World Bank says services lead KenyaMonday, March 14, 2016 > 11:56:55
Services are driving Kenya’s export drive, amounting to a 50% increase in earnings led by trade, transport, ICT and financial services according to World Bank figures.
‘Since 2005, services exports in Kenya have accounted for over 50% of the increase in total exports, and are poised to overtake goods exports’, the The Kenya Country Economic Memorandum: From Economic Growth to Jobs and Shared Prosperity reads in part. It was published last week in Nairobi.
The service sector makes a direct and significant contribution to GDP and job creation, and provides crucial inputs, including logistics, energy, financial or ICT services for the rest of the economy. This has significant effect on the overall investment climate, which is an essential determinant of growth and development
The report is positive aboout Kenya’s economic outlook, but raises questions aboutand the declining emphasis on the agriculture sector and imbalances in income.
Diarietou Gaye, the World Bank Country Director for Kenya said, “Reviving agriculture remains Kenya’s main pathway to poverty reduction. On jobs, improving the business environment, the education system, and reforming dated labor laws will help. On informality, the real gains come from increasing productivity in the Jua Kali sector” says Diarietou Gaye, World Bank Country Director for Kenya.
According to the report agriculture’s share in GDP declined from 26.5% in 2006 to 22% in 2014 while manufacturing stagnated at 11.8% of GDP on average during the same period.
The World Bank says growth has not been inclusive: poverty, unemployment, and informality remain prevalent.
Kenya’s economic growth has been uneven and volatility is high. Domestic shocks have had bigger and longer-lasting effects than external shocks. Hence, reducing volatility becomes primarily a question of domestic policies.
“To accelerate short-term growth, the current savings rate needs to be doubled, primarily by mobilizing domestic savings. The report also identifies three long-term growth drivers: Innovation, Oil, and Urbanization. But, underpinning these recommendations is one overarching theme; that of functioning institutions” says Apurva Sanghi, World Bank Lead Economist and Program Leader for Kenya.
However one major accomplishment and often under-appreciated about the country’s growth is that Kenya has lived within its means. ‘
‘The country has never sought or received debt relief, but has opted for better economic policy - raising revenues, liberalizing trade and the forex market,’ the report states.