RISING expectations
Kenya is East Africa’s awakening giant. The peaceful transition of power to an administration dedicated to good governance has set the region’s largest economy on course to capitalize on its vast potential.

Priority sectors for investment include tourism, Kenya’s third largest foreign exchange earner

A new feeling of optimism is in the air in Kenya, a general impression that prospects have brightened and that the country’s 30 million-strong population can look to the future with confidence.

The landslide victory of President Mwai Kibaki and the National Rainbow Coalition (NARC) in presidential and legislative elections in December 2002 has marked the beginning of a new political era by ending almost four decades of one-party rule.

The new administration has embarked on policies that focus on economic development, building up the country’s infrastructure, and generating employment.

The economic recovery program is targeted to achieve an 8 percent growth rate and industrial status for Kenya by 2025, creating 500,000 jobs a year in the process. President Kibaki has called on Kenyans to work with the government to realize the country’s enormous potential.

The administration’s promotion of good governance and an aggressive campaign against corruption have won back the support of the World Bank and the International Monetary Fund, and raised Kenya’s profile as a destination for foreign investment.

The Central Bank of Kenya has pledged to pursue “a stable monetary policy, which accommodates the highest economic growth rate possible”, while keeping inflation low and stable. Its Governor, Andrew Mullei, underlines the government’s commitment to transparency as a key requirement for encouraging economic growth.
“The people have high expectations of the new government, and to meet those expectations we need to look at what is required to provide an enabling environment,” Mr. Mullei says. “Good governance makes a major contribution toward enhancing productivity.”

Moves to liberalize the economy taken over the last ten years have laid the groundwork for an investment-friendly environment in Kenya. The country has been politically stable since it gained its independence in 1963, and the recent peaceful transition of power to the new administration has been widely praised as an impressive example of African democracy in action.

Kenya is an important player in East Africa. Strategically placed, with a major port, Mombasa, and the best-developed financial markets in the region, the country has the makings of a regional services hub in banking, information, and transportation.

The country’s membership in the East African Community (with Tanzania and Uganda) and the Common Market for Eastern and Southern Africa (COMESA), makes it an attractive base for U.S. companies looking to access the East and Central African market.

“When you invest in Kenya, you are investing in a very large market,” says Minister of Trade and Industry Mukhisa Kituyi. “We are one of the biggest players in COMESA, which represents a market of 385 million people.”
Exports from Kenya enjoy preferential access to both the United States and the European Union. Considerable effort has been made to take advantage of opportunities offered by the African Growth and Opportunity Act (AGOA) to penetrate the U.S. market. Analysts say AGOA is responsible for almost $13 million in new investments in Kenya, and the creation of 20,000 new jobs.

Major Kenyan products that qualify for duty-free access under AGOA include textiles, apparel, and leather products. Indeed, textile and apparel products have become Kenya’s dominant export category to the United States, and more than doubled to $130 million in 2002.