Economic and Political Overview

flag Kenya Kenya: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Kenya has enjoyed a decade of strong economic growth, allowing the nation to access the status of middle-income country in 2016. Kenya was one of the fastest-growing economies in Sub-Saharan Africa and growth was only partially affected by the Covid-19 pandemic, with GDP contracting 0.3%. The country returned to its growth path in 2021 (7.5%) and in 2022 (5.3% as per the IMF estimates), driven by broad-based increases in services and industry, whereas the agricultural sector’s performance was hampered by drought (the most severe in the last forty years). According to the IMF, Kenya’s medium-term growth prospects remain positive with GDP projected to grow by 5.1% this year and 5.5% in 2024 notwithstanding current global and domestic shocks, backed by private sector credit expansion, a near-term recovery in agricultural production, and high commodity prices favourable to the country’s exports.

Concerning public finances, the COVID-19 pandemic and the Russia-Ukraine war contributed to lower international reserves and a widening current account deficit, estimated at 5.9% of GDP – USD 6.9 billion according to Fitch Ratings. Exchange rate flexibility has helped absorb some of the external pressure, but foreign-currency liquidity has tightened (to USD7.2 billion as of November 2022, down from USD 9.5 billion at the end of 2021) and currency depreciation has increased Kenya's external interest servicing in shilling terms. For 2023 and 2024, Fitch Ratings expects the current account deficit to remain stable. The debt-to-GDP ratio rose to 69.4% in 2022 (from 67.8% one year earlier), and is projected to follow a downward trend over the forecast horizon – to 67.5% this year and 64.6% in 2024 according to the IMF – although external debt service should rise to 24.8% of current external receipts by 2024. Similarly, an improved revenue performance helped the fiscal deficit narrow to 6.2% of GDP in FY22, down from 8.2% in FY21. Inflationary pressures increased over the course of the year due to a rise in food prices caused by the drought that affected the country, as well as global supply shocks, resulting in an average inflation rate of 7.4%. For 2023, the IMF expects the rate to moderate marginally to 6.6%, followed by 5.1% in 2024, below the 5.9% average recorded between 2017-21. In order to achieve this target, the Central Bank of Kenya raised the main policy rate three times in 2022, by a total of 175bp. Kenyan authorities remain committed to the 38-month program under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements (worth USD 2.34 billion) approved by the IMF in April 2021. This program aims to reduce debt vulnerabilities by raising tax revenues and tightly controlling spending while safeguarding resources to protect vulnerable groups (IMF). The third review under these arrangements was completed in July 2022, providing Kenya access to about USD 236 million of funding. The new government will also pursue the previously launched Big 4 development agenda: the program, which is part of the long-term development plan of the country “Vision 2030”, prioritizes four major areas: manufacturing, universal healthcare, affordable housing and food security. Kenya relies heavily on international portfolio investment inflows, which makes the local currency highly vulnerable to potential capital outflows and decreasing global risk appetite.

The country has been invested in reducing child mortality, meeting this Millennium Development Goals (MDGs) target. Kenya also managed to almost reach universal primary school enrolment, while narrowing gender gaps in education. The unemployment rate was estimated at 5.7% in 2021 (World Bank). Kenya’s total workforce is projected to increase by 40.6% to 40.4 million by 2035; as data from the Kenya National Bureau of Statistics (KNBS) indicate the country will add 11.7 million to the job market by 2035, this may cause mounting unemployment in an economy that is not generating adequate jobs for school leavers and college graduates. Overall, the country’s GDP per capita (PPP) was estimated at USD 6,122 in 2022 by the IMF, while the World Bank macro poverty outlook estimates the country’s ratio of extremely poor (living below USD 1.9 a day) reduced from 19.2 million or 35.7% of the population in 2020 to 18.8 million or 34.3% in 2021.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 113.70112.75115.08122.39130.14
GDP (Constant Prices, Annual % Change) 4.85.05.35.35.4
GDP per Capita (USD) 2,2452,1882,1942,2942,398
General Government Gross Debt (in % of GDP) 68.470.268.366.765.0
Inflation Rate (%) n/a7.76.65.45.4
Current Account (billions USD) -5.86-5.49-5.64-6.29-6.63
Current Account (in % of GDP) -5.1-4.9-4.9-5.1-5.1

