NAIROBI: Kenya is at a very critical juncture in its history. On the one hand, it is implementing a new constitutional order that marks a transformational shift from the past while on the other, it is presiding over a new governance framework with a devolved system of governance.
Over and above all this, the country is experiencing a youth bulge that the Jubilee-led government sees as an asset to be grown.
Economic decisions that Kenya makes in the present will fundamentally shape its future socio-economic prospects.
Vision 2030 lays out an elaborate vision for attaining middle-income status that is founded on a three-pronged framework. Kenya is most certainly on an upward economic trajectory and looking back two years into the Jubilee government a good number of economic accomplishments have been recorded. Consider the following:
In 2014, Kenya rebased its economy and is now the 9th largest economy on the continent having been elevated to middle income status. This year, Kenya was listed by Bloomberg as one of the 20 fastest growing economies this year" and cited as an 'economy all star' by virtue of being the second out of 20 countries with the highest growth projection for the year 2015 at approximately 6 per cent.
This is echoed by other reports and publications, which tout Kenya as a rapidly growing economy.
Kenya is becoming increasingly diversified and with the advent of devolution that is channeling more resources to county governments, additional investment in energy and infrastructure projects, more and more businesses are becoming viable because of lower costs of production and improved infrastructure.
In 2014, the country registered a GDP growth from multiple sources including manufacturing, which contributed 9.21 per cent, wholesale retail trade 10.18 per cent, transport and communication 9.33 per cent and agriculture 25.94 per cent.
The devolved government has also brought about a great number of opportunities at the local level. Counties are the new frontiers for economic growth because economic resources and political power have been devolved. Devolution has also incentivised counties to focus on their comparative advantages.
In Civilization: The Rise of the West and the Rest, Niall Ferguson offers a theory on why western economies flourished in the 19th Century and why other nations did not. First, Ferguson denotes the importance of a free market in which individuals are allowed to compete.
From an economic perspective, competition ensures that goods and services are produced efficiently and are offered to consumers at the most competitive price.
This is best exemplified in the financial services sector. Kenya has one of the most diversified, vibrant and competitive banking sectors the world over. The financial sector overall is now the third largest in sub-Saharan Africa behind South Africa and Nigeria. There is a mix of both established and new entities, national and international.
Secondly, Ferguson lists science. Theories have to be proven and disproven through experimentation as this is the only path to finding new knowledge.M-pesa, which in 2014, recorded transfers worth a staggering Sh4.18 trillion has made Kenya a world leader in mobile money transfer.
Thirdly, Kenya's liberal property rights regime incentivises investors and entrepreneurs to pursue business opportunities. This is seen in the booming real estate, commercial farming and tourism sectors.
Improvements in medical facilities and better healthcare increases the life expectancy of the population, resulting in a more productive and long lasting work force that yields more output. Having devolved healthcare, there has been great improvement in healthcare provision through the construction of new dispensaries, maternity wings, additional personnel, upgraded equipment.
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Furthermore, through the First Lady's initiative, the Beyond Zero Campaign, maternity care has been improved in addition to the President's directive to offer maternal healthcare services free of charge. Together, these policies have improved the overall healthcare standards in the country.
The recently launched Managed Medical Equipment Services scheme, will also go a long way in revolutionising healthcare provision, by improving diagnostics and treatment throughout the country.
To drive production, a country must consume goods and services. Increased production translates into additional revenues for companies, which in turn creates more employment. Kenya's emerging middle class is a boon for business.
The Kenya National Bureau of Statistics (KNBS) defines the middle-income group as households with monthly expenditures of between Sh23,671 and Sh120,000 and going by these statistics about a quarter of Nairobi's population is of middle class status.
Moving forward, the disposable income from the burgeoning middle class will be critical in the growth of our economy.
Last, but not least, is work ethic. People are not automatically hardworking and driven. Human beings develop a strong work ethic because they are motivated by future gains. Across the world, Kenyans are known to have a strong work ethic and this is manifested in our entrepreneurial spirit and the growth of local businesses as well as our stewardship of multinational enterprises. This hardworking culture has been reintroduced into the public sector.
And yet our task is far from complete. We owe it to the Kenyan people to go further and work more towards a stable, inclusive and sustainable growth that will meet the needs of all our people.
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