Publisher's Synopsis
Kenya has a market-based economy and is generally considered the economic, commercial, and logistics hub of East Africa. With the strongest industrial base in East Africa, Kenya has been successful in attracting private equity capital. More U.S. companies are investing in Kenya and setting up local and regional operations to take advantage of Kenya's strategic location, comprehensive air routes, and status as a regional financial center. An additional attraction for U.S. companies is the strength of Kenya's human resources. Kenya's population is estimated at 44.3 million. Its urban areas, particularly Nairobi, are noted for their large number of well-educated English-speaking, and multi-lingual professionals, and for their strong entrepreneurial tradition. Kenya is also a very "young" country with almost 70 percent of the population under the age of 35. At the same time, businesses operating in Kenya face a number of challenges associated with corruption, unemployment, ethnic tensions, land titles, insecurity, and poverty. With an unofficial estimate of 40 percent unemployment, 50 percent of Kenya's people still live below the poverty line, and the country's GDP per capita is approximately USD 1,800. Kenya's key economic challenge is to increase its real GDP growth rate. Sustained, significant economic growth is essential if Kenya is to address its high unemployment rate and widespread poverty. Kenya achieved 4.7 percent growth in 2013, and an optimistic Government of Kenya (GoK) is projecting 6 percent growth in 2014. Inflation fell to 9.4 percent in 2012 and further down to 5.7 percent in 2013. Achieving high growth, however, will depend on improved economic governance and greater economic reform. The general elections held under Kenya's new constitution in 2013 have ushered in a new devolved governance system. However, global economic reversals and continuing underemployment for Kenya's highly-educated youth, and potential ethnic conflicts substantially increase political risk. According to the Kenya National Bureau of Statistics 2014 report, Kenya's volume of trade fell by 2.2 percent in 2013. While Kenya's domestic exports fell by 3.0 percent, imports grew by 2.8 percent mainly due to purchases of petroleum products, capital goods, food products and chemical fertilizers, which accounted for 58.4 percent of the total import bill. Kenya's current account deficit grew from USD 4.31 billion in 2012 to nearly USD 4.495 billion in 2013.