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Kenya is particularly advanced in the sector of services and has been the source of innovations adopted throughout the continent (for example, it was the first country to sell government bonds through mobile phones). It is also the third-largest producer of tea and first exporter (in volume) in the world, the 8th producer of dry beans, the 15th producer of oilseeds, and is among the 20 largest coffee exporters (FAO). The primary sector represents 22.4% of Kenyan GDP and employs 54% of the workforce (World Bank, latest data available), making agriculture and horticulture the two largest sectors of the national economy. Coffee, wheat, sugarcane, fruit and vegetables are among the main crops, and dairy products, beef, fish, pork, poultry, and eggs are the main animal products. The country exports tea, coffee, cut flowers and vegetables. According to the World Bank, the agriculture sector contracted by 1.5% in the first half of 2022 amid the worst drought in 40 years.

Industry accounts for 17% of the GDP and employs only 6% of the workforce. Although the country has little in terms of mineral resources, some high-value minerals, such as titanium, have considerable potential. In addition, Kenya could become an oil and gas producer in the years to come, as new oil deposits (with a potential of 750 million barrels) were found following the drilling of exploration wells in the Turkana County (North-West). The manufacturing sector is estimated to account for 7% of GDP, with the processing of agricultural products as the main subsector.

The services sector contributes to 54.4% of the GDP and employs 39% of the workforce. Tourism, a core sector of the Kenyan economy, has been hit by several terrorist attacks carried out by the Al-Shabab group since 2013. According to a performance update by the Kenya Tourism Board, the total number of arrivals in Kenya in the period Jan-Nov 2022 grew by 74.5% compared to the same period one year earlier, recording more than 1.3 million arrivals (70.2% of the level recorded before the pandemic). Manufacturing and financial industries, although modest, are among the most sophisticated in East Africa. The IT and communications sectors are expanding rapidly and the construction industry is very dynamic. The growth pace of transport, medicine, education and financial services makes Kenya a regional hub. Furthermore, Mombasa is the third-largest port in Africa.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 33.0 15.7 51.2
Value Added (in % of GDP) 21.2 17.7 55.1
Value Added (Annual % Change) -1.6 3.9 6.7

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Kenyan Shilling (KES) - Average Annual Exchange Rate For 1 MUR 2.873.002.992.872.71

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
54,9/100
World Rank:
138
Regional Rank:
28

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
4.58/10
World Rank:
75/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Kenya is relatively open to foreign trade, which accounts for 31% of its GDP (World Bank, latest data available). The country remains committed to trade liberalization through its membership in the World Trade Organisation (WTO), the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC), which includes Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan. Kenya also ratified the African Continental Free Trade Agreement and signed many bilateral trade agreements. The country is currently negotiating a free trade agreement with the United States and is one of the top five beneficiaries of the US-Africa trade initiative, the African Growth and Opportunity Act (AGOA). Moreover, in 2022 the two countries launched the U.S.-Kenya Strategic Trade and Investment Partnership. Most tariff barriers have been eliminated and customs duties are not very high. Kenya mostly exports agricultural products (tea, flowers, coffee, fruits, and vegetables), petroleum oils, titanium ores, iron and medicines; and mainly imports petroleum products, palm oil, medicines, cereals, vehicles, and manufactured products.

The country's main customers are Uganda (12.3%), the Netherlands (8.3%), the United States (8%), Pakistan (7.2%), the United Kingdom (6.7%), and Tanzania (6.1%); whereas its main suppliers are China (20.5% of total imports), India (10.8%), the United Arab Emirates (8.3%), Saudi Arabia (5.3%), Japan (4.6%), Malaysia (4.4%) and the United States (4.1% - data Comtrade).

Kenya imports almost three times more than it exports, which translates into a trade balance that is largely in deficit. This situation persists, due to imports related to infrastructure modernization and oil exploration. In 2021, total goods exports reached USD 6.7 billion whereas imports amounted to USD 19.5 billion (+11.6% and +26.7% y-o-y, respectively). The bill of import for services stood at USD 4 billion, slightly below that of export (USD 4.6 billion). Overall, the negative trade balance was estimated at 9.5% of the country’s GDP (up from -8% one year earlier – data World Bank). Although official figures for 2022 are not available yet, Kenya’s exports suffered from the severe drought that hit the country: as an example, in the first nine months of the year overseas sales of black tea (the main export) dropped 22% in volume terms compared to the same period one year earlier (marking the first decline in five years).

