result-oriented and accountable democratic political system.
A key tenet of the Vision 2030 is underpinned by the fact that it transcends any government of the day. The above pillars are anchored on macroeconomic stability, continued government reforms, enhancement of equity and wealth creation for the poor, infrastructure development human resource development and land reforms. The Vision 2030 is a long term process that dedicates focuses during the first initial 5 years. During the lifespan of the Vision, strategies and action plans will be reviewed and adjusted to respond to the changing global, regional and local environment. The Vision 2030 will be delivered on different horizons each defining specific goals and flagship projects.
The main flagship projects as derived from the policy document are in the following key sectors where the government is implementing key projects; Tourism, Agriculture, Manufacturing, Financial Services and infrastructure.
Kenya has easy access to various export market not only to COMESA and EAC, but also the rest of Africa, Asia, the Middle East and Europe. As a transport and communications hub for the sub-region, Kenya is also competitive when trading with distant markets such as the USA, Canada, and Australia. Increased trade with the USA has been enhanced by the African Growth and Opportunity Act (AGOA).
Kenya is a member of various regional organizations which include the East African Community and the Common Market for Eastern and Southern Africa (COMESA) comprising 19 countries with a population of over 400 million. Kenya is also a member of several commercial and economic organizations which make the country a safe and secure place to do business. These include the World Trade Organisation (WTO); the United Nations Conference on Trade and Development (UNCTAD); the African, Caribbean and Pacific/European Unions (ACP/EU) Cotonou Agreement, the International Monetary Fund; the World Bank, the Multilateral Investment Guarantee Agency; and the African Trade Insurance Agency among others.