Why Kenya

Kenya is known as the regional hub for trade as well as financial transactions in East Africa. Situated on the East Coast of Africa facing the Arabian Sea and the Indian Ocean , it becomes the gateway to merchandise arriving from the Arab Countries, The Indian Sub Continent and the Far East Counties . Moreover, the lenient trade policies of the PTA (Preferential Trade Area), the regional trade bloc comprising them to trade comfortably amongst each other. The other 20 African Countries get yet another very good reason to import goods from Kenya since they are available with ease and economy. Kenya serves as the gateway to a vast African market of 400 million consumers. It offers great opportunities for both inland and overseas traders.

 

 

The performance of the Kenyan economy in 2009 was severely affected by three adverse shocks. First, the second-round effects of the global economic downturn depressed Kenya's main export markets. Second, the erratic, delayed and shorter rainfall had a negative impact on the agricultural and power sectors. Third, the prolonged effects of the 2008 post-election violence depressed investor confidence and had adverse effects on the whole Kenyan economy and population. As a result, the Kenyan economy is expected to have grown by 2.5% in 2009. In spite of the slump of international capital markets, Kenya demonstrated the depth and liquidity of its domestic capital market by successfully floating two infrastructure bonds in 2009.

The 2010 outlook for the Kenyan economy is more positive. First, Kenya's exports are likely to benefit from the expected recovery in world economic growth and the increase in prices for some of Kenya's main exports recorded in early 2010. Second, the impact of the 2009 fiscal stimulus, implemented by the government in late 2009, will be felt throughout 2010. Public and private investments are also expected to increase in 2010. As a result, the Kenyan economy is expected to grow by 3.6% in 2010.

 

Risks to a robust recovery in 2010 remain significant, however. Given the importance of agriculture to gross domestic product (GDP) and employment, any delay in the long or short rainy season will have severe economic and social consequences. Progress on improving institutional transparency is also critical for all Kenyan stakeholders to be confidently engaged. Particular attention needs to be paid to issues arising from the evictions and relocations of those who had settled in the Mau Forest, Kenya's main water catchment area. Similarly, the International Criminal Court's progress in investigating Kenya's post-election violence, as well as efforts to have the constitution put to a referendum in 2010, will be closely watched.

 

More positively, Kenya, which is already a hub for East African countries, stands to benefit from further integration of the East African Community (EAC). The plan for the EAC to have a common central bank and common currency has the potential to further enhance trade within the region. The common-market protocol that was signed at the end of 2009 and should be ratified by mid-2010 ought to have a significant impact on Kenya's integration with the rest of East Africa in the immediate term. Kenyan businesses are well-positioned to take advantage of the free movement of labour and capital. An important characteristic of the Kenyan economy when compared with the rest of Africa is the large share of its exports which are for other East African countries.

 

 

Kenya will also benefit from its strategic location, its communication with the rest of the world through the port of Mombasa and Nairobi airport, and its well-developed financial and services sectors. In addition, Kenyan businesses, especially those operating in the burgeoning information and computer technology sector are likely to reap strong benefits from the two fibre-optic cables (TEAMS and SEACOM) that came into operation in 2009. Bearing all these factors in mind and barring any major external shock, Kenya's economy is likely to recover in 2010 and 2011