 
Foreign Trade Indicators 20182019202020212022
Imports of Goods (million USD) 17,37817,65515,43519,55921,166
Exports of Goods (million USD) 6,0525,8396,0346,7397,411
Imports of Services (million USD) 3,8813,8553,3273,9995,000
Exports of Services (million USD) 5,4775,6013,6585,0366,926
Imports of Goods and Services (Annual % Change) 1.41.8-9.422.24.5
Exports of Goods and Services (Annual % Change) 6.8-3.2-14.915.310.7
Imports of Goods and Services (in % of GDP) 21.920.317.619.921.5
Exports of Goods and Services (in % of GDP) 12.511.49.610.812.2
Trade Balance (million USD) -10,200-10,683-8,338-11,065-11,704
Trade Balance (Including Service) (million USD) -8,603-8,937-8,008-10,028-10,547
Foreign Trade (in % of GDP) 34.431.827.230.733.7

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
Uganda 10.3%
United States 9.8%
Pakistan 8.2%
Netherlands 6.7%
Tanzania 6.3%
See More Countries 58.6%
Main Suppliers
(% of Imports)
2022
China 18.2%
United Arab Emirates 16.4%
India 10.1%
Saudi Arabia 4.9%
Malaysia 4.8%
See More Countries 45.6%

Source: Comtrade, Latest Available Data

 
 

Main Products

6.6 bn USD of products exported in 2022
Tea, whether or not flavouredTea, whether or not flavoured 21.0%
Cut flowers and flower buds of a kind suitable for...Cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared 9.5%
Coffee, whether or not roasted or decaffeinated;...Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion 5.0%
Titanium ores and concentratesTitanium ores and concentrates 3.8%
Dates, figs, pineapples, avocados, guavas, mangoes...Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried 2.5%
See More Products 58.2%
21.1 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 24.0%
Palm oil and its fractions, whether or not refined...Palm oil and its fractions, whether or not refined (excl. chemically modified) 5.1%
Wheat and meslinWheat and meslin 3.1%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.7%
Flat-rolled products of iron or non-alloy steel,...Flat-rolled products of iron or non-alloy steel, of a width >= 600 mm, hot-rolled, not clad, plated or coated 2.5%
See More Products 62.6%

Source: Comtrade, Latest Available Data

 
 

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Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Tourism
Ministry of East African Community (EAC), Labour and Social Protection
Ministry of Agriculture, Livestock and Fisheries
Ministry of Mining
Ministry of Transports and Infrastructure, Housing and Urban Development
Ministry of Industrialisation, Commerce and Cooperatives
Ministry of Energy and Oil
Statistical Office
Kenya Bureau of Statistics
Central Bank
Central Bank
Stock Exchange
Nairobi Securities Exchange
Search Engines
Google Kenya
Economic Portals
Kenya Moja

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Political Outline

Current Political Leaders
President: President William Ruto (since 13 September 2022)
Vice President: Rigathi Gachagua (since 13 September 2022)
Next Election Dates
Presidential: 2027
National Assembly: August 2027
Main Political Parties
The main active parties in Kenya include:

- United Democratic Alliance (UDA): liberal conservatism, centre-right. It is the current ruling party
- Amani National Congress (ANC): social-liberalism
- Forum For Restoration of Democracy-Kenya (FORD-Kenya): centre-left, social democracy
- Orange Democratic Movement (ODM): centre-left, promotes social democracy. It is currently the main opposition party
- Jubilee Party: centre-right to right-wing
- Wiper Democratic Movement–Kenya (WDM-K): centre-left, social democracy
- Kenya African National Union (KANU): centre-right, nationalist; it ruled for nearly 40 years after Kenya's independence.
Type of State
Federal democratic presidential republic.
Executive Power
The executive power consists of the President, who is directly elected for a five-year term (and can serve for a maximum of two terms), an elected Vice President and the Cabinet (subject to confirmation by the National Assembly). The President is the head of state and government, commander-in-chief of the armed forces and also chairs the National Security Council.
Legislative Power
The legislature consists of the National Assembly and the Senate. The National Assembly has control over the nation's expenditure and the distribution of revenue between the two levels of government. The Senate represents the country's 47 counties and serves their interests and those of county governments.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
102/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Kenya, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: December 2023