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Kenya Economic Report 2013 Report Economic Kenya 9 789966 058010 01 Creating an Enabling Environment for Stimulating Investment for The Kenya Institute for Public Policy Research and Analysis (KIPPRA) is an autonomous institute whose primary mission is to conduct public policy research Competitive and Sustainable Counties leading to policy advice. KIPPRA’s mission is to produce consistently high-quality analysis of key issues of public policy and to contribute to the achievement of national long-term development objectives by positively influencing the decision-making process. These goals are met through effective dissemination of recommendations resulting from analysis and by training policy analysts in the public sector. KIPPRA therefore produces a body of well-researched and documented information on public policy, and in the process assists in formulating long-term strategic perspectives. KIPPRA serves as a centralized source from which KENYA ECONOMIC the Government and the private sector may obtain information and advice on public policy issues. KIPPRA acknowledges generous support from the Government of Kenya (GoK), the REPORT 2013 European Union (EU), the African Capacity Building Foundation (ACBF), and the Think-Tank Initiative of IDRC. Creating and Creating Enabling Environment for Stimulating and Investment Competitive Sustainable for Counties Our Vision To be the leading institute in public policy research and analysis; an international centre of excellence Our Mission To provide quality public policy advice to the Government of Kenya and other stakeholders by conducting objective research and through capacity building in order to contribute to the achievement of national development goals ISBN9789966 058010 01 Kenya Economic Report 2013 Report Economic Kenya 9 789966 058010 01 Bishops Garden Towers, Bishops Road PO Box 56445 00200, Nairobi, Kenya tel: +254 20 2719933/4; fax: +254 20 2719951 cell: +254 724 256078, 736 712724 email: [email protected]; website: http://www.kippra.org Kenya Economic Report 2013 Creating an Enabling Environment for Stimulating Investment for Competitive and Sustainable Counties Nairobi, Kenya 2013 © 2013 Kenya Institute for Public Policy Research and Analysis (KIPPRA) Bishops Garden Towers, Bishops Road PO Box 56445-00200, Nairobi, Kenya Tel: +254 20 4936000; 2719933/4; Fax: +254 20 2719951 Cellphone: +254 724 256078, 736 712724 Email: [email protected] Website: http://www.kippra.org All rights reserved This volume is a product of the Kenya Institute for Public Policy Research and Analysis (KIPPRA). The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Government of Kenya or its agencies. Although all effort has been made to ensure accuracy of data and interpretations, the Institute does not guarantee the accuracy of the data included in this volume. Rights and permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work and its derivatives without permission from the Institute may be a violation of applicable law. KIPPRA encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reproduce this work or any of its parts, please send a request with complete information to [email protected] ISBN 978996605801010 Other Available Kenya Economic Reports 2009: Building a Globally Competitive Economy 2010: Enhancing Sectoral Contribution towards Reducing Poverty, Unemployment and Inequality in Kenya 2011: Transformative Institutions for Delivering Kenya Vision 2030 2012: Imperatives for Reducing the Cost of Living in Kenya C Contents Figures and Tables .................................................................................................................................................................................iv Foreword ....................................................................................................................................................................................................x Preface .....................................................................................................................................................................................................xii Acknowledgments ...............................................................................................................................................................................xiv Abbreviations and Acronyms ............................................................................................................................................................ xv Executive Summary ............................................................................................................................................................................xix PART I: MACRO AND SOCIO-ECONOMIC PERFORMANCE ......................................................... 1 Macroeconomic Performance ..........................................................................................................................2 Governance ....................................................................................................................................................... 12 Poverty, Inequality and Population Growth ............................................................................................... 19 Labour Market and Employment Opportunities ...................................................................................... 29 Health ................................................................................................................................................................. 35 Education and Skills Development .............................................................................................................. 54 PART II: SELECTED SECTOR PERFORMANCE ............................................................................. 73 Agriculture ........................................................................................................................................................ 74 Manufacturing .................................................................................................................................................. 77 Trade and Foreign Policy................................................................................................................................ 87 Financial Services............................................................................................................................................. 98 Tourism ............................................................................................................................................................105 Micro and Small Enterprises (MSEs) ........................................................................................................115 Infrastructure and Economic Services ......................................................................................................121 Environment and Natural Resources .........................................................................................................135 PART III: MEDIUM TERM PROSPECTS ......................................................................................... 156 Medium Term Prospects ................................................................................................................................................157 PART IV: CREATING AN ENABLING ENVIRONMENT FOR STIMULATING INVESTMENT FOR COMPETITIVE AND SUSTAINABLE COUNTIES ................................................................ 168 An Enabling Environment for Stimulating Investment for Competitive and Sustainable Counties .....................................................................................................................................169 References .......................................................................................................................................................207 Annex ...............................................................................................................................................................219 Index .................................................................................................................................................................225 kenya economic report 2013 iii F Figures and Tables Figures Figure 1.1: GDP growth and GDP per capita (2009-2012) .......................................................................................2 Figure 1.2: Gross investment and savings in Kenya ......................................................................................................4 Figure 1.3: Components of investment ...........................................................................................................................4 Figure 1.4: Incremental capital output ratio ...................................................................................................................5 Figure 1.5: Gross capital formation and gross savings in selected countries ...........................................................5 Figure 1.6: Current account deficit as percentage of GDP (1996-2012) .................................................................6 Figure 1.7: Diaspora remittances to Kenya (US$) ........................................................................................................6 Figure 1.8: Overall inflation rate .......................................................................................................................................7
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