Economy In Kenya

 Economy in Kenya

"Give advice; if people don't listen let adversity teach them." (Ethiopian proverb)

Now I've been in Kenya for so long and until now I've given little thought to Kenya's economy. But I should.

How exactly the economy works in a country, which rules apply to it, is determined by the respective economic system.

When people work, they usually create something. They build cars, machines, houses, they sew clothes, bake bread, plant grain or grow fruit. All areas in which people produce something are called the economy. Services are also part of the economy. These are all activities where people work, but nothing is directly manufactured. This includes trade, transport, banks, insurance companies, administration, the police and much more. A country's economy must ensure that people get the goods and services they need and want.

"Kenya is the economic hub in the East African Community (EAC) and for most German companies it is the entry point into the East Africa region. In recent years we have seen a significant increase in interest from Germany in having a local presence. Not surprising, because East Africa is the most important growth region on the continent. Kenya offers extensive economic freedom when it comes to entrepreneurial commitments. This is to be expected in the long term, because Kenya is committed to liberal economic policies."

Maren Diale-Schellschmidt Delegate of German Business for East Africa

"...Kenya offers extensive economic freedom..." and this sentence is exactly the problem. We'll get into that in more detail later. Employee rights, union are foreign words here. Corruption in the post-colonial government of Kenya has a history that stretches from the founding president's era to Jomo Kenyatta, to Daniel arap Moi's KANU, Mwai Kibaki's PNU government and the current Uhuru Kenyatta's Jubilee Party government. In the 2012 Corruption Perceptions Index, Kenya ranks 139th out of 176 countries for corruption, tied with Azerbaijan, Nepal, Nigeria and Pakistan.

Brisk construction activity, massive investments in public infrastructure and a growing middle class have long been significant for the dynamics of development, which according to many observers shows the resilience of the Kenyan economy. A major step forward was the opening of the first new railway line in 100 years: the Madaraka Express between Mombasa and Nairobi. A $3.2 billion project funded and built by Chinese investors that will cut Mombasa – Nairobi travel time from around 12-16 hours to 4.5 hours.

Kenya is the ninth largest economy in Africa. In the 2018 Doing Business Index, it was already ranked 80th out of 190 countries compared, ahead of South Africa (82), a good place in the region and also in the overall African comparison, where Rwanda ranks 41st, but Tanzania and Uganda 40th perform worse up to 60 places in the ranking. In the following year, Kenya climbs to 61st place in the DBI 2019 and the following year to 56th place, which shows a trend towards policies geared to the needs of the economy. However, the index was temporarily suspended in August 2020 after criticism. From the point of view of the Bertelsmann Transformation Index 2020 (BTI), however, the transformation of the economy can only be regarded as very limited, ranking 71st among 137 countries compared.

In general, the economy and the survival of the masses in Kenya are based on agriculture, which with flowers, vegetables (beans, snow peas, baby corn), tea and coffee contributes to a quarter of GDP and employs around two thirds of the population. The economy has to struggle with the typical problems of an African country: population pressure, corruption and climatic adversities are combined with structural disadvantages in world trade, unpredictable price fluctuations and the labor market's insufficient ability to absorb.

Let's get straight to the most important thing, wages and salaries.

In Kenya, an estimated 5.3 percent of the population is in regular employment. As in many other African countries, companies and numerous headhunters compete for a few highly qualified workers who can choose their employer. Taking out pension and health insurance is not compulsory. Nevertheless, a good pension plan and additional medical benefits are important in order to recruit and retain good employees. Workers' rights and the work of trade unions are restricted in Kenya. And that's an important note.

Here are some wages paid in Kenya.

Average salary Kenya= 138€

Minimum wage Kenya= 308.46€

Salary of an accountant in Kenya= 337.31€

Salary of an Architect Kenya= 402.28€

Salary of a babysitter Kenya= 131.72€

Salary of a waiter in Kenya= 195.80€

Salary of a bricklayer Kenya= 226.06€

Salary of a Dentist Kenya= 983.45€

Here are some prices of groceries in the supermarket.

A loaf (250 g)= 0.235€

A dozen eggs= 1.51€

A kilo of chicken wings = 5.79€

A kilo of apples= 2.37€

A liter of milk= 0.83€

A kilo of local cheese= 4.23€

A kilo of salad = 0.84€

A kilo of onions= 1.01€

A kilo of potatoes= 1.3€

1 kg of tomatoes= 1.09€

1 kg of oranges= 1.31€

1kg bananas= 0.98€

And the food in the restaurant costs:

Eat for one person in a cheap restaurant= 3.93€

Meal for two in a good restaurant= 22.46€

A meal in McDonalds= 6.11€

Milk coffee in a café= 2.19€

A can of Coca Cola or Pepsi (0.33l)= 0.47€

Water bottle (0.33l)= 0.42€

The qualification of young professionals, which is based on the needs of the Kenyan economy, is one of the great challenges of the country.

The strengths of Kenya are:

Largest and most diversified economy on the continent;

Large domestic market with 55 million people (annually increasing by about 1.2 million);

Nairobi and Mombasa as regional hubs

Kenya Airways flies to many destinations in Africa.

The weaknesses in Kenya are:

Currently moderate economic climate (pandemic)

Poor investment conditions in many areas

Financing problems: the private sector lacks capital and the state is heavily indebted

The opportunities in Kenya are:

Presidential election in 2022 affects the ability to plan investments;

risk of payment delays in dealings with the government;

crime, terrorism and political unrest,

The economy is growing, there is a middle class, and the state is investing in infrastructure. But despite the dynamism, a large part of the population continues to live in poverty.

