FACTORS AFFECTING THE KENYAN ECONOMY

Economy refers to a set of related consumption and production activities that assist in
determinacy of how certain scarce resources are allocated. Most countries in Africa are rated as
developing countries. Kenya is no different. The Kenyan economy can be described as marketbased and one that maintains a liberalized external trade system. Just as other countries, Kenyas
economy is affected by both positive and negative factors as discussed by Salemy (2013). This
paper will therefore discuss factors affecting the Kenyan economy.
TOURISM. Tourism refers to the activity of travelling out of ones usual environment to a new
one for business, or leisure activities. Tourism has promoted the economy of Kenya. This is
evident since 21% of foreign exchange earnings are traced back to tourism. Tourists also provide
a market for local goods. 11% of paid employment comes from tourism. Tourism in Kenya has
grown due to reduced fees on long haul flights, stunning scenery; for example The Rift Valley,
and Mt. Kenya-Africas second highest mountain. Also, rich and diverse cultures can be credited
for the growth of tourism, not forgetting cool climatic conditions in Kenya and the sandy beaches
in the Kenyan coast. Game parks and reserves are also a big tourist attraction in Kenya.
INFRASTRUCTURE. Infrastructure can be termed as fundamental systems, facilities and
structures serving a particular area. As a developing country, Kenyas infrastructure has room for
improvement. However improvements in this sector have improved the countrys economy. This
is by enhancing competition hence better quality goods and services, facilitating trade and
integrating counties. Increased government investment in transportation infrastructure has led to
a positive effect on the GDP, Kenya National Bureau of Statistics (2013). For example,
completion of the Nairobi-Thika superhighway has eased up traffic congestion and improved

delivery of goods from factories in places like Thika. This has a gone a long way in improving
Kenyas economy. Also government investment in communications had an effect on the GDP in
that increased investment led to a positive mark on the GDP.
DEVOLUTION. Devolution is the delegation of power and authority to sub-levels by the central
government. Devolution in Kenya was part of the constitutional reforms made in the new
Kenyan constitution promulgated on 27/08/2010. Kenya was divided into 47 counties.
Devolution has had both positive and negative impacts on the economy of the country. The major
negative impact is the misuse of allocated funds. There lack a policy of how counties should
spend their finances. Some counties allocate too much on leisure activities, for example,
Bungoma County bought 10 wheelbarrows for Kshs. 1,000,000. Some counties go for meetings
abroad on training. It would be much cheaper for the county governments to bring the trainer to
their county since there will be a reduction on costs. Also the health sector is unstable at the
moment over doctors salaries; this has led to strikes by doctors. On the other hand, devolution
has spurred development in some counties. For example, Nairobi County has worked towards
eradication of ghost workers, and also improved lighting in the city. Machakos County has
commissioned the drilling of boreholes in arid parts of the county. Such, moves will spur more
economic growth.
POLITICAL INSTABILITY. This can be termed as near-collapse of a government. Economic
growth and political stability are connected. With a poor economy, the political state of a country
is likely to be unstable. With an unstable government, there tends to be few investors and
investors hence a slow-paced economy growth. Most developing countries suffer from political
instability at times and Kenya is no different. This is evident as the country suffered major
economic setbacks during the 2007/2008 post election violence. In 2010, there was a reduction in

the number of investors, Synovate (2010). The cabinet had not met due to political wrangles
within itself. Currently, county governments are experiencing instability as there are leadership
wrangles. For example in Makueni County, the county government was almost dissolved due to
instability. However, the country is recovering and has significantly improved economically.
INSECURITY. Security is basically a concept of a government to protect its land and citizens
from national crisis like food shortages and external attacks. Kenya has suffered external attacks,
for example Al-Shabaab attacks. The attacks originated from the Kenyan army incursion into
Somalia which was facing political instability. These attacks had a huge impact on the countrys
economy negatively, for example, the tourism sector which accounts for more than 10% of the
countrys GDP, was affected by travel bans. Britain, France, Australia, and the United State of
America issued travel bans to its citizens. The number of tourists in the country dropped by 7%
from July 2012 to July 2013. One of the most devastating attacks was one staged in the uptown
shopping mall-Westgate Mall, where 69 people from different countries were killed by AlShabaab militants.
REFERENCE
Salemi.M.K, Money And Banking: What Everyone Should Know. (2013)
Anna Rosenberg, Frontier Strategy Group, (2014)
Synovate
Ari Aisen and Francisco Jose Veiga political instability, (