Tourist Destinations. Economic Development in Kenya.

Seminar Paper, 2018

8 Pages, Grade: 2



Kenya is the fourth largest economy in Sub-Saharan Africa with a GDP of 29.5 billion and an annual growth rate of 2.6 percent. Kenya is also the largest economy in East Africa and this has helped in positioning the country as an infrastructural, industrial, financial, and economic hub in East and Central Africa (UNDP, 2013). Kenya has a vibrant economy endowed with several natural resources including soda ash, wildlife, and agriculture with tea and coffee being the main exports from the country. Agriculture is the main economic contributor with a GDP of 25 percent to the economy (World Bank, 2015). The service-based economy is changing with many manufacturing companies arising in the production of food beverages, cement, stone plaster, and chemicals thus giving the country a comparative advantage in the global market. Despite the current growth rate in the country, the International Labour Organization (ILO) Report indicates that the poverty levels in the country are still high with 20 percent of the population living in less than 1.25USD a day, and half of the Kenya population is living below the poverty line. With a population of 45 million people, the employment levels in the country especially in urban areas are a challenge to the country (ILO, 2014).

Data on Growth and Other Key Indicators

GDP Growth

In the last three years, Kenya economy has grown at a growth rate of 4.6 percent in the middle of weak global economy. In 2012, the economy was weak attributed to high inflation rates as a result of high interest rates. In the recent years, the government has successfully stabilized the economy with inflation rates going as low as 5 percent, and this played a key role in stabilizing the exchange rate which eventually helped in easing the monetary policy. Kenya economy slag’s behind South Africa, Nigeria, and Angola attributing the low level of GDP growth to increasing unemployment rates and falling exports (World Bank, 2015). However, domestic demand has been increasing over the years with GDP expected to increase in the near future. The Euro Zone is the largest trading partner for Kenya but the 2008 global financial crisis resulted into higher imports and low export growth in the global market. The 2008 post-election violence also contributed to the slow of the economy. The unfavorable climate is hurting the agricultural sector which is the main growth indicator in the country contributing to 35 percent of the country’s GDP. However, the government is currently investing on an irrigation project, the Galana maize project which is expected to increase exports for competitive advantage (World Bank, 2015).

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Figure 1: The GDP growth rate in the last five years (World Bank, 2015).

Growth in Foreign Direct Investments

Kenya has a strong economic position and this has positioned the country as a favorite investment destination in the global market. Kenya currently enjoys a stable political economy, and this has contributed to the increasing number of foreign investors in the country. In the last ten years, Kenya has witnessed massive inflow of Foreign Direct Investments (FDI) with 2014 and 2015 FDIs doubling with most of the foreign investors targeting the mining industry in oil and gas and the real estate sector. Several multinational companies such as Shelter-Afrique have invested heavily in both residential and office space (IMF, 2015).

Industrial Output

Kenya industrial sector including the service sector (education, hotels and restaurant, wholesale and retail trade, transport and communication, financial intermediation, real estate, renting) and agriculture has being performing well in the last five years. Industrial output increased by 4.5 percent in 2015 compared to 2.9 percent in 2010 (World Bank, 2015). The main driver to this growth was electricity supply and water sector which grew by 10.3 percent. Electricity capacity for instance, grew by 4.7 percent (1606MW) thus boosting production in most of the manufacturing sectors. The manufacturing sector for instance, reported 3.1 percent in output although most of these companies receive stiff competition from imported goods, political uncertainties as witnessed in 2008 post-election violence, and high costs of credit (Nichter, Simeon & Lara, 2015).

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Tourist Destinations. Economic Development in Kenya.
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tourist, destinations, economic, development, kenya
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Caroline Mutuku (Author), 2018, Tourist Destinations. Economic Development in Kenya., Munich, GRIN Verlag,


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