## A New Frontier for Kenya and Africa

_IMF Blog, January 8, 2014_

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## Bibliographic details
- Authors: Christine Lagarde
- Published: January 8, 2014

---

### Overview
- Author: Christine Lagarde
- Date: January 8, 2014
- Context: Third consecutive New Year visit to Sub-Saharan Africa by the IMF Managing Director, focusing on Kenya as a regional "frontier economy" moving toward middle-income status.
- Key message: Sub-Saharan Africa has quietly forged ahead with strong growth led by a vibrant private sector and surging foreign investment; Kenya exemplifies this dynamism and offers promise for inclusive, sustainable growth.

### Recent performance and structural strengths
- Sub-Saharan Africa growth averaged 5.6 percent a year over the past decade.
- Kenya is one of the top five destinations for foreign direct investment in Africa.
- Kenya is a regional hub with a dynamic business community led by a service sector.
- Kenya’s development of mobile communications has spurred rapid expansion of online banking.
- Kenya has the highest share of the population with access to financial services in all of Sub-Saharan Africa: more than 70 percent.
- Kenya is now the second-largest investor in the East African region.

### The "Three Cs" — policy priorities highlighted
- Completing fiscal devolution
  - Kenya is transitioning to a new form of devolved government under the new constitution.
  - Careful implementation is crucial to enable all parts of Kenya to gain access to fiscal resources and ensure benefits of growth are spread more equitably.
- Closing infrastructure gaps
  - Kenya still has large infrastructure needs: roads, railways, power generation, and other components of a modern economy.
  - New-found natural resources wealth—if properly and transparently used—offers an opportunity to invest for growth and job creation.
- Continuing regional integration
  - Regional integration can offer East Africa new markets and opportunities.
  - Last November, the heads of state of the East African Community (Burundi, Kenya, Rwanda, Tanzania, and Uganda) signed the Monetary Union Protocol, which sets in motion the process toward a common currency.
  - The Monetary Union is described as an opportunity but also a major challenge that can benefit from lessons learned in other regions.

### Challenges and risks
- Recent shocks and difficulties:
  - Impact of the global crisis.
  - Drought in the Horn of Africa.
  - The Westgate Mall attack in September.
- Fiscal devolution process carries significant risks if not carefully implemented.
- Infrastructure shortfalls risk constraining Kenya’s take-off unless addressed.
- Regional monetary integration poses major challenges in design and implementation.

### IMF engagement and policy recommendations
- The IMF has stood with Kenya—providing financial backing and policy advice.
- Recommended policy directions implied by the visit and remarks:
  - Continue economic reforms that have delivered low inflation, strengthened buffers, and increased capital flows.
  - Strengthen implementation of reforms to make growth more sustainable and inclusive, especially for job creation for Kenya’s young population.
  - Ensure transparent and proper use of natural resource revenues to finance infrastructure and inclusive growth.
  - Draw on international experience to manage the Monetary Union process effectively.

### Key statistics and factual points
- Sub-Saharan Africa growth: 5.6 percent (average per year over the past decade).
- Kenya financial access: more than 70 percent of the population with access to financial services.
- Kenya’s regional investment rank: second-largest investor in the East African region.
- East African Community members named: Burundi, Kenya, Rwanda, Tanzania, and Uganda.

*Source: A New Frontier for Kenya and Africa — Christine Lagarde, January 8, 2014.*

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## References

- [https://www.imf.org/wp-content/uploads/2014/01/11821158305_59570f3587.jpg](https://www.imf.org/wp-content/uploads/2014/01/11821158305_59570f3587.jpg)
- [https://www.imf.org/wp-content/uploads/2014/01/11821195445_c350a87b66.jpg](https://www.imf.org/wp-content/uploads/2014/01/11821195445_c350a87b66.jpg)
- [https://www.imf.org/wp-content/uploads/2014/01/11806053785_2a962e494e.jpg](https://www.imf.org/wp-content/uploads/2014/01/11806053785_2a962e494e.jpg)
- [signed](http://www.imf.org/external/pubs/ft/survey/so/2013/CAR123013A.htm)

_Source: https://www.imf.org/en/blogs/articles/2014/01/08/a-new-frontier-for-kenya-and-africa_