According to the recently released Kenya Economic update, by the World Bank Group, “if Kenya can navigate another tough economy in 2011 and accelerate growth, it can reach Middle Income Status by 2019.”
Below are highlights of the findings, as well as a link to download the full report.
- Kenya will need to navigate through another economic storm in 2011; This will reduce growth to a projected 4.8 percent, which is still substantially higher than the average of the last decade.
- The decade has started on a bullish note for Kenya. In 2010, growth was higher than expected at 5.6 percent. If growth accelerated to 6 percent, Kenya could reach Middle Income Country status by 2019.
- Kenya needs to retain its macroeconomic credibility, especially in containing inflation and managing fiscal deficits. At 5 percent growth, Kenya can run a fiscal deficit of 4 percent to reach its debt targets by 2014.
- If high food prices persist and it becomes necessary to cushion the most vulnerable, distribute cash rather than food, if poor families in need can be identified. Given Kenya’s success with ‘mobile money’, this is a more effective approach and one that would also help to build a more robust social protection system.
- Kenya is at the threshold of a major demographic transition and rapid urbanization. Each year, Kenya will continue to grow by more than one million people to reach 63 million in 2030, who will live longer, be better educated, and increasingly live in cities. By 2033, half of Kenyans (33 million people) will live in cities.
- Urbanization supports economic growth if well managed.The best way for Kenya to make the most out of urbanization and remain competitive is to strengthen its coastal hub and to modernize the port of Mombasa, improve infrastructure within and between Nairobi and Mombasa.
- Let the cities grow and thrive because economic prosperity is concentrated in urban centers. Kenya can leverage ongoing devolution to develop an urban policy which allows for a separate urban tier with autonomy for medium-sized cities with 100,000 to 400,000 people.
- The decentralization architecture will need to balance growth with equity. In Kenya as elsewhere, economic activity will remain concentrated, but development can still be inclusive. Kenyans can benefit from urban growth if government provides social services and basic infrastructure equitably.
Download the full report, click here