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Kenya Can … End Poverty

Wolfgang Fengler's picture

UPDATE: Watch an interview on the report I gave to CNBC

Today the World Bank launched its first “Kenya Economic Update” and we want to use this opportunity to launch the  blog “Kenya Can … End Poverty” as part of Shanta’s “Africa Can ...” blog. After leaving Indonesia in July 2009, this also brings me back to the community of bloggers.

The title of this first Kenya Economic Update is “Still standing – Kenya’s slow recovery from a quadruple shock with a special focus on the food crisis”.

This title has two meanings.  First, the economy seems to stand still as economic growth barely matches population growth. Kenya continues to operate below its potential. Second, Kenya’s economy has weathered four crises – post-election violence, global food crisis, global financial turmoil, and drought – and is “still standing”.

 

 

Kenya has proven particularly resilient to the global financial crisis:  Its fiscal position is strong, the financial sector robust, the external sector in balance, and inflation below 10 percent.

The World Bank projects a GDP growth rate of 3.5 percent in Kenya for 2010.

In 2009, growth has been driven by services and construction (figure 1). Kenya’s service sector has been traditionally very strong and accounts for 55 percent of the economy. This year, growth in the service sector (+4.5%) was supported by a rebound in tourism (+28 percent) which experienced a record decline in 2008 (-36 percent). IT-based industries have also shown strong growth in phone connectivity (+35%) and internet access (+28 percent). Industry, which accounts for 17 percent of the economy, will grow by an estimated 3 percent, owing mostly to the booming construction sector (+13%).

Figure  1 – 2009 growth: Services perform strongly but agriculture contracts again

Source: KNBS and Bank Staff estimates (growth at factor costs)


Agriculture remains the Achilles’ heel of Kenya’s economy, both in terms of productivity and wealth distribution. In 2009, the sector is projected to contract again by 2.4 % after declining by 5 percent in 2008, despite record high commodity prices. The agriculture sector has not only been hit by domestic and external shocks but it is also the sector with some of the most difficult policy challenges.

At the end of 2009, the price of maize, Kenya’s main staple, was double the international price (figure 2), and for most of the year it was also substantially higher than in Uganda and Tanzania. Kenya’s high maize price policy benefits only a very small group – less than 2 percent of maize farmers, most of whom are large and influential producers. The rest of the population, particularly the urban and rural poor, pays a high price.

Figure 2 – Kenya’s maize prices increased while global prices declined

Source: World Bank commodity price data-stream; Regional Agricultural Trade Intelligence Network 

 

 

 

 

 

 

 

Comments

Submitted by NEVILLE KISHORE... on
It would be of interest to know whether this decline in agriculture is on account of lack of adequate supplies of water.Maybe a programme of least cost options as spelled out in a recent McKinsey report on water would be useful in strategising the growth of agriculture.NEVILLE BHASIN

Submitted by Paul Macdonald on
I work with about 150 farmers who are based on the shores of lake Victoria. We have supplied them with certified seeds and fertilizers for one acre, mainly maize. More importantly, we provide advise and support from local people. The results for most are impressive. Our operation demonstrates that with the correct inputs and support that farmers can find a way out of absolute poverty. This operation costs around €60 per farmer. I also think you need to run it for a minimum of three years. I am not sure if we are doing everything right but if the thousand of local farmers could obtain simple and inexpensive supplies then Kenya's agricultural output could be transformed. Moreover, there are enough local people who could be trained up as advisers and who could earn a reasonable living from the farmers. The trainers could be supported in the first couple of years but the cost of this support would be less than €2,000 per annum. The Millennium Village at Bas Sauri is probably a better example of what can be achived.

As a young woman in Kenya today, I applaud the tremendous efforts to abate poverty. I believe that the key lies in vastly investing in the young, upcoming Kenyans. Many lack financial backing for noble ideas which if realized would drastically improve the livelihood of the youth concerned. This is a feasible option for eradicating poverty in Kenya. akinyiadongo@infoafricanow.com

Submitted by Anonymous on
It is true that Kenya can end poverty. but lacks the will through its leadership to do so. The leaders are the beneficiaries of poverty, hence their resolve to keep the majority in the country poor so they can continue to exploit them. However, until our government and leaders as well as politicians acknowledge their greed and take steps to deal or delink themsleves from corruptive deals, nothing will change. The leaders are the drivers of poverty, e.g. several programs/activities have been undertaken to reduce poverty but we keep hearing about involvement of leaders even things that reduce their stature or values to zero - taking funds belonging to the poor including IDP's - the most vulnereable and poor lot. Until our leaders stop being the main drivers of powerty, however much development partners pump into our country - agriculture, education, health etc. poverty will remain with us for a long long time to come. Empowering the youth alone will not help reduce poverty. The main action required to end poverty is to delink our politicians/current leadership from heading the resource portfolio and confine them to what they do best - talking. This way empowering the majoirty and the youth could be a first step to reducing poverty to an acceptable level or improving the poor's standard of living.

Submitted by Joseph Ndegwa on
Kenya's agricultural potential is huge. This is best demonstrated by the bumper harvest currenly experienced in Ukambani (Lower Eastern Province), which is largely clasified as an ASAL area. The success of Ukambani can be attributed to the recent government's initiative of distributing farm inputs to farmers and the elnino rains that have brought good tidings for the people of Ukambani. My take is that such potentials should be harnessed and replicated in other areas of the country such as Voi, Baringo, Tana Riverand the lower regions of Lake Victoria basin. This can be done through development of capital dam construction and irrigation projects to harvest and use rainwater for agricultural and domestic purposes. It's a feasible option for Kenya. ndegwajoseph@gmail.com

Submitted by Alice on
Kenya has a rich agriculture base and partly sufficient rainfall but most of our resources are not tapped. For example during the rain seasons we have floods and two months down the line drought and hunger. By tapping rainfall we would at least be sufficient in food production As our leaders are busy politicking and hurling abuses, they do not have time to assist the people who voted for them in eradicating poverty and most of the resources we get are actually squandered in one corruption case after the other. The only time we have leaders who really care for this beautiful country then Kenya will improve drastically.

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