Economy of Kenya
Kenya’s economy is market-based, with some
state-owned infrastructure enterprises, and
maintains a liberalized external trade system.
The economy’s heavy dependence on rain-fed
agriculture and the tourism sector leaves it
vulnerable to cycles of boom and bust. The
agricultural sector employs nearly 75 percent
of the country’s 37 million people. Half of the
sector’s output remains subsistence produc-
tion.[1]
Kenya’s gross domestic product (GDP)
growth rate declined continuously from a
peak of about 6.5 percent per year during the
first decade after independence to less than 4
percent per year in the following decade, to
only about 1.5 percent per year during the
1990s. It has experienced an upturn to more
than 5 percent per year since 2004. Several
decades of declining economic performance,
combined with rapid population growth,
translated over time into reduced income per
head, increased poverty, and worsening un-
employment. Between the 1970s and 2000,
the number of Kenyans classified as poor
grew from 29 percent to about 57 percent.[1]
Kenya’s economic performance has been
hampered by numerous interacting factors:
heavy dependence on a few agricultural ex-
ports that are vulnerable to world price fluc-
tuations, population growth that has out-
stripped
economic
growth,
prolonged
drought that has necessitated power ration-
ing, deteriorating infrastructure, and ex-
treme disparities of wealth that have limited
the opportunities of most to develop their
skills and knowledge. Poor governance and
corruption also have had a negative impact
on growth, making it expensive to do busi-
ness in Kenya. According to Transparency In-
ternational, Kenya ranks among the world’s
half-dozen most corrupt countries. Bribery
and fraud cost Kenya as much as US$1 bil-
lion a year. Kenyans, 23 percent living on
less than US$1 per day, pay some 16 bribes a
month—two in every three encounters with
public officials. Another
large drag on
Kenya’s economy is the burden of human im-
munodeficiency virus/acquired immune de