Estimated GDP

approx. US$ 95.5 billion (World Bank, 2019)

Per capita income (adjusted for purchasing power) US$ 1750 (World Bank, 2019)

Human Development Ranking (HDI) Rank 147 out of 189 in 2018. (2016: 143, 2017: 142)

Income distribution (Gini coefficient) 40.8 (HDR 2018. 2017:48.5)

Population below poverty line $1.9 36.8% (HDR 2018)

Economic Transformation (BTI 2020) Rank 71 out of 137 (2018: 72)

There are other problems in Kenya. The water is one of them. Water is life! Everyone needs to drink daily to survive. But over a billion people around the world - a large proportion of them live in Africa - do not have access to clean drinking water. In Kenya, too, there is a lack of access to clean drinking water.

With a population of 53 million, 15 percent of Kenyans rely on unimproved water sources, such as ponds, shallow wells and rivers, while 41 percent of Kenyans lack access to basic sanitation solutions. These challenges are especially evident in rural areas and urban slums where people are often unable to connect to piped water infrastructure.

According to the WHO / UNICEF Joint Monitoring Program (JMP) for water and sanitation in 2008, only 12% of all households in rural Kenya had a water connection.

In rural Kenya, the average total coping costs for an unreliable or distant water supply are approximately $38 per month. In comparison, the average water bill of a typical household in Nairobi that is connected to a piped system is only $4.46 per month. This comparison highlights the economic burdens that often fall more heavily on unconnected rural customers than on households with piped connections. However, there are many areas where piped water connections do not produce a reliable, constant flow of water. Thus, solutions like borehole wells and rainwater harvesting tanks are also needed in urban and peri-urban areas.

As a result, people often have to walk long distances to the nearest water point or are forced to drink water that is dirty and contaminated with germs. Children in particular then suffer from diseases caused by dirty water, such as cholera, typhus and diarrhea. Water scarcity is also exacerbated by droughts, climate change and political instability.

Another problem in Kenya is corruption. The "Corruption Perceptions Index" for the public sector showed 70 points in Kenya for 2021. The scale ranges from 0 to 100, with the higher the value, the greater the corruption. Kenya ranks 134th. The result is therefore significantly below average compared to other countries. There was a slight increase in corruption in 2021 compared to the previous year. In the long term, however, it has fallen moderately in recent years. Germany is in 10th place with a value of 20. Incidentally, the ranking is led by New Zealand with a value of 12. The sad last place is occupied by South Sudan (89 points).

The "Corruption Perceptions Index" showed 26 points in Austria for 2021. Austria thus occupies 13th place. The result is therefore above average compared to other countries. There was a slight increase in corruption in 2021 compared to the previous year. From a long-term perspective, it has also risen moderately in recent years.

Most bribes paid by urban residents in Kenya are fairly small, but large ones are also taken – bribes worth over 50,000 Kenyan shillings (€600, US$450) account for 41% of the total. There is also corruption on a larger scale, with each of the latter two regimes being criticized for their involvement.

Despite market reforms, several business surveys show that corporate corruption is still rampant and companies in Kenya often ask for bribes and informal payments to 'get things done' - a trend that has contributed to higher costs of doing business in Kenya. The public procurement sector in Kenya suffers from widespread corruption and is the leading form of manipulation in the public service and always at the center of all major corruption scandals. The use of agents to facilitate business and transactions in Kenya is widespread and poses a risk to companies, particularly at the market entry and start-up stage. It is observed

Health care in Kenya. In recent years, the country's healthcare system has improved, but there are still a number of issues to consider for healthcare in Kenya. The Kenyan health system can be divided into three categories. Public providers, private non-profit organizations (including faith-based and missionary hospitals, as well as local and international NGOs), and private, for-profit healthcare providers. Government-funded basic public health care is provided in primary health centers and pharmacies. The state pharmaceutical chain KEMSA supplies the state pharmacies with medicines and medical supplies. The public health centers provide free services for simple illnesses such as cold and flu, uncomplicated cases of malaria and minor skin diseases. Patients with medical conditions that cannot be treated by nurses are referred to clinics and hospitals.

The private healthcare sector in Kenya has gained in importance in recent years. Private clinics of varying standards can be found in most major towns, including coastal resorts such as Diani and Malindi. There are private hospitals mainly in Nairobi, with a few also in Mombasa. The private AGA Khan University Hospital in Nairobi offers a high level of care and is very popular with expats. However, expats should be aware that private healthcare in Kenya can be costly without comprehensive medical insurance.

The Kenyan healthcare system is struggling with issues of substandard and counterfeit medicines. In big cities there are a lot of small roadside pharmacies. Although these are cheaper than large chains that are affiliated with renowned hospitals, they also have more problems with counterfeit medicines. In addition, their staff may not be trained or qualified enough to provide sound medical advice. Most prescription drugs should be available in Kenya.

https://www.africa-business-guide.de/de/maerkte/kenya

https://lebenshaltungkostenin.com/preise-und-lohne-in-kenya-land/

http://www.keniatours.org

Global Nature Fund, drinking water filters in Kenya

Water.org, Kenya

Corruption in Kenya, Länderdaten.info

Corruption in Kenya, Watch Crime and Justice

Healthcare in Kenya, Allianz Care

What is economy, bpi