Kenya Economy

Market Based

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Kenya economy is market-based and enjoys a liberalized external trade system. The economy of Kenya has a large dependency on rain-fed agriculture as well as on tourism. Both leave themselves vulnerable to cycles of boom or bust.

Kenya trade partners include the UK, Saudi Arabia, Iran, Japan, Germany, the USA, Tanzania Zambia, and the Netherlands.

The official currency is the Shilling (KSh) divided into 100 cents.

20 note Kenya Schilling

Hindrances

A rapid growth in population together with several decades of economic decline has reduced available income per person, increased poverty, and made unemployment worse.

Kenya economy also suffers from a deteriorating infrastructure and little wealth is available to the average citizen to develop their skills and knowledge.

Poorly run and corrupt governmental systems make it expensive to do business in Kenya and further hinders economic growth.

Of huge concern is the epidemic proportions of HIV/AIDS sufferers. Many are too weak to work, let alone provide the basics for their families. The medical costs to treat patients is staggering.

Government Policies

After Kenya received it's independence, the government promoted an economic recovery plan through public investment, and incentives for private industrial investment with hopes to improve the Kenya economy.

By 1990, however, it was clear that inappropriate agricultural policies, inadequate credit, and poor terms of international trade had all contributed to the deline in agriculture, a huge sector of Kenya's economy.

Kenya's policy of import substitution and rising oil prices made its manufacturing sector uncompetitive. Lack of export incentives, too tight import controls, and foreign exchange controls made investment in Kenya even less attractive.

Agriculture

Agriculture is a main provision of economy in Kenya. However, only 15 percent of Kenya's total land has the necessary fertility and rainfall to be farmed with only 7 or 8 percent being classed as first-class land.

It is estimated that about one-half of the total agricultural output is non-marketed subsistence production.

The principal cash crops are tea, produce and coffee. Horticultural produce and tea are the main growth sectors and the two most valuable exports.

The fertile highlands are the most successful agricultural regions in Africa where tea, coffee, sisal, pyrethrum, corn, and wheat are grown. These crops come from small African-owned farms.

The semi-arid savanna of the north and east predominately produces livestock and the lower-lying areas produce coconuts, pineapples, cashew nuts, cotton, sugarcane, sisal, and corn.

Foresty and Fishing

Forests have been depleted in Kenya resulting in drastically reduced output from foresty.

Fishing has also been decling because of pollution, overfishing and the use of unauthorized fishing equipment that have led to endangered local species.

Energy

Dams along the upper Tana River and the Turkwel Gorge Dam in the west supply the larges share of Kenya's electricity from hydroelectric stations.

When drought reduces water flow there are periodic shortfalls of electricity. These outages are serious obstacles to economic activity.

Plans are underway to encourage investment in hydroelectricity and in geothermal energy, in which Kenya is a pioneer.

Kenya Petroleum Refineries is a 50:50 joint venture between the government and several oil comapnies. It operates the country's only oil refinery in Mombasa. Most of this production is transported via Kenya's Mombasa-Nairobi pipeline.

Tourism

Tourism in Kenya has become the country's principal source of foreign exchange, and has been a boost to the Kenya economy in more recent years. Other foreign income sources are flowers, tea, and coffee.

Many are attracted to the coastal beaches and the game parks that provide safari adventures.

June through to September, the annual migration of wildlife happens between Maasai Mara National Park in Kenya and Serengeti National Park in Tanzania. It's an amazing display of nature with nearly two million wildebeest, zebras, and other species that filmakers from around the world have captured.

While we didn't experience the migration, Jim and I had the adventure of a lifetime on our Safari at Masai Mara Park. Check out our safari stories for more details.

Tourism has experienced a significant revival over the past few year and is the major contributor to the pick up in the economy of Kenya.